REG - Yourgene Health PLC - Audited Final Results
27/07/2022 07:16
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RNS Number : 8391T Yourgene Health PLC 27 July 2022
Yourgene Health plc
("Yourgene", the "Company" or the "Group")
Audited Final Results
Manchester, UK - 27 July 2022: Yourgene (AIM: YGEN), the international
molecular diagnostics group, announces its final results for the financial
year ended 31 March 2022 ("FY22"), and provides an unaudited update on trading
for the first quarter of the current financial year ("Q1 FY23").
The Group's performance in FY22 reflects the significant revenue growth
delivered from COVID-related products and services, as well as a return to
growth in the Company's core business. The strong financial performance has
allowed Yourgene to invest further in creating a broader platform or products
and services to serve a wider, global customer base, focussed on accelerating
growth across Genomic Services, NIPT, Ranger® Technology and PCR testing.
Financial highlights
● Record revenues of £37.6m (FY21: £18.3m), up 105% and ahead of previously
upgraded expectations
- Genomic Services up 238% to £21.6m, dominated by COVID-19 testing
- Genomic Technologies up 34% to £16.0m including +9% year-on-year growth in
non-COVID sales
● Gross profit up 88% to £21.4m (FY21: £11.4m)
● Adjusted EBITDA* of £3.4m (FY21: loss of £2.0m)
● Reported pre-tax loss of £3.2m (FY21: loss of £12m)
● Reported loss after tax of £1.9m, following £1.3m tax credit (FY21: £12.2m)
● EPS loss of 0.3p (FY21: 1.8p loss)
● £1.3m cash generated from operating activities (FY21: £3.8m used), despite a
net working capital outflow of £1.7m (FY21: £0.9m outflow)
● £3.5m of cash used in investing activities (FY21: £7.4m) - reflecting
investment in growth strategy
● £5.0m term loan secured in January 2022 from Silicon Valley Bank to support
growth strategy
● Cash improved to £8.4m (31 March 2021: £7.0m)
* Adjusted EBITDA is the operating profit/(loss) before interest, tax,
depreciation, amortisation, share-based payments and acquisition-related
expenses shown separately disclosed on the face of the Income Statement
Operational highlights
● National Microbiology Framework awards for COVID-19 PCR testing and variant
sequencing services
● DPYD screening contract for NHS Wales and DPYD screening recommended in Spain
● Opening of new Yourgene Health Canada facilities to support future growth of
Ranger® Technology
● US strategic partnership for NIPT with Ambry Genetics and expanded market
access to oncology portfolio for Yourgene Genomic Services
● Secured two supply contracts with US diagnostic majors for Ranger® Technology
(announced in March and June 2021 respectively) are now validated and using
the technology in routine clinical testing)
● Launch of IONA® Care - our NIPT service with expanded clinical menu including
sex chromosome aneuploidies
Expansion of geographical reach with indirect distribution channels
● strengthened in Middle East, Africa and Eastern Europe and commercial teams
strengthened in APAC, Americas and EMEA
New customers for IONA® Nx NIPT Workflow with strong installed base in the
● USA, Mexico and Singapore
Post period end developments
● Strategic partnership with Ambry Genetics extended to oncology services
portfolio offering in Europe
● Launch of Yourgene's Accelerator Phase for its Microdeletions Plugin, which
expands on the clinical menu and capabilities of IONA® Nx NIPT Workflow
offering
● Yourgene Genomic Services receive ISO 15189:2012 accreditation for UK
laboratory
● Ranger® technology offering expanded with launch of LightBench® Detect -
clinical platform for liquid biopsy applications including NIPT with the use
of EDTA blood collection tubes
● Business restructuring is now complete, the Group's platform has been reshaped
to deliver growth within the core portfolio across Yourgene's operating
footprint
● Q1 FY23 trading returns to pre-pandemic growth rates (20% year-on-year) for
non-COVID revenue streams
Lyn Rees, Chief Executive Officer of Yourgene, commented: "We are greatly
encouraged by the performance of the business over the last 12 months. We have
delivered record revenues as a result of high demand for our COVID-related
products and services, and we have been able to invest the resultant proceeds
towards enhancing the growth drivers for our core markets opportunities.
Yourgene has progressed significantly over the last few years, and we remain
focused on our long-term growth strategy despite some of the challenges faced
over the last two years.
"Looking forward we are now established as a growing force in genomic testing
with a team of nearly 200 staff with a strong and increasing presence in key
overseas geographies including North America, Europe and Asia. We have diverse
revenue streams built on proprietary technologies and growth opportunities
across cell-free DNA applications such as NIPT, oncology, reproductive health
and infectious disease. Our core business is now back to being a stable
platform from which to deliver growth, building on the progress in the first
quarter. Yourgene has a unique opportunity to benefit from the more
significant growth rates available from the expanded range of market segments
in which we operate."
Q&A with CEO, Lyn Rees:
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation
and the Directors of the Company are responsible for the release of this
announcement.
Yourgene Health plc Tel: +44 (0)161 669 8122
Lyn Rees, Chief Executive Officer investors@yourgene-health.com (mailto:investors@yourgene-health.com)
Barry Hextall, Chief Financial Officer
Joanne Cross, Director of Marketing
Cairn Financial Advisers LLP (NOMAD) Tel: +44 (0)20 7213 0880
Liam Murray / James Caithie / Ludovico Lazzaretti
Singer Capital Markets (Joint Corporate Broker) Tel: +44 (0)20 7496 3000
Aubrey Powell / Tom Salvesen / George Tzimas
Stifel Nicolaus Europe Limited (Joint Corporate Broker) Tel: +44 (0)20 7710 7600
Nicholas Moore / Matthew Blawat / Ben Maddison
Walbrook PR Ltd (Media and Investor Relations) Tel: +44 (0)20 7933 8780 or yourgene@walbrookpr.com
(mailto:yourgene@walbrookpr.com)
Paul McManus / Lianne Applegarth Mob: 07980 541 893 / Mob: 07584 391 303
Alice Woodings Mob: 07407 804 654
About Yourgene Health
Yourgene Health is an international molecular diagnostics group which develops
integrated genomic technologies and services enabling precision medicine. The
group works in partnership with global leaders in DNA technology to advance
diagnostic science.
Yourgene primarily develops, manufactures, and commercialises simple and
accurate molecular diagnostic solutions, for reproductive health, precision
medicine and now infectious diseases. The Group's flagship products include
non-invasive prenatal tests (NIPT) for Down's Syndrome and other genetic
disorders, Cystic Fibrosis screening tests, invasive rapid aneuploidy tests,
and a recent extension into the oncology space with DPYD genotyping.
The Yourgene Genomic Services team works with healthcare professionals,
researchers and pharmaceutical organisations to support and accelerate
scientific advances in genomic medicine. The division's specialist services
guide decisions about abnormalities, hereditary risk and treatment in addition
to providing novel insights in research and discovery. Accredited clinical
services are provided in Oncology and Reproductive Health within the UK and
worldwide. The team of scientific experts offer consultative services to help
guide partners in selecting the right technology and approach for their
applications.
In August 2020, Yourgene acquired Coastal Genomics, Inc., a sample preparation
technology company based in Vancouver, Canada, enabling the Company to extend
its offering and IP portfolio in the DNA sample preparation sector. The
acquisition increased Yourgene's geographical penetration into the US and
Canada, supplementing existing coverage in the UK, Europe, MEA and Asia.
Yourgene Health is headquartered in Manchester, UK with offices in Taipei,
Singapore, the US and Canada, and is listed on the London Stock Exchange's AIM
market under the ticker "YGEN". For more information visit
www.yourgene-health.com (http://www.yourgene-health.com/) and follow us on
twitter @Yourgene_Health.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders and
prospective security holders not to place undue reliance on these
forward-looking statements, which reflect the view of the Company only as of
the date of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the statements are
made. The Company will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory
authority.
Chairman's statement
The foundations for growth are stronger than ever.
Yourgene has come on a considerable journey over the last six years since I
became Chairman. Despite current market conditions the business has weathered
the pandemic and delivered its best ever results. More importantly it has used
the income generated from COVID testing to strengthen the growth drivers for
the business in the future. At the same time, we have continued to build a
strong Board and appropriate governance as we build a business of scale.
At the IPO in 2014 we were a UK focused pre-revenue business with a headcount
of 10, and a single product due to launch into the NIPT space. Today we have
established ourselves as a growing force in genomic testing and technologies:
we are a team of approximately 200 staff with more direct presence in key
overseas geographies than ever before. On behalf of the Board, I would like to
thank the management team and all Yourgene colleagues for their considerable
efforts and outstanding contribution to the national pandemic response.
During the year Nick Mustoe left the Board after eight years and Mary Tavener
joined the Board as a Non-executive Director. I would like to take this
opportunity to thank Nick for all of his time and support during his tenure
with Yourgene and to welcome Mary to the Board for the next phase of the
Group's journey.
As announced in April 2022 I will be stepping back from my role as
Non-executive Chairman of Yourgene to return to being a Non-executive Director
and Dr John Brown CBE will assume the role as Non-executive Chairman, which I
totally support. John has over 20 years capital markets experience in the
healthcare and life sciences sector and has significant relevant Board
experience. I look forward to working with John and the rest of the Board as
we strive to leverage these strong foundations and deliver the shareholder
returns we all desire.
Adam Reynolds
Non-executive Chairman
27 July 2022
Chief Executive's report
We have achieved record results through agility and resilience
Over the last 12 months Yourgene has been both agile and resilient in equal
measure. We have achieved record revenues as a result of high demand for our
COVID-related products and services, and we have also seen a return to growth
in many of our core markets as the year progressed. This success has provided
us with additional funds to invest across our Genomic Services and Genomic
Technologies businesses, both of which offer strong growth potential. We are
very excited about the broader service offering that we now have, as well as
the growth opportunities available from our Genomic Services business, the
NIPT markets in the Americas, and in particular the disruptive potential of
our Ranger® Technology.
First and foremost, I must offer a huge thanks to all our staff for their hard
work over the last 12 months. The application of our skill-base to meet the
demands and challenges of the COVID-19 pandemic, and to now redeploy those
skills into other growth areas, has been remarkable. Last year's success is a
testimony to the commitment of the whole team and there is no doubt that they
have helped ensure that Yourgene is in a much better position now than we were
going into the pandemic.
We enter the new financial year with a strong platform to meet the needs of a
wider customer-base via an adaptable mixture of technologies and services,
with the aim of delivering improved profitable growth from our core business
in FY23 and beyond.
Full year trading overview
Revenues for FY22 were £37.6m, up 105% on the previous year, with the vast
majority of this revenue derived from UK focused COVID PCR testing and variant
sequencing services, as well as sales of our own Clarigene® COVID-19 PCR
assay. Going forward we expect to see these geographical splits normalise and
in particular a greater contribution from sales in North America, a key growth
area for Yourgene.
Revenue by Geographical Market 2022 % of Group 2021 % of Group Growth/ decrease
£m £m
UK 26.5 71% 5.5 30% 387%
Europe 5.5 14% 5.5 30% 0%
International 5.6 15% 7.4 40% -24%
Group 37.6 100% 18.3 100% 105%
Genomic Services
Our Genomic Services business delivers clinical and research testing services
to consistently high standards, incorporating our longstanding NIPT testing
services, our oncology and CRO (contract research organisations) testing
services, as well as high-throughput COVID testing services. We have an
established international laboratory network with upgraded facilities in the
UK (Manchester) and Taiwan (Taipei).
Genomic Services revenue mix 2022 % of Group 2021 % of Group Growth/ decrease
£m £m
COVID-19 services 18.7 50% 1.7 10% +981%
NIPT services 1.6 4% 1.9 10% -12%
Other services 1.3 3% 2.8 15% -55%
Genomic Services 21.6 57% 6.4 35% +238%
COVID-19 Testing Services
The significant growth in Genomic Services revenues to £21.6m can be
attributed to a very strong performance from the team in delivering the
highest-quality COVID PCR testing and variant sequencing for the Department of
Health and Social Care and non-Government customers. Whilst private COVID-19
testing continues these are at more modest levels and we continue to repurpose
our testing capacity in this area.
One of the many examples of how we are now stronger as a business coming out
of the pandemic is the recognition of the high quality of performance and
competence that our Genomic Services provide. Following assessments by the UK
accreditation service, our Manchester labs received ISO 15189:2012
accreditation for its COVID-19 testing and sequencing services, one of the few
independent UK labs to have attained this globally recognised ISO standard. It
is also a testament to our team that our labs also passed the rigorous
assessments required to support the Government's COVID-19 testing programme
and provide genetic sequencing services to the UK Health Security Agency.
Our expertise in preparing for successful contract tenders was also developed
further during the pandemic as was evidenced by Yourgene's inclusion in the
Public Health England National Microbiology Framework Agreement and then
subsequent awards granted under it. We have a number of submissions for
tenders in place currently where we believe we are well-placed to compete, and
we will update shareholders on those that are successful.
Non-Invasive Prenatal Testing (NIPT) services
NIPT and research testing services stabilised in H2 after a challenging first
half of the financial year. Whilst the pandemic had a negative effect on birth
rates globally, trading at the end of the financial year indicates an
encouraging recovery in NIPT services towards previous pre-pandemic growth
rates.
Expansion into oncology testing services
We also continue to expand our range of genomic testing services, and in April
2022 we announced an extension of our strategic partnership with Ambry
Genetics, part of REALM IDx, Inc (previously Konica Minolta Precision
Medicine), which adds a range of leading oncology products to our services
offering.
Genomic Technologies
Our Genomic Technologies business encompasses a wide range of instruments,
reagents, consumables and software including screening and diagnostic products
in the areas of NIPT, Cystic Fibrosis, chemotoxicity (DPYD) and COVID-19 as
well as our Ranger® Technology, used in DNA applications such as liquid
biopsy including; NIPT, infectious diseases and oncology. Our Ranger®
Technology offers clinical and research laboratories with an automated DNA
target enrichment solution to enrich and purify DNA samples with a low overall
level of target present which improves the performance of DNA test. This
provides a clear economic benefit to labs when incorporated into sample
preparation.
Genomic Technologies revenues were up 34% to £16.0m (FY21: £11.8m).
Genomic Technologies revenue mix 2022 % of Group 2021 % of Group Growth/ decrease
£m £ 000
NIPT 5.4 15% 5.9 32% -9%
COVID-19 related assays 4.5 12% 1.4 8% +216%
Reproductive health 3.9 10% 3.6 20% +7%
Precision Medicine (Ranger®, DPYD and other) 2.2 6% 1.0 5% +135%
Genomic Technologies 16.0 43% 11.9 65% +34%
NIPT
Whilst we have grown our portfolio considerably into areas beyond NIPT we
remain very excited about the growth opportunity this market offers. We saw a
recovery in the second half of the year to double digit growth, recording 11%
growth year-on-year compared to H2 2021, and a 19% improvement against H1 2022
sales.
Our UK and European NIPT customer base is now firmly established on our IONA®
Nx NIPT workflow using Illumina's next generation sequencing technology, and
we have added new partners across the region. Internationally, the launch of
IONA® NX and its component technologies opened up many new markets to us and
we are building a strong installed base for IONA® NX in the USA, Mexico and
Singapore. This installed base is starting to build clinical volumes and
offers significant growth potential in the coming years.
We remain active in R&D to ensure we continue to offer class leading
products to the NIPT market. Post-period end we announced the launch of the
accelerator phase for clinical menu expansion for our IONA® Nx NIPT Workflow
offering, the Microdeletions Plugin. The expansion offers customers the
ability to detect chromosomal microdeletions, an abnormality that occurs when
a piece of a chromosome is missing, with a number of microdeletion patterns
being associated with a number of clinically categorised syndromes. Yourgene
is one of a small group of NIPT providers to include microdeletions in the
NIPT workflow and we are pleased to be working alongside leading genomics
partners in Asia and Europe.
Looking forward, we are confident that we can exploit commercially the
significant opportunity that Yourgene has to influence and disrupt the NIPT
market in the Americas by leveraging our Ranger® technology for size
selection into established competitor NIPT workflows. The Ranger® Technology
is already integrated as a key element in the IONA® Nx NIPT workflow, but the
technology can be integrated into other NIPT workflows, and immediately offers
laboratories a clear value proposition with unrivalled fetal fraction
enrichment, thus improving the success rates of testing and reducing the
number of false positives. It also offers potential customers clear economic
benefits by simplifying the sample preparation process, allowing considerably
lower cost sample tubes to be used and potentially halving the number of
sample tubes required. Given that the Ranger® Technology can be used with
existing NIPT workflows it allows the Yourgene sales team to begin dialogue
with potential customers at any time during the sales cycle, not only when
longer term service contracts are approaching renewal. Over time we expect to
gain entry to subsequent tender processes via the adoption of the Ranger®
Technology into NIPT workflows currently using competing sample testing or
reporting workflows.
Across the NIPT landscape in the Americas we have already demonstrated that
our technology offering is attractive to all of the various market segments:
from the high volume 'Mega Labs', to large private screening labs, as well as
to smaller regional reference labs. The fact that we have attracted a key
strategic partner such as Ambry Genetics, a leading US laboratory services
provider, reinforces the credibility our Ranger® Technology has in the NIPT
market.
COVID-19 related assays
Clarigene® COVID-19 PCR assay reported revenues of £4.5m (FY21: £1.4m).
Sales are continuing into the new financial year through private testing
channels, although ongoing sales are expected to reduce in line with a global
reduction in mandatory COVID testing requirements.
Reproductive Health
The reproductive health PCR portfolio of tests such as Cystic Fibrosis, male
factor infertility, QST*R rapid aneuploidy analysis and pregnancy loss test
has seen a 7% year on year growth. This growth has been with our CE-IVD kits
through our existing direct sales and distributor network for predominantly
UK, European, Canada and Australian markets. We are now making research use
only (RUO) versions that we can take to non IVD regulated markets.
Ranger® technology, DPYD and other technologies
Revenues in this category more than doubled year-on-year and now represent 15%
of core Group revenues (i.e.
non-COVID-related revenues) and we continue to invest in developing additional
complementary precision medicine products.
We are very pleased with the growth being delivered by our DPYD chemotoxicity
genotyping test, which is being used increasingly across Europe to determine
which cancer patients (those with a specific genetic deficiency) will be
subject to severe, or sometimes lethal, side effects after being treated with
a widely used chemotherapy drug, 5-Fluorouracil ("5-FU"). DPYD test revenues
increased to £1.2m for the financial year (FY21: £0.7m) reflecting the wider
adoption of this screening test, which is now recommended in Wales, England,
Germany, Spain and Belgium.
Ranger® Technology is applicable beyond NIPT and this disruptive technology
can be applied to all types of DNA testing where automated size selection can
bring considerable benefits to labs by enriching the DNA interest in a sample
with considerable precision and speed. We have the unique opportunity to take
advantage of multiple market segments, addressing needs in areas that use
liquid biopsy (such as NIPT, oncology and infectious disease) as well as the
gene synthesis and RNA size selection markets. We have a significant
pipeline of opportunities for Ranger® Technology which are at various stages
of feasibility and validation.
Operational improvements and right sizing
With a return to focusing on growth acceleration in our core activities, we
have ensured the business has an appropriate resource allocation moving
forward. As COVID-testing activities have receded we have reduced our variable
cost base in that domain and have started to consolidate our UK activities
through a programme of co-location and shared support services between both
segments of the business. We believe that, once complete, these actions will
reduce the Group's annual operating cost base to a more appropriate post-COVID
level. At the same time, we are also undertaking a strategic review of our
Taiwan business unit which was badly hit by the pandemic with key CRO customer
business continuing to fluctuate while the region remains subject to ongoing
travel restrictions. The restructuring process is largely complete at the date
of this Annual Report and the UK facilities consolidation is very well
advanced.
Strengthening global routes to market
During the year we have invested in developing our commercial team to ensure
we are best placed to deliver on the growth opportunities we have ahead of us.
This has meant that we have strengthened our team in key regions, in
particular across the Americas, Asia and Europe. Yourgene now has more teams
in local settings and in closer dialogue with our customers and potential
customers on the ground. I am delighted to be taking the opportunity to meet
these teams over the next few months and to support them to deliver our next
stage of commercial growth.
During the pandemic, we also benefitted from a fast-tracked experience curve
whereby our Genomic Services team were tested under exceptional circumstances,
in terms of delivering to accelerated timelines and unprecedented testing
volumes. I am very proud of the team as they have adapted and developed during
challenging times whilst ensuring that we continue to operate to the highest
quality standards. Our best-of-breed approach to solving customer challenges
remains a key differentiator.
As part of our continued investment in growth and the wider drive for
operational improvement we opened our new Yourgene Health Canada facilities in
Vancouver in January 2022. The new facility, approximately four times larger
than our previous facility, will support the scale up of manufacturing for our
Ranger® Technology platforms, reagents and consumables.
Outlook
As we realign our business to focus on post-pandemic growth drivers the
strategic pillars for this growth are unchanged: product penetration,
geographic expansion, new products and targeted synergistic M&A.
Within Genomic Services we expect to see recovery in NIPT and research
services as we also broaden our portfolio to provide whole exome and whole
genome sequencing services. We continue to repurpose our testing capacity
towards non-COVID testing and our extension of our partnership with Ambry
Genetics provides us with an oncology testing range that broadens the Genomic
Service offering considerably.
For Genomic Technologies we expect to maintain the momentum that is building
in the adoption of the IONA® Nx NIPT solution and we will continue to enhance
this technology with new innovations to complement the recently launched
Microdeletions Plugin. We also believe that the commercial adoption of our
Ranger® Technology provides an exciting opportunity for the business, whether
as part of our IONA® Nx NIPT Workflow offering or as an enabler for
third-party NIPT workflows. It also has the potential to be a hugely
disruptive technology bringing the advantage of Ranger® size selection to
adjacent markets of liquid biopsy, RNA and gene synthesis. We believe the
offering we have has a number of unique-selling points that will support
continued market adoption across all market segments, from the largest
"Mega-labs" to smaller regional testing facilities. We also anticipate
further growth in our DPYD chemotoxicity test as screening becomes adopted
more widely and we continue to invest in developing further complementary
content.
Overall, I believe we have a stable business platform and a number of exciting
routes to deliver future growth across the core business, along with a unique
opportunity to benefit from the significant growth that is expected from the
segments of the molecular diagnostic market in which we operate.
Lyn Rees
Chief Executive Officer
27 July 2022
FINANCIAL REVIEW
Strengthened financial position despite pandemic turbulence
Income Statement
In the reporting period revenues more than doubled to £37.6 million (2021:
£18.3 million) as Covid-related products and services delivered significant
revenues and core markets started to return to pre-pandemic growth levels.
Our Genomic Services operating segment delivered revenue growth of 240% whilst
our product-focused segment, Genomic Technologies, delivered 33% growth. Gross
profits grew by 88% to £21.4m (2021: £11.4m) with gross margins decreasing
slightly to 57% (2021: 62%) due to the mix bias towards lower margin COVID
testing services in a highly competitive market.
Administrative expenses increased to £18.0m (2021: £13.5m). A more
detailed breakdown of key administrative expenses is shown in note 6 and
includes expenditure on projects which are expected to generate significant
financial improvements which the pandemic deferred into future reporting
periods, such as expanding Genomic Services capabilities for post-Covid
opportunities, continued investment in the Group's North American commercial
presence and the acquired Coastal Genomics business (now renamed Yourgene
Health Canada). Long-term projects standardising cloud-based business systems
and transitioning to the IONA® Nx NIPT workflow continued and made
significant progress during the reporting period.
2022 2021
Genomic Genomic Central Total Genomic Genomic Central Total
Technologies Services £ m £ m Technologies Services £ m £ m
£ m £ m £ m £ m
Revenues 16.0 21.6 - 37.6 11.9 6.4 - 18.3
Cost of sales (6.6) (9.6) - (16.2) (4.7) (2.2) - (6.9)
Gross profit 9.4 12.0 - 21.4 7.2 4.2 - 11.4
Other operating income - - - - - - - -
Segmental expenses (5.6) (6.6) - (12.2) (5.3) (3.4) - (8.7)
Central overheads - - (5.8) (5.8) - - (4.7) (4.7)
Adjusted EBITDA * 3.8 5.4 (5.8) 3.4 1.9 0.8 (4.7) (2.0)
Depreciation and amortisation - - (4.6) (4.6) - - (3.2) (3.2)
Goodwill impairment - - (1.0) (1.0) - - (4.8) (4.8)
Share-based payments expense - - (0.3) (0.3) - - (1.0) (1.0)
Costs associated with subsidiary acquisition - - - - - - (0.3) (0.3)
Acquisition integration expense - - - - - - (0.4) (0.4)
Operating profit/(loss) 3.8 5.4 (11.7) (2.5) 1.9 0.8 (14.4) (11.7)
* Adjusted EBITDA is measured as the operating loss before depreciation,
amortisation, and separately disclosed items.
The Group's two operating segments both delivered positive adjusted EBITDA
contributions after segment-specific expenses. Genomic Services contributed
£5.6m (2021: £0.8m) with COVID testing services in the UK offsetting
pandemic-related weakness in our Taiwan laboratory services. Genomic
Technologies contributed £3.6m (2021: £1.9m) with sales of Clarigene®
COVID-19 PCR test augmenting a return to growth in core product lines. Overall
adjusted EBITDA after deducting central expenses was a profit of £3.4m (2021:
£2.0m loss). The increase in central expenses reflects the expansion of the
Group through previous acquisitions and the Group's decisions to continue
investing in its future growth drivers despite the pandemic headwinds in its
core markets.
Separately Disclosed Items
Significant items within administrative expenses are shown separately in the
Consolidated Statement of Comprehensive Income, with further details in note
6. These include non-cash accounting charges for share-based payments of
£312k (2021: £952k) which reflect lower awards in recent years as the
Company has moved towards a Share Incentive Plan for general staff
participation. Acquisition related expenses were £nil (2021: £674k)
reflecting the Group's focus on organic growth and driving the benefits from
acquisitions made in earlier reporting periods.
Within separately disclosed items is a £1,045k (2021: £4,789k) impairment of
goodwill and other intangibles relating to the Genomic Services Taiwan
cash-generating unit. These intangibles arose from the 2017 acquisition of
Yourgene Health Taiwan (Yourgene Bioscience at the time of acquisition). The
markets in which Genomic Services Taiwan operates were particularly badly hit
by the COVID-19 pandemic and these restrictions have continued throughout the
reporting period. The Group has announced a strategic review of this
operation and this impairment writes down to nil the value of the acquired
intangibles.
Operating Loss
The business growth in the reporting period has resulted in a significantly
reduced operating loss of £2.5m (2021: £11.7m loss).
Finance Income/(Expenses)
During the period the Group incurred net finance expenses of £0.7m (2021:
£0.3m) which reflects the additional term loan secured with Silicon Valley
Bank as well as increased lease liability interest charges arising from new
leases on the Group's upgraded facilities in Taiwan, Vancouver and Manchester.
Taxation and Foreign Exchange
The resulting loss on ordinary activities after taxation of £1.9m (2021:
£12.2m) reflects a £1.3m tax credit (2021: £0.2m charge) which is described
in note 12 and is primarily the recognition of a deferred tax asset. This
tax asset arises from previously unrecognised historic losses based on the
Group's expectation of profitability in its UK operations over the next 5
years. There are still significant historic tax losses in the UK which have
not yet been recognised and which will help offset taxes arising on any
additional future profits.
Total Comprehensive Loss
After accounting for exchange differences arising on consolidation the Group
recorded a much-reduced total comprehensive loss of £1.8m (2021: £12.2m).
Earnings per Share
Earnings per share were a loss of 0.3 pence (2021: 1.8 pence loss).
Statement of Financial Position
At the reporting date the Group had total assets of £64.1m (2021: £49.1m).
Intangible assets reduced to £12.9m (2021: £14.8m) as a result of the
impairment of the Taiwanese assets and ongoing amortisation of previously
acquired or capitalised intangible assets. Goodwill reduced to £8.9m (2021:
£9.2m) due to the Genomic Services Taiwan impairment. Property, plant and
equipment increased to £4.8m (2021: £4.1m) with capital expenditure on new
laboratory facilities in the UK and expansion of the Group's facility in
Vancouver. Right of use assets increased to £13.5m (2021: £4.2m) due to the
relocation to a new long-term leased facility in Vancouver. In the UK the
Group is in the process of relocating from multiple sites to a single facility
leading to some temporary duplication of property leases until the relocation
completes by March 2023. The recognised deferred tax asset increased
slightly to £2.3m (2021: £1.1m) in light of improved business forecasts for
the Group's UK operations which have significant unrecognised historic tax
losses available.
Total current assets increased to £21.7m (2021: £15.7m) with inventories
increased significantly (to £6.0m from £2.9m) for extra resilience in
response to global supply chain challenges experienced during the pandemic,
and also to support planned business growth. Trade and other receivables
also increased (to £7.0m from £5.3m) reflecting a strong second half of the
reporting period. There was also an increase in cash and cash equivalents to
£8.4m (2021: £7.0m).
Total equity and liabilities increased to £64.1m (2021: £49.1m) with the
principal increases being due to the new property lease liabilities in
Vancouver and Manchester (IFRS16 lease liabilities up to £13.9m from £4.6m)
and also a £5m term loan facility entered into in January 2022 with Silicon
Valley Bank. This funding was secured to support growth for the Group.
After an initial 3-month interest free period the loan is repayable over the
remainder of a 3-year term (see note 21 for more details).
Statement of Cash Flows
The Group had an opening cash position of £7.0m (2021: £2.8m) and a net cash
increase of £1.4m during the year (2021: £4.2m increase). Cash and cash
equivalents at the end of the period were £8.4m (2021: £7.0m). During the
period the Group's improved performance generated £1.3m (2021: used £3.8m)
of cash in operating activities despite a net working capital outflow of
£1.7m (2021: £0.9m outflow). Cash used in investing activities was £3.5m
(2021: £7.4m) reflecting capital expenditure in the year on service capacity,
new facilities in Vancouver plus capitalisation of internally generated
intangible assets.
Financing activities generated a surplus of £3.6m (2020: £15.5m surplus)
primarily due to the Silicon Valley Bank term loan entered into in January
2022 (see note 21).
As with all businesses at this stage of development and with high growth
ambitions, the Board assesses carefully the Group's ability to operate as a
going concern and has detailed plans for revenue growth, margin improvement
and cash flow control, which are intended to achieve positive cash flows in
the near future. More detail on these plans can be found in the notes to the
accounts.
Dividends
No dividend is recommended (2021: £nil) in order to invest in the Group's
growth strategy, which is designed to enhance value over the longer term.
Capital Management
The Board's objective is to maintain a balance sheet that is both efficient
for delivering long-term shareholder value and also safeguards the Group's
financial position in light of variable economic cycles and the principal
risks and uncertainties outlined elsewhere in the Annual Report. The COVID
pandemic presented significant challenges during the reporting period but the
provision of COVID-related services also provided some risk mitigation against
consequential instability in our core markets. As the COVID pandemic recedes
the Group is restructuring itself to better reflect its underlying business
model and to capitalise on the significant growth opportunities available in
its core markets. As at 31 March 2022 the Group had net cash of £3.2m (2021:
£6.8m) which is stated after borrowings of £5.2m (2021: £0.2m) but before
lease liabilities arising under IFRS16 (with their offsetting Right of Use
assets). Business growth in the Group's Genomic Services and Genomic
Technologies segments are expected to enable the Group to operate as a going
concern for the foreseeable future.
Post-balance Sheet Events
After the end of the reporting period the Group has undertaken a restructuring
of its operations, primarily in the UK and Taiwan, to better reflect its
post-COVID model and to direct resources at its primary growth drivers of
NIPT, Ranger® technology, Genomic Services and DPYD assets.
Barry Hextall
Chief Financial Officer
27 July 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2022
2022 2021
Notes £ 000 £ 000 £ 000 £ 000
Revenue 37,562 18,288
Cost of sales (16,197) (6,912)
Gross profit 21,365 11,376
Other operating income 7 60
Administrative expenses 6 (17,967) (13,483)
Adjusted EBITDA 3,405 (2,047)
Depreciation and amortisation 6 (4,588) (3,247)
Impairment of goodwill 5 (1,045) (4,789)
Share-based payments expense 5 (312) (952)
Costs associated with acquisitions and integration 5 - (674)
Total depreciation, amortisation and separately disclosed items 5 (5,945) (9,662)
Operating loss 6 (2,540) (11,709)
Financing income 10 5 2
Financing expenses 11 (656) (302)
Loss on ordinary activities before taxation (3,191) (12,009)
Tax credit/(charge) on loss on ordinary activities 12 1,275 (175)
Loss for the year (1,916) (12,184)
Other comprehensive expense: to be subsequently reclassified to profit or loss
Exchange translation differences 68 (57)
Loss and total comprehensive loss for the year (1,848) (12,241)
Earnings per share (pence) 13
Basic: Loss (0.3p) (1.8p)
Diluted: Loss (0.3p) (1.7p)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2022
2022 2021
Notes £ 000 £ 000
Assets
Non-current assets
Goodwill 14 8,881 9,181
Intangible assets 14 12,932 14,750
Property, plant and equipment 15 4,752 4,109
Right-of-use assets 16 13,475 4,209
Deferred tax assets 23 2,282 1,145
Total non-current assets 42,322 33,394
Current assets
Inventories 17 5,987 2,897
Trade and other receivables 19 6,982 5,333
Tax asset 23 343 507
Cash and cash equivalents 8,429 6,995
Total current assets 21,741 15,732
Total assets 64,063 49,127
Equity and liabilities attributable to equity holders of the Company
Equity
Called up share capital 28 32,672 32,668
Share premium account 28 67,786 67,260
Merger relief reserve 28 12,994 12,970
Reverse acquisition reserve 28 (39,947) (39,947)
Foreign exchange translation reserve 28 2 (66)
Other reserves 28 5,833 4,914
Retained losses 28 (46,595) (44,876)
Total equity 32,745 32,923
Current liabilities
Trade and other payables 20 8,403 5,239
Lease liabilities 16 1,250 587
Current tax liabilities 405 543
Borrowings 21 2,193 119
Other liabilities and provisions 22 - 2,283
Total current liabilities 12,251 8,771
Non-current liabilities
Borrowings 21 3,027 77
Deferred tax liability 23 2,060 2,173
Lease liabilities 16 12,641 4,057
Other long-term liabilities and provisions 22 1,339 1,128
Total non-current liabilities 19,067 7,435
Total equity and liabilities 64,063 49,127
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
Notes Share Share Merger Other Reverse acquisition Foreign exchange reserve Retained Total
capital premium account relief reserves reserve £ 000 losses £ 000
£ 000 £ 000 reserve £ 000 £ 000 £ 000
£ 000
Balance at 1 April 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,298
Year ended 31 March 2021:
Loss for the year - - - - - - (12,184) (12,184)
Other comprehensive loss - - - - - (58) - (58)
Total comprehensive loss for the year - - - - - (58) (12,184) (12,242)
Issue of share capital 28 106 17,149 - - - - - 17,255
Share issue expenses - (1,069) - - - - - (1,069)
Issue of share capital on acquisition - - 33 - - - - 33
Issue of exchange share on acquisition - - - 1,845 - - - 1,845
Share-based payments: share option schemes 29 - - - - - - 802 802
Balance at 31 March 2021 32,667 67,260 12,971 4,914 (39,947) (66) (44,877) 32,923
Balance at 1 April 2021 32,667 67,260 12,971 4,914 (39,947) (66) (44,877) 32,923
Year ended 31 March 2022:
Loss for the year - - - - - - (1,916) (1,916)
Other comprehensive gain - - - - - 68 - 68
Total comprehensive loss for the year - - - - - 68 (1,916) (1,848)
Issue of share capital 28 4 526 24 919 - - - 1,472
Share-based payments: share option schemes 29 - - - - - - 198 198
Balance at 31 March 2022 32,672 67,786 12,994 5,833 (39,947) 2 (46,595) 32,745
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
2022 2021
£ 000 £ 000 £ 000 £ 000
Cash flows from operating activities
Loss for the year before tax (3,190) (12,009)
Adjustments for:
Finance costs 656 302
Finance income (5) (2)
Depreciation and impairment of property, plant and equipment 1,755 1,023
Depreciation and impairment of right-of-use asset 959 699
Loss on disposal of property, plant and equipment 1 -
Loss on revaluation of right-of-use asset 25 -
Amortisation of intangible non-current assets 1,874 1,526
Impairment of goodwill and intangible non-current assets 1,044 4,789
Impairment on financial assets (IFRS 9) 13 (39)
Non-cash foreign exchange movements (421) (204)
Share-based payment and warrant expense 198 802
Release of provisions - (85)
Tax received 144 296
Movements in working capital:
(Increase) in inventories (3,089) (1,528)
(Increase)/Decrease in trade and other receivables (1,661) 646
Increase in trade and other payables 3,165 44
(Increase) in tax asset (158) (78)
Cash used by operations 1,309 (3,820)
Investing activities
Purchase of subsidiaries (832) (3,637)
Cash acquired on purchase of subsidiaries - 32
Purchase of property, plant and equipment (2,334) (3,004)
Capitalisation of intangible assets (324) (838)
Finance income 5 2
Net cash used in investing activities (3,484) (7,445)
Financing activities
Net proceeds from issue of shares 55 16,186
Proceeds from borrowings 5,286 160
Loan arrangement fee (159) -
Repayment of borrowings (289) (321)
Decrease or repayment of lease liability obligations (935) (319)
Finance expense (349) (211)
Net cash generated from financing activities 3,609 15,496
Net increase in cash and cash equivalents 1,434 4,231
Cash and cash equivalents at beginning of period 6,995 2,764
Cash and cash equivalents at end of period 8,429 6,995
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2022
Notes to the financial statements are taken directly from the Annual Report
and Accounts, and Note numbering refers to that document, which is now
available to view in full here:
https://www.yourgene-health.com/investors/key-documents/financial-reports
(https://urldefense.proofpoint.com/v2/url?u=https-3A__www.yourgene-2Dhealth.com_investors_key-2Ddocuments_financial-2Dreports&d=DwMF-g&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=DXsoWgaKe76emNP_XXly_OVFGN-BOeuOIAa3c_Pq7Bo&m=nYj7Y12j5eGY2rnInJT7K4v6Pk0kK3Zw7w__kackL7w&s=ainjHrpZYAv7Z_OEEEAq9H31W721riH1ai6-b3Hk2Xo&e=)
1. Accounting Policies
Basis of Preparation
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined by section 434 and 435 of the
Companies Acct 2006. The financial information for the year ended 31 March
2022 has been extracted from the Group's financial statements upon which the
auditor's opinion is unmodified and does not include any statement under
section 498(2) or (498(3) of the Companies Act 2006.
The financial information has been prepared in accordance with International
Financial Reporting Standards (IFRS), adopted for use in the United Kingdom
and including IFRIC interpretations issued by the International Accounting
Standards Board (IASB) and the Companies Act (2006).
The consolidated financial information has been prepared on the basis of
accounting policies set out in the Group's Annual Report and Accounts for 2022
and selectively included in this announcement.
Company information
Yourgene Health PLC is a public limited company incorporated and domiciled in
the United Kingdom. The address of its registered office is Citylabs 1.0,
Nelson Street, Manchester M13 9NQ.
The principal activity of Yourgene Health PLC and its subsidiaries is that of
a molecular diagnostics business for research into, and the development and
commercialisation of gene analysis techniques for prenatal screening and other
clinical applications in the early detection, monitoring and treatment of
disease.
The financial statements are presented in British Pounds Sterling, the
currency of the primary economic environment in which the Company's
headquarters is operated.
1. Going concern
In their assessment of the Group's ability to continue as a going concern, the
Directors have looked at the business prospects for the business as it adjusts
to a post-pandemic operating model. These forecasts are largely based on
recurring organic growth drivers including the cash profiles of various prior
year asset acquisitions and business combinations.
The COVID pandemic suppressed organic growth somewhat and the forecasts
reflect a transition period during which these longer-term growth drivers
regain momentum as the pandemic recedes. The Group anticipates a return to
organic growth of the non-Covid business streams including the 2020
acquisition of Coastal Genomics (now renamed Yourgene Health Canada) which has
secured some strategic customers but remains an early-stage cash-consuming
business. The acquired company's Ranger® technology has multiple
competitive advantages in NIPT testing, oncology, liquid biopsy more generally
and adjacent markets such as gene synthesis. The more speculative
applications for this technology are not factored into business forecasts at
this stage and the technology is still highly regarded and is expected to act
as a catalyst for the Group's accelerating penetration of the US diagnostics
market, the largest in the world. For the enlarged Group the Directors have
assessed the market dynamics in which it operates, the historic and
anticipated rate of growth of gross profits, decisions available to them for
management of the cost base of the Group and the potential for future
fundraising.
The Group operates a strategic planning process which has historically
delivered strong progress on its ambitious multi-year business plan and which
has proven resilient and agile, including in the face of the COVID pandemic
which continued to significantly impact the reporting period but which is
noticeably receding, at least in the Company's home and Western hemisphere
markets. There are early signs that Eastern hemisphere markets are also
starting to reopen to non-Covid diagnostics activity.
As described in the Strategic Report, the Group has been leveraging
Covid-generated funds inflows to invest in more recurring cashflow drivers.
The August 2020 fundraise enabled the acquisition of Coastal Genomics Inc and
has also continued to facilitate the significant expansion of the Group's UK
laboratory testing services activities, the underlying business systems and
the Group's laboratory in Taiwan, all of which are designed to drive
cash-generative growth in the years to come. These investments, coupled with
the pandemic headwinds which affected the Group's traditional customers and
inhibited the penetration into new target markets such as the USA and Japan,
have meant that the Group continues to use cash in its trading and that
break-even trading performance has not yet been reached. The Group's forecasts
include assumptions of further growth in revenue, which are key in achieving
positive cash flows. The Directors have also assessed the Group's cost
structure as part of the strategic planning process and believe that an
ongoing scalability programme, coupled with a significant cost base
restructure to adjust to the expected absence of Covid-related revenues, will
enable costs growth to be contained below gross profit increases.
There remains an ongoing commitment to keep costs and working capital under
control so that increasing gross profits can drive positive cash flows.
Detailed sensitivity analysis has been performed to assess the potential
impact on the Group's liquidity caused by any continuing delays in revenue
growth up to -10% against expected levels along with potential mitigating
actions which can be taken to safeguard the Group's cash position if revenues
are in a range of -10% to -20% against expected levels. These include working
capital controls and reductions in discretionary spending.
If events transpire differently to this assessment, for example if revenues
fail to grow at the anticipated pace, there could be lower cash headroom. To
mitigate this scenario the existence of significant share options and warrants
could potentially generate additional funds within the forecast horizon. The
Group also has a successful track record in raising funds from capital markets
and has new debt facilities which could potentially be restructured or
expanded. Taking all the above into account the Directors believe there is
sufficient cash available or accessible to avoid a cash shortfall.
The Directors have concluded that considering the circumstances described
above and mitigation strategies in place, the Directors have a reasonable
expectation that the Group and Company will have adequate resources to
continue in operational existence for the foreseeable future. For these
reasons, they continue to adopt the going concern basis in preparing the
Annual Report and Accounts.
Revenue
Revenue from the sale of goods, equipment and related services is recognised
in accordance with IFRS 15 'Revenue from Contracts with Customers' in the
Statement of Comprehensive Income when the deemed Contractual Performance
Obligations have been completed, which is determined to be at the point of
despatch of the product or service unless there are specific provisions in the
relevant contract. Revenue from the provision of testing and reporting
services is recognised upon delivery of the report to the customer. Invoices
are typically raised upon delivery of the products or reporting services,
unless there is a different contractual requirement, for payment according to
credit terms which are usually 30-75 days from date of invoice. For some
contracts advance invoices are raised and payments received. These are held on
the Statement of Financial Position as 'payments received on account' (see
note 20) and are only recognised as revenue once the performance obligations
have been deemed satisfied as described above.
Grant income and income for research projects is recognised when all
conditions for receiving the grant or research income have been satisfied.
Adjusted EBITDA
Earnings before interest, tax, depreciation and amortisation (EBITDA) is a
recognised measure for shareholders and investor analysts when comparing the
performance of different companies in their investment portfolios. The
Company reports on this measure after excluding certain separately disclosed
items which are shown on the face of the Statement of Comprehensive Income and
in Note 5, and recognises these exclusions by using the term Adjusted EBITDA.
Separately disclosed items
Separately disclosed items are those significant items, within Administrative
expense which in management's judgement should be highlighted on the face of
the Statement of Comprehensive Income by virtue of their size or incidence to
enable a full understanding of the Group's financial performance.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. Cost
includes the original purchase price, costs directly attributable to bringing
the asset to its working condition for its intended use, dismantling and
restoration costs. Depreciation is provided on all items of property, plant
and equipment to write off the carrying value of items over their expected
useful lives. Depreciation is applied at the following rates:
Leasehold land and buildings 20% straight line
Plant and equipment 20-25% straight line
Computer software and hardware 25%-33% straight line
The gain or loss arising on the disposal of an asset is determined as the
difference between the sale proceeds and the carrying value of the asset and
is recognised in the Statement of Comprehensive Income.
Leases and right-of-use assets (IFRS 16)
Right-of-use assets and lease liabilities are valued on a present value basis
of the lease payments over the lease term. The right-of-use asset is
depreciated over the term or remaining term of the lease.
Where there is potential for future increases in lease payments, amounts are
not included in the lease liability until they are implemented. The leases are
reviewed annually and where the lease liability is increased the lease
liability is reassessed and adjusted against the right-of-use asset. When a
lease is terminated, or a term amended, the lease liability and right-of-use
asset are recalculated and adjusted accordingly.
Lease payments are divided between principal and interest expense. The
interest expense is charged to finance expense in the statement of
comprehensive income.
The Group has also elected not to reassess whether a contract is or contains a
lease at the date of initial application. Instead, for contracts entered into
before the transition date, the Group relied on its assessment made in
applying IAS 17 and IFRIC 4, 'Determining whether an Arrangement contains a
Lease'.
Accounting for acquisitions
The Group assesses the acquisition of shares in a company under IFRS 3
'Business Combinations', to make an initial determination as to whether the
acquisition meets the test for the definition "a business". This is defined
as: "An integrated set of activities and assets that is capable of being
conducted and managed for the purpose of providing goods or services to
customers, generating investment income (such as dividends or interest) or
generating other income from ordinary activities." For acquisitions that meet
the test, the accounting treatment will follow IFRS 3 protocols to arrive at
fair values. Where the test for a business is not met, then the assets of the
acquired company will be accounted for as acquired tangible or intangible
assets as described in these policies.
Where the acquisition includes future contingent consideration, this is
accrued based on management's judgement of the contingent consideration it
considers likely to be paid. Where the actual consideration paid varies to
this amount then the difference is written off through General administrative
expense in the Statement of Comprehensive Income.
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value
of net assets acquired. It is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment losses. Goodwill
is not amortised but is tested annually for impairment, or earlier if there is
an indication of impairment. Goodwill impairments are not reversed even if a
subsequent fair value assessment would ordinarily give rise to an upward
revaluation.
Acquired intangible assets
Intangible assets acquired directly or as part of business combinations are
capitalised at fair value at the date of acquisition. Following the initial
recognition, the carrying amount of an intangible is its cost less accumulated
amortisation and any accumulated impairment losses. Amortisation is charged on
the basis of the estimated useful life on a straight-line basis and the
expense is taken to the Statement of Comprehensive Income where it is
recognised within Depreciation & Amortisation.
The Group has recognised customer relationships as separately acquired
intangible assets. The useful economic life attributed to each intangible
asset is determined at the time of the acquisition and ranges from 4 to 10
years as described in note 14.
Impairment reviews are undertaken annually and whenever the Directors consider
that there has been a potential indication of impairment.
Impairment of tangible and intangible assets
At each reporting end date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. Where the
recoverable amount is determined by reference to fair value less costs to
sell, the recoverable value is assessed by analysing publicly listed peer
group revenue multiples, deemed a relevant basis for the sector in which
Yourgene operates. An impairment loss is recognised immediately in profit or
loss, unless the relevant asset is carried at a revalued amount, in which case
the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from goodwill or from the initial recognition
of other assets and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end
date and reduced to the extent that it is not probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered,
or to the extent that there are deferred tax liabilities recognised that would
not fall due as a result of previously unrecognised deferred tax assets. Where
deferred tax assets not recognised in prior periods begin to meet the criteria
for recognition, their value is assessed based on a discounted view of
five-year profit forecasts for the relevant taxable entity or Group deferred
tax is calculated at the tax rates that are expected to apply in the period
when the liability is settled, or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity. Deferred tax assets and liabilities are offset when the
Group has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to taxes levied
by the same tax authority.
Leases
Leases are classified under IFRS 16 'Leases' as lease liabilities with
corresponding right-of-use assets in most circumstances except for leases of
low value or a lease term of less than 12 months, in which circumstances the
lease payments are expensed as incurred.
Research and development tax credits
The Group undertakes research and development activities in the UK which
potentially attract a tax credit. Where such activities give rise to a tax
credit, amounts receivable are recorded in the Statement of Financial Position
as a tax asset and the associated credit is recorded within administrative
expenses. The research and development tax credit is recognised in the
financial statements in the same year in which the research and development
expenditure occurred. This treatment is in line with the recognition of
government grants to which the UK research and development tax credits scheme
approximates.
Critical judgements
Accounting for acquisitions of a business and intangible assets
In the prior reporting period the Group acquired Ex5 Genomics Ltd (July 2020;
now renamed Yourgene Genomic Services Ltd), and Coastal Genomics Inc (August
2020; now renamed Yourgene Health Canada Inc). In the prior period the
acquisition of Coastal Genomics Inc was deemed to meet the IFRS 3 criteria for
a business combination as it was a full standalone trading business. Also in
the prior period, the acquisition of Ex5 Genomics Ltd was deemed to be the
acquisition of assets in the form of plant and equipment and customer
relationships, as there were no significant trading activities.
The acquisition of Coastal Genomics also contained provisions for earn-out
payments to the vendors, based on achieving certain sales performance and
concluding contracts with strategic partners post acquisition. Those targets
were based on business forecasts and deemed sufficiently probable to be met
such that they are recorded as provisions rather than contingent liabilities.
Note 14 Intangibles and note 18 Subsidiaries provide further information on
these acquisitions.
Accounting for the capitalisation of development costs
The Group has now been in operation for several years and has resolved some
significant technical challenges in bringing its products to market. In
certain circumstances this leads to reduced technical risk during the product
development cycle. The Group has also started to decouple some previously
integrated components of its products, for example its software applications.
Development costs are capitalised where it is judged that a development
project has met the IAS 38 criteria as described in the accounting policy for
internally generated intangible assets above. The triggers for capitalisation
are assessed by reference to the completion of specific design review stages
as defined by the Group's product development methodology.
Accounting for share-based payments
The Group's rapid growth in revenues and gross profits resulted in a
significant swing to an adjusted EBITDA profit in the reporting period. This
was largely due to commercial revenues generated through COVID-19 related
products and services. The pandemic in the UK is now receding and the UK
Government has significantly reduced testing levels. Whilst the Group
expects to see a reduction in revenues and margins as a result of this, there
has been significant investment in the Group's non-Covid revenue generation
capabilities. The Directors assessment is that these enhanced revenue
generation capabilities will return the Group quickly to historic sustained
growth in earnings per share, the key basis on which share based payments are
measured. This performance trajectory is forecast to continue which increases
the likelihood that share options will become exercisable in the future. As a
result the assumptions for share-based payments remain likely to meet the
relevant performance conditions.
Accounting for deferred tax
The Group has generated significant historic losses during its development
stage, which have largely not been recognised as a deferred tax asset due to
lack of visibility of future profitability within a 5 year time horizon. As
the Group now moves towards profitability, such visibility is becoming more
likely in the near term. The Group has therefore started to recognise some of
these losses where it deems it has a prudent basis on which to do so,
including where there are deferred tax liabilities arising on acquisition that
can be offset against historic tax losses.
Key sources of estimation uncertainty
Impairment of goodwill and customer relationship intangible assets
The Group's management undertakes impairment reviews of its cash generating
units (CGUs) annually, or more frequently if events or changes in
circumstances indicate that the carrying value may not be recoverable. In
respect of impairment reviews, the key assumptions are as follows:
Growth rates
The value in use of the intangible assets is calculated from cash flow
projections for the relevant business activities based on the latest financial
projections covering the anticipated useful economic life of the intangible
assets.
Discount rates
The pre-tax discount rate used to calculate value is determined in relation to
the relevant business activities and their geographic location, using external
benchmarks where possible to arrive at a relevant weighted average cost of
capital.
Cash flow assumptions
The key assumptions for the value-in-use calculations are those regarding
discount rates, growth rates and expected cash flows. Changes in revenues and
expenditures are based on past experience and expectations of future growth.
As a result of this exercise, £472k of Goodwill and £572k of Customer
relationships were impaired as described in note 14 where the relevant growth
and discount rates are detailed.
4. Segment Reporting
In the opinion of the Directors, the Group has two business segments; Genomic
Technologies and Genomic Services which are monitored by the Group's chief
operating decision maker (CODM). Strategic decisions are made on the basis of
unadjusted operating results. The Genomic Technologies segment represents the
in vitro diagnostic products, software and instrumentation manufactured by the
Group and distributed globally through the Group's direct and indirect sales
channels. These technologies are often integrated with each other and require
the support of the same internal and external resources. The Genomic Services
segment operates testing laboratories in Taiwan and the UK and provides
services to clinicians, third party clinical service providers and contract
research organisations. These services require similar technical, commercial
and managerial competences in the two host countries, and sometimes consume
the output from the Genomic Technologies segment, but also from third party
suppliers where appropriate. Genomic Technologies and Genomic Services are
subject to different regulatory requirements, registrations and assessment
bodies.
The Group also has three geographic regions, defined as UK, Europe and
International.
Revenue
Revenue analysed by geographical market:
2022 2021
£ 000 £ 000
UK 26,503 5,440
Europe 5,436 5,462
International 5,630 7,386
37,569 18,288
Revenue analysed by business segment:
2022 2021
£ 000 £ 000
Genomic Services
NIPT services 1,609 1,833
COVID-19 services 18,714 1,730
Other services 1,259 2,820
21,582 6,382
2022 2021
£ 000 £ 000
Genomic Technologies
NIPT 5,385 5,925
Reproductive health 3,841 3,603
COVID-19-related 4,537 1,437
Ranger, DPYD and other technologies 2,217 942
15,980 11,906
37,562 18,288
During the reporting period two customers represented more than 10% of Group
revenues (2021: none). These customers generated revenue of £7,803k and
£4,218k respectively, both within the Genomic Services business segment and
arose due to increased activity in COVID-19 testing.
Non-current assets
The Group's non-current assets are located in the following geographic
regions:
2022 2021
£ 000 £ 000
UK 25,409 15,812
Europe 3,550 4,206
International 13,364 13,377
42,322 33,394
Operating profit/(loss) by segment
2022 2021
Genomic Genomic Central Total Genomic Genomic Central Total
Technologies Services £ 000 £ 000 Technologies Services £ 000 £ 000
£ 000 £ 000 £ 000 £ 000
Revenues 15,980 21,582 - 37,562 11,906 6,382 - 18,288
Cost of sales (6,557) (9,640) - (16,197) (4,690) (2,223) - (6,912)
Gross profit 9,423 11,942 - 21,365 7,216 4,160 - 11,376
Other operating income 7 - - 7 - - 60 60
Segmental expenses (5,657) (6,540) - (12,197) (5,339) (3,400) - (8,738)
Central overheads - - (5,770) (5,770) - - (4,745) (4,745)
Adjusted EBITDA 3,773 5,402 (5,770) 3,405 1,877 760 (4,685) (2,047)
Depreciation and amortisation - - (4,588) (4,588) - - (3,247) (3,247)
Goodwill impairment - - (1,045) (1,045) - - (4,789) (4,789)
Share-based payments expense - - (312) (312) - - (952) (952)
Costs associated with acquisitions and integration - - - - - - (286) (286)
Acquisition integration expense - - - - - - (388) (388)
Operating profit/(loss) 3,773 5,402 (11,715) (2,540) 1,877 760 (14,346) (11,709)
Central costs are those costs which are not directly attributable to either of
the Group's trading business segments.
5. Separately Disclosed Items
2022 2021
£ 000 £ 000
Impairment of goodwill and intangibles (1,045) (4,789)
Share-based payments expense (312) (952)
Costs associated with acquisitions and integration - (674)
(1,317) (6,415)
Impairment of goodwill and intangibles relates to the residual unimpaired
value of goodwill and customer relationships that arose on the acquisition of
Yourgene Bioscience in March 2017 (now Yourgene Health Taiwan) and have been
attributed to the Genomic Services Asia CGU. The COVID-19 pandemic has
created significant headwinds for this CGU and a review was announced in April
to determine the appropriate strategic direction for this business unit.
See note 34 for further details.
Share-based payment expense comprises £198k (2021: £802k) relating to the
longstanding share option schemes and £114k (2021: £150k) relating to the
new share incentive plan, both as detailed in note 29. The Share-based payment
expense relating to the option schemes is provided for in accordance with IFRS
2 'Share-based payment' following the issue of share options to employees
under the Company's share option schemes, as set out in note 29.
Costs associated with the acquisition of subsidiaries represents costs
incurred during the acquisition of Ex5 Genomics in July 2020, and Coastal
Genomics Inc in August 2020.
Acquisition integration expense relates to the expense incurred integrating
Delta Diagnostics UK Ltd (acquired April 2019, now integrated into Yourgene
Health UK Ltd), AGX-DPNI SAS (acquired March 2020, now Yourgene Health France
SAS), EX5 Genomics Ltd (acquired May 2020, now Yourgene Genomic Services Ltd)
and Coastal Genomics Inc (acquired August 2020, now Yourgene Health Canada
Inc) into the Group.
6. Operating Loss
2022 2021
£ 000 £ 000
Operating loss for the year is stated after charging the following within
Administrative Expenses:
UK Genomic Service laboratory expenses 3,157 1,181
Research and Development expenditure net of capitalisations, grants and tax 1,845 1,777
credits
Yourgene Health Canada operating expenses (formerly Coastal Genomics Inc) 1,675 495
US market entry expenses 1,068 316
Depreciation of property, plant and equipment 1,755 1,023
Depreciation of right-of-use assets 959 699
Amortisation of intangible assets 1,874 1,526
8. Employees
The average monthly number of persons (including Directors) employed globally
by the Group during the year was:
2022 2021
Number Number
Directors 10 9
Administrative 182 117
Research and development 61 54
253 180
Their aggregate remuneration comprised:
2022 2021
£ 000 £ 000
Wages and salaries 10,588 6,950
Social security cost 1,054 684
Pension cost 374 322
Share-based payments: share incentive plan (note 29) 114 150
Share-based payments: share option schemes (note 29) 198 802
12,328 8,908
10. Finance Income
2022 2021
£ 000 £ 000
Interest income:
Bank deposits 5 1
Loans and receivables - 1
Total finance income 5 2
11. Finance Expense
2022 2021
£ 000 £ 000
Interest on loans and borrowings 214 101
IFRS 16 Interest 283 201
Loan arrangement fee 159 0
Total finance expense 656 302
Interest on loans and borrowings increased during the reporting period due to
the parent company entering into a term loan agreement with Silicon Valley
Bank as described in Note 21.
The Group is required to estimate the income tax in each of the jurisdictions
in which it operates. This requires an estimation of the current tax liability
together with an assessment of the temporary differences which arise as a
consequence of different accounting and tax treatments. These temporary
differences result in deferred tax assets or liabilities which are included
within the Statement of Financial Position. Deferred tax assets and
liabilities are measured using substantially enacted tax rates expected to
apply when the temporary differences reverse. Management judgement is required
to determine the total provision for income tax. Amounts accrued are based on
management's interpretation of country-specific tax law and the likelihood of
settlement.
Factors that may affect future tax charges
The Group has estimated trading losses of £9,798k (2021: £14,545k), excess
management fees of £20,075k (2021: £16,696k), non-trade loan relationship
deficits of £1,320k (2021: £1,320k) and capital losses of £1,934k (2021:
£1,934k). In recognising a UK deferred tax asset of £1,831k in the
reporting period the company is utilising UK trading losses of £7,623k out of
£33,128k of its cumulative UK losses.
The tax losses have resulted in a potential deferred tax asset of
approximately £8,282k (2021: £6,554k), which has been partially recognised
based on conservative estimates of future taxable profits in line with Group
policy. Further recognition in future reporting periods is subject to the
extent that future taxable profits will be sufficient to utilise the losses,
in accordance with current and expected future UK tax rates which are due to
increase to 25% from 1 April 2023.
13. Earnings/Loss Per Share
Basic
Basic loss per share was 0.3 pence (2021: loss of 1.8 pence) by dividing the
loss for the period of £1,916k (2021: loss £12,184k) by the weighted average
number of ordinary shares in issue during the period 724,248,137 (2021:
685,643,605).
Diluted
Diluted loss per share was 0.3 pence (2021: loss of 1.7 pence) after diluting
the basic earnings per share to take into account share options, exchangeable
shares and warrants. The calculation includes the weighted average number of
ordinary shares that would have been issued on the conversion of all the
dilutive share options, exchangeable shares and warrants into ordinary shares.
The adjusted weighted average number of shares used to calculate diluted
earnings per share is 739,276,004 (2021: 726,355,871). 69,314,463 options and
warrants (2021: 28,159,443) have been excluded from this calculation as the
effect would be anti-dilutive.
After the reporting period end:
A further 1,130,000 new performance-based share options were issued in April
2022 which would have no material impact on the above calculations.
14. Intangible Assets
Goodwill Customer Product IP Trademarks & brand names Software Product Total
£ 000 relationships £ 000 £ 000 development development £ 000
£ 000 cost cost
£ 000 £ 000
Cost
At 1 April 2020 10,806 8,444 2,052 - 256 440 21,998
Additions - 390 47 - 147 643 1,227
Business combinations 3,098 1,454 3,355 24 - - 7,931
Exchange differences 66 (57) 72 - - - 81
At 31 March 2021 13,970 10,231 5,526 24 403 1,083 31,237
Additions - - - - - 324 324
Exchange differences 173 82 280 1 - - 536
At 31 March 2022 14,143 10,313 5,806 25 403 1,407 32,097
Amortisation and impairment
At 1 April 2020 - 812 188 - - - 1,000
Charge for the year - 974 420 3 42 86 1,525
Impairment 4,789 - - - - - 4,789
Exchange differences - (10) 2 - - - (8)
At 31 March 2021 4,789 1,776 610 3 42 86 7,307
Charge for the year - 1,027 535 5 118 189 1,874
Impairment 472 573 - - - - 1,045
Exchange differences - 12 47 - - - 59
At 31 March 2022 5,261 3,388 1,192 8 160 275 10,285
Carrying amount
At 31 March 2022 8,881 6,925 4,614 17 243 1,132 21,813
At 31 March 2021 9,181 8,455 4,916 21 361 997 23,931
Certain intangible assets arose as part of the business combinations of
Yourgene Health Taiwan (March 2017), Delta Diagnostics UK Ltd (April 2019) and
Coastal Genomics Inc (August 2020; now renamed Yourgene Health Canada Inc),
and also the asset purchases of Yourgene Health France SAS (March 2020,
formerly AGX-DPNI SAS) and Ex5 Genomics Ltd (July 2020; now renamed Yourgene
Genomic Services Ltd). The following intangible assets are amortised over a
useful economic life defined upon acquisition:
Useful economic life Remaining useful life
Customer relationships 10 years 6-10 years
Product IP 10 years 8-10 years
Trademarks & brand names 5 years 4-5 years
Software development cost 4 years 3-4 years
Product development cost 5 years 3-5 years
Goodwill is allocated to the Group's cash-generating units (CGUs) identified
as the Group's operating segments with Genomic Technologies as a single CGU
and Genomic Services as two CGUs, representing the distinct local markets of
Europe and Asia. Genomic Services Europe has no goodwill assigned to it.
Genomic Services Asia goodwill is a revenue-based allocation of the goodwill
associated with the acquisition of Yourgene Health Taiwan (March 2017).
Genomic Technologies goodwill represents a revenue-based allocation of the
goodwill arising on the acquisition of Yourgene Bioscience (Taiwan) in March
2017, since renamed Yourgene Health Taiwan; plus all the goodwill arising on
the acquisitions of Delta Diagnostics Ltd (April 2019) and Coastal Genomics
Inc (August 2020; now renamed Yourgene Health Canada Inc).
Goodwill attribution by cash generating unit 2022 2021
£ 000 £ 000
Genomic Technologies 8,882 8,709
Genomic Services Asia - 472
8,882 9,181
Intangible assets other than goodwill are subject to an annual test to
determine if indicators of impairment are present. Where indicators are
present, an impairment test is performed to determine the recoverable
amount. Goodwill is tested for impairment annually. Impairment tests
ascertain if the value in use is greater than the carrying value in the
financial statements. The intangible assets arising from the acquisitions
above are tested over a five-year forecast period plus a terminal value to
represent their remaining useful economic life as deemed appropriate for the
diagnostics sector in which the Group operates which tends to see lifecycles
for intangible assets which are longer than 5 years. A cash flow model for
each CGU is used based on historical performance, in which future expectations
of growth are forecast based on internal budgets for 24 months, and then on
growth rates judged to be relevant to the respective CGUs. Growth rates for
Genomic Technologies range from 28% down to 2% over the forecast period,
reflecting maturation in certain key markets and anticipated continued pricing
pressure on NIPT solutions. Genomic Services Asia growth rates range from
30% down to 10% reflecting an anticipated bounce back after the pandemic
reduced business levels in that CGU. Genomic Services Europe revenues are
expected to reduce by 56% after the COVID pandemic recedes, with CGU revenues
then growing at 30% in FY24 due to the introduction of new revenue streams and
then 5% per annum thereafter as growth becomes more organic. Growth rates for
all CGUs reduce to 2% per annum for the terminal value estimation. Pre-tax
discount rates were set at 10%, being the representative cost of capital.
These assumptions are reviewed and benchmarked to ensure they remain
appropriate.
The impairment assessments for Genomic Technologies and for Genomic Services
Europe showed assessed values that exceeded the carrying values with
significant headroom in excess of £45m for each of these CGUs. For Genomic
Technologies a revenue growth reduction of 13 percentage points in each year,
which almost eliminates the assumed growth in the latter part of the forecast
period, resulted in an impairment of that CGU. For Genomic Services Europe a
revenue growth reduction of 21 percentage points in each year, which gives
rise to revenue declines of 16% in the latter part of the forecast period,
resulted in an impairment of that CGU. For both Genomic Technologies and
Genomic Services Europe a discount rate sensitivity of 24% did not give rise
to an impairment.
For Genomic Services Asia, using the assumptions described above, the
recoverable amount of the Genomic Services Asia CGU is deemed to give rise to
an impairment charge of £1,045k (2021: £4,789k) with £472k recognised
against previously unimpaired goodwill and £572k recognised against an
intangible asset relating to acquired customer relationships. The impairment
charge within the Genomic Services Asia CGU arose as a result of the continued
impact of the COVID-19 pandemic which reduced health tourism in the CGU's core
South East and East Asian markets and the redirection of resources by a large
customer from their Yourgene-supported research programme. Sensitivity
analysis with respect to this impairment has been performed. Increasing the
average growth rate by 5 percentage points in each year would reduce the
impairment charge by £902k. The Genomic Services Asia impairment assessment
is based on the realisable value for that CGU, calculated based on revenue
multiples for similar companies, which is higher than the forecast discounted
cashflows. Therefore, sensitivities to reduce forecast revenue or to
increase the discount rate will not give rise to any further impairment.
15. Property, Plant and Equipment
Leasehold land and buildings Plant and equipment Computer Total
£ 000 £ 000 software £ 000
£ 000
Cost
At 1 April 2020 738 5,545 126 6,409
Additions 480 2,682 2 3,164
Business combinations - 80 5 85
Foreign currency adjustments (10) (131) (1) (142)
At 31 March 2021 1,208 8,176 132 9,515
Additions 989 1,280 65 2,334
Disposals (150) (32) - (182)
Foreign currency adjustments 37 84 2 123
At 31 March 2022 2,084 9,508 198 11,790
Accumulated depreciation and impairment
At 1 April 2020 586 3,811 42 4,439
Charge for the year 61 934 29 1,024
Foreign currency adjustments (4) (51) (1) (56)
At 31 March 2021 643 4,694 70 5,406
Charge for the year 149 1,576 30 1,755
Disposals (150) (32) - (182)
Foreign currency adjustments 5 50 1 57
At 31 March 2022 647 6,288 101 7,036
Carrying amount
At 31 March 2022 1,437 3,218 97 4,753
At 31 March 2021 565 3,482 62 4,109
Business combination refers to assets acquired in the acquisition of Coastal
Genomics Inc (now renamed Yourgene Health Canada Inc) in August 2020, see note
18.
16. Leases
Lease liabilities
The Group has a number of leases for property in the UK, Taiwan, Singapore and
Canada. The incremental borrowing rate applied to the lease liabilities is
based on comparable loan interest rates in the relevant jurisdiction where the
lease is operable.
Property Motor Equipment Total
£ 000 vehicles £ 000 £ 000
£ 000
At 1 April 2020 3,051 - - 3,051
Additions 1,690 83 143 1,916
Business combinations 64 - - 64
Lease payments (417) (29) (74) (520)
Interest expense 193 3 4 200
Foreign currency adjustments (69) - - (68)
At 31 March 2021 4,512 57 73 4,643
Additions 10,066 - 90 10,156
Lease payments (1,030) (25) (90) (1,145)
Interest expense 274 3 7 284
Terminations and amendments (74) - - (74)
Foreign currency adjustments 27 - - 27
At 31 March 2022 13,776 35 80 13,891
2022 2021
£ 000 £ 000
Current 1,250 587
Non-current 12,641 4,056
At 31 March 13,891 4,643
Right-of-use assets
There were no onerous lease contracts that would have required an adjustment
to the right-of-use assets at the date of initial application.
Property Equipment Motor Total
£ 000 £ 000 vehicles £ 000
£ 000
Cost
At 1 April 2020 3,248 - - 3,248
Additions 1,690 142 83 1,915
Business combinations 64 - - 64
Terminations and amendments (44) - - (44)
Foreign currency adjustments (74) - - (74)
At 31 March 2021 4,884 142 83 5,109
Additions 10,081 90 - 10,171
Terminations and amendments (159) - - (159)
Foreign currency adjustments 108 - - 108
At 31 March 2022 14,914 232 83 15,230
Accumulated depreciation and impairment
At 1 April 2020 252 - - 252
Charge for the year 653 24 23 700
Eliminated on termination and amendment (44) - - (44)
Foreign currency adjustments (6) - - (6)
At 31 March 2021 853 24 23 900
Charge for the year 871 63 24 958
Eliminated on termination and amendment (134) - - (134)
Foreign currency adjustments 29 - - 29
At 31 March 2022 1,619 87 47 1,754
Carrying amount
At 31 March 2022 13,294 145 36 13,475
At 31 March 2021 4,030 118 60 4,210
Changes to property leases
New leases have been entered into during the reporting period for new
long-term facilities in Vancouver and the UK (Manchester). In Vancouver the
new lease replaced a short-term lease on a facility acquired with Coastal
Genomics Inc (now Yourgene Health Canada Inc). In the UK the Group is in the
process of exiting multiple existing facilities with varying lease commitments
and relocating to a single facility in the same vicinity with significant
expansion potential. At the reporting date the new facility lease had been
entered into and the existing facility leases were also still in place
creating a degree of duplication which will reverse when all legacy facilities
have been exited.
Operating lease commitments
In addition to the property leases disclosed above under IFRS 16 the Group has
a small number of low-value asset operating leases.
2022 2021
£ 000 £ 000
Minimum lease payments expensed in the Income Statement under operating leases 51 60
At the reporting period date, the Group had outstanding commitments for future
minimum lease payments under non-cancellable operating leases, which fall due
as follows:
2022 2021
£ 000 £ 000
Within one year 50 25
Between one and five years 4 9
In over five years - -
54 34
19. Trade and Other Receivables
2022 2021
£ 000 £ 000 £ 000 £ 000
Trade receivables 5,447 4,523
Provision for doubtful trade receivables (924) (459)
Loss allowance due to expected credit losses under IFRS 9 (76) (63)
Net trade receivables 4,447 4,001
Other receivables 561 598
Provision for doubtful other receivables (269) (269)
VAT recoverable 852 148
Other loans and receivables at amortised cost - -
Net other loans and receivables at amortised cost 1,144 477
Prepayments 1,391 855
6,982 5,333
20. Trade and Other Payables
2022 2021
£ 000 £ 000
Trade payables 4,325 3,125
Payments received on account 516 373
Accruals 1,576 1,209
Social security, taxation and pensions 569 384
VAT payable 1,391 135
Other payables 26 13
8,403 5,239
The book value of trade and other payables approximates to the fair values.
See note 26 for maturity analysis.
21. Borrowings
2022 2021
£ 000 £ 000
Unsecured borrowings at amortised cost
Bank loans 5,220 196
5,220 196
Analysis of borrowings
Borrowings are classified based on the amounts that are expected to be settled
within the next 12 months and after more than 12 months from the reporting
date, as follows:
2022 2021
£ 000 £ 000
Current liabilities 2,193 119
Non-current liabilities 3,027 77
5,220 196
The continuing borrowings as at 31 March 2022 are:
In January 2022 the Group entered into a £5m 3-year term loan facility with
Silicon Valley Bank secured against the Group's intangible and tangible assets
in the UK, USA and Canada. The facility provides access to non-dilutive
funding to enable the Group to capitalise on future accretive growth
opportunities including potential licensing and M&A activity, allowing for
faster deal execution and lower transaction costs.
The Facility is repayable over three years with an interest-only period until
April 2022 after which interest is payable at a commercially competitive rate
of 4.65% above Bank of England base rates. Covenants are based on a target
trailing quarterly revenue basis compared to internal forecasts and were met
within the reporting period. The loan is secured against UK IP and fixed
assets and a first priority line over IP in the USA and Canada and represents
the only material bank debt and third party security borne by Yourgene.
In addition Yourgene Health (Taiwan) Co. Ltd has an asset finance facility
which is repayable in equal instalments until September 2023 at an fixed
interest rate of 0.66%. At the reporting date the balance on this
facility was £80k (2021: £128k).
Borrowings incurred by Delta Diagnostics (UK) Ltd were fully paid off by
October 2021. The covenants attached to these borrowings were all met and
the associated security charge has been cancelled.
22. Provisions for Liabilities
2022 2021
£ 000 £ 000
Acquisition - additional consideration 1,339 3,411
Analysis of provisions
Provisions are classified based on the amounts that are expected to be settled
within the next 12 months and after more than 12 months from the reporting
date, as follows:
2022 2021
£ 000 £ 000
Current liabilities - 2,283
Non-current liabilities 1,339 1,128
1,339 3,411
23. Deferred Taxation and Current Taxation Assets and Liabilities
The deferred tax liabilities and assets recognised by the Group and movements
thereon during the current and prior reporting period are shown below.
The deferred tax assets and deferred tax liabilities are not offset and are
both deemed non-current.
£ 000
Deferred tax liability at 1 April 2020 1,153
Deferred tax movements
Acquired in business combination 1,226
Credit to profit or loss (232)
Foreign exchange revaluation 26
Deferred tax liability at 31 March 2021 2,173
Deferred tax movements
Credit to profit or loss (172)
Foreign exchange revaluation 59
Deferred tax liability at 31 March 2022 2,060
£
Deferred tax asset at 1 April 2020 1,181
Deferred tax movements
Charge to profit or loss (23)
Foreign exchange revaluation (11)
Deferred tax asset at 31 March 2021 1,145
Deferred tax movements
Credit to profit or loss 1,112
Foreign exchange revaluation 25
Deferred tax asset at 31 March 2022 2,282
Tax assets are sums arising from enhanced R&D reliefs available in the UK
and tax prepayments in Germany. UK R&D tax credits are allocated between
current and non-current according to the Company's view on when the benefits
will arise.
31. Analysis of Changes in Net Cash/(Debt)
01-Apr-21 Cash flow Acquisitions and disposals Exchange movements Accrued interest charges 31-Mar-22
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Cash and bank balances 6,995 1,434 - - - 8,429
Bank loans - see note 21 (196) 289 (5,286) (5) (22) (5,220)
Net cash/(debt) 6,799 1,723 (5,286) (5) (22) 3,209
34. Events After the Reporting Date
The Company issued 1,130,000 EPS-based share options to non-UK staff and some
UK-based managers, and the purchase by Lyn Rees, Chief Executive Officer, of
1,000,000 ordinary shares in the Company. Mr Rees' interest in the Company
increased to 0.3% of the issued share capital as a result.
In April 2022 a strategic review was announced into the Group's Taiwanese
operations in light of ongoing COVID-19 restrictions in the region and the
resulting impairments to intangible assets (see note 14).
Also in April 2022 the Group announced it was undertaking a realignment of its
global cost base to adapt to the post-pandemic commercial landscape.
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