REG - Yourgene Health PLC - Half-year Report
14/12/2021 07:00
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RNS Number : 5115V Yourgene Health PLC 14 December 2021
Yourgene Health plc
("Yourgene" or the "Company")
Half-year Report
H1 revenues doubled year-on-year
Full year revenues to exceed already upgraded market expectations
Manchester, UK - 14 December 2021: Yourgene (AIM: YGEN), a leading integrated
technologies and service group enabling the delivery of genomic medicine,
announces its unaudited half-year report for the six months ended 30 September
2021 ("H1 FY22"). Unless otherwise stated, comparative data shown is for the
six-month period ended 30 September 2020 ("H1 FY21").
The first half of the financial year saw record performance as prior
investment into clinical service lab capacity started to deliver a substantial
return, with significant growth seen in both Genomic Technologies and Genomic
Services business segments. The Board is confident that trading for the full
year will remain robust and that full year revenues are therefore likely to
exceed current market expectations, already upgraded previously in October.
Financial highlights
· Revenues increased by 113% to £17.5m (H1 FY21: £8.2m) with Genomic
Services segment up 260% to £10.5m and Genomic Technologies segment up 32% to
£6.9m
· Gross profit up 107% to £10.2m (H1 FY21: £4.9m)
· General administrative expenses up 55% to £8.1m (H1 FY21: £5.2m)
including growth-focused expenditures on UK COVID-19 testing, continuation of
the NIPT transition to IONA® Nx and expansion of strong US commercial
personnel
· Adjusted EBITDA* of £2.1m (H1 FY21: loss of £0.3m)
· Cashflow neutral at operating level (H1 FY21: outflow £1.2m)
· Cash and cash equivalents as at 30 September 2021: £4.7m (31 March
2021: £7.0m)
Operational highlights
· IONA® Nx moving from transition phase to pipeline expansion and
since year end has been installed as a CE-IVD or technology transfer in labs
in the USA, Mexico, Singapore, Switzerland and Italy
· The Illumina-based IONA® Nx workflow has experienced overall good
growth but has had to overcome some challenges with supply chain disruption
and extended validation phases due to the transitions. These issues have now
been fully resolved and confidence in the IONA® Nx workflow is stronger than
ever.
· Concerns around COVID's impact on supply chain resulted in customers
carrying additional stock into H1 FY22 normalising for this affect shows that
NIPT is stable through H1 FY22
· Successful attainment of earn-out milestones for the Coastal Genomics
business acquired in H1 FY21, with $2m equity issued. Over performance due to
contract wins with two US diagnostic majors of which Labcorp supported digital
marketing campaigns with customer webinar in post-period end
· Expansion of geographical reach with indirect distribution channels
strengthened in Middle East, Africa and Eastern Europe
· DPYD chemo-toxicity assay revenues doubled as a result of strong
domestic and international adoption and on track to be a £1m+ pa product
· COVID-19 testing service scaled significantly in the UK through a
combination of public contracts and direct to consumer retail channels,
generating c. £9m revenue, compared to £0.4m in H1 FY21. Public tender
contract award in August 2021 for the UK National Microbiology Framework
(COVID-19 testing) which delivered £0.6m revenues in the period, with a
further £0.6m post period end. In addition, Clarigene® product sales
contribute an additional £1.4m in the period (H1 FY21: £0.2m)
Post period end:
· DPYD adoption recommended in November 2021 by experts in Spain, the
fifth such country to recognise the benefits of using a DPYD genotyping test
to help identify cancer patients at risk of higher toxicity from DPD
deficiency
· Expect to continue provision of COVID-19 testing to all our existing
partners, both public and private until the end of Q4
· Further contract secured under National Microbiology Framework for
COVID-19 sequencing, details to follow
· Coastal Genomics, acquired in August 2020, rebranded as Yourgene
Health Canada as part of corporate integration and embedding the Ranger®
technology as a core part of the Group's broadened genomic technologies
portfolio
· Commercial team further enhanced with new appointments in key regions
including LATAM, Singapore and Taiwan
Genomic Services continues to expand the portfolio to include further tests in
reproductive health and DPYD from Genomic Technologies, strengthening the
integration between Technologies and Services.
Lyn Rees, Chief Executive Officer of Yourgene, commented:
"The strong performance in this first half is a testament to how we are able
to take our core competencies from Genomic Technologies and Genomic Services
offerings and react to market demands. The first half has seen this result in
very substantial growth in COVID-19 testing where we have quickly mobilised
our core lab services and scaled resources to meet this key need, and we have
the ability to apply these core skills and capacity to other areas in due
course.
"Whilst growth across non-COVID areas of the business is subdued, we are
seeing reassuring signs of a return to growth across a number of our Genomic
Technologies and Genomic Services portfolios, particularly following growing
access for our sales teams in Europe and North America. We remain confident in
the recovery of non-COVID-19 revenue streams to underpin longer-term growth
prospects.
"It was a great pleasure to again be able to visit the USA and Canada
recently, and I am as optimistic as ever about our prospects in the North
American market. As we fill out our global footprint into Latin America and
refresh our presence in the Middle East and Asia, we can truly say that
Yourgene is now a globally integrated provider of leading genomic technologies
and services."
A presentation on the financial results and business outlook will be delivered
by Lyn Rees, CEO, and Barry Hextall, CFO and via the Investor Meet Company
platform and there will be an opportunity for investors to submit questions.
Investors can sign up to Investor Meet Company for free and register for the
Yourgene Health meeting via:
https://www.investormeetcompany.com/yourgene-health-plc/register-investor
(https://www.investormeetcompany.com/yourgene-health-plc/register-investor)
* Adjusted EBITDA is the operating profit/(loss) before interest, tax,
depreciation, amortisation, and expenses shown separately disclosed on the
face of the Income Statement
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation.
The Directors of the Company take responsibility for 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 / Alice Woodings Mob: 07980 541 893 / 07584 391 303 / 07407 804 654
About Yourgene Health
Yourgene Health is an international molecular diagnostics group which develops
and commercialises integrated genomic technologies and services enabling
genomic medicine in over 60 territories. The group works in partnership with
global leaders in DNA technology to advance diagnostic science and support
precision medicine.
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.
Yourgene has a range of innovative DNA sample preparation platforms, and
launched Yourgene Genomic Services in 2020, which has enabled Yourgene to
offer a global laboratory service network equipped to provide high quality
genetic testing and bioinformatics solutions and serve as a full life-cycle
partner for clinical, research and pharmaceutical organisations to support
partners at the preclinical, clinical, and post-market stages to develop,
manufacture, obtain regulatory approval and commercialise new products and
services. In addition, Yourgene Genomic Services offers an NIPT and high
throughput COVID-19 testing service. These capabilities [are also being/will
begin to be / will be] made available for Non-COVID health testing.
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.
BUSINESS REVIEW
As announced in the October 2021 trading update, the first half of the
financial year has delivered a significant uplift in revenues to more than
double those of the comparative period last year, with substantial growth in
both our Genomic Technologies and Genomic Services business segments. COVID-19
related products and services have driven a substantial proportion of this
growth and the funds generated are allowing us to continue to invest in our
broader portfolio of services and products in line with our longer-term growth
strategy, against which we continue to make progress both in terms of the
diversification of our customer offer and our international footprint.
Strategy
Our strategy remains to build a globally integrated molecular diagnostics
business through the deployment of scientific advances to enable the delivery
of genomic services through Yourgene's own clinical laboratories in
Manchester, UK, Taipei and Taiwan, and the provision of genomic technologies
to laboratory customers across the world. As shown below, substantial revenue
growth has been driven by sustained UK-based COVID-19 testing as the world
attempts to return to some form of normality. Over time, we expect to
re-deploy the capabilities and capacity acquired from the rapid scale-up and
deployment of COVID-19 related services into genomic testing in other health
areas such as oncology and reproductive health. This will enable us to
capitalise fully on recent investments and maximise the return from the
interplay between our proprietary technologies and delivered services in the
growing field of molecular diagnostics and other precision medicine
applications.
Group revenue Unaudited Unaudited Audited
by territory
6 months to
6 months to
12 months to
30 September 2021
30 September 2020
31 Mar 2021
£'000 £'000 £'000
UK 12,450 1,521 5,440
Europe 2,436 2,877 5,462
International 2,564 3,783 7,386
17,450 8,181 18,288
Genomic Services
Launched as Yourgene Genomic Services ("YGS") in September 2020, the Company
has established an international laboratory network which leverages
proprietary and third-party products, automation and software to process human
samples as a full life-cycle partner for clinical, research and pharmaceutical
organisations. YGS now offers non-invasive prenatal testing ("NIPT"), high
throughput COVID-19 testing services and a range of clinical and research
services to prestigious partner organisations.
COVID-19 testing services in the UK were the major driver of growth, recording
unaudited revenues of £9.0m in the first half (H1 2021: £0.4m). Sustained
demand has seen testing volumes steadily increase over the period, with record
volumes processed in September 2021. Whilst travel PCR testing was an early
contributor to growth, market channels have been expanded into non-travel
related testing, particularly through the National Microbiology Framework with
the Department of Health and Social Care plus other third-party channels.
NIPT services have seen some repositioning towards private sector clinics as
the NHS England national hub strategy has come into force. Other
non-COVID-19 services in the fields of research and clinical genome testing
offered from Yourgene's UK laboratory also delivered double digit growth and
the YGS laboratory in Taiwan continues to rebound from a challenging FY21.
Unaudited Unaudited Audited
6 months to
6 months to
12 months to
30 September 2021
30 September 2020
31 Mar 2021
£'000 £'000 £'000
Genomic Services Revenue
NIPT services 879 969 1,833
Covid-19 services 9,045 392 1,730
Other services 624 1,576 2,819
10,548 2,937 6,382
Genomic Technologies
The Genomic Technologies business stream provides an integrated portfolio of
instruments, reagents, consumables and software, all aimed at supporting
laboratory customers around the world. Flagship screening and diagnostic
products include NIPT, Cystic Fibrosis, DPYD genotyping and Clarigene™
SARS-CoV-2. DNA handling platforms include the LightBench with Ranger®
Technology, acquired as part of Coastal Genomics, for size selection in
cell-free DNA applications such as NIPT, oncology and liquid biopsy. This
capability supports longer sequencing reads and is a key attraction to
customers seeking efficiency and accuracy gains. The Ranger® Technology also
provides innovative sample preparation and removes barriers to and enhances
utilisation of sequencing using Yourgene's Genomic Technologies.
The Company's Clarigene® SARS-CoV-2 PCR product to third-party testing
providers contributed revenues of £1.4m in the period (H1 FY21: £0.2m) after
routes to market had been partly established in the second half of the last
financial year.
Non-COVID-19 product and technology sales delivered growth of 9% to £5.5m (H1
FY21: £5.0m) with strong growth in the acquired Ranger® technology platform
plus a doubling of DPYD revenues, couple with robust reproductive health PCR
revenues more than offsetting declines in NIPT revenues. These declines were
partly cyclical as a very strong H2 FY22 created an inventory overhang in
countries such as France which then experienced new pandemic waves.
Transitional issues on IONA® Nx were also a factor as supply chain challenges
required free of charge reagents and consumed commercial and aftersales energy
which we would have preferred to have used for installing new workflows.
These issues have been fully diagnosed and the IONA® Nx system has a number
of optimisations rolling out in the second half of the financial year which
will give us the high-performance platform to return NIPT to growth. Indeed,
new installations of CE-IVD IONA® Nx workflows, and equivalent technology
transfers have been completed in the USA, Mexico, Singapore, Switzerland and
Italy.
Revenues from the differentiated Ranger® Technology have exceeded $1m for the
first time in the six-month period, more than double the equivalent period
prior to its acquisition in August 2020 and, before further anticipated
inflection points as recently won new contracts start to go live in the coming
months.
Unaudited Unaudited Audited
6 months to
6 months to
12 months to
30 September 2021
30 September 2020
31 Mar 2021
£'000 £'000 £'000
Genomic Technologies Revenue
NIPT 2,570 3,160 5,925
Reproductive health 1,776 1,666 3,602
Covid-19 related 1,413 200 1,437
Ranger and other technologies 1,143 218 942
6,902 5,244 11,906
FINANCIAL REVIEW
The Group's results for the six months to 30 September 2021 are presented in
the financial statements below and show gross profits having more than doubled
to £10.2m (H1 FY21: £4.9m), on the back of similar levels of revenue growth.
Gross margins slipped back slightly to 58% (H1 FY21: 60%) due to increased
IONA Nx manufacturing costs arising from a temporary supplier issue which has
since been resolved, and a heavier usage of third-party consumables in the
provision of COVID-19 testing services to the DHSC.
General administrative expenses increased to £8.1m (H1 FY21: £5.2m) with the
notes to the accounts providing a breakdown of some of the more significant
items. This breakdown demonstrates higher operating costs of £1.3m incurred
in delivering the revenue uplift from UK-based COVID-19 testing services (H1
FY21: £0.4m) as well as continued investment in future growth drivers such as
a £0.3m spend on US market entry (H1 FY21 £0.1m), tail-end spending of
£0.2m on the Company's flagship NIPT product transition to the new platform
IONA Nx (H1 FY21: £0.3m), and £0.1m spent on strengthening business systems
(H1 FY21: £0.0m). Debtor provisions of £0.3m were primarily a final
provision for a sole debtor as noted in the Company's annual results for FY21,
otherwise receivables are under control at an average of 60 days of turnover.
Adjusted EBITDA, even after the above increased expenditure items, was a
profit of £2.1m (H1 FY21: loss of £0.3m). The Group's operating loss all but
reversed to £0.2m (H1 FY21: loss of £2.5m) and was at a breakeven position
before share-based payments and residual FY21 acquisition expenses.
Net financing expenses remained low at £0.2m (H1 FY21: £0.1m) reflecting the
minimal debt position of the Group. The total comprehensive loss for the
period was almost eliminated at £0.1m (H1 FY21: loss of £2.5m). Earnings per
share were 0.0 pence (H1 FY21: loss of 0.4 pence per share; FY21: loss of 1.8
pence).
In the reporting period, the Group was cash neutral for operating activities
(H1 FY21: £1.2m consumed), despite heavy working capital outflows associated
with the rapid increase in COVID-19 testing services. Investing activities
consumed £1.9m (H1 FY21: £5.0m) reflecting incremental additions to
operational infrastructure and the crystallisation of earn-outs from the 2020
acquisition of Coastal Genomics Inc. in Canada. Financing activities
technically consumed £0.4m on lease repayments under IFRS 16 (H1 FY21:
£15.7m net proceeds generated via equity fundraise).
At the end of the reporting period, the Group had £4.7m in cash and cash
equivalents (H1 FY21: £12.2m post equity raise). Borrowings outside IFRS16
lease commitments remain modest and net cash is £4.6m (30 Sept 2019:
£11.9m). As cash generation and balance sheet strength improve, and in
response to shareholder feedback at the time of the AGM, the Company is
reviewing its capital structure with a view to accessing manageable debt
facilities where appropriate to fund future growth.
Post period end:
Since the end of September 2021, the Group has maintained H1 revenue run-rates
and continued to pursue its non-COVID-19 growth strategy. The opening up of
North American travel has enabled a recommencement of face-to-face partner
visits and closer collaboration with our Canadian colleagues on their scale-up
journey, both of which are expected to accelerate momentum for the next
financial year. Testing for DPD chemo-toxicity has also been adopted by the
Spanish national healthcare system, which offers the Group additional traction
for its DPYD assay in a market where it already has established distribution
channels.
Outlook
Due to the strong performance in H1 FY22, and despite the inherent
unpredictability of COVID-19 related revenue streams, the Board is confident
that trading for the full year will remain robust. Having already upgraded
guidance in October, the Board believes that full year revenues are likely to
further exceed current market expectations. However, the exact scale of
out-performance remains difficult to judge at this stage in the financial
year.
For the remainder of the financial year the Company expects to continue to
generate revenues from COVID-19 testing products and services whilst
continuing its strategic focus on building its non-COVID-19 pipelines for both
Genomic Services and Genomic Technologies segments. A further contract has
recently been awarded to Yourgene under the National Microbiology Framework
for COVID-19 sequencing. Outside COVID-19 we have strengthened local
commercial teams across the world and now with travel corridors into Europe
and North America hopefully open for business, we remain confident in the
recovery of non-COVID-19 revenue streams to underpin longer-term growth
prospects.
Lyn Rees, Chief Executive Officer
14 December 2021
Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30-Sep 30-Sep 31-Mar
2021 2020 2021
£'000 £'000 £'000
Revenue 17,450 8,181 18,288
Cost of sales (7,296) (3,265) (6,912)
Gross profit 10,154 4,916 11,376
Other operating income 41 59 60
Administrative expenses
General administrative expenses (8,096) (5,225) (13,483)
Adjusted EBITDA 2,099 (250) (2,047)
Depreciation and amortisation (2,095) (1,308) (3,247)
Impairment of goodwill - - (4,789)
Share-based payments expense (118) (453) (952)
Costs associated with the acquisition of subsidiary - (280) (286)
Acquisition integration expense (17) (219) (388)
Total Depreciation, Amortisation and separately disclosed items (2,230) (2,260) (9,662)
Operating loss (131) (2,510) (11,709)
Financing income - 1 2
Financing expenses (175) (96) (302)
Profit /(loss) on ordinary activities before taxation (306) (2,605) (12,009)
Tax credit/(charge) on loss on ordinary activities 69 47 (175)
Profit/(loss) for the period (237) (2,558) (12,184)
Other comprehensive expense
Exchange translation differences 138 41 (57)
Profit/(loss) and total comprehensive profit/(loss) for the period (99) (2,517) (12,241)
Earnings per share pence
Basic: Profit/(loss) 0.0p (0.4p ) (1.8p )
Diluted: Profit/(loss) 0.0p (0.4p ) (1.7p )
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30-Sep 30-Sep 31-Mar
2021 2020 2021
£'000 £'000 £'000
Assets
Non-current assets
Goodwill 9,214 12,987 9,181
Intangible assets 14,083 17,621 14,750
Property, plant and equipment 4,334 3,427 4,109
Right of Use Asset 4,649 3,069 4,209
Tax Asset - 132 -
Deferred tax asset 1,305 1,131 1,145
Total non-current assets 33,585 38,367 33,394
Current assets
Inventories 4,901 1,804 2,897
Trade and other receivables 8,827 5,647 5,333
Tax asset 308 541 507
Cash and cash equivalents 4,674 12,204 6,996
Total current assets 18,710 20,196 15,733
Total assets 52,295 58,563 49,127
Equity and liabilities attributable to equity holders of the company
Equity
Called up share capital 32,669 32,666 32,668
Share premium account 67,315 67,057 67,260
Merger relief reserve 12,994 14,815 12,970
Reverse acquisition reserve (39,947) (39,947) (39,947)
Foreign exchange translation reserve 72 33 (66)
Other reserves 6,307 3,069 4,914
Retained losses (45,031) (35,600) (44,876)
Total equity 34,379 42,093 32,923
Current liabilities
Trade and other payables 8,592 4,848 5,239
Lease liability 1,175 388 586
Current tax liabilities 495 320 543
Borrowings 42 171 119
Other Liabilities & Provisions - 3,404 2,283
Total current liabilities 10,304 9,131 8,770
Non-current liabilities
Borrowings 81 107 77
Deferred tax liability 2,260 2,849 2,173
Lease Liability 4,043 2,835 4,056
Long term provisions 1,228 1,548 1,128
Total non-current liabilities 7,612 7,339 7,434
Total equity and liabilities 52,295 58,563 49,127
Consolidated Statement of changes in equity
Share capital Share premium account Merger relief reserve Other reserve Reverse acquisition reserve Foreign exchange reserve Retained losses Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30 September 2020 (unaudited)
Balance at 1 April 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,298
Loss for the period - - - - - (2,558) (2,558)
Other comprehensive Gain - - - - - 41 41
Total comprehensive loss for the period - - - - - 41 (2,558) (2,517)
Transactions with owners
Issue of share capital 104 16,945 17,049
Share issue expenses (1,068) (1,068)
Issue of share capital on acquisition 1 1,877 1,878
Share-based payments 453 453
Warrants issued - - - - - - - -
Total transactions with owners 105 15,877 1,877 - - - 453 18,312
Balance at 30 September 2020 32,666 67,057 14,815 3,069 (39,947) 33 (35,600) 42,093
Consolidated Statement of changes in equity
Share capital Share premium account Merger relief reserve Other reserve Reverse acquisition reserve Foreign exchange reserve Retained losses Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
12 months ended 31 March 2021 (audited)
Balance at 1 April 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,298
Profit for the year - - - - - - (12,183) (12,183)
Other comprehensive loss - - - - - (58) - (58)
Total comprehensive profit for the year - - - - - (58) (12,183) (12,241)
Transactions with owners
Issue of share capital 107 17,148 - - - - - 17,255
Share issue expenses - (1,068) - - - - - (1,068)
Issue of share capital on acquisition - - 32 - - - - 32
Issue of share options on acquisition - - - 1,845 - - - 1,845
Share-based payments - - - - - - 802 802
Warrants issued - - - - - - - -
Total transactions with owners 107 16,080 32 1,845 - - 802 18,866
Balance at 31 March 2021 32,668 67,260 12,970 4,914 (39,947) (66) (44,876) 32,923
Consolidated Statement of changes in equity
Share capital Share premium account Merger relief reserve Other reserve Reverse acquisition reserve Foreign exchange reserve Retained losses Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Six months ended 30 September 2021 (unaudited)
Balance at 1 April 2021 32,668 67,260 12,970 4,914 (39,947) (66) (44,876) 32,923
Loss for the period (237) (237)
Other comprehensive Gain 138 138
Total comprehensive loss for the period - - - - - 138 (237) (99)
Transactions with owners
Issue of share capital 1 55 - - - - - 56
Share issue expenses - - - - - - - -
Issue of share capital on acquisition - - 24 - - - - 24
Issue of share options on acquisition - - - 1,393 - - - 1,393
Share-based payments - - - - - - 82 82
Warrants issued - - - - - - - -
Total transactions with owners 1 55 24 1,393 - - 82 1,555
Balance at 30 September 2021 32,669 67,315 12,994 6,307 (39,947) 72 (45,031) 34,379
Consolidation statement of cash flows
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30-Sep 30-Sep 31-Mar
2021 2020 2021
£'000 £'000 £'000
Cash flows from operating activities
Profit / (loss) for the year before tax (306) (2,605) (12,009)
Adjustments for:
Finance costs 175 96 302
Finance income - (1) (2)
Depreciation and impairment of property, plant and equipment 733 414 1,023
Depreciation and impairment of right of use asset 422 249 698
Amortisation of intangible non-current assets 940 645 1,526
Impairment of goodwill - - 4,789
Impairment on financial assets (IFRS9) 2 25 (39)
Foreign exchange movements 4 (134) (204)
Share based payment (Options) expense 82 452 802
Decrease in provisions - - (85)
Tax (paid) / received 234 333 296
Movements in working capital:
(Increase)/decrease in inventories (2,004) (435) (1,528)
(Increase)/decrease in trade and other receivables (3,496) 264 646
Increase/(decrease) in trade and other payables 3,353 (344) 44
Decrease/(increase) in tax asset (103) (132) (79)
Cash generated / (used by) operations 36 (1,173) (3,820)
Investing activities
Purchase of subsidiaries (832) (2,765) (3,637)
Cash acquired on purchase of subsidiaries - 32 32
Purchase of property, plant and equipment (908) (1,615) (3,004)
Capitalisation of intangible assets (201) (690) (838)
Interest received - 1 2
Net cash (used in) investing activities (1,941) (5,037) (7,445)
Financing activities
Net proceeds from issue of shares 56 15,981 16,186
Proceeds from borrowings - 160 160
Repayment of borrowings (78) (247) (321)
(Increase)/decrease in lease liability - - -
Repayment of Lease liability obligations (291) (148) (318)
Interest paid (103) (96) (211)
Net cash (used in) / generated from financing activities (416) 15,650 15,496
Net (decrease)/increase in cash and cash equivalents (2,321) 9,440 4,231
Cash and cash equivalents at beginning of period 6,995 2,764 2,764
Cash and cash equivalents at end of period 4,674 12,204 6,995
Notes to the interim financial statements
General information
The principal activity of Yourgene Health plc (the "Company") and its
subsidiaries (together, the "Group") is that of a molecular diagnostics
business for the development and commercialisation of gene analysis techniques
for non-invasive prenatal screening, reproductive health and oncology
diagnostics, and the provision of DNA sequencing services for the early
detection, monitoring and treatment of disease. The Company is incorporated
and domiciled in the United Kingdom. The address of its registered office is
Citylabs 1.0, Nelson Street, Manchester, M13 9NQ. The registered number is
03971582.
As permitted, this Interim Report has been prepared in accordance with the AIM
rules and not in accordance with IAS 34 "Interim Financial Reporting". The
consolidated financial statements are prepared under the historical cost
convention.
This Consolidated Interim Report and the financial information for the six
months ended 30 September 2020 does not constitute full statutory accounts
within the meaning of section 434 of the Companies Act 2006 and are unaudited.
This unaudited Interim Report was approved by the Board of Directors on 16
December 2020.
The Group's financial statements for the period ended 31 March 2021 have been
filed with the Registrar of Companies. The Group auditor's report on these
financial statements was unqualified and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Electronic communications
The Company is not proposing to bulk print and distribute hard copies of this
Interim Report for the six months ended 30 September 2021 unless specifically
requested by individual shareholders. The Board believes that by utilising
electronic communication it delivers savings to the Company in terms of
administration, printing and postage, and environmental benefits through
reduced consumption of paper and inks, as well as speeding up the provision of
information to shareholders.
News updates, Regulatory News and Financial statements can be viewed and
downloaded from the Group's website, www.yourgene-health.com
(http://www.yourgene-health.com) . Copies can also be requested from; The
Company Secretary, Yourgene Health plc, Citylabs 1.0, Nelson Street,
Manchester, M13 9NQ or by email: investors@yourgene-health.com
(mailto:investors@yourgene-health.com) .
Accounting policies
Basis of preparation
This financial information has been prepared in accordance with International
Financial Reporting Standards (IFRS), including IFRIC interpretations issued
by the International Accounting Standards Board (IASB) as adopted by the
United Kingdom and in accordance with the accounting policies which will be
adopted in presenting the Group's Annual Report and Financial Statements for
the year ending 31 March 2022. These are consistent with the accounting
policies used in the Financial Statements for the year ended 31 March 2021.
Going concern
In their assessment of the Group's ability to continue as a going concern, the
Directors have focused on the implications of the COVID pandemic, underlying
organic growth drivers and the cash profiles of various in-year and prior year
asset acquisitions and business combinations.
The COVID pandemic has suppressed organic growth somewhat and has also led to
the creation of a significant revenue stream of its own through the provision
of COVID testing services in the UK and sales of the Group's SARS-CoV-2 PCR
test in the UK and internationally. Looking forward as the pandemic hopefully
recedes the Group anticipates a return to organic growth of the existing
business plus the positive long-term benefits of recent acquisitions, not
least that of Coastal Genomics Inc which is an early-stage cash-consuming
business at present but which is 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 in the face of the COVID pandemic which ran
concurrently with the reporting period.
As described in the 31 March 2021 Annual report, the Group has been investing
heavily in future cashflow drivers as a result of a successful equity issuance
in August 2020. This fundraise enabled the acquisition of Coastal Genomics Inc
and has also facilitated 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.
Nonetheless, the significant revenues achieved through COVID-19 testing have
allowed the Group to be cash neutral in its trading operations and only
consumed in investing and financing activities. 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 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 against expected levels along with potential mitigating actions which
can be taken to safeguard the Group's cash position. 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
are likely to generate additional funds within the forecast horizon. The Group
also has a successful track record in raising funds from capital markets and
is exploring debt facilities. 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 these
interim financial statements.
Revenues
Revenue analysed by geographical region.
Unaudited Unaudited Audited
6 months to
6 months to
12 months to
30 September 2021
30 September 2020
31 Mar 2021
£'000 £'000 £'000
UK 12,450 1,521 5,440
Europe 2,436 2,877 5,462
International 2,564 3,783 7,386
17,450 8,181 18,288
Revenue analysed by operating segment.
Unaudited Unaudited Audited
6 months to
6 months to
12 months to
30 September 2021
30 September 2020
31 Mar 2021
£'000 £'000 £'000
Genomic Services
NIPT services 879 969 1,833
Covid-19 services 9,045 392 1,730
Other services 624 1,576 2,819
10,548 2,937 6,382
Genomic Technologies
NIPT 2,570 3,160 5,925
Reproductive health 1,776 1,666 3,602
Covid-19 related 1,413 200 1,437
Other technologies 1,143 218 942
6,902 5,244 11,906
17,450 8,181 18,288
Operating profit / (loss) by segment
Unaudited 6 months to Unaudited 6 months to Audited 12 months to
30 September 2021
30 September 2020
31 Mar 2021
Genomic Genomic Central Total Genomic Genomic Central Total Genomic Genomic Central Total
Technologies
Services
Technologies
Services
Technologies
Services
£ £ £ £ £ £ £ £ £
Revenues 6,902 10,548 - 17,450 5,244 2,937 - 8,181 11,906 6,382 - 18,288
Cost of Sales (3,273) (3,867) - (7,140) (1,816) (1,449) - (3,265) (4,690) (2,222) - (6,912)
Gross Profit 3,629 6,681 - 10,310 3,428 1,488 - 4,916 7,216 4,160 - 11,376
Other operating income - - 41 41.00 - - 59 59 - - 60 60
Segmental expense (1,716) (1,654) - (3,370.00) (1,016) (759) - (1,775) (5,339) (3,400) - (8,739)
Central overhead - - (4,882) (4,882.00) - - (3,448) (3,448) - - (4,745) (4,745)
Adjusted EBITDA 1,913 5,027 (4,841) 2,099 2,412 729 (3,389) (248) 1,877 760 (4,685) (2,048)
Depreciation and amortisation - - (2,095) (2,095) - (1,309) (1,309) - - (3,247) (3,247)
Goodwill impairment - - - - - - - - - - (4,788) (4,788)
Share-based payments expense - - (118) (118) - - (453) (453) - - (952) (952)
Costs associated with subsidiary acquisition - - - - - - (280) (280) - - (286) (286)
Acquisition integration expense - - (17) (17) - - (220) (220) - - (388) (388)
Operating Profit / (Loss) 1,913 5,027 (7,071) (131) 2,412 729 (5,651) (2,510) 1,877 760 (14,346) (11,709)
Operating loss for the period is stated after charging / (crediting)
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
30-Sep 30-Sep 31-Mar
2021 2020 2021
£000 £000 £000
Research and development costs excluding salaries 123 192 406
Research and development tax credit (103) (133) (78)
Debtor provisions, impairment, and bad debts 299 58 639
Iona NX transition expense 170 281 767
Cloud ERP Services and Implementation costs 145 - 397
Genomic services UK cost 1,347 439 1,181
US market entry expense 329 64 316
Depreciation of property, plant, and equipment 733 414 1,023
Depreciation of right of use assets 422 249 698
Amortisation of intangible assets 940 645 1,526
Share-based payments (Options & SIP) expense 118 453 952
Taxation
Taxes on income in the interim periods are accrued using the rate of tax that
would be applicable to expected total annual earnings.
The research and development tax credit of £103k (30 Sept 2020: £133k; 31
March 2021: £78k) is shown as a deduction against general administrative
expenses.
Deferred tax liability of £2,260k (30 Sept 2020: £2,849k; 31 March 2021:
£2,173k) is recognised in respect of the intangible fixed assets acquired in
business combinations in March 2017, April 2019, and August 2020. The UK rate
of Corporation tax to 25% (effective from 1 April 2023) was substantively
enacted on 24 May 2021, as such any timing differences expected to reverse on
or after 1 April 2023 have been recognised at the higher rate of 25%. This
resulted in an increase to the deferred tax liabilities of £196k.
A deferred tax asset of £968k (30 Sept 2020: £1,064k; 31 March 2021 £823k)
has been recognised to offset the deferred tax liability arising on the
acquisition of Delta Diagnostics UK Ltd in April 2019 which should be
available to be sheltered by those losses. 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.
Earnings/Loss per share
Basic
Basic loss per share is calculated by dividing the loss for the period of
£237k (30 Sept 2020: loss £2,588k; 31 March 2021: loss £12,184k) by the
weighted average number of ordinary shares in issue during the period
723,439,822 (30 Sept 2020: 650,842,212; 31 March 2021: 685,643,605).
Diluted
Diluted earnings per share dilute the basic earnings per share to take into
account share options 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 and warrants into ordinary
shares. The adjusted weighted average number of ordinary shares used to
calculate diluted earnings / loss per share is 754,536,235 (30 Sept 2020:
681,646,876; 31 March 2021: 726,355,871).
28,439,443 options and warrants (30 Sept 2019: 26,759,443; 31 March 2021:
28,159,443) have been excluded from this calculation as the effect would be
anti-dilutive.
Acquisitions of Subsidiaries
Acquisition of Coastal Genomics Inc
During the period two further elements of consideration of US$1.0m each were
paid in April and August 2020 for early strategic customer wins, payable in
Yourgene Health Canada Investment Ltd ("YGEN-HCIL") shares, exchangeable for
shares in Yourgene Health Plc, and subject to lock-up periods of 12 months
except for specific circumstances.
Further consideration is payable under the terms of the acquisition as
follows:
· cash consideration of US$2.0m should Coastal Genomics generate
revenues of at least US$4.0m for the year ended 31 March 2022, which would
become payable in April 2022, or rolled over into the year ended 31 March
2023; and
· contingent cash consideration of US$4.0m should Coastal Genomics
generate revenues of at least US$8.5m in the financial year to 31 March 2023,
which would become payable in April 2023. The Group has deemed this a stretch
target which was not included in the fair value assessment at acquisition,
which is based on more cautious cashflows than would trigger this stretch
target payment. This consideration will either be earned or not and there is
no contractual provision for partial payment. As such, this amount is
disclosed as a contingent liability.
Acquisition of Yourgene Health SAS (formerly AGX-DPNI SAS)
In April 2021 the Company paid the final performance payment (earn-out) of
€977,500 to the former shareholders of AGX-DPNI SAS, a French distribution
company acquired on 9 March 2020. The performance payment was based on sales
volumes achieved in the French market. There are no further remaining
performance payments outstanding on the acquisition of AGX-DPNI SAS.
Share capital
During the period the company announced the issue of the following in
consideration for the acquisition of Coastal Genomics Inc:
· On 12 April 2021
o 81,899 new ordinary shares
o 4,696,065 new shares in the wholly owned subsidiary Yourgene Health Canada
Investments Ltd. These YGEN-HCIL shares are exchangeable on a one-for-one
basis with the Company's ordinary shares, subject to certain lock-in
provisions over the next one to six years.
· On 11 August 2021
o 85,124 new ordinary shares
o 4,880,971 new shares in the wholly owned subsidiary Yourgene Health Canada
Investments Ltd. These YGEN-HCIL shares are exchangeable on a one-for-one
basis with the Company's ordinary shares, subject to certain lock-in
provisions over the next one to six years.
On 17 June 2021 the Company announced the exercise of the following options:
· Options over 150,000 ordinary shares at a price of 10.25 pence, with
proceeds of £15k
· Options over 400,000 ordinary shares at a price of 10 pence, with
proceeds of £40k
Total shares in issue after these transactions is 723,780,306 ordinary shares
at the end of the reporting period and at the date of this report.
In addition, as a result of the issuance of the YGEN-HCIL shares detailed
above there are now a total of 19,826,660 unlisted YGEN-HCIL shares issued
which are exchangeable on a one-for-one basis for the Company's shares as
described above.
As at 30 September 2021 there are 59,459,232 outstanding options, of which
48,685,893 are exercisable. During the six month period to 30 September 2021;
550,000 options were exercised, 1,160,000 new options were options issued, and
2,410,000 options were forfeited.
Contingent liabilities
The Company has two contingent liabilities. The first arose as part of a
February 2019 capital restructure which created a £6.5 million liability,
payable to Thermo Fisher only in the event of a sale of the Company or an
insolvency event before February 2022. The second arose upon the August 2020
acquisition of Coastal Genomics Inc. The consideration for the acquisition of
Coastal Genomics included performance-based earn-out payments, the last of
which is a US$ 4 million payment in the event of the acquired company
achieving stretch target revenues of US$ 8.5 million in financial year
2022-23. This final payment is not included in the fair valuation of the
acquired company which is based on more conservative cashflows than would
trigger this final earn-out payment, and it is therefore regarded as a
contingent liability.
Events after the reporting period
For the purposes of the financial statements there have been no material
events after the reporting period end and the business has continued to trade
at run-rates consistent with those it achieved in the first six months of the
financial year.
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.
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