Novacyt
S.A.
("Novacyt", the "Company" or
the "Group")
Full Year 2023 results
Integration of Yourgene Health remains
on track
Laying the foundations for future
growth
Paris,
France, and Eastleigh and Manchester, UK - 30 May 2024
- Novacyt S.A. (EURONEXT GROWTH: ALNOV; AIM:
NCYT), an international molecular diagnostics company with a broad
portfolio of integrated technologies and services, announces its
audited results for the year ended 31 December 2023.
The results include almost four months' trading
of Yourgene Health Limited (formerly plc) ("Yourgene") following
its acquisition by the Group, which completed on 8 September
2023.
Operational Highlights (including post year-end and Yourgene
2023 activities pre-acquisition)
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Completed the strategic
acquisition of Yourgene, significantly enhancing Novacyt's global
diagnostics business, adding scale and diversification
to accelerate long-term growth.
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Lyn Rees and John Brown CBE joined
the Novacyt Board as Executive and Non-Executive
Director respectively.
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Lyn Rees appointed Chief Executive Officer
following a six-year tenure as CEO of Yourgene Health plc,
bringing over 28 years' global healthcare leadership and
commercial experience.
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Steve Gibson appointed CFO, and to join the
Board along with Dr Jo Mason, CSO, subject to shareholder
approval.
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IVDR certification:
received first IVDR accreditation for the
Yourgene DPYD genotyping assay for chemotoxicity in chemotherapy
patients; submitted application for Cystic Fibrosis
quantitative fluorescence PCR (QF-PCR) test.
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Yourgene became a compatible
partner of PacBio, a leading global developer of sequencing
technology, supporting the use of the LightBench™ instrument
(Ranger® Technology) to its
global customer base.
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Yourgene launched MagBench™
automated DNA extraction platform for NIPT workflows in
Asia-Pacific and the Middle East.
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Launch of the Primer Design Co-Prep
ES instrument, providing automated DNA and RNA extraction using
Primer Design assays, for use in multiple applications.
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Primer Design launched a range of
"complete" assays, including customised mastermix reagent for RUO
customers.
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Financial Highlights
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Acquired the AIM-listed company Yourgene and
its subsidiaries for an all-cash consideration of £16.7m on 8
September 2023.
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Group statutory revenue for FY2023 was £11.6m,
in line with guidance, of which £0.6m relates to COVID-19 (FY2022*:
£21.0m, of which £14.7m related to COVID-19).
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Group statutory revenue for the non-COVID-19
portfolio of £11.0m represents circa 95% of total revenue (FY2022*:
£6.3m).
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Group gross profit totalled £3.7m (32%) in
FY2023 (FY2022: £5.7m (27%)). This was reduced predominantly as a
result of providing for all remaining COVID-19 associated stock, in
addition to writing off stock that had not been provided for
previously. Excluding the impact of these items, the Group gross
profit margin would be in excess of 60%.
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Group EBITDA loss in FY2023 totalled £13.7m
before exceptional items (FY2022: £13.5m loss).
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Loss after tax increased to £28.3m in FY2023
(FY2022: £25.7m loss).
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Completed cost savings actions that will
deliver over £4.0m of bottom-line improvement, the Group is
tracking ahead of schedule on the targeted synergies to be achieved
from the Yourgene acquisition.
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Cash position at 31 December 2023 was £44.1m
(2022: £87.0m), reflecting the cash consideration and associated
costs of the acquisition of Yourgene. The Group remains debt
free.
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*excludes any Yourgene revenue as
pre-acquisition
Commenting on the results Lyn Rees, CEO of Novacyt,
said: "2023 was a transitional year
for Novacyt, during which the Group completed the acquisition of
Yourgene, a significant milestone that has enhanced our global
diagnostics capabilities, diversified our product portfolio and
increased the scale of our non-COVID-19 revenues.
"We continue to focus all efforts
towards working as a single business so that the reorganisation of the Group and the
resulting synergies will leave us well placed to deliver future
growth. We remain focused on driving the global sales of our key
clinical and instrumentation products, while also rebuilding our
RUO business. The Board believes that investment in R&D
combined with our commercial strength is key to achieving long-term
growth and we are increasingly well-placed to execute our business
strategy."
Contacts
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Novacyt SA
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https://novacyt.com/investors
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Lyn Rees, Chief Executive
Officer
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Via Walbrook PR
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Steve Gibson, Chief Financial
Officer
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SP Angel Corporate Finance LLP (Nominated Adviser and
Broker)
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+44
(0)20 3470 0470
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Matthew Johnson / Charlie Bouverat
(Corporate Finance)
Vadim Alexandre / Rob Rees
(Corporate Broking)
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Deutsche Numis (Joint
Broker)
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+44
(0)20 7260 1000
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Freddie Barnfield / Duncan
Monteith / Michael Palser
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Allegra Finance (French Listing Sponsor)
Rémi Durgetto / Yannick Petit
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+33 (1) 42 22 10 10
r.durgetto@allegrafinance.com
/ y.petit@allegrafinance.com
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Walbrook PR
(Financial PR & IR)
Stephanie Cuthbert / Paul McManus /
Phillip Marriage / Alice Woodings
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+44 (0)20 7933 8780
or novacyt@walbrookpr.com
+44 (0)7796 794 663
/ +44 (0)7980 541 893
+44 (0)7867
984 082 / +44 (0)7407 804 654
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About Novacyt
Group (www.novacyt.com)
Novacyt is an international
molecular diagnostics company providing a broad portfolio of
integrated technologies and services, primarily focused on the
delivery of genomic medicine. The Company develops,
manufactures, and commercialises a range of molecular assays
and instrumentation to deliver workflows and services that enable
seamless end-to-end solutions from sample to result across multiple
sectors including human health, animal health and
environmental.
The Company is divided into three business
segments:
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Clinical
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Broad portfolio of human clinical in vitro diagnostic products,
workflows and services focused on three therapeutic
areas:
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Reproductive Health: NIPT, Cystic Fibrosis and other rapid
aneuploidy tests
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Precision Medicine: DPYD genotyping assay
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Infectious Diseases: Winterplex, multiplex winter
respiratory PCR panel
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Instrumentation
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Portfolio of next generation size selection
DNA sample preparation platforms and rapid PCR machines,
including:
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Ranger® Technology: automated DNA sample preparation and
target enrichment technology
MyGo: real-time quantitative PCR (qPCR)
instruments
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Research Use
Only
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Range of services for the life sciences
industry:
· Design,
manufacture, and supply of high-performance qPCR assays and
workflows for use in human health, agriculture, veterinary and
environmental, to support global health organisations and the
research industry
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Pharmaceutical research services: whole genome sequencing (WGS) /
whole exome sequencing (WES)
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Novacyt is headquartered in
Vélizy-Villacoublay in France with offices in the UK (in Stokesley,
Eastleigh and Manchester), Taipei, Singapore, the US and Canada and
has a commercial presence in over 65 countries. The Company is
listed on the London Stock Exchange's AIM market ("NCYT") and on
the Paris Stock Exchange Euronext Growth ("ALNOV").
For more information, please refer to the
website: www.novacyt.com
Chief Executive's
review
2023 represented a transitional
year for Novacyt, as we continued to diversify the business away
from COVID-19. In September 2023, the Group completed the
acquisition of Yourgene, which represented a significant milestone
that enhanced and diversified our portfolio. We are now working as
one integrated global diagnostics business, benefitting from
initial synergies between the combined entities, and are focused on
investing to further leverage these and achieve long-term,
sustainable growth for the Group.
Yourgene acquisition and
integration
Following the strategic acquisition
of Yourgene, the Group now has a broader technology portfolio, with
a stronger end-to-end customer offering, enhanced routes to market
in Europe, Asia and the Americas, expanded skills and expertise in
our R&D and commercial teams, and a rationalised, high quality
distribution network to drive growth and maximise
efficiencies.
We have successfully completed the
integration of all key operational departments including R&D
and sales, combining complementary skills in molecular biology and
instrumentation and our commercial teams have full access to the
wider product portfolio to address customer needs. We have also
streamlined support functions, such as finance, regulatory and
other back-office activities to remove duplicate corporate
functions.
As part of this process, the Group
has been reorganised into three business segments: Clinical,
Instrumentation and Research Use Only ("RUO"). This has transferred
the development and commercialisation of all clinical products to
Yourgene, enabling Primer Design to focus on its core flagship
offering of developing RUO assays. The IT-IS business is continuing
its focus on real-time quantitative PCR instrumentation and is
adding complementary technical and engineering expertise to support
growth in the Ranger® Technology products.
With the strengthened expertise of
the combined leadership team, we are continuing to evaluate our
portfolio and product mix, identifying those products that will
benefit most from further investment. With the strength of our
balance sheet, I am confident we will be able to accelerate growth
in areas with highest potential, particularly NIPT,
Ranger® Technology and
Precision Medicine.
The Yourgene acquisition business
case assumed £5.0m of annualised cost synergies would be achieved
by year three of the integration, with circa £2.5m of investment
required to achieve those savings. We announced in our January
trading update that the Group is tracking substantially ahead of
this target with 80% of the annualised savings realised at the end
of 2023 and we are on track to deliver the balance by the end of
2024. The main savings delivered thus far coming from the refocus
of the Primer Design business on the RUO market, the elimination of
duplicate corporate functions and streamlining of
management.
Portfolio
update
1)
Clinical
The Clinical business is focused on three key
therapeutic areas, Reproductive Health, Precision Medicine and
Infectious Diseases, which each represent large and growing
addressable market opportunities. We continue to drive sales of
these products in our core markets in Europe, Asia and some key
regions in the Americas.
Obtaining certification for our clinical
products under the new EU requirements of the In Vitro Diagnostic Regulation
("IVDR") remains a key priority for the Group. We received our
first IVDR certification in November 2023, with the Yourgene® DPYD
genotyping assay, an important test for oncology treatment,
which identifies cancer patients at risk of suffering a severe, and
potentially life-threatening, reaction to common
chemotherapy. In December 2023, the Company submitted the
application for its Cystic Fibrosis quantitative fluorescence PCR
(QF-PCR) test, which is used for newborn screening as well as
carrier screening in adults during family planning.
Reproductive
Health
We saw encouraging growth in our Reproductive
Health business, with the addition of several new non-invasive
prenatal testing ("NIPT") laboratory customers across Europe,
Columbia, Uzbekistan, India, UK and Taiwan. With the
NIPT market expected to reach $5.71 billion by 2028, we are
well positioned to meet the growing global demand for accurate and
reliable NIPT workflows as an increasing number of laboratories
offer NIPT testing internationally.
We have continued to see strong growth in
India, which is a major market for Yourgene's
Sage™ 32 and 12 NIPT
workflows. To support this in September, the Company launched
MagBench™ in Asia-Pacific and the Middle East. MagBench™ is an
automated DNA extraction platform optimised for the Sage 32 NIPT
Workflow, which enables simple, fast, and cost-efficient, bench-top
robotic, cell-free DNA (cfDNA) extraction.
The Group also saw strong growth in its cystic
fibrosis portfolio in Australia in Q4 2023, following the
introduction of a new nationwide reimbursement pathway by the
Australian government that enables all eligible Australians to
receive cystic fibrosis screening either prior to, or early in
pregnancy, and have seen this momentum continue into
2024.
Precision
Medicine
Over two million cancer patients globally are
treated with fluoropyrimidines (including 5-FU) each year; 10-30%
of these patients suffer severe, and sometimes fatal, side effects
associated with DPD deficiency. Our DPYD genotyping assay can
identify patients with this deficiency, and we are seeing increased
adoption being driven by government reimbursement programmes and
the introduction of DPYD screening into cancer care clinical
pathways. We are seeing growth across UK, Ireland and Europe and in
Canada where new customers are starting to screen for DPYD as part
of a province roll-out with reimbursement in Ontario and other
regions are expected to follow.
Infectious
diseases
The Group launched its CE marked winter
respiratory panel, genesig™ Real-time PCR SARS-CoV-2 Winterplex,
before the cold winter season in the UK and has had a steady uptake
with a number of NHS customers. However, given the considerable
financial and staff resource required to advance a product to IVDR,
we will monitor clinical demand over the coming winter to evaluate
the opportunity and the investment required to progress the
test.
As part of our portfolio evaluation, we have
deprioritised the clinical development of the nine new genesig™
multiplex products. These products are currently available for
research use only and we are seeing steady interest from our
growing RUO customer base.
2)
Instrumentation
Our instrumentation offering has been
significantly enhanced by the addition of Ranger® Technology,
Yourgene's automated DNA sample preparation and target enrichment
technology, which provides better performance and
improved workflows in multiple applications including NIPT, oncology, infectious disease testing and gene
synthesis. We see opportunities for
Ranger® across multiple markets, as it addresses
key industry problems such as sample preparation and purity, can
meet high volume requirements in markets such as gene synthesis,
and has proven capability with multiple gene sequencing
platforms.
The team has continued to drive new
opportunities for Ranger® across new
human and non-human applications. In November 2023, Yourgene became
a compatible partner of PacBio, a leading developer of
high-quality, highly accurate sequencing solutions with a global
customer base. PacBio released a Technical Note, supporting the use
of Yourgene's LightBench® instrument (Ranger®
Technology) with PacBio's HiFi sequencing system for size
selection of long DNA fragments to enable high yields for HiFi
sequencing data. PacBio's customer base spans a broad set of
research areas, including human genome sequencing, plant and animal
sciences, infectious diseases and microbiology, oncology and other
emerging applications, which represents a significant opportunity
to expand the use of Ranger® Technology.
In addition, the Company has just signed a co-marketing agreement
with PacBio, strengthening our relationship and ensuring
Ranger® Technology is available for their
long-read sequencing customers. There are also a number of ongoing
collaborations with key institutions around the world to test
Ranger® across a number of different
applications. Having a stronger data set in these new use cases
will drive further adoption and market penetration.
In Q1 2023 we saw the launch of the Primer
Design Co-Prep ES instrument, providing automated DNA and RNA
extraction using Primer Design optimised assays, which enables
pathogen detection across numerous applications.
Within the IT-IS International Instrument division/business,
the renewed marketing plans and commercial restructure is beginning
to make an impact and the Group is seeing greater awareness and
lead generation, with sales improving during Q1 2024.
3)
Research Use Only
Primer Design has maintained its position as a
leader in custom assay development, having delivered over 500+
custom assays in addition to its extensive catalogue, which
includes over 1200 assays. Building on this expertise it has
expanded its capabilities into the animal diagnostics and
aquaculture sectors, developing assays for both its own portfolio
as well as client-specific needs.
The business has a solid and growing pipeline
addressing the need for fit-for-purpose testing options and
streamlined workflows. The R&D team is also working on a
Norovirus RUO assay, which will be ready to go to market in Q2 2024
and has built on the market needs of key strategic customers within
the oyster farming community in the UK.
Based on extensive customer and market
feedback, the team have launched a range of "Complete" assays,
which include our market leading customised mastermixes, unique
enzyme and control combinations, that are tailored to provide
everything our customers need in one kit for their experiments. In
addition, the mastermix reagents have been launched as a
stand-alone component that can be used for any labs working with
multiplex assays, giving a route into potential new customer
labs.
4)
Genomic Services
Yourgene Genomic Services ("YGS") saw a
decline in NIPT volumes and revenue, after a key customer moved
these capabilities in-house and the termination of discussions
regarding the sale of the lab in Taiwan. However, the Group is
experiencing steady growth in new clinical customers across the UK.
We have also seen growth across our pharmaceutical research
services, which offers whole genome sequencing ("WGS"), whole exome
sequencing ("WES") and other specialist laboratory testing services
to pharma, biotech and central laboratories for clinical studies
and assay validation, as well as biomarker discovery
services.
Taiwan
update
As announced on 6 February 2024,
the Group received formal notification from
INEX Innovate Pte Ltd of its decision to
terminate discussions regarding the acquisition of Yourgene Health
Taiwan Co Ltd, as originally announced by Yourgene in
June 2023. As a result, Yourgene's
Taiwanese laboratory business will remain part of the
Novacyt Group. We are continuing to
evaluate a number of options in relation to the
future of the Taiwanese laboratory business that offer the best
value to all stakeholders and will provide any further updates in
due course.
Strengthened
Board
Since the acquisition of Yourgene, the Novacyt
Board has been reshaped and Yourgene's former Chair, Dr John Brown
CBE and I joined the Board, as Non-Executive and Executive Director
respectively, helping to make Yourgene's integration into the wider
Group as smooth as possible.
On 1 May 2024, I was appointed CEO of the
Group and James McCarthy stepped down from the Board of Directors
as Acting CEO. Dr Andrew Heath, Non-Executive
Director, has also retired from the Board. I would like to thank
James and Andrew for their hard work and significant contribution
to the Group and wish them both well in their future
endeavours.
Post-period end, we announced the appointment
of Steve Gibson as Chief Financial Officer. Both Steve and Dr Jo
Mason, the Company's Chief Scientific Officer, will
join the Novacyt Board as Executive Directors, subject to
shareholder approval at the Company's Annual General
Meeting. Steve played a key role in the acquisition of
Yourgene, as well as in executing key strategic changes to the
Group over the past two years. Jo is a leading
molecular biologist, with over 22 years' experience having worked
in senior positions both in industry and at prominent research
institutes and I look forward to welcoming both Steve
and Jo to the Board in due course.
DHSC
As previously announced, the Company and its
subsidiary Primer Design Ltd are party to litigation with the
DHSC. The trial hearing has been listed to commence on
10 June 2024, and finish on 4 July 2024. The Company expects the
court to reserve judgment, meaning that the outcome of the trial
will not be known on 4 July 2024.
The Company is unable to provide additional
comment at this time but will provide further updates as
appropriate and to the extent it is permitted to do so.
Current trading and
outlook
Group revenue for the first four months of
2024 totalled £6.9m, 73% of which was generated by Yourgene. On a
proforma basis, year-on-year revenue is down £1.3m, or 16%, of
which £0.7m is as a result of reduced COVID-19 product sales.
Revenue for the full year will likely continue at a similar
run-rate to what has been seen so far in 2024. We are still working
through the cost base of the business following the acquisition of
Yourgene so, at this stage in the year, it is too early to provide
guidance on a full year EBITDA position.
Post-acquisition we have implemented actions
that will deliver annual cost reductions to the Group of over £4.0m
for 2024, and we will continue to look at further opportunities to
right size the cost base.
We commenced the year with £44.1m in cash,
with cash of £36.3m at 30 April 2024; a cash outflow of £7.8m.
Within this cash outflow there was approximately £3.3m of
exceptional items, including DHSC legal fees and the remaining
deferred consideration from the Coastal Genomics
acquisition.
We continue to place all efforts towards
working as a single business so that the reorganisation of the
Group and the resulting synergies will leave us well placed to
deliver future growth.
We remain focused on driving the global sales
of our key clinical and instrumentation products, while also
rebuilding our RUO business. The Board believes that investment in
R&D combined with our commercial strength is key to achieving
long-term growth. Over the coming months, we will continue to
evaluate the Group's product portfolio to identify those highest
potential areas whose growth can be accelerated through additional
investment.
Lyn
Rees
Chief
Executive Officer
30 May 2024
FINANCIAL
REVIEW
Overview
In September 2023, Novacyt completed the
strategic acquisition of Yourgene for an all-cash consideration of
£16.7m, significantly enhancing its global diagnostics
capabilities, adding scale and diversification to accelerate the
long-term growth of the Group. As such, Novacyt's 2023 results
include the financial performance of Yourgene from 8 September
2023, the date of acquisition. The financial results of Yourgene
before this date are not included within the 2023 Novacyt Group
Statutory Accounts.
Novacyt generated sales of £11.6m, an EBITDA
loss of £13.7m and a loss after tax of £28.3m.
Cash decreased substantially during 2023 as a
result of the acquisition of Yourgene, which consumed circa £27.6m
of cash. This included paying down Yourgene liabilities acquired
such as bank loans, contingent liabilities and advisors' fees, the
initial cash consideration and Novacyt advisor fees. As such, cash
at the end of 2023 was £44.1m, which provides the Group with a
solid foundation on which to build its future strategy.
Business Combinations
The acquisition of Yourgene was implemented by
way of a UK scheme of arrangement between Yourgene and its
shareholders under Part 26 of the UK Companies Act 2006.
IFRS 3 provides for a period of 12 months
from acquisition to complete the identification and measurement of
the fair value of assets acquired and liabilities assumed. This
means that the gross amount of goodwill is subject to adjustment
until September 2024.
The gross goodwill recognised upon acquisition
totalled £19.5m which will be assessed annually for
impairment.
Revenue
Revenue for 2023 fell to £11.6m compared with
£21.0m in 2022. The main driver for the reduction was reduced
COVID-19 sales; 2023 included £0.6m of COVID-19 related sales
compared to £14.7m in 2022. The decline was driven by reduced
demand for COVID-19 testing as we emerged from the pandemic,
partially offset by the inclusion of Yourgene sales from September
2023.
At a business unit level, Primer Design
delivered sales totalling £5.0m and IT-IS International £1.0m for
twelve months' trading activity. Yourgene delivered sales of £5.6m
post-acquisition in 2023 (approximately four months).
Gross profit
The business delivered a gross profit of £3.7m
(32%), compared with £5.7m (27%) in 2022. The margin, at 32%, is
significantly below the Group's historic margin (60%+)
predominantly due to the impact of stock adjustments in the form of
i) booking a higher stock provision than normal as a result of
providing for all remaining COVID-19 associated stock, and ii)
writing off stock that had not been provided for previously.
Excluding the impact of these items, the margin would be in excess
of 60%.
Operating expenditure
Group operating costs fell by £1.9m to £17.4m
in 2023, compared with £19.3m in 2022.
Labour costs have reduced year-on-year as a
result of the restructuring programmes undertaken by the Group, but
they have been partially offset by the inclusion of employee costs
resulting from the Yourgene acquisition. Novacyt commenced 2023
with a headcount of circa 137, falling to 118 pre-acquisition, and
rising to 237 at December 2023 with the inclusion of Yourgene
employees.
Non-labour costs follow a similar pattern in
that the year-on-year reduction would have been larger had it not
been for the inclusion of Yourgene related costs
post-acquisition.
EBITDA
The Group reported an EBITDA loss of £13.7m
for 2023 compared with a loss of £13.5m in 2022. The loss has
increased slightly, by £0.2m, driven by a £1.9m fall in operating
expenditure, but offset by a reduced gross profit contribution of
£2.1m as a result of lower sales.
Operating loss
The Group reported an operating loss of £29.5m
compared with a 2022 loss of £23.4m. Year-on-year, depreciation and
amortisation charges have increased by £2.1m, to £4.2m, mainly due
to the inclusion of charges associated with assets acquired as part
of the Yourgene acquisition.
Other operating expenses have increased from
£7.7m to £11.7m. The main items making up the 2023 charge are i) a
£4.1m impairment charge in relation to the goodwill associated with
the Primer Design acquisition, ii) £1.9m costs in relation to the
ongoing DHSC contract dispute, iii) £1.7m of acquisition related
fees which excludes deal advisory fees incurred by Yourgene
(totalling circa £2.1m) as they have been treated as a
pre-acquisition cost, iv) a £1.7m impairment charge in relation to
the remaining goodwill and intangible assets associated with the
IT-IS International acquisition, v) £1.6m restructuring expenses
predominantly covering redundancy payments, and vi)
£0.7m of other expenses.
Loss after tax from continuing
operations
The Group reported a loss after tax from
continuing operations of £27.8m, compared with a loss of £22.2m in
2022. Other financial income and expenses netted to a £0.9m income
compared with a £3.3m net income in 2022. The two key items making
up the balance are i) £2.0m interest income on deposits held in
bank accounts, and ii) a £1.0m net financial foreign exchange loss
mainly resulting from revaluations of bank and intercompany
accounts held in foreign currencies. Taxation at £0.8m is
predominantly a result of the movement in deferred tax.
Loss from discontinued
operations
In accordance with IFRS 5, the net result of
the Lab21 Products business has been reported on a separate line
"Loss from discontinued operations" in the consolidated income
statement for 2023 and 2022.
2023 balances relate to clearing balance sheet
items and interest on intercompany balances.
Earnings Per Share
2023 saw a loss per share of
£0.40 compared to a loss per share of
£0.36 in 2022.
Business Combinations - pro forma
view
If the acquisition of Yourgene was to have
completed on 1 January 2023, the opening date of the Group's 2023
financial year, consolidated Group revenue for 2023 would have
amounted to £22.8m and the Group would have generated a net loss
attributable to owners of the Company of £50.3m.
Yourgene pro forma results include various
one-off charges including i) acquisition related costs totalling in
excess of £8.5m, including the recognition of a £6.5m contingent
liability, and ii) around £4.8m covering items such as stock
provisions, impairing ROU assets and bad debt
provisions.
Non-current assets
Goodwill has increased from £6.6m in 2022 to
£21.4m in 2023. The increase is driven by the goodwill arising from
the acquisition of Yourgene, totalling £19.5m, offset by impairment
charges to goodwill totalling £4.4m. Impairments relating to the
acquisitions of Primer Design (£4.1m) and IT-IS International
(£0.3m) were made as a result of reduced future expected cash flow.
The remaining movement is due to exchange revaluations on the
Primer Design and Yourgene goodwill balances, which are not held in
pound sterling.
Right-of-use assets have increased from £0.5m
at 31 December 2022 to £11.0m at 31 December 2023, largely as a
result of the inclusion of lease costs associated with Yourgene and
its largest facility, Skelton House, in the UK.
Property, plant and equipment has increased by
£1.4m from 31 December 2022 to £4.2m at 31 December 2023. This is
driven mainly by the inclusion of fixed assets acquired as part of
the Yourgene acquisition offset by depreciation costs.
Other non-current assets have increased by
£7.2m to £10.3m as at 31 December 2023, driven by the inclusion of
intangible assets acquired as part of the Yourgene acquisition
including customer relationships, brands and development costs.
These were partly offset by amortisation charges totalling £3.1m,
which includes a £1.4m impairment charge for IT-IS International
related intangibles.
Current assets
Inventories and work in progress are flat
year-on-year closing 2023 at £3.0m. However, the composition has
changed due to the inclusion of Yourgene stock totalling £2.3m
(net), offset by the reduction in stock held by Primer Design and
IT-IS International primarily as a result of providing for all
remaining COVID-19 associated stock and writing off stock that
expired in 2023 and was not previously provided for.
Trade and other receivables have increased by
£2.3m to £36.0m at 31 December 2023 mainly as a result of the
inclusion of the Yourgene receivable balances. The trade
receivables balance includes a £24.0m unpaid DHSC invoice raised in
December 2020, in respect of products delivered during 2020 that
remains unpaid at the date of publishing the accounts. Recovery of
the invoice is dependent on the outcome of the contract dispute.
Also included in trade and other receivables is an £8.5m VAT
receivable balance (December 2022: £8.3m), that mainly relates to
UK VAT paid on sales invoices in dispute with the DHSC. As these
sales have not been recognised in accordance with IFRS 15, the
revenue, trade receivable and VAT element of the transactions have
been reversed, resulting in a VAT debtor balance.
Tax receivables have fallen by £0.4m to £0.7m
at 31 December 2023. The current balance relates to Research and
Development tax credits (SME Scheme) accruals covering 2022 and
2023.
Other current assets have increased to £2.6m
from £2.4m in 2022. The year-on-year change is minimal as the 2022
balance included prepaid stock that was delivered in 2023 which is
largely offset by the inclusion of Yourgene prepayments in 2023.
Prepayments at 31 December 2023 include the annual Group commercial
insurance, rent, rates and prepaid support costs.
Current liabilities
Short-term lease liabilities have increased by
£0.6m, to £1.2m, as a result of the inclusion of lease liabilities
associated with Yourgene.
The short-term contingent consideration
balance of £0.2m as at 31 December 2023 relates to the acquisition
of Coastal Genomics in Canada by Yourgene and was subsequently paid
in April 2024.
Trade and other liabilities increased to £7.2m
at 31 December 2023 from £2.8m at 31 December 2022, predominantly
as a result of the inclusion of Yourgene liabilities.
Other provisions and short-term liabilities
are broadly flat year-on-year at £20.9m (December 2022: £20.8m).
The largest balance relates to a product warranty provision for
£19.8m booked in 2020 to cover Management's view of the maximum
cost of replacing products in relation to the ongoing commercial
dispute with the DHSC that remains unchanged in 2023.
Non-Current
Liabilities
Deferred tax liabilities have increased to
£2.2m from £1.0m in 2022. Deferred tax liabilities on temporary
timing differences relate to the assets acquired as part of the
Yourgene acquisition in September 2023 and accelerated capital
allowances.
Lease liabilities long-term has increased to
£12.5m, from £0.3m, largely as a result of the inclusion of lease
liabilities associated with Yourgene. The main liabilities relate
to two premises in the UK, Skelton House and City Labs, that have
multi-year leases.
Other provisions and long-term liabilities
have increased to £2.3m, from £0.1m, as a result of the inclusion
of i) a Coastal Genomics earnout milestone totalling £0.7m (which
has since been paid in 2024 following a settlement negotiation),
and ii) dilapidations provisions associated with Yourgene premises
totalling £1.5m.
Cash flow
Cash held at the end of 2023 totalled £44.1m
compared with £87.0m at 31 December 2022. Net cash used in
operating activities was £25.0m for 2023, made up of a working
capital outflow of £11.3m and an EBITDA loss of £13.7m, compared to
a cash outflow of £13.7m in 2022.
The working capital outflow of £11.3m includes
fees attributable to the Yourgene acquisition including the payment
of the £6.5m contingent liability and £3.4m of deal
advisory fees.
Net cash used in investing activities
increased to £13.9m, from £0.6m in 2022, predominantly driven by
the all-cash acquisition of Yourgene less cash acquired. This
outflow was offset by the Group generating £2.0m interest income
from its cash balances during 2023.
Capital expenditure in 2023 totalled £0.7m
compared with £0.4m in 2022.
Net cash used in financing activities in 2023
totalled £4.0m compared with £0.5m in 2022, with the two main cash
outflows being i) repayment of the Yourgene SVB bank loan totalling
£2.4m, and ii) lease payments totalling £1.1m.
The Group remains debt free at 31 December
2023.
Announcement Note
The information included in this announcement
is extracted from the audited Group Consolidated Accounts. Defined
terms used in the announcement refer to terms as defined in the
Group Consolidated Accounts unless the context otherwise requires.
This announcement should be read in conjunction with, and is not a
substitute for, the full Group Consolidated Accounts.
Chief Financial Officer
Novacyt S.A.
Consolidated income statement for the years ended 31 December
2023 and 31 December 2022
|
Amounts in £'000
|
Notes
|
Year ended
31 December
2023
|
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
Continuing Operations
|
|
|
|
|
|
Revenue
|
|
11,579
|
|
21,040
|
|
Cost of sales
|
4
|
-7,849
|
|
-15,294
|
|
|
|
|
|
|
|
Gross profit
|
|
3,730
|
|
5,746
|
|
|
|
|
|
|
|
Sales, marketing and distribution
expenses
|
|
-3,950
|
|
-4,826
|
|
Research and development
expenses
|
|
-3,228
|
|
-5,047
|
|
General and administrative
expenses
|
5
|
-14,524
|
|
-12,090
|
|
Governmental subsidies
|
|
125
|
|
562
|
|
|
|
|
|
|
|
Operating loss before exceptional items
|
|
-17,847
|
|
-15,655
|
|
|
|
|
|
|
|
Other operating income
|
6
|
31
|
|
-
|
|
Other operating
expenses
|
6
|
-11,700
|
|
-7,738
|
|
|
|
|
|
|
|
Operating loss after exceptional items
|
|
-29,516
|
|
-23,393
|
|
|
|
|
|
|
|
Financial income
|
|
3,410
|
|
3,969
|
|
Financial expense
|
|
-2,462
|
|
-629
|
|
|
|
|
|
|
|
Loss before tax
|
|
-28,568
|
|
-20,053
|
|
|
|
|
|
|
|
Tax income / (expense)
|
|
768
|
|
-2,148
|
|
|
|
|
|
|
|
Loss after tax from continuing operations
|
|
-27,800
|
|
-22,201
|
|
|
|
|
|
|
|
Loss from discontinued
operations
|
|
-492
|
|
-3,529
|
|
|
|
|
|
|
|
Loss after tax attributable to owners of the Company
(*)
|
|
-28,292
|
|
-25,730
|
|
Loss per share (£)
|
7
|
-0.40
|
|
-0.36
|
|
Diluted loss per share
(£)
|
7
|
-0.40
|
|
-0.36
|
|
|
|
|
|
|
|
Loss per share from continuing
operations (£)
|
7
|
-0.39
|
|
-0.31
|
|
Diluted loss per share from
continuing operations (£)
|
7
|
-0.39
|
|
-0.31
|
|
|
|
|
|
|
|
Loss per share from discontinued
operations (£)
|
7
|
-0.01
|
|
-0.05
|
|
Diluted loss per share from
discontinued operations (£)
|
7
|
-0.01
|
|
-0.05
|
* There are no non-controlling
interests.
Consolidated statement of comprehensive income for the years
ended 31 December 2023 and 31 December 2022
|
Amounts in £'000
|
Notes
|
|
Year ended
31 December
2023
|
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
Loss for the period recognised in the income
statement
|
|
|
-28,292
|
|
-25,730
|
|
|
|
|
|
|
|
|
Items that may be subsequently reclassified to profit or
loss:
|
|
|
|
|
|
|
Translation reserves
|
14
|
|
363
|
|
-843
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
-27,929
|
|
-26,573
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company (*)
|
|
|
-27,929
|
|
-26,573
|
*There are no non-controlling
interests.
Statement of financial position as of 31 December 2023 and 31
December 2022
|
Amounts in £'000
|
Notes
|
Year ended
31 December
2023
|
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
Goodwill
|
8
|
21,446
|
|
6,646
|
|
Other intangible assets
|
|
10,232
|
|
3,121
|
|
Property, plant and
equipment
|
|
4,183
|
|
2,751
|
|
Right-of-use assets
|
|
11,036
|
|
521
|
|
Non-current financial
assets
|
|
57
|
|
-
|
|
Deferred tax assets
|
|
413
|
|
624
|
|
Total non-current assets
|
|
47,367
|
|
13,663
|
|
|
|
|
|
|
|
Inventories and work in
progress
|
9
|
3,022
|
|
3,027
|
|
Trade and other
receivables
|
10
|
36,034
|
|
33,662
|
|
Tax receivables
|
|
728
|
|
1,149
|
|
Prepayments and short-term
deposits
|
|
2,601
|
|
2,418
|
|
Investments short-term
|
|
9
|
|
9
|
|
Cash and cash
equivalents
|
|
44,054
|
|
86,973
|
|
Total current assets
|
|
86,448
|
|
127,238
|
|
|
|
|
|
|
|
Total assets
|
|
133,815
|
|
140,901
|
|
|
|
|
|
|
|
Lease liabilities
short-term
|
11
|
1,209
|
|
609
|
|
Contingent consideration
short-term
|
|
193
|
|
-
|
|
Provisions short-term
|
12
|
19,988
|
|
20,300
|
|
Trade and other
liabilities
|
13
|
7,183
|
|
2,787
|
|
Tax liabilities
|
|
65
|
|
-
|
|
Other current
liabilities
|
|
927
|
|
540
|
|
Total current liabilities
|
|
29,565
|
|
24,236
|
|
|
|
|
|
|
|
Net current assets
|
|
56,883
|
|
103,002
|
|
|
|
|
|
|
|
Lease liabilities
long-term
|
11
|
12,495
|
|
263
|
|
Contingent consideration
long-term
|
|
722
|
|
-
|
|
Provisions long-term
|
12
|
1,547
|
|
95
|
|
Deferred tax
liabilities
|
|
2,241
|
|
1,041
|
|
Other long-term
liabilities
|
|
3
|
|
50
|
|
Total non-current liabilities
|
|
17,008
|
|
1,449
|
|
|
|
|
|
|
|
Total liabilities
|
|
46,573
|
|
25,685
|
|
|
|
|
|
|
|
Net assets
|
|
87,242
|
|
115,216
|
Statement of financial position as of 31 December 2023 and 31
December 2022 (continued)
|
Amounts in £'000
|
Notes
|
Year ended
31 December
2023
|
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
14
|
4,053
|
|
4,053
|
|
|
Share premium account
|
|
50,671
|
|
50,671
|
|
|
Own shares
|
|
-138
|
|
-91
|
|
|
Other reserves
|
14
|
1,599
|
|
-2,017
|
|
|
Equity reserve
|
|
1,155
|
|
1,155
|
|
|
Retained earnings
|
14
|
29,902
|
|
61,445
|
|
|
Total equity - owners of the Company
|
|
87,242
|
|
115,216
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
87,242
|
|
115,216
|
|
Statement of changes in equity for the years ended 31
December 2023 and 31 December 2022
|
Amounts in £'000
|
|
|
|
|
|
Other Group
reserves
|
|
|
|
|
|
Share
capital
|
Share
premium
|
Own shares
|
Equity
reserves
|
Other
|
Translation
reserve
|
OCI on retirement
benefits
|
Total
|
Retained
earnings
|
Total
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2022
|
|
4,053
|
50,671
|
-78
|
1,155
|
-2,407
|
1,241
|
-8
|
-1,174
|
87,188
|
141,815
|
|
Translation differences
|
|
-
|
-
|
-
|
-
|
-
|
-843
|
-
|
-843
|
-
|
-843
|
|
Loss for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-25,730
|
-25,730
|
|
Total comprehensive income / (loss) for the
period
|
|
-
|
-
|
-
|
-
|
-
|
-843
|
-
|
-843
|
-25,730
|
-26,573
|
|
Own shares acquired / sold in the
period
|
|
-
|
-
|
-13
|
-
|
-
|
-
|
-
|
-
|
-
|
-13
|
|
Other
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-13
|
-13
|
|
Balance at 31 December 2022
|
|
4,053
|
50,671
|
-91
|
1,155
|
-2,407
|
398
|
-8
|
-2,017
|
61,445
|
115,216
|
|
Translation differences
|
|
-
|
-
|
-
|
-
|
-
|
363
|
-
|
363
|
-
|
363
|
|
Loss for the period
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-28,292
|
-28,292
|
|
Total comprehensive loss for the period
|
|
-
|
-
|
-
|
-
|
-
|
363
|
-
|
363
|
-28,292
|
-27,929
|
|
Own shares acquired / sold in the
period
|
|
-
|
-
|
-47
|
-
|
-
|
-
|
-
|
-
|
-
|
-47
|
|
Other
|
|
-
|
-
|
-
|
-
|
3,253
|
-
|
-
|
3,253
|
-3,251
|
2
|
|
Balance at 31 December 2023
|
|
4,053
|
50,671
|
-138
|
1,155
|
846
|
761
|
-8
|
1,599
|
29,902
|
87,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Other Group reserves in column
'Other' shows the reserve related to the acquisition of Primer
Design shares and the reserve for payment in shares. The 2023
movement of £3,253,000 is a result of the acquisition of Yourgene
Health.
Statement of cash flows for the years ended 31 December 2023
and 31 December 2022
|
Amounts in £'000
|
Notes
|
Year ended
31 December
2023
|
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
16
|
-24,991
|
|
-13,729
|
|
Operating cash flows from discontinued
operations
|
|
-689
|
|
-1,955
|
|
Operating cash flows from continuing
operations
|
|
-24,302
|
|
-11,774
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
Acquisition of subsidiary net of
cash acquired
|
|
-15,429
|
|
-787
|
|
Purchases of patents and
trademarks
|
|
-154
|
|
-260
|
|
Purchases of property, plant and
equipment
|
|
-517
|
|
-156
|
|
Sales of property, plant and
equipment
|
|
26
|
|
-
|
|
Variation of deposits
|
|
116
|
|
-12
|
|
Interest received
|
|
2,023
|
|
638
|
|
Net cash used in investing activities
|
|
-13,935
|
|
-577
|
|
Investing cash flows from discontinued
operations
|
|
88
|
|
28
|
|
Investing cash flows from continuing
operations
|
|
-14,023
|
|
-605
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
Repayment of lease
liabilities
|
|
-1,110
|
|
-395
|
|
Repayment of bank loans
|
|
-2,355
|
|
-
|
|
Purchase of own shares -
net
|
|
-47
|
|
-13
|
|
Paid interest expenses
|
|
-455
|
|
-108
|
|
Net cash used in financing activities
|
|
-3,967
|
|
-516
|
|
Financing cash flows from discontinued
operations
|
|
-325
|
|
-142
|
|
Financing cash flows from continuing
operations
|
|
-3,642
|
|
-374
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
-42,893
|
|
-14,822
|
|
Cash and cash equivalents at beginning of
year
|
|
86,973
|
|
101,746
|
|
Effect of foreign exchange rate
changes
|
|
-26
|
|
49
|
|
Cash and cash equivalents at end of year
|
|
44,054
|
|
86,973
|
Notes to the ANNUAL ACCOUNTS
1. Corporate Information
Novacyt is an international molecular
diagnostics company providing a broad portfolio of integrated
technologies and services, primarily focused on the delivery of
genomic medicine. The Company develops, manufactures, and
commercialises a range of molecular assays and instrumentation to
deliver workflows and services that enable seamless end-to-end
solutions from sample to result across multiple sectors including
human health, animal health and environmental. Its registered
office is located at 13 Avenue Morane Saulnier, 78140
Vélizy Villacoublay.
2. BASIS OF ANNOUNCEMENT
2.1 Basis of Preparation
The financial information contained in this
report comprises the consolidated financial statements of the
Company and its subsidiaries (hereinafter referred to collectively
as the "Group"). The
figures in the tables are prepared and presented in Great British
Pounds ("GBP"), rounded to the nearest thousand
("£'000s").
2.2 Discontinued operations and assets held for
sale
A discontinued operation is a component that
either has been disposed of, or is classified as held for sale,
and
(a) represents a separate major line of
business or geographical area of operations,
(b) is part of a single co-ordinated
plan to dispose of a separate major line of business or
geographical area of operations, or
(c) is a subsidiary acquired
exclusively with a view to resale.
Discontinued operations are presented in the
consolidated income statement as a single amount comprising the
total of:
- The
post-tax profit or loss of the discontinued operation,
- The
post-tax gain or loss recognised on the measurement to fair value
less costs to sell, and
- The
post-tax gain or loss recognised on the disposal of assets or the
disposal group making up the discontinued operation.
In the statement of cash flows the net cash
flow attributable to the operating, investing and financing
activities of discontinued operations have been disclosed
separately.
No adjustments have been made in the statement
of financial position.
2.3 Going concern
The Directors have, at the time of approving
the financial statements, a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future. Thus, they adopt the going concern basis of
accounting in preparing the financial statements after having taken
into account the available information they have for the future,
and especially the cash forecast prepared for the next 12
months.
In preparing this cash forecast, the Directors
have considered the following assumptions:
- The
business plan for the next 12 months;
- The
working capital requirements of the business;
- A
positive cash balance at 31 December 2023 of
£44,054,000;
- The
possible outcomes of the Department of Health and Social Care
"DHSC" commercial dispute having a trial date set for June
2024;
-
Payment of the remaining Coastal Genomics earn-out
milestones;
- No
additional external funding has been forecast.
If Novacyt had to pay the full value of the
DHSC claim in the period up to and including May 2025, which is not
the scenario that management considers to be most likely, then the
Group would not have sufficient funds to settle the liability
without agreeing a payment plan. This matter raises substantial
doubt about the ability of the Group to continue as a going concern
in the worst-case scenario.
2.4 Business combinations
Business combinations are accounted for using
the purchase method (see IFRS 3).
Each time it acquires a company or group of
companies constituting a business, the Group identifies and
measures the assets acquired and liabilities assumed, most of which
are carried at fair value. The difference between the fair value of
the consideration transferred, including the recognised amount of
any non-controlling interest in the acquiree, and the net amount
recognised in respect of the identifiable assets acquired and
liabilities assumed measured at fair value, is recognised as
goodwill.
Pursuant to IFRS 3, the Group applies the
following principles:
-
Transaction costs are recognised immediately as operating
expenses when incurred;
- Any
purchase price adjustment of an asset or a liability assumed is
estimated at fair value at the acquisition date, and the initial
assessment may only subsequently be adjusted against goodwill in
the event of new information related to facts and circumstances
existing at the acquisition date if this assessment occurs within
the 12-month allocation period after the acquisition date. Any
adjustment of the financial liability recognised in respect of an
additional price subsequent to the intervening period or not
meeting these criteria is recognised in the Group's comprehensive
income;
- Any
negative goodwill arising on acquisition is immediately recognised
as income; and
- For
step acquisitions, the achievement of control triggers the
remeasurement at fair value of the interest previously held by the
Group in profit or loss. Loss of control results in the
remeasurement of the possible residual interest at fair value in
the same way.
For companies acquired during the year, only
the results for the period following the acquisition date are
included in the consolidated income statement. For the financial
year 2023, this applies to Yourgene Health Ltd (formerly PLC) and
its subsidiaries, which were acquired on the 8 September
2023.
2.5 Critical accounting judgements and key sources of
estimate uncertainty
In the application of the Group's accounting
policies, the Directors are required to make judgements (other than
those involving estimations) that have a significant impact on the
amounts recognised and to make estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future
periods.
2.5.1 Critical accounting judgements
· Constraint of revenue
Revenue is only constrained if it is highly
probable there will not be a significant reversal of revenue in the
future. Highly probable is not defined in IFRS 15 and so it is a
significant judgement to be exercised by Management. The value of
revenue related to performance obligations fulfilled in 2020 to
which constraint has not been applied is £130,642,000 and relates
to the DHSC dispute, further details are disclosed in note
18.
· Trade and other
receivables
An estimate of the risks of non-receipt based
on commercial information, current economic trends and the solvency
of individual customers is made to determine the need for
impairment on a customer-by-customer basis. Management use
significant judgement in determining whether a credit loss
provision is required.
At the year end, the Group had trade
receivables of £28,151,000 against which a credit loss provision of
£865,000 has been applied. At the date of signing the financial
statements, £23,957,000 of the 31 December 2023 receivables,
relating to products delivered during 2020, were overdue due to the
contract dispute with the Department of Health and Social Care
"DHSC" (see note 18). Management considers it to be more likely
than not that the 31 December 2023 balances are recoverable; this
is a significant judgement.
· Provisions
The carrying value of provisions at 31
December 2023 and 2022 are as per the table below:
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Provisions for restoration of
premises
|
1,576
|
425
|
|
Provision for
litigation
|
157
|
157
|
|
Provisions for product
warranty
|
19,795
|
19,813
|
|
Provisions for retirement
benefits
|
7
|
-
|
|
|
|
|
|
Total provisions
|
21,535
|
20,395
|
o Provisions for restoration of
premises
The value of provision required is determined
by Management on the basis of available information, experience
and, in some cases, expert estimates. When these obligations are
settled, the amount of the costs or penalties that are ultimately
incurred or paid may differ significantly from the amounts
initially provisioned. Therefore, these provisions are regularly
reviewed and may have an effect on the Group's future
results.
To the Group's knowledge, there is no
indication to date that the parameters adopted as a whole are not
appropriate, and there are no known developments that could
significantly affect the amount of provision.
o Provisions for product
warranty
The value of provision required is determined by Management based
on available information, experience and, in some cases, expert
estimates. Product warranty provisions are only included if it is
considered to be probable that an outflow of economic benefit will
be required. Determination of probable is a significant judgement
especially in light of the dispute described in note 18.
2.5.2 Key sources of estimation uncertainty
The Group has a number of key sources of
estimation uncertainty. Of these items, only the measurement of
goodwill (see note 8) is considered likely to result in a material
adjustment. Where there are other areas of estimates these have
been deemed not material.
· Measurement of
goodwill
Goodwill is tested for impairment on an annual
basis. The recoverable amount of goodwill is determined mainly on
the basis of forecasts of future cash flows. The total amount of
anticipated cash flows reflects Management's best estimate of the
future benefits and liabilities expected for the relevant CGU. The
assumptions used and the resulting estimates sometimes cover very
long periods, taking into account the technological, commercial and
contractual constraints associated with each CGU. These estimates
are mainly subject to assumptions in terms of volumes, selling
prices and related production costs, and the exchange rates of the
currencies in which sales and purchases are denominated. They are
also subject to the discount rate used for each CGU.
The value of the goodwill is tested whenever
there are indications of impairment and reviewed at each annual
closing date or more frequently should this be justified by
internal or external events.
The carrying amount of goodwill in the
statement of financial position and related impairment loss over
the period is shown below:
|
Amounts in £'000
|
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill Primer Design
|
|
6,255
|
6,384
|
|
Cumulative impairment of
goodwill
|
|
-4,103
|
-
|
|
Net value
|
|
2,152
|
6,384
|
|
|
|
|
|
|
Goodwill IT-IS
International
|
|
9,437
|
9,437
|
|
Cumulative impairment of
goodwill
|
|
-9,437
|
-9,175
|
|
Net value
|
|
-
|
262
|
|
|
|
|
|
|
Goodwill Yourgene Health - provisional
amount
|
|
19,294
|
-
|
|
|
|
|
|
|
Total goodwill
|
|
21,446
|
6,646
|
Sensitivity analysis has been performed on the
goodwill balance and is presented in note 8.
The remaining Goodwill associated with the
IT-IS International acquisition has been fully impaired in 2023 due
to reduced future expected cash flow generation.
3. Operating segments
Segment
reporting
Pursuant to IFRS 8, an operating segment is a
component of an entity:
- that
engages in business activities from which it may earn revenues and
incur expenses (including revenues and expenses relating to
transactions with other components of the same entity);
- whose
operating results are regularly reviewed by the Group's Chief
Executive to make decisions regarding the allocation of resources
to the segment and to assess its performance; and
- for
which discrete financial information is available.
-
The Group has identified five operating
segments, whose performance and resources are monitored separately.
Following the Group's decision to discontinue the Microgen
Bioproducts and Lab21 Healthcare businesses in 2022, the Lab21
Products segment, which is made up of these businesses, has been
treated as a discontinued operation:
o
Primer
Design
This segment represents the activities of
Primer Design Ltd, which is a designer, manufacturer and marketer
of molecular 'real-time' qPCR testing devices and reagents in the
area of infectious diseases based in Eastleigh, UK.
o
IT-IS
International
This segment represents the activities of
IT-IS International Ltd, a diagnostic instrument development and
manufacturing company specialising in the development of PCR
devices for the life sciences and food testing industry based in
Stokesley, UK.
o
Lab21
Products
This segment represents the activities of
Lab21 Products, which was a developer, manufacturer and distributor
of a large range of protein-based infectious disease IVD products
covering Microgen Bioproducts Ltd and Lab21 Healthcare Ltd, both
based in Camberley, UK. As these businesses ceased trading in June
2022, this segment is being treated as a discontinued
operation.
o
Corporate
This segment represents Group
central/corporate costs. Where appropriate, costs are recharged to
individual business units via a management recharge
process.
o
Yourgene
Health
This segment represents the activities of
Yourgene Health and its subsidiaries, a genomics technology and
services business, focussed on delivering molecular diagnostic and
screening solutions, across reproductive health and precision
medicine, based throughout the world but with its headquarters in
Manchester, UK.
o
Intercompany
eliminations
This represents intercompany transactions
across the Group that have not been allocated to an individual
operating segment. It is not a discrete segment.
The Chief Operating Decision
Maker is the Chief Executive Officer.
Headcount
The average headcount by segment is presented
in the table below:
|
Segment
|
2023
|
2022
|
|
|
|
|
|
Primer Design
|
74
|
141
|
|
Lab21 Products
|
-
|
21
|
|
IT-IS International
|
24
|
31
|
|
Corporate
|
23
|
29
|
|
Yourgene Health
|
149
|
-
|
|
Total headcount
|
270
|
222
|
The Yourgene Health headcount reflects the
average headcount post-acquisition. The reduction in Primer Design
headcount reflects the impact of redundancy programmes on the
business.
Breakdown of revenue by operating segment and geographic
area
o Year
ended 31 December 2023
|
Amounts in £'000
|
Primer
Design
|
IT-IS
International
|
Yourgene
Health
|
Total
|
|
|
|
|
|
|
|
Geographical area
|
|
|
|
|
|
United Kingdom
|
1,415
|
29
|
1,919
|
3,363
|
|
France
|
268
|
48
|
743
|
1,059
|
|
Europe (excluding UK and
France)
|
628
|
397
|
815
|
1,840
|
|
America
|
1,076
|
163
|
419
|
1,658
|
|
Asia-Pacific
|
1,029
|
290
|
1,449
|
2,768
|
|
Middle East
|
211
|
10
|
222
|
443
|
|
Africa
|
360
|
20
|
68
|
448
|
|
Total revenue
|
4,987
|
957
|
5,635
|
11,579
|
o Year
ended 31 December 2022
|
Amounts in £'000
|
Primer
Design
|
IT-IS
International
|
Total
|
|
|
|
|
|
|
Geographical area
|
|
|
|
|
United Kingdom
|
10,051
|
72
|
10,123
|
|
France
|
218
|
25
|
243
|
|
Europe (excluding UK and
France)
|
3,154
|
452
|
3,606
|
|
America
|
4,134
|
347
|
4,481
|
|
Asia-Pacific
|
1,373
|
479
|
1,852
|
|
Middle East
|
347
|
30
|
377
|
|
Africa
|
357
|
1
|
358
|
|
Total revenue
|
19,634
|
1,406
|
21,040
|
Breakdown of result by operating segment
o Year
ended 31 December 2023
|
Amounts in £'000
|
Primer
Design
|
IT-IS
International
|
Corporate
|
Yourgene
Health
|
Intercompany
eliminations
|
Total
|
|
|
|
|
|
|
|
|
|
Revenue
|
4,987
|
957
|
-
|
5,635
|
-
|
11,579
|
|
Cost of sales
|
-3,978
|
-679
|
-
|
-3,282
|
90
|
-7,849
|
|
Sales and marketing
costs
|
-2,447
|
-357
|
-41
|
-1,105
|
-
|
-3,950
|
|
Research and
development
|
-1,846
|
-378
|
-
|
-1,004
|
-
|
-3,228
|
|
General and
administrative
|
-6,030
|
-1,398
|
-716
|
-2,254
|
27
|
-10,371
|
|
Governmental subsidies
|
154
|
-29
|
-
|
-
|
-
|
125
|
|
|
|
|
|
|
|
|
|
Earnings before interest, tax, depreciation and amortisation
as per management reporting
|
-9,160
|
-1,884
|
-757
|
-2,010
|
117
|
-13,694
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortisation
|
-1,700
|
-417
|
-73
|
-2,001
|
38
|
-4,153
|
|
|
|
|
|
|
|
|
|
Operating (loss) / profit before exceptional
items
|
-10,860
|
-2,301
|
-830
|
-4,011
|
155
|
-17,847
|
|
Other operating income
|
-
|
-
|
31
|
-
|
-
|
31
|
|
Other operating
expenses
|
-6,734
|
-1,727
|
-2,539
|
-700
|
-
|
-11,700
|
|
Operating (loss) / profit after exceptional
items
|
-17,594
|
-4,028
|
-3,338
|
-4,711
|
155
|
-29,516
|
|
Financial income
|
8,014
|
74
|
2,841
|
1,336
|
-8,855
|
3,410
|
|
Financial expense
|
-886
|
-112
|
-8,272
|
-1,087
|
7,895
|
-2,462
|
|
Loss before tax
|
-10,466
|
-4,066
|
-8,769
|
-4,462
|
-805
|
-28,568
|
o Year
ended 31 December 2022
|
Amounts in £'000
|
Primer
Design
|
IT-IS
International
|
Corporate
|
Intercompany
Eliminations
|
Total
|
|
|
|
|
|
|
|
|
|
Revenue
|
19,634
|
1,417
|
-
|
-11
|
21,040
|
|
Cost of sales
|
-14,710
|
-2,026
|
-
|
1,442
|
-15,294
|
|
Sales and marketing
costs
|
-4,231
|
-321
|
-274
|
-
|
-4,826
|
|
Research and
development
|
-4,458
|
-589
|
-
|
-
|
-5,047
|
|
General and
administrative
|
-7,668
|
-1,046
|
-1,261
|
-
|
-9,975
|
|
Governmental subsidies
|
490
|
72
|
-
|
-
|
562
|
|
|
|
|
|
|
|
|
Earnings before interest, tax, depreciation and amortisation
as per management reporting
|
-10,943
|
-2,493
|
-1,535
|
1,431
|
-13,540
|
|
|
|
|
|
|
|
|
Depreciation and
amortisation
|
-1,699
|
-405
|
-44
|
33
|
-2,115
|
|
|
|
|
|
|
|
|
Operating (loss) / profit before exceptional
items
|
-12,642
|
-2,898
|
-1,579
|
1,464
|
-15,655
|
|
Other operating
expenses
|
-1,766
|
-5,285
|
-687
|
-
|
-7,738
|
|
Operating (loss) / profit after exceptional
items
|
-14,408
|
-8,183
|
-2,266
|
1,464
|
-23,393
|
|
Financial income
|
6,045
|
44
|
2,684
|
-4,804
|
3,969
|
|
Financial expense
|
-542
|
-171
|
-4,353
|
4,437
|
-629
|
|
Loss before tax
|
-8,905
|
-8,310
|
-3,935
|
1,097
|
-20,053
|
Assets and liabilities are not reported to the
Chief Operating Decision Maker on a segmental basis and are
therefore not disclosed.
Please note that in accordance with IFRS 5 the
results of the Lab21 Products segment for 2023 and 2022 have been
reported on a separate line 'Loss from discontinued operations' in
the consolidated income statement, which is shown below loss before
tax and thus all items above loss before tax have a nil
value.
4. Cost of sales
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Cost of inventories recognised as
an expense
|
7,018
|
17,509
|
|
Change in stock
provision
|
-797
|
-6,473
|
|
Freight costs
|
51
|
73
|
|
Direct labour
|
1,575
|
4,141
|
|
Product warranty
|
-18
|
14
|
|
Other
|
20
|
30
|
|
|
|
|
|
Total cost of sales
|
7,849
|
15,294
|
Total cost of sales has fallen year on year
reflecting the reduction in sales.
The £797,000 net fall in the 2023 stock
provision is driven by a £1,286,000 reduction in the Yourgene
Health stock provision between acquisition and the reporting date,
partially offset by a £489,000 net increase in the Novacyt legacy
business stock provision.
A large amount of stock, which had previously
been provided for, was written off and disposed of during 2023,
with the cost being charged to 'Cost of inventories recognised as
an expense' and a corresponding release of the stock provision
being made.
Direct labour (including subcontractor costs)
has decreased year on year as a result of manufacturing being
performed in-house versus an element being outsourced in
2022.
5. General and administrative
expenses
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Purchases of non-stored raw
materials and supplies
|
343
|
323
|
|
Lease and similar
payments
|
340
|
477
|
|
Maintenance and repairs
|
465
|
370
|
|
Insurance premiums
|
743
|
1,024
|
|
Legal and professional
fees
|
1,802
|
1,622
|
|
Banking services
|
50
|
55
|
|
Employee compensation and social
security contributions
|
4,631
|
5,144
|
|
Depreciation and amortisation of
property, plant and equipment and intangible assets
|
4,154
|
2,115
|
|
Other general and administrative
expenses
|
1,996
|
960
|
|
|
|
|
|
Total general and administrative expenses
|
14,524
|
12,090
|
Legal and professional fees include advisors'
fees, audit fees and legal fees.
Underlying labour costs have decreased as a
result of restructuring. The impact of these savings has been
partially offset by the inclusion of employee costs as a result of
the Yourgene Health acquisition.
Depreciation and amortisation of property,
plant and equipment and intangible assets increased in 2023 due to
the inclusion of assets associated with the Yourgene Health
acquisition.
Other general and administrative expenses
include building rates, regulatory fees, loss on disposal of fixed
assets and IT expenses.
6. Other operating income and
expenses
|
Amounts in £'000
|
Year ended
31 December 2023
|
Year ended
31 December 2022
|
|
|
|
|
|
|
|
|
|
Other operating income
|
31
|
-
|
|
|
|
|
|
Total other operating income
|
31
|
-
|
|
|
|
|
|
Impairment of Primer Design
goodwill
|
-4,113
|
-
|
|
Impairment of IT-IS International
goodwill and intangible assets
|
-1,682
|
-5,156
|
|
DHSC contract dispute
costs
|
-1,862
|
-927
|
|
Restructuring expenses
|
-1,593
|
-1,255
|
|
Acquisition related
expenses
|
-1,705
|
-325
|
|
Other expenses
|
-396
|
-75
|
|
Loss on disposal of Taiwan
subsidiaries
|
-305
|
-
|
|
Taiwan divestment costs
|
-44
|
-
|
|
|
|
|
|
Total other operating expenses
|
-11,700
|
-7,738
|
Operating expenses
Goodwill and intangible assets associated with
the IT-IS International acquisition were fully impaired in 2023,
having also been impaired in 2022, due to reduced future expected
cash flow generation.
Goodwill associated with the Primer Design
acquisition was impaired in 2023 due to reduced future expected
cash flow generation.
DHSC contract dispute costs relate to legal
and professional fees and product storage costs incurred in the
ongoing commercial dispute.
Restructuring expenses are driven by the Group
restructuring programmes.
Acquisition related expenses in 2023 include
costs associated with the acquisition of Yourgene Health on 8
September 2023. These costs include advisory fees, legal and
professional fees and termination fees where applicable. Advisory
costs incurred by Yourgene Health relating to the acquisition have
been treated as pre-acquisition costs and are therefore not
included in the Consolidated Income Statement.
Taiwan divestment costs relate to costs
associated with the failed sale of the Yourgene Health (Taiwan) Co.
Ltd.
7. Loss per share
The loss per share is calculated based on the
weighted average number of shares outstanding during the period.
The diluted loss per share is calculated based on the weighted
average number of shares outstanding and the number of shares
issuable as a result of the conversion of dilutive financial
instruments. At 31 December 2023 there are no outstanding dilutive
instruments.
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Net loss attributable to owners of
the Company
|
-28,292
|
-25,730
|
|
Impact of dilutive
instruments
|
-
|
-
|
|
Net diluted loss attributable to
owners of the Company
|
-28,292
|
-25,730
|
|
|
|
|
|
Weighted average number of shares
(actual amount)
|
70,626,248
|
70,626,248
|
|
Impact of dilutive
instruments
|
-
|
-
|
|
Weighted average number of diluted
shares
|
70,626,248
|
70,626,248
|
|
|
|
|
|
Loss per share (£)
|
-0.40
|
-0.36
|
|
Diluted loss per share (£)
|
-0.40
|
-0.36
|
|
|
|
|
|
Loss per share from continuing operations
(£)
Diluted loss per share from continuing operations
(£)
|
-0.39
-0.39
|
-0.31
-0.31
|
|
Loss per share from discontinued operations
(£)
Diluted loss per share from discontinued operations
(£)
|
-0.01
-0.01
|
-0.05
-0.05
|
8. Goodwill
Goodwill is the difference recognised, upon
consolidation of a company, between the fair value of the purchase
price of its shares and the net assets acquired and liabilities
assumed, measured in accordance with IFRS 3.
|
Cost
|
|
|
£'000
|
|
At 1 January 2022
|
|
|
30,358
|
|
|
|
|
|
|
Exchange differences
|
|
|
1,144
|
|
At 31 December 2022
|
|
|
31,502
|
|
|
|
|
|
|
Acquisition of the Yourgene Health
Group of companies
|
|
|
19,542
|
|
Disposal of Cambridge Genomics Corporation and Yourgene Biosciences Co.
Ltd
|
|
|
-276
|
|
Exchange differences
|
|
|
-419
|
|
At 31 December 2023
|
|
|
50,349
|
|
|
|
|
|
|
Accumulated impairment losses
|
|
|
|
|
At 1 January 2022
|
|
|
18,887
|
|
|
|
|
|
|
Impairment of the IT-IS
International goodwill
|
|
|
5,156
|
|
Exchange differences
|
|
|
813
|
|
At 31 December 2022
|
|
|
24,856
|
|
|
|
|
|
|
Impairment of the Primer Design
goodwill
|
|
|
4,113
|
|
Impairment of the IT-IS
International goodwill
|
|
|
262
|
|
Exchange differences
|
|
|
-328
|
|
At 31 December 2023
|
|
|
28,903
|
|
|
|
|
|
|
Carrying value
At 1 January 2022
|
|
|
11,471
|
|
At 31 December 2022
|
|
|
6,646
|
|
At 31 December 2023
|
|
|
21,446
|
Primer Design
The impairment testing of the CGU as at 31
December 2023 was carried out using the DCF method, with the key
assumptions as follows:
o Five-year
business plan;
o Extrapolation
of cash flows beyond five years based on a growth rate of 1.5%;
and
o Discount rate
corresponding to the expected rate of return on the market for a
similar investment, regardless of funding sources, equal to
15.1%.
The implementation of this approach
demonstrated that the value in use amounted to £2,152,000, which is
lower than the carrying amount of this asset. As such, an
impairment charge of £4,113,000 was recognised in the year ended 31
December 2023.
IT-IS International
The impairment testing of the CGU as at 31
December 2023 was carried out using the DCF method, with the key
assumptions as follows:
o Five-year
business plan;
o Extrapolation
of cash flows beyond five years based on a growth rate of 1.5%;
and
o Discount rate
corresponding to the expected rate of return on the market for a
similar investment, regardless of funding sources, equal to
12.1%.
The output from the model demonstrated that
the remaining goodwill needed to be fully impaired.
Yourgene Health
On 8 September 2023, Novacyt UK Holdings
Limited, a wholly-owned subsidiary of Novacyt SA, completed the
purchase of the entire share capital of Yourgene Health Ltd
(formerly plc), an international molecular diagnostic group. The
acquisition was implemented by way of a UK scheme of arrangement
between Yourgene Health and its shareholders under Part 26 of the
UK Companies Act 2006.
The goodwill calculation is presented in note
15 'Business combinations'.
IFRS 3 provides for a period of 12 months
from the date of the acquisition to complete the identification and
measurement of the fair value of assets acquired and liabilities
assumed. The gross amount of goodwill is subject to adjustment
until September 2024.
9. Inventories and work in progress
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Raw materials
|
10,691
|
8,562
|
|
Work in progress
|
1,751
|
2,854
|
|
Finished goods
|
3,631
|
3,404
|
|
Stock provisions
|
-13,051
|
-11,793
|
|
|
|
|
|
Total inventories and work in progress
|
3,022
|
3,027
|
Gross stock has increased in the year due to
the inclusion of Yourgene Health stock.
The 2023 increase in the stock provision is
predominantly due to i) providing for all remaining COVID-19 and
other non-Research Use Only stock as Primer Design focuses on being
a Research Use Only business and ii) the inclusion of Yourgene
Health stock provisions.
10. Trade and other receivables
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
27,509
|
25,485
|
|
Expected credit loss
provision
|
-223
|
-214
|
|
Tax receivables - Value Added
Tax
|
8,541
|
8,312
|
|
Receivables on sale of
businesses
|
-
|
69
|
|
Other receivables
|
207
|
10
|
|
|
|
|
|
Total trade and other receivables
|
36,034
|
33,662
|
Trade receivables have increased in the year
due to the inclusion of the Yourgene Health receivable
balances.
The trade receivables balance includes a
£23,957,000 unpaid DHSC invoice raised in December 2020, in respect
of products delivered during 2020, that remains unpaid at the date
of publishing the annual accounts. Recovery of the invoice is
dependent on the outcome of the contract dispute.
The 'Tax receivables - Value Added Tax'
balance of £8,541,000 mainly relates to VAT paid in the UK on sales
invoices in dispute with the DHSC. As these sales have not been
recognised in accordance with IFRS 15, the revenue, trade
receivable and VAT element of the transactions have been reversed,
resulting in a VAT debtor balance.
Trade receivables balances are due within one
year. Once an invoice is more than 90 days overdue, it is deemed
more likely to default and as such, these invoices have been
provided for in full as part of an expected credit loss model,
except where Management have reviewed and judged
otherwise.
The movement in the expected credit loss
provision is shown below:
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Balance at the beginning of the
period
|
214
|
89
|
|
Impairment losses
recognised
|
260
|
453
|
|
Amounts written off during the
year as uncollectible
|
-98
|
-14
|
|
Impairment losses
derecognised
|
-120
|
-157
|
|
Amounts recovered during the
year
|
-36
|
-157
|
|
Impact of foreign
exchange
|
3
|
-
|
|
|
|
|
|
Balance at the end of the period
|
223
|
214
|
The split by maturity of the clients' receivables is presented
below:
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
Less than one month
|
2,579
|
970
|
|
Between one and three
months
|
575
|
143
|
|
Between three months and one
year
|
75
|
121
|
|
More than one year
|
24,280
|
24,251
|
|
|
|
|
|
Balance at the end of the period
|
27,509
|
25,485
|
11. Lease liabilities
The following tables show lease liabilities
carried at amortised cost.
o Maturities
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Lease liabilities - Less than 1
year
|
1,209
|
609
|
|
Lease liabilities - Between 1 and
5 years
|
4,664
|
263
|
|
Lease liabilities - More than 5
years
|
7,831
|
-
|
|
|
|
|
|
Total lease liabilities
|
13,704
|
872
|
o Change in lease liabilities in 2023 and 2022
|
Amounts in £'000
|
Opening
|
Business
Combinations
|
Repayment
|
Non-cash
movements
|
Closing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in 2022
|
1,870
|
-
|
-503
|
-495
|
872
|
|
Changes in 2023
|
872
|
13,283
|
-1,110
|
659
|
13,704
|
|
|
|
|
|
|
|
The increase in the total lease liability is
due to the inclusion of Yourgene Health lease
liabilities. The main liabilities relate to two premises in
Manchester, UK, Skelton House and City Labs that have multi-year
leases.
12. Provisions
The table below shows the nature of and
changes in provisions for risks and charges for the period from 1
January 2023 to 31 December 2023:
|
Amounts in £'000
|
At
1 January
2023
|
Business
Combinations
|
Increases
|
Reversals
|
Impact of foreign
exchange
|
At
31 December
2023
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for retirement
benefits
|
-
|
7
|
-
|
-
|
-
|
7
|
|
Provisions for restoration of
premises
|
95
|
1,407
|
51
|
-15
|
2
|
1,540
|
|
|
|
|
|
|
|
|
|
Provisions long-term
|
95
|
1,414
|
51
|
-15
|
2
|
1,547
|
|
|
|
|
|
|
|
|
|
Provisions for restoration of
premises
|
330
|
-
|
-
|
-294
|
-
|
36
|
|
Provision for
litigation
|
157
|
-
|
-
|
-
|
-
|
157
|
|
Provisions for product
warranty
|
19,813
|
-
|
-
|
-18
|
-
|
19,795
|
|
|
|
|
|
|
|
|
|
Provisions short-term
|
20,300
|
-
|
-
|
-312
|
-
|
19,988
|
The table below shows the nature of and
changes in provisions for risks and charges for the period from 1
January 2022 to 31 December 2022:
|
Amounts in £'000
|
At
1 January
2022
|
Increase
|
Reduction
|
Other
movements
|
Reclass
|
At
31 December
2022
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions for restoration of
premises
|
308
|
-
|
-
|
117
|
-330
|
95
|
|
|
|
|
|
|
|
|
|
Provisions long-term
|
308
|
-
|
-
|
117
|
-330
|
95
|
|
|
|
|
|
|
|
|
|
Provisions for restoration of
premises
|
-
|
-
|
-
|
-
|
330
|
330
|
|
Provision for
litigation
|
157
|
-
|
-
|
-
|
-
|
157
|
|
Provisions for product
warranty
|
19,799
|
14
|
-
|
-
|
-
|
19,813
|
|
|
|
|
|
|
|
|
|
Provisions short-term
|
19,956
|
14
|
-
|
-
|
330
|
20,300
|
Provisions chiefly cover:
- Risks
related to litigations;
- The
restoration expenses of the premises as per the lease agreements;
and
-
Product assurance warranties.
The provisions for the restoration of the
premises are an estimation of amounts payable to cover
dilapidations at the end of the rental periods, thus at the
following dates:
-
Primer Design Ltd: November 2025;
- IT-IS
International Ltd: September 2025 and December 2028, as there are
two sites that do not have co-terminus leases.
-
Yourgene Health: January 2026, August 2026, January 2028,
September 2029, September 2030, and February 2037 as there are
multiple sites that do not have co-terminus leases.
The provision for product assurance warranties
predominantly relates to the notification of a product warranty
claim with the DHSC (see note 18). Management have assessed the
DHSC product warranty provision held at 31 December 2022 and have
deemed that it is still appropriate at 31 December 2023.
13. Trade and other
liabilities
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Trade payables
|
2,311
|
278
|
|
Accrued invoices
|
3,585
|
2,035
|
|
Payroll related
liabilities
|
1,114
|
455
|
|
Tax liabilities - Value Added
Tax
|
159
|
6
|
|
Other liabilities
|
14
|
13
|
|
|
|
|
|
Total trade and other liabilities
|
7,183
|
2,787
|
Trade payables and accrued invoices have
increased since December 2022 due to the inclusion of Yourgene
Health liabilities.
14. ISSUED CAPITAL AND RESERVES
14.1 Share capital
As of 31 December 2023 and 2022, the Company's
share capital of €4,708,416.54 was divided into 70,626,248 shares
with a par value of 1/15th of a Euro each.
The Company's share capital consists of one
class of share. All outstanding shares have been subscribed, called
and paid.
|
|
Amount of share
capital
£'000
|
Amount of share capital
€'000
|
Unit value per
share
€
|
Number of
shares
issued
|
|
Balance at 1 January
2022
|
4,053
|
4,708
|
0.07
|
70,626,248
|
|
|
|
|
|
|
|
Balance at 31 December
2022
|
4,053
|
4,708
|
0.07
|
70,626,248
|
|
|
|
|
|
|
|
Balance at 31 December
2023
|
4,053
|
4,708
|
0.07
|
70,626,248
|
14.2 Other reserves
|
Amounts in £'000
|
|
|
|
|
|
|
|
|
Balance at 1 January 2022
|
-1,174
|
|
|
|
|
Translation differences
|
-843
|
|
Balance at 31 December 2022
|
-2,017
|
|
|
|
|
Transfer reserve payment in shares
from "retained earnings"
|
3,253
|
|
Translation differences
|
363
|
|
Balance at 31 December 2023
|
1,599
|
14.3 Retained earnings/losses
|
Amounts in £'000
|
|
|
|
|
|
|
|
|
Balance at 1 January 2022
|
87,188
|
|
|
|
|
Loss for the year
|
-25,730
|
|
Adjustment of the LTIP
contribution
|
-13
|
|
Balance at 31 December 2022
|
61,445
|
|
|
|
|
Loss for the year
|
-28,292
|
|
Transfer reserve payment in shares
to "other reserves"
|
-3,253
|
|
Other
|
2
|
|
Balance at 31 December 2023
|
29,902
|
15. Business Combinations
Acquisition
of Yourgene Health Ltd (formerly PLC)
On 8 September 2023, Novacyt UK Holdings
Limited, a wholly-owned subsidiary of Novacyt SA, completed the
purchase of the entire share capital of Yourgene Health Ltd
(formerly PLC), an international molecular diagnostic group. The
acquisition was implemented by way of a UK scheme of arrangement
between Yourgene Health and its shareholders under Part 26 of the
UK Companies Act 2006.
The acquisition combines highly complementary
technologies and services, with the enlarged Group able to leverage
mutual research and development capabilities for ongoing product
development and portfolio enhancement to improve the customer
offering.
The purchase price was £16,670,000, and was
settled in full in cash.
As at the date of acquisition, the fair value
of the assets acquired and the liabilities assumed are as
follows:
|
Intangible assets
|
£10,618,000
|
|
Property, plant and
equipment
|
£2,844,000
|
|
Right-of-use assets
|
£10,980,000
|
|
Inventory
|
£2,541,000
|
|
Trade receivables
|
£2,473,000
|
|
Other current assets
|
£4,252,000
|
|
Cash
|
£1,289,000
|
|
Lease liabilities
|
-£13,283,000
|
|
Bank borrowings
|
-£2,367,000
|
|
Contingent liabilities
|
-£1,020,000
|
|
Deferred tax
liabilities
|
-£1,932,000
|
|
Trade payables and
accruals
|
-£13,353,000
|
|
Other current
liabilities
|
-£5,914,000
|
|
Fair value of assets acquired and liabilities
assumed
|
-£2,872,000
|
|
|
|
|
Goodwill
|
£19,542,000
|
The table above shows how the goodwill figure
of £19,542,000 is arrived at after allocating the purchase price
across all the assets and liabilities acquired. The residual
goodwill arising from the acquisition reflects the future growth
expected to be driven by new and existing customers, the value of
the workforce, patents and know-how.
IFRS 3 provides for a period of 12 months
from acquisition to complete the identification and measurement of
the fair value of assets acquired and liabilities assumed. This
means that the gross amount of goodwill is subject to
adjustment until September 2024.
Goodwill is a residual component calculated as
the difference between the purchase price for the acquisition of
control and the fair value of the assets acquired and liabilities
assumed. It includes unrecognised assets such as the value of the
personnel and know-how of the acquiree.
The total amount of goodwill that is expected
to be deductible for tax purposes is nil.
The gross trade receivables balance in the
opening balance sheet totalled £3,971,000 of which Novacyt
estimates that £1,580,000 is unlikely to be collectable.
The amount of contingent consideration
recognised at acquisition date totalled £1,020,000. This balance
represents an earn-out milestone payment contingent upon achieving
revenue targets, which had been achieved at the date of the
acquisition.
In addition to the £16,670,000 cash
consideration for Yourgene Health, there were a number of other
acquisition related fees that were incurred as a result of the
transaction resulting in the deal generating a cash outflow of
£27,626,000, which breaks down as follows:
- Cash
consideration:
-£16,670,000
-
Settlement of Life Sciences contingent liability:
-£6,500,000
-
Repayment of SVB Bank loan in GBP:
-£2,362,000
- Deal
advisory costs incurred by Yourgene Health:
-£1,959,000
- Deal
advisory costs incurred by Novacyt:
-£1,424,000
- Cash
acquired: (cash Inflow)
£1,289,000
|
Total cash
outflow
|
£27,626,000
|
Depending on their nature, these disbursements
are presented in the cash flow statement as part of the operating
loss for the financial year, movements in payables, movements in
investing activities or movements in financing
activities.
The acquisition costs of £1,424,000 incurred
by Novacyt only, are included in the consolidated income statement
in the year ended 31 December 2023 within 'other operating
expenses'.
Yourgene Health contributed £5,635,000 to
consolidated revenue and contributed a loss of £4,824,000 in the
year ended 31 December 2023 between its consolidation on 8
September 2023 and 31 December 2023.
If the acquisition of the Yourgene Health
shares were deemed to have been completed on 1 January 2023, the
opening date of the Group's 2023 financial year, consolidated Group
revenue would have amounted to £22,816,000 with a net loss
attributable to owners of the Company of £50,283,000.
The table below presents the Group income
statement for the 12 months period ended on 31 December 2023 as if
the acquisition of Yourgene Health had been completed on 1 January
2023:
|
Amounts in £'000
|
Year ended
31 December 2023
Pro forma
|
|
|
|
|
|
|
|
Revenue
|
22,816
|
|
Cost of sales
|
-14,934
|
|
Gross profit
|
7,882
|
|
|
|
|
Sales and marketing and
distribution expenses
|
-6,483
|
|
Research and development
expenses
|
-4,701
|
|
General and administrative
costs
|
-25,594
|
|
Governmental subsidies
|
125
|
|
Operating loss before exceptional items
|
-28,771
|
|
|
|
|
Costs related to
acquisitions
|
-1,705
|
|
Other operating
expenses
|
-19,570
|
|
Operating loss after exceptional items
|
-50,046
|
|
|
|
|
Financial income
|
3,701
|
|
Financial expense
|
-3,989
|
|
Loss before tax
|
-50,334
|
|
|
|
|
Tax income
|
51
|
|
Loss after tax
|
-50,283
|
|
|
|
|
Loss after tax attributable to
owners of the Company
|
-50,283
|
16. Notes to the cash flow statement
|
Amounts in £'000
|
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year
|
|
-28,292
|
-25,730
|
|
Loss from discontinued operations
|
|
-492
|
-3,529
|
|
Loss from continuing operations
|
|
-27,800
|
-22,201
|
|
|
|
|
|
|
Adjustments for:
|
|
|
|
|
Depreciation, amortisation,
impairment loss and provisions
|
|
9,643
|
7,918
|
|
Unwinding of discount on
contingent consideration
|
|
31
|
133
|
|
Losses on disposal of
assets
|
|
1,195
|
543
|
|
Surrendering the Watchmoor Point
lease (non-cash impact)
|
|
-
|
281
|
|
Other revenues and charges without
cash impact
|
|
270
|
-
|
|
Income tax charge /
(credit)
|
|
-893
|
1,998
|
|
Operating cash flows before movements of working
capital
|
|
-18,046
|
-14,857
|
|
|
|
|
|
|
Decrease in inventories
(*)
|
|
2,554
|
8,434
|
|
Decrease in receivables
|
|
3,769
|
4,625
|
|
Decrease in payables
|
|
-12,680
|
-15,624
|
|
Cash used in operations
|
|
-24,403
|
-17,422
|
|
|
|
|
|
|
Income taxes received
|
|
980
|
4,223
|
|
Finance costs
|
|
-1,568
|
-530
|
|
Net cash (used in) / from operating
activities
|
|
-24,991
|
-13,729
|
|
Operating cash flows from discontinued
operations
|
|
-689
|
-1,955
|
|
Operating cash flows from continuing
operations
|
|
-24,302
|
-11,774
|
(*) The variation of the inventories value
results from the following movements:
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
Decrease in the gross value of
inventories
|
3,351
|
15,743
|
|
Variation of the stock
provision
|
-797
|
-7,309
|
|
Total variation of the net value of
inventories
|
2,554
|
8,434
|
The details for the change in the stock
provision are covered in notes 4 and 9.
17. Related parties
Parties related to Novacyt SA are:
- the
managers, whose compensation is disclosed below; and
- the
Directors of Novacyt SA.
Remuneration of key management personnel
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Fixed compensation and company
cars
|
1,176
|
1,605
|
|
Variable compensation
|
57
|
15
|
|
Social security
contributions
|
158
|
224
|
|
Contributions to supplementary
pension plans
|
33
|
26
|
|
Cash based payment benefits
- LTIP
|
-
|
17
|
|
Total remuneration
|
1,424
|
1,887
|
Aggregate Directors' remuneration
|
Amounts in £'000
|
Year ended
31 December
2023
|
Year ended
31 December
2022
|
|
|
|
|
|
|
|
|
|
Fixed compensation and company
cars
|
726
|
988
|
|
Variable compensation
|
-
|
-
|
|
Social security
contributions
|
115
|
155
|
|
Contributions to supplementary
pension plans
|
4
|
-
|
|
Fees
|
-
|
38
|
|
Total remuneration
|
845
|
1,181
|
Other related
party transactions
Yourgene Health invoiced £20,000 (excluding
VAT) in the post-acquisition period for goods and services to
MyHealthChecked plc, a company for which Lyn Rees is a
non-executive Director.
18. Contingent liabilities
During 2021, the Group received notification
of a contract dispute between its subsidiary, Primer Design Ltd,
and the DHSC. The total amount of revenue in dispute is
£130,642,000 (£156,770,000 including VAT) in respect of performance
obligations satisfied during the financial year to 31 December
2020.
Payment for £23,957,000 of invoices in respect
of products delivered during 2020 remains outstanding at the date
of publishing the annual accounts and recovery of the debt is
dependent on the outcome of the dispute.
During 2021, a further £49,034,000 (including
VAT) of products and services were delivered and invoiced to the
DHSC which have subsequently been included as part of the ongoing
dispute. Management made the judgement that in accordance with IFRS
15, Revenue from Contracts with Customers, it was not appropriate
at that stage in the dispute to recognise as revenue, any sales
invoices raised to the customer in 2021 that were in dispute.
However, Management remains committed to obtaining payment for
these goods and services.
On 25 April 2022, legal proceedings were
issued against Novacyt and Primer Design Ltd in respect of amounts
paid to Primer Design Ltd totalling £134,635,000 (including VAT) by
the DHSC.
On 15 June 2022, Novacyt and Primer Design Ltd
filed a defence of the claim received on 25 April 2022, and Primer
Design Ltd made a counterclaim of circa £81,500,000 including
interest and VAT against the DHSC.
On 30 January 2023, Novacyt announced that the
UK High Court had directed Novacyt that the hearing of the case
between Primer Design Ltd / Novacyt SA and the DHSC has been listed
to commence on 10 June 2024 and is expected to last 16
days.
The Group remains committed to defending the
case and asserting its contractual rights, including recovering
outstanding sums due from the DHSC.
Management have reviewed the position at 31
December 2023 and deem this to be an appropriate reflection of the
current commercial dispute.
Management and the Board of Directors have
reviewed the product warranty provision totalling £19,753,000
booked in 2020 in relation to the DHSC dispute and have deemed that
it remains appropriate at 31 December 2023.
19. Subsequent events
On 6 February 2024 Novacyt received formal
notification from INEX Innovate Pte Ltd of its decision to
terminate discussions regarding the acquisition of Yourgene Health
(Taiwan) Co. Ltd, as originally announced by Yourgene Health on 13
June 2023.