REG - Yourgene Health PLC - Half-year Results
Yourgene Health plc
("Yourgene", the "Company" or the "Group")
Half-year Results
Manchester, UK - 3 December 2018: Yourgene Health plc (AIM: YGEN), the international molecular diagnostics group which commercialises genetic products and services, announces its unaudited half-year results for the six months ended 30 September 2018.
Financial highlights
· Revenues increased by 45% to £3.9m (H1 2017-18: £2.7m)
· Gross profit up 49% to £2.0m (H1 2017-18: £1.3m)
· General administrative expenses down 4% to £4.4m (H1 2017-18: £4.5m)
o Expenses excluding depreciation and amortisation down to £3.8m (H1 2017-18: £4.1m)
o Further £1m annualised cost reduction being implemented
· Operating loss reduced by 46% to £2.5m (H1 2017-18: £4.7m)
· Loss before tax reduced by 30% to £3.5m (H1 2017-18: £4.9m)
· Cash used by operations reduced by 25% to £3.2m (H1 2017-18: £4.3m)
· Cash and cash equivalents at 30 September 2018 of £0.2m (31 March 2018: £0.3m)
· Post period-end, in October 2018, completed a £3.1m equity raise
Operational highlights
· Test volumes increased by 73% to 38,000 (H1 2017-18: 22,000)
· Entered into a legal settlement and licence agreement with Illumina, ending all patent litigation
o Development of the Illumina-based IONA® test progressing well and on schedule
· Appointment of Mr Lyn Rees as Chief Executive Officer
· Appointment of Mr Hayden Jeffreys as Group Commercial Director
· Significant commercial progress achieved, including:
o Continued to expand international footprint in both existing and new territories with laboratories added in Africa and Asia
o A 3-year agreement signed with one of India's leading diagnostics groups to offer mass-population non-invasive prenatal testing ("NIPT") screening
o Secured an agreement with Coastal Genomics to develop advanced technologies for clinical DNA sequencing tests
o Entered into a partnership with Abnova to collaborate on the development of next generation sequencing ("NGS") capabilities for single cell analysis
· Post period-end
o Announced a $1m collaboration agreement between Yourgene Bioscience and a leading clinical research organisation in Taiwan to deliver NGS testing in oncology
o Changed the Group's name to Yourgene Health plc, to reflect the Group's broadened product development ambitions and research service capabilities
Lyn Rees, Chief Executive Officer of Yourgene, commented:
"We are making excellent commercial progress, with revenues and test volumes up by 45% and 73% respectively in the first half, with costs and cash consumption reducing rapidly.
"We continued to grow our customer base successfully outside of the IP-restricted markets for NIPT in the period, and now have product and service sales in over 20 global territories. With market access now clear post the settlement with Illumina, we will look to broaden our international reach with a refreshed and upskilled commercial structure. As well as bringing new customers to the business, we are excited to rapidly expand existing markets such as India, the Middle East, Africa and South East Asia where the foundations for growth have been laid.
"We are also implementing a rapid reorientation of the business towards strategic growth drivers in line with my initial goals for the business, and I believe we now have a very significant opportunity ahead of us. I look forward to providing further updates as we leverage our redefined structure and industry leading technical capabilities to offer contract development services, develop our product portfolio and accelerate growth and geographic expansion."
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For more information, please contact:
Yourgene Health plc
Lyn Rees, Chief Executive Officer
Barry Hextall, Chief Financial Officer
Joanne Cross, Head of Marketing
Tel: +44 (0)161 667 1053
Cairn Financial Advisers LLP (NOMAD)
Liam Murray / James Caithie
Tel: +44 (0)20 7213 0880
finnCap (Broker)
Geoff Nash / Matthew Radley (Corporate Finance)
Tim Redfern (Corporate Broking)
Tel: +44 (0)20 7220 0500
Vigo Communications
Ben Simons / Fiona Henson / Antonia Pollock
Tel: +44 (0)20 7390 0238
About Yourgene Health
Yourgene Health is an international molecular diagnostics group which develops and commercialises genetic products and services. The group works in partnership with global leaders in DNA technology to advance diagnostic science.
Our product development, research service and commercial capabilities extend across the lifecycle of genetic test development including regulatory submissions.
Yourgene Health's first commercialised products are non-invasive prenatal tests (NIPT) for Down's syndrome and other genetic disorders, targeting a share of an emerging billion-dollar global market.
Prenatal screening is an established clinical practice, but accuracy challenges with traditional methods are driving the need for NIPT and other DNA-based reproductive health testing solutions. Yourgene Health's customer-focused products and services support all types of customer, irrespective of size, geography and market maturity. Our commercial footprint is already established in the UK, Europe, the Middle East, Africa and Asia.
Through our technical expertise and partnerships, Yourgene Health is aiming to extend its genetic testing offering into complementary areas of reproductive health and oncology.
Yourgene Health is headquartered in Manchester, UK with offices in Taipei and Singapore. For more information visit www.yourgene-health.com and follow us on twitter @Yourgene_Health.
CEO BUSINESS REVIEW
I am pleased to present Yourgene Health's interim results for the six months to 30 September 2018, which demonstrate substantial commercial progress. Revenues are up by 45% for the period, test numbers up by 73%, gross profits up by 49% and operating losses were down by 46% as we exited the long-running litigation.
We continued to grow our customer base outside of the IP-restricted markets for NIPT in the period, and now have product and service sales in over 20 global territories. With market access now clear post the settlement with Illumina, we will look to broaden our international reach with a refreshed and upskilled commercial structure. As well as bringing new customers to the business, we are excited to further penetrate existing markets such as India, the Middle East, Africa and South East Asia where the foundations have been laid to enable us to expand.
Our overarching goal is year-on-year profit improvement and we are making rapid progress on my initial goals for the business:
• We have moved to partnership models with both Illumina and Thermo Fisher as we become increasingly platform agnostic
• We have redefined the business structure to be focused on strategic growth drivers
• We have created a growth pipeline that can be tracked and monitored via a simple Programme Management Office (PMO) system
• We have implemented a structured product development pipeline to deliver above trend growth
• We are in the process of refreshing the culture alongside the corporate name change
Litigation settlement
In September 2018, we announced the settlement of all patent litigation with Illumina, Inc. and its co-claimants. Under the terms of the settlement and associated licence and supply partnership, Yourgene has taken a licence under Illumina's patent pool for NIPT and is now free to operate in countries where Illumina holds rights to relevant granted patents, including the countries of the European Patent Convention and selected other territories. Yourgene has a transition period during which it will modify the IONA® test in affected territories and will make a series of payments in full and final settlement of all ongoing UK litigation. The directors estimate that these payments will be no more than £1m.
We are putting significant effort into developing a version of the IONA® test that will run on Illumina sequencing technology, to be launched in early 2020. We are also working with our distributors and customers in the licensed territories to prepare for migration to the Illumina-based technology at the appropriate time. Once launched, Yourgene will pay Illumina a royalty per test using the IONA® test based on Illumina sequencing technology.
Thermo Fisher
Alongside the settlement and new partnership with Illumina, we have been working hard to maintain and strengthen our relationship with Thermo Fisher who remain a key partner to the Group. We now have a new partnership framework in place focusing on improved collaboration in open territories, we have improved communication on potential co-development opportunities and we are jointly reviewing the financial relationship to ensure it will help deliver future value for both parties.
Commercial progress
In the first half of the year, the Group has made significant progress in expanding its international customer base and penetrating new markets as well as developing strategic partnerships through which to collaborate on product development and accelerate market penetration.
H1
2018-19% of total
H1
2017-18% of total
Growth
£
£
%
Revenue analysed by geographical market
UK
633,052
16%
512,489
19%
+24%
Europe
715,832
18%
506,244
19%
+41%
International
2,591,084
66%
1,694,677
62%
+53%
3,939,968
100%
2,713,409
100%
+45%
In May 2018, we announced the addition of two new laboratory hubs, one in Kenya and the other in India. Kenya is a new country entry for Yourgene and the Group signed an agreement with Massive Genomics, part of the Nairobi IVF centre in Kenya, to establish a dedicated NIPT centre, with the intention to offer NIPT to each of the c. 5,000 women who visit the centre each year. In addition, as the only laboratory in the region capable of processing NIPT in-house, there is potential for Massive Genomics and Yourgene to broaden its scope into other east African countries with which the centre has relations, such as Uganda, Botswana and Tanzania.
NIPT is in the early phase of development in India but, with over 26 million births per annum, and increasing awareness of the benefits of NIPT, Yourgene expects India will be a key growth market. In addition to the new laboratory, we also announced in June 2018 that we have secured a 3-year agreement with one of the most advanced clinical laboratory groups in India. The agreement is to provide a bespoke, high quality and scalable NIPT solution for the Indian market with Yourgene developing a bespoke NIPT screening system for this partner.
The Group also signed an agreement in the period with Coastal Genomics, a biotechnology engineering firm based in Vancouver, Canada, to develop advanced technologies for clinical DNA sequencing tests. Under the agreement, Coastal Genomics is working with Yourgene to develop customised advanced technologies to enhance Yourgene's in vitro diagnostic product portfolio.
Furthermore, in June 2018, Yourgene announced that it had entered into a partnership with Abnova, the world's largest monoclonal antibody manufacturer, to collaborate on the development of NGS capabilities for single cell analysis. Yourgene and Abnova are working together in order to accelerate the adoption of a laboratory-developed single cell test by integrating their respective systems and developing the applications for in vitro diagnostics, as well as commercialising the test for the cancer and prenatal markets.
Finally, post period-end, the Group's Yourgene Bioscience division entered into a collaboration agreement, worth an initial $1m revenue to Yourgene, with a leading clinical research organisation in Taiwan to deliver NGS testing in oncology, with further project phases anticipated in the future.
Financial position
The Group's results for the six months to 30 September 2018 are presented in the financial statements and show gross profits having increased by 49% to £2.0m (H1 2017-18: £1.3m), due to the roll-out of lower cost product variants and increasing sales of products without margin dilutive sequencing reagents. Downward pressure on costs led to a decrease of 4% in general administrative expenses to £4.4m (H1 2017-18: £4.5m) before separately disclosed items. Total administrative expenses were down 25% to £4.5m (H1 2017-18: £6.0m) reflecting significantly lower litigation-related expenses. A cost review is underway and annualised savings of c.£1m are being implemented by the end of the current financial year, moving the Group significantly closer to its goal of profitability. Financing expenses increased to £0.9m (H1 2017-18: £0.3m; 31 March 2018 £1.0m) reflecting interest arising on Thermo Fisher loans and £0.3m arising from the period end revaluation of their loan tranche denominated in US Dollars.
The total comprehensive loss for the period reduced by 32% to £3.4m (H1 2017-18: £5.0m). Loss per share was £0.01 (H1 2017-18: £0.02).
In the reporting period, the Group used £3.2m cash for operating activities (H1 2017-18: £4.3m). Net proceeds from financing activities were £2.8m (H1 2017-18: £4.7m) from an equity issue in May 2018. Cash at the end of the period was £0.2m (31 March 2018: £0.3m), with £0.5m R&D tax credits anticipated in H2. The Group completed a further equity raise for £3.1m in October 2018 and remains focused on driving revenues, improving margins, reducing costs and effectively managing working capital in order to achieve positive cashflows.
If revenues fail to grow at the anticipated pace, there could be lower cash headroom or even a cash shortfall. In this situation, the Group will need to seek additional funding through its existing funders, the London capital markets or potentially through Asian investors now that the Group is more balanced to that region. The directors have not yet sought to raise additional funding and therefore the availability of this in the future is inherently uncertain.
Outlook
All of Yourgene's major commercial territories delivered growth in the last six months and we expect this to continue as adoption rates for NIPT increase globally. We also expect to announce further progress, including adding global partnerships, as we remain focused on delivering against our key strategic priorities. These include:
· developing and commercialising genetic products and services that positively impact human health;
· driving worldwide sales of the Group's NIPT products and services by targeting further expansion through direct and key distribution channels to expand the geographic footprint;
· continuing to offer highly customer-focused NIPT products and services which support all types of customer - irrespective of size, geography and market maturity - in partnership with leading DNA technology providers;
· leveraging the Group's technical and regulatory expertise and partnerships to extend its genetic testing offering into complementary areas of reproductive health and oncology, both with owned intellectual property and as a third-party collaborator; and
· supporting diagnostic majors and bioinformatics specialists with in vitro diagnostic product contract development partnerships.
Following the success of the Yourgene Bioscience acquisition in 2017, the Group continues to consider additional selective synergistic M&A opportunities. The market is fragmented with minimal medium-sized entities, which presents an opportunity for market consolidation, especially where new products and customers can be acquired into the Group. I believe we now have a very significant opportunity ahead of us and I look forward to providing further updates on our progress.
Lyn Rees
Chief Executive Officer
3 December 2018
Consolidated statement of comprehensive income
Unaudited
Unaudited
Audited
6 months to
6 months to
12 months to
30-Sep
30-Sep
31-Mar
2018
2017
2018
£
£
£
Revenue
3,939,969
2,713,409
6,146,863
Cost of sales
(1,987,327)
(1,405,220)
(2,973,730)
Gross profit
1,952,642
1,308,189
3,173,133
Other operating income
20,544
16,548
28,350
Administrative expenses
General administrative expenses
(4,384,401)
(4,548,899)
(8,956,324)
Litigation expenses
-
(1,299,609)
(2,692,556)
Share-based payments and warrant expenses
(126,698)
(170,843)
(144,247)
Costs associated with the acquisition of subsidiary
-
-
(10,084)
Total administrative expenses
(4,511,099)
(6,019,351)
(11,803,211)
Operating loss
(2,537,913)
(4,694,614)
(8,601,728)
Financing income
17,935
18,177
45,264
Financing expenses
(936,356)
(253,405)
(981,979)
Loss on ordinary activities before taxation
(3,456,334)
(4,929,842)
(9,538,443)
Tax credit on loss on ordinary activities
14,893
16,746
55,516
Loss for the period
(3,441,441)
(4,913,096)
(9,482,927)
Other comprehensive expense
Exchange translation differences
15,272
(107,537)
(121,096)
Loss and total comprehensive loss for the period
(3,426,169)
(5,020,633)
(9,604,023)
Loss per share (£)
Basic
0.01
0.02
0.03
Diluted
0.01
0.02
0.03
Consolidated statement of financial position
Unaudited
Unaudited
Audited
30-Sep
30-Sep
31-Mar
2018
2017
2018
£
£
£
Assets
Non-current assets
Goodwill
7,014,447
7,014,447
7,014,447
Intangible assets
1,306,544
1,461,776
1,384,160
Property, plant and equipment
1,533,925
2,414,815
1,919,406
Total non-current assets
9,854,916
10,891,038
10,318,013
Current assets
Inventories
427,880
323,937
276,766
Other short-term assets
63,820
-
475,385
Trade and other receivables
2,271,404
3,321,574
2,075,301
Tax asset
760,628
919,550
1,158,765
Cash and cash equivalents
225,581
1,594,519
282,432
Total current assets
3,749,313
6,159,580
4,268,649
Total assets
13,604,229
17,050,618
14,586,662
Equity and liabilities attributable to equity holders of the company
Equity
Called up share capital
32,922,440
32,266,188
32,266,188
Share premium account
30,719,094
28,482,061
28,482,061
Merger relief reserve
10,012,644
10,012,644
10,012,644
Reverse acquisition reserve
(39,947,033)
(39,947,033)
(39,947,033)
Foreign exchange translation reserve
(164,188)
(165,901)
(179,460)
Warrants reserve
4,085,546
4,123,559
4,085,546
Retained losses
(40,633,502)
(32,722,331)
(37,318,758)
Total equity
(3,004,999)
2,049,187
(2,598,812)
Current liabilities
Trade and other payables
2,819,183
4,802,207
3,792,112
Current tax liabilities
9,285
-
9,487
Borrowings
88,095
38,665
59,344
Provisions
335,733
1,769,794
780,000
Total current liabilities
3,252,296
6,610,666
4,640,943
Non-current liabilities
Borrowings
12,907,310
8,113,028
12,098,883
Deferred tax liability
248,243
277,737
262,990
Long term provisions
201,380
-
182,658
Total non-current liabilities
13,356,933
8,390,765
12,544,531
Total equity and liabilities
13,604,230
17,050,618
14,586,662
Statement of changes in equity
Share capital
Share premium account
Merger relief reserve
Warrants reserve
Reverse acquisition reserve
Currency translation reserve
Retained losses
Total
£
£
£
£
£
£
£
£
Six months ended 30 September 2017 (unaudited)
Balance at 1 April 2017
32,266,188
28,482,061
10,012,644
3,069,382
(39,947,033)
(58,364)
(27,980,078)
5,844,800
Loss for the year
-
-
-
-
-
-
(4,913,096)
(4,913,096)
Other comprehensive loss
-
-
-
-
-
(107,537)
-
(107,537)
Total comprehensive loss for the period
-
-
-
-
-
(107,537)
(4,913,096)
(5,020,633)
Transactions with owners
Share-based payments
-
-
-
-
-
-
170,843
170,843
Warrants issued
-
-
-
1,054,177
-
-
-
1,054,177
Total transactions with owners
-
-
-
1,054,177
-
-
170,843
1,225,020
Balance at 30 September 2017
32,266,188
28,482,061
10,012,644
4,123,559
(39,947,033)
(165,901)
(32,722,331)
2,049,187
Share capital
Share premium account
Merger relief reserve
Warrants reserve
Reverse acquisition reserve
Currency translation reserve
Retained losses
Total
£
£
£
£
£
£
£
£
12 months ended 31 March 2018 (audited)
Balance at 1 April 2017
32,266,188
28,482,061
10,012,644
3,069,382
(39,947,033)
(58,364)
(27,980,078)
5,844,800
Loss for the year
-
-
-
-
-
-
(9,482,927)
(9,482,927)
Other comprehensive loss
-
-
-
-
-
(121,096)
-
(121,096)
Total comprehensive loss for the year
-
-
-
-
-
(121,096)
(9,482,927)
(9,604,023)
Transactions with owners
Issue of share capital - other
-
Share issue expenses
-
Issue of share capital on acquisition
-
Share-based payments
-
-
-
-
-
-
144,247
144,247
Warrants issued
-
-
-
1,016,164
-
-
-
1,016,164
Total transactions with owners
-
-
-
1,016,164
-
-
144,247
1,160,411
Balance at 31 March 2018
32,266,188
28,482,061
10,012,644
4,085,546
(39,947,033)
(179,460)
(37,318,758)
(2,598,812)
Share capital
Share premium account
Merger relief reserve
Warrants reserve
Reverse acquisition reserve
Currency translation reserve
Retained losses
Total
£
£
£
£
£
£
£
£
Six months ended 30 September 2018 (unaudited)
Balance at 1 April 2018
32,266,188
28,482,061
10,012,644
4,085,546
(39,947,033)
(179,460)
(37,318,758)
(2,598,812)
Loss for the period
(3,441,441)
(3,441,441)
Other comprehensive Gain
15,272
15,272
Total comprehensive loss for the period
-
-
-
-
-
15,272
(3,441,441)
(3,426,169)
Transactions with owners
Issue of share capital
656,252
2,296,883
2,953,135
Share issue expenses
(59,851)
(59,851)
Share-based payments
126,698
126,698
Warrants issued
-
Total transactions with owners
656,252
2,237,032
-
-
-
-
126,698
3,019,982
Balance at 30 September 2018
32,922,440
30,719,093
10,012,644
4,085,546
(39,947,033)
(164,188)
(40,633,501)
(3,004,999)
Consolidated statement of cash flows
Unaudited
Unaudited
Audited
6 months to
6 months to
12 months to
30-Sep
30-Sep
31-Mar
2018
2017
2018
£
£
£
Cash flows from operating activities
Loss for the period after tax
(3,441,441)
(4,913,096)
(9,482,927)
Adjustments for:
Taxation (credited)/charged
(14,893)
(16,746)
(55,516)
Finance costs
669,604
253,405
981,979
Investment income
(17,935)
(18,177)
(45,264)
Depreciation and impairment of property, plant and equipment
478,595
535,434
1,046,951
Amortisation of intangible non-current assets
77,616
77,616
155,232
Loss on disposal of property, plant and equipment
-
15,486
16,293
Foreign exchange movements
251,944
19,045
(357,127)
Share based payment and warrant expense
126,698
170,843
144,247
Decrease in provisions
(425,545)
(1,726,161)
(2,533,298)
Movements in working capital:
(Increase)/decrease in inventories
(151,114)
103,988
151,159
(Increase)/decrease in trade and other receivables
(204,135)
(290,948)
137,961
(Decrease)/increase in trade and other payables
(972,929)
1,304,301
301,843
Decrease/(increase) in tax asset
398,137
181,795
(57,420)
Cash used by operations
(3,225,398)
(4,303,215)
(9,595,887)
Tax (received)/paid
(56)
(459)
25,413
Investing activities
Purchase of property, plant and equipment
(70,883)
(135,868)
(163,268)
Proceeds on disposal of property, plant and equipment
-
-
4,500
Reduction/(investment) in short-term financial assets
411,565
-
(475,385)
Interest received
470
1,701
-
Net cash generated from/(used in) investing activities
341,152
(134,167)
(634,153)
Financing activities
Net proceeds from issue of shares
2,893,284
-
-
Proceeds from borrowings
128,992
4,852,184
9,388,732
Repayment of borrowings
(190,182)
(111,520)
(185,922)
Interest paid
(4,643)
(8,971)
(16,418)
Net cash generated from financing activities
2,827,451
4,731,693
9,186,392
Net (decrease)/increase in cash and cash equivalents
(56,851)
293,852
(1,018,235)
Cash and cash equivalents at beginning of period
282,432
1,300,667
1,300,667
Cash and cash equivalents at end of period
225,581
1,594,519
282,432
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 research into, and the development and commercialisation of gene analysis techniques for pre-natal screening and other clinical applications in 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 Enterprise House, Lloyd Street North, Manchester Science Park, Manchester, M15 6SE. 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 2018 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 30 November 2018.
The Group's financial statements for the period ended 31 March 2018 have been filed with the Registrar of Companies. The Group's 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 2018 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. Copies can also be requested from; The Company Secretary, Yourgene Health plc, Enterprise House, Lloyd Street North, Manchester Science Park, Manchester M15 6SE or by email: 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 European Union 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 2019. These are consistent with the accounting policies used in the Financial Statements for the year ended 31 March 2018, except that IFRS 15 Revenue from Contracts with Customers, is now effective for the annual reporting period ending on 31 March 2019. The IFRS15 standard, which replaces IAS 18, covering contracts for goods and services and IAS 11, covering construction contracts, addresses the recognition of revenue. The new standard is based on the principle that revenue is recognised to depict the satisfaction of performance obligations stated explicitly or implied in customer contracts in amounts that reflect the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group has adopted the new standard as at 1 April 2018 and apply the modified retrospective approach. Comparatives for the year ended 31 March 2018 have not been restated and the cumulative impact of adoption will be recognised in retained losses as at 1 April 2018, although this expected to not be material.
The Group do not believe there will be any material profit impact arising from the application of IFRS15. There will be no cash flow impact from the adoption of IFRS15. This review is still ongoing and the Group continues to assess the impact of IFRS 15 prior to its full adoption in the audited 2019 accounts.
Going concern
In their assessment of the Group's and Company's ability to continue as a going concern, the directors have focused on the implications of the recently settled patent infringement legal cases, the rate of growth of revenue, decisions available to them for management of the cost base of the Group and the potential for future fundraising. A £3.1m fundraising round was successfully completed in October 2018. The new CEO is currently leading a strategic planning process which is due to deliver a revised business plan in the coming months, when the directors anticipate that further fundraising will be required to support the execution of that growth strategy and also to ensure sufficient liquidity for the business. The directors are confident that this can be achieved due to their strong track record of successful fundraisings and their understanding of current levels of investor interest, along with the new management team and the ongoing support of investors now that the litigation risks have been resolved.
The Group continues to make progress towards achieving positive cashflows through growth in revenues. The Group has however reported a loss for the period; which reflects that break-even levels of revenues have not yet been reached. The Group's forecasts include assumptions of further growth in revenue; which are key in achieving positive cashflows. The directors have also assessed the Group's and Company's cost structure following the settlement with Illumina, and are implementing plans to reduce costs to shorten the time to breakeven.
There is an ongoing commitment to keep costs and working capital under control so that increasing gross profits can drive positive cashflows. Detailed sensitivity analysis has been performed to assess the potential impact on the Group's liquidity caused by 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 or even a cash shortfall. In this situation, the Group and Company will need to secure additional finance through alternative means. The directors have concluded that the combination of these circumstances represent a material uncertainty that, if they were to transpire adversely, may cast significant doubt upon the Group's and Company's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the ordinary course of business. Nevertheless, after making enquiries, and considering the uncertainties described above and mitigation strategies in place, the directors have a reasonable expectation that the Group and the 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
Unaudited
Unaudited
Audited
6 months to
6 months to
12 months to
30-Sep-2018
30-Sep-2017
31-Mar-2018
£
£
£
Turnover
Sale of goods
2,532,381
1,499,592
3,554,048
Rendering of services
1,407,587
1,213,818
2,592,815
3,939,968
2,713,410
6,146,863
Revenue analysed by geographical market
UK
633,052
512,489
1,014,723
Europe
715,832
506,244
1,213,773
International
2,591,084
1,694,677
3,918,367
3,939,968
2,713,410
6,146,863
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
2018
2017
2018
£
£
£
Research and development costs
219,601
353,621
501,438
Research and development tax credit
(212,000)
(405,687)
(628,688)
Depreciation of property, plant and equipment
478,595
535,412
1,046,951
Loss on disposal of property, plant and equipment
-
16,293
16,293
Amortisation of non-current intangible assets
77,616
77,616
155,232
Revaluation of foreign currency denominated loan*
-
(117,567)
(302,596)
* Revaluation of the US Dollar tranche of loans from Life Technologies for the period to 30 September 2018 is shown as a finance expense of £266,752, previously classified as foreign exchange revaluations within General Administrative Expenses as shown above.
Taxation
Taxes on income in the interim periods are accrued using the rate of tax that would be applicable to expected total annual earnings.
Unaudited
Unaudited
Audited
6 months to
6 months to
12 months to
30-Sep
30-Sep
31-Mar
2018
2017
2018
£
£
£
Current tax
UK corporation tax on profits for the current period
-
-
-
Foreign corporation tax on profits for the current period
(146)
459
(23,564)
Deferred tax
Origination and reversal of temporary differences
(14,747)
(17,205)
(31,952)
Total tax (credit)
(14,893)
(16,746)
(55,516)
The research and development tax credit of £212,000 (H1 2017-18: £405,687; 31 March 18: £628,688) is shown as a deduction against general administrative expenses. Deferred tax of £248,243 (31 March 18: £262,990) is recognised in respect of the intangible fixed assets acquired in a business combination in March 2017.
Loss per share
Basic
Basic loss per share is calculated by dividing the total comprehensive loss for the period of £3,426,169 (H1 2017-18: £5,020,633; 31 March 18: loss £9,604,023) by the weighted average number of ordinary shares in issue during the period 369,988,952 (H1 2017-18: 321,218,709; 31 March: 321,218,709).
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. 150,606,885 options and warrants (31 March 18: 131,206,885) have been excluded from this calculation as the effect would be anti-dilutive.
Provisions
On 14 September 2018, the Company announced the settlement of all ongoing patent litigation with Illumina Inc ("Illumina"). With respect to the litigation, the Group recognised a provision in the financial statements to 31 March 2018 of £780,000 for expected costs in respect of this litigation up to and including the anticipated settlement. Costs of £444,267 have been incurred against the provision in the reporting period and the provision as at 30 September 2018 totals £335,733. It is anticipated that the provision will be fully utilised, with any unused sums released, before the end of the current financial year.
Interest bearing loans and borrowings
A secured loan facility was provided by Life Technologies Corporation (part of the Thermo Fisher Scientific group) in December 2015 and this was subsequently extended by additional facilities in September 2016, July 2017 and January 2018. As at 31 March 2018, there was £149,375 remaining to be drawn down from this facility. During the period an additional £128,992 was drawn down, and £125,345 was returned to LTC to complete the use of these facilities. These loans are secured by way of fixed and floating charges over intellectual property of the Group, and over the shares held in Yourgene Bioscience Co Ltd, Taiwan. These loans are accruing interest at 6% per annum and are repayable in 2023, unless corresponding warrants are converted to reduce the loan balances outstanding. Loan movements and loans outstanding are shown in the table below.
Unaudited
Unaudited
Audited
6 months to
6 months to
12 months to
30-Sep
30-Sep
31-Mar
2018
2017
2018
£
£
£
Thermo Fisher Scientific Loan
Fair Value brought Forward
11,727,983
3,813,464
3,813,464
Amounts drawn down in period
128,992
4,969,752
9,388,732
Amounts repaid in period
(125,345)
-
-
USD loan revaluation
266,752
(117,568)
(302,596)
Interest charges in period
475,790
244,434
628,310
Accretion charges in period
189,172
-
338,876
Commitment Fee released
(33,346)
(1,263,035)
(2,138,803)
Carrying Value
12,629,998
7,647,047
11,727,983
Share capital
On 15 May 2018, the Company announced completion of a fundraising of £2.5m via the issuance of 55,527,784 new ordinary shares and the satisfaction of £0.5m liabilities, owed principally to directors of the Company, via the issuance of a further 10,097,460 new ordinary shares. The combined total of 65,625,244 new Ordinary Shares were issued at 4.5 pence per share and rank pari passu with all previously existing ordinary shares.
Events after the reporting period
After the reporting period end, in October 2018, the Company completed a fundraising of £3.1m via the issuance of 30,800,000 new ordinary shares to investors and other subscribers including certain company directors. The new Ordinary Shares were issued at 10 pence per share and rank pari passu with the existing ordinary shares. None of the ordinary shares are held in treasury. The Company now has 417,643,523 ordinary shares in issue.
Also, after the reporting period-end the Company obtained shareholder approval for a name change to Yourgene Health plc (formerly Premaitha Health plc), and separately announced the resignation of Mr Peter Collins and the appointment of Mr Hayden Jeffreys as a director of the Company.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR DDBDBRDXBGIG
Recent news on Yourgene Health
See all newsREG - Velay Financial - Form 8.3 - YOURGENE HEALTH PLC
AnnouncementREG - AIM Yourgene Health PLC - Cancellation - Yourgene Health plc
AnnouncementREG - Yourgene Health PLC - De-listing and cancellation of trading of Shares
AnnouncementREG - Takeover Panel - Disclosure Table
AnnouncementREG - Takeover Panel - Disclosure Table
Announcement