TIDMYGEN
RNS Number : 9206I
Yourgene Health PLC
17 December 2020
Yourgene Health plc
("Yourgene", the "Company" or the "Group")
Half-year Report
Manchester, UK - 17 December 2020: Yourgene Health plc (AIM:
YGEN), the international molecular diagnostics group which
commercialises genetic products and services, announces its
unaudited half-year report for the six months ended 30 September
2020.
The results demonstrate the resilience of the Group's core
business during the first few months of the global pandemic, its
responsiveness in launching COVID-19 testing solutions rapidly and
its focus on driving further long-term growth through the
acquisition of Coastal Genomics Inc. ("Coastal Genomics") in August
2020. This half-year has also been a period of continued
investment, further strengthening the underlying business and
enabling growth for the full year and beyond.
Operational highlights
-- IONA(R) Nx, the Illumina-based non-invasive prenatal test
(NIPT), launched, CE-marked and now mid roll-out in EU; also
approved in Australia
-- Acquisition of Coastal Genomics and associated GBP15.1m (net)
equity fundraise in August 2020, providing additional capital for
investment in revenue generating assets and broader commercial
footprint
-- Launch of COVID-19 testing service in the UK and the
CE-marked Clarigene Sars-CoV-2 PCR test, with overseas
registrations underway
-- All previous acquisitions exceeded performance conditions for the reporting period
-- Launch of Yourgene Genomic Services in late September as a
full lifecycle research-to-clinical offering, combining existing
NIPT, CRO and research services plus recent partnerships in
Alzheimer's and Naso-Pharyngeal Cancer
-- German reimbursement level set for DPYD testing, supporting
market penetration for the Company's Elucigene DPYD Test
Financial highlights
-- Revenues increased by 5% to GBP8.2m (H1 2019-20: GBP7.8m)
-- Gross profit up 4% to GBP4.9m (H1 2019-20: GBP4.7m)
-- General administrative expenses up 21% to GBP5.2m (H1
2019-20: GBP4.3m) including GBP0.8m targeted investment including
expenditure on the IONA(R) Nx transition programme, manufacturing
scale-up and testing laboratory provisioning plus incremental
acquired overheads
-- Adjusted EBITDA* was a loss of GBP0.2m (H1 2019-20: profit of
GBP0.4m) after the above additional administrative expenditures
-- Operating loss GBP2.5m (H1 2019-20: GBP1.7m); GBP1.6m before
separately disclosed Income Statement items
-- Oversubscribed GBP15.1m (net) equity fundraise; being
deployed for Coastal Genomics acquisition, laboratory expansions in
Manchester and Taipei, IONA(R) Nx reagent rental contracts and
stronger commercial team
-- Cash used by operations reduced to GBP1.2m (H1 2019-20: GBP1.6m)
-- Cash and cash equivalents as at 30 September 2020 of GBP12.2m
(30 September 2019: GBP4.1m); net cash GBP11.9m (30 September 2019:
GBP3.6m)
Post period end:
-- Two US customer reproductive health contracts, delayed in H1
due to COVID-19 restrictions, now in final stage validation
-- A warded a renewed 3-year contract with St George's
University Hospitals NHS Foundation Trust for the new IONA(R) Nx
NIPT workflow
-- Partnerships in Japan and Taiwan for Yourgene's
bioinformatics platform and naso-pharyngeal cancer respectively
-- Dr Joanne Mason appointed to the Board as Chief Scientific
Officer, Dr Bill Chang remaining on the Board as Chief
Entrepreneur, focusing on new scientific collaborations and
business ventures
-- DPYD adoption in Wales and recommendation for use by NHS England
Lyn Rees, Chief Executive Officer of Yourgene, commented:
"The results demonstrate the resilience of the Group's core
business during the first few months of the global pandemic and
although Yourgene's operating landscape during the first half was
volatile, as experienced by the great majority of businesses, we
have built a significant hedge through our UK COVID-19 testing
offering. From a standing start in May 2020, our COVID-19 products
and services generated revenues of GBP0.5m in H1 and have already
exceeded that in the first two months of H2. We are very proud of
our contribution to the global effort both to combat the virus and
to get the global economy moving again.
"We have proven very adaptable in the face of COVID-19 and,
whilst not unaffected, we have more than stood our ground. The
reorientation of the business that was commenced in 2019, namely to
focus on our four key strategic growth drivers - product
penetration, geographical expansion, product expansion and
acquisition growth - continues to bear fruit, and we are working
well with our new Canadian colleagues at Coastal Genomics to
convert the exciting pipeline of opportunities they bring to the
Group.
"We continue to have a very significant opportunity ahead of us,
and we remain confident in our outlook for the current financial
year. Being at the forefront of new diagnostic technologies, we are
hugely excited about the prospects for substantial growth in the
years to come and we are utilising the additional funds entrusted
to us by shareholders to ensure we capitalise on these
opportunities as effectively as possible."
A presentation on the financial results and business outlook
will be delivered by Lyn Rees, CEO, and Barry Hextall, CFO and will
be available to view on the Company's website later today, here:
Yourgene Health plc - Investor Videos and Media
(yourgene-health.com)
* Adjusted EBITDA is the operating profit/(loss) before
interest, tax, depreciation, amortisation, and expenses shown
separately disclosed on the face of the Income Statement
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For more information, please contact:
Yourgene Health plc Tel: +44 (0)161 669 8122
Lyn Rees, Chief Executive Officer investors@yourgene-health.com
Barry Hextall, Chief Financial Officer
Joanne Cross, Director of Marketing
Cairn Financial Advisers LLP (NOMAD) Tel: +44 (0)20 7213 0880
Liam Murray / James Caithie / Ludovico
Lazzaretti
N+1 Singer (Joint Corporate Broker) Tel: +44 (0)20 7496 3000
Aubrey Powell / Tom Salvesen / George
Tzimas
Stifel Nicolaus Europe Limited (Joint Tel: +44 (0)20 7710 7600
Corporate Broker)
Nicholas Moore / Matthew Blawat / Ben
Maddison
Walbrook PR Ltd (Media and Investor Tel: +44 (0)20 7933 8780 or yourgene@walbrookpr.com
Relations)
Paul McManus / Lianne Cawthorne Mob: 07980 541 893 / Mob: 07584
391 303
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.
Yourgene primarily develops, manufactures, and commercialises
simple and accurate molecular diagnostic solutions, for
reproductive health, precision medicine and now infectious
diseases. The Group's flagship products include non-invasive
prenatal tests (NIPT) for Down's Syndrome and other genetic
disorders, Cystic Fibrosis screening tests, invasive rapid
aneuploidy tests, and a recent extension into the oncology space
with DPYD genotyping.
The launch of Yourgene Genomic Services has enabled Yourgene to
offer a global laboratory service network equipped to be a full
life-cycle partner for clinical, research and pharmaceutical
organisations to support partners at the preclinical, clinical, and
post-market stages to develop, manufacture, obtain regulatory
approval and commercialise new products and services. In addition,
Yourgene Genomic Services offers an NIPT and high throughput
COVID-19 testing service.
In August 2020, Yourgene acquired Coastal Genomics, Inc., a
sample preparation technology company based in Vancouver, Canada,
enabling the Company to extend its offering and IP portfolio in the
DNA sample preparation sector. The acquisition increased Yourgene's
geographical penetration into the US and Canada, supplementing
existing coverage in the UK, Europe, MEA and Asia.
Yourgene Health is headquartered in Manchester, UK with offices
in Taipei, Singapore, the US and Canada, and is listed on the
London Stock Exchange's AIM market under the ticker "YGEN". For
more information visit www.yourgene-health.com and follow us on
twitter @Yourgene_Health.
BUSINESS REVIEW
I am encouraged by the resilience of our exceptional team in
adapting to the new reality we all face. We have kept our focus on
our strategic journey while also admirably rising to the challenge
of the COVID-19 pandemic.
Despite the headwinds and significant uncertainty brought about
by the global pandemic, we remain focused on our four strategic
priorities to deliver growth and shareholder value:
Product penetration selling more into existing channels
Geographic expansion selling more into new territories
Product expansion new product lines and content
Acquisitive growth both earnings enhancement opportunities and technology
consolidation
I am very pleased to report that we have again made significant
progress with all of these strategic objectives.
Product penetration
There have been logistical challenges for both our products and
our customer-facing teams, and a number of our international
partners had to divert resources to the fight against COVID-19, as
described in our trading update of 26 October 2020. Despite these
challenges, and some false dawns in between successive COVID-19
waves, revenues grew modestly and we firmly believe our business
has strong foundations to benefit as the world's clinical activity
levels return to focus more on health challenges outside of the
pandemic. The successful equity placing in early August has enabled
us to further invest in our commercial team, our laboratory
services capabilities and in capital equipment to support the
transition of our core European NIPT markets over to the new
IONA(R) Nx solution.
The greater diversity of our revenue base can be seen in the
table below:
H1 H1 Growth
2020-21 % of 2019-20 % of
total total
GBP'000 GBP'000 %
Revenue analysed by product segments
NIPT 4,166 51% 4,783 62% -13%
Reproductive Health 1,661 20% 1,633 21% +2%
Molecular Genetics 2,354 29% 1,351 17% +74%
----------- ------- ---------- ------- -------
8,181 100% 7,767 100% +5%
=========== ======= ========== ======= =======
Geographic expansion
We have a significant focus on building a sizeable business in
North America which has been somewhat delayed due to COVID-19
obstacles. These are now resolved and strong momentum has resumed .
We now have two active US partners for our next-generation
sequencing based Flex(R) software and related general-purpose
library preparation reagents. They are both in the validation
stages and we anticipate they will launch their reproductive
health-based clinical services in the first half of calendar 2021.
In September 2020 we also appointed an experienced North American
distributor for our PCR-based product portfolio.
Our other international markets have suffered during the
pandemic due to logistical constraints into India, Japan and the
Middle East, as well as the effect of diverting healthcare budgets
towards fighting the COVID-19 pandemic. We are confident that the
underlying strength of our customer base and commercial channels
will allow this territory to bounce back as soon as possible but
the timing of that is unpredictable at present.
We have made changes to our distribution channels in northern
Europe, India and the Middle East to strengthen our partner network
and be ready for those markets to reopen.
The positive impact of the AGX-DPNI acquisition on NIPT in
France, the continued DPYD product penetration in the UK and
Europe, and our COVID-19 testing services in the UK succeeded in
offsetting COVID-19-affected weakness in our international markets
as shown below:
H1 H1 Growth
2020-21 % of 2019-20 % of
total total
GBP'000 GBP'000 %
Revenue analysed by geographical market
UK 1,521 19% 1,095 14% +39%
Europe 2,877 35% 1,602 21% +80%
International 3,783 46% 5,070 65% -25%
-------------- ------- ---------- ------- -------
8,181 100% 7,767 100% +5%
============== ======= ========== ======= =======
Product expansion
The third growth driver for the business is to offer more
customers new product lines and content and it is our continuing
strategic goal to broaden our portfolio further beyond NIPT. The
2019 launch of DPYD, a chemotherapy toxicity assay, is going from
strength to strength as it becomes incorporated into clinical
treatment and reimbursement pathways internationally. Earlier this
month post period end, Yourgene welcomed the Clinical Commissioning
Urgent Policy Statement, published by NHS England, recommending the
routine availability of DPYD testing prior to the start of
treatment with chemotherapeutic drug 5-Fluorouracil (5-FU), to
identify the risk of severe side effects, h ighlighting the
importance of such test and improving care for cancer patients.
This followed the news that the Elucigene DPYD test is routinely
being used in Wales since October 2020.
The primary product development focus in the first half of this
financial year has been the launch of IONA(R) Nx, the
Illumina-based NIPT test which is now live in many of our key
European customers. The roll-out of IONA(R) Nx is continuing into
early 2021. The tender success with St. George's Hospitals NHS
Foundation Trust, a long-time partner of Yourgene, is a real vote
of confidence in the new product in the face of competition from
international majors.
The Group has also expended considerable effort on developing a
high precision PCR assay for the detection of Sars-CoV-2, both for
commercial reasons and to contribute to the diagnostic industry's
fight against the virus. The Clarigene(R) test was launched in June
2020 and received its CE-mark in July 2020. Whilst the news of
available vaccines is very welcome, we still believe that in-lab
and near-patient testing at scale and speed, with PCR precision,
will be essential to getting the global economy moving again in
2021.
Acquisitive growth
In August 2020, we undertook an equity placing, raising net
proceeds of GBP15.1m and completed the acquisition of Coastal
Genomics for an enterprise value of up to GBP10.5m, comprising
initial consideration of GBP2.3m cash and GBP1.9m equity, with the
potential and further earn-outs (up to GBP1.5m in equity and
GBP4.8m in cash), based on demanding performance targets. Funds
from the raise are also being used to support the acceleration of
commercial activity, including the roll-out of the IONA(R) Nx NIPT
workflow and scale-up of our testing and production capacity.
We are continuing to build a strong track record with respect to
carefully identifying, successfully pursuing and closing
acquisition targets and integrating them into the wider Yourgene
Group. The acquisition of Coastal Genomics not only brings some
valuable IP-based technology into the Group to strengthen our
position in the global NIPT market, but it also opens up an
exciting pipeline of oncology opportunities, especially in North
America.
The earlier acquisitions of our French distribution business
(AGX-DPNI) in France in March 2020, and the assets of Ex5 Genomics
in the UK in July have both exceeded their respective performance
conditions thus far, and the 2019 acquisition of Elucigene
Diagnostics continues to perform well, especially with the DPYD
product launched in late 2019. We remain focused on integrating the
recent acquisitions and managing them through the COVID-19
pandemic. We continue to consider additional selective synergistic
M&A opportunities where our target criteria are met and the
Group is able to integrate effectively .
Financial position
The Group's results for the six months to 30 September 2020 are
presented in the financial statements below and show gross profits
having increased by 4% to GBP4.9m (H1 2019-20: GBP4.7m), on the
back of similar levels of revenue growth. Investment of GBP0.8m
across acquired company overheads, the expansion of UK-based
Genomic Services operating capabilities, manufacturing scale-up and
the transition costs associated with the switchover of European
customers to the newly launched IONA(R) Nx NIPT workflow led to a
21% increase in general administrative expenses to GBP5.2m (H1
2019-2020: GBP4.3m). This targeted expansion creates the platform
to support revenue growth in H2 and in subsequent financial
years.
Adjusted EBITDA was a loss of GBP0.2m (2019-20: profit of
GBP0.4m), reflecting these additional expenditures. The Group's
operating loss was GBP2.5m (H1 2019-20: loss of GBP1.3m), GBP1.6m
before the separately disclosed items.
Net financing expenses remained low at GBP0.1m (H1 2019-20:
GBP0.1m) reflecting the minimal debt position of the Group. The
total comprehensive loss for the period was GBP2.5m (H1 2019-20:
GBP1.4m). Earnings per share were a loss of 0.4 pence per share (H1
2019-20: loss of 0.2 pence; full year 2019-20: loss of 0.4
pence).
In the reporting period, the Group used GBP1.2m cash for
operating activities (H1 2019-20: GBP1.6m) reflecting
self-sufficient trading plus separately disclosed acquisition and
integration expenses and reduced working capital consumption
compared to the prior year. Working capital increases were largely
due to an increase in inventories ahead of the IONA(R) Nx roll-out
and the scale-up of Clarigene(R)-based services and sales.
The August 2020 equity placing, to support the Coastal Genomics
acquisition, plus the issue of unrelated share options and warrant
exercises in the period, generated significant liquidity (GBP15.6m
vs H1 2019-20: GBP10.4m). These funds were partly utilised on the
GBP2.3m up-front portion of the acquisition cost of Coastal
Genomics, in capital equipment for the IONA(R) Nx roll-out,
expansion of our UK service offering and on capitalised development
costs for the Clarigene(R) and IONA Nx products meeting IFRS
criteria. Together investing activities consumed GBP5.0m (H1
2019-20: GBP6.0m, due to the larger cash component in the Elucigene
acquisition in that period) and we continue to invest funds in
growth initiatives.
At the end of the reporting period, the Group had GBP12.2m in
cash and cash equivalents, a threefold year-on-year increase (30
Sept 2019: GBP4.1m). Borrowings are modest and net cash is GBP11.9m
(30 Sept 2019: GBP3.6m).
Post period end:
Since the end of September the Group has made a number of new
announcements demonstrating further product penetration and
geographic and product expansion. Two US customer reproductive
health contracts, delayed in H1 due to COVID-19 restrictions, are
now in final stage validation and are contributing to H2 revenues
even prior to anticipated launches in early 2021. In the UK the
Group was awarded a renewed 3-year contract with the flagship St
George's University Hospitals NHS Foundation Trust for the new
IONA(R) Nx NIPT workflow. In the Asia Pacific region the Group
announced partnerships in Japan, using Yourgene's bioinformatics
platform and software for reproductive health and in Taiwan using
Yourgene's local presence to promote certain oncology testing
solutions. The DPYD product has continued to build on its
successful launch in late 2019 and has recently had reimbursement
authorised in Germany and is increasingly an approved element on
chemotherapy clinical pathways in England and Wales.
Board changes
In November 2020, we appointed Dr Joanne Mason to the executive
board position of Chief Scientific Officer and Dr Bill Chang became
executive Chief Entrepreneur. Dr Joanne Mason has been a champion
of modernising diagnostics with the use of genomic technologies and
having worked with Dr Mason for the past year, the Company
witnessed the tremendous job she has done enabling the launch and
commercialisation of key products, making her a perfect candidate
to help deliver the Company's new product development roadmap. Bill
continues to apply his entrepreneurial flair actively to our
business development agenda.
Outlook
The results demonstrate the resilience of the Group's core
business during the first few months of the global pandemic and
although the business conditions during the first half were
volatile, as experienced by the great majority of businesses, we
have built a significant hedge, from a standing start, in our UK
COVID-19 testing offerings. These products and services generated
revenues of GBP0.5m in H1 and have already exceeded that in the
first two months of the second half, as we utilise our expanded
testing and production capacity. Our UK Genomic Services team has
established multiple routes to market for our COVID-19 testing
covering entertainment, consumer, travel and sporting sectors plus
an expanding network of pharmacies, travel hubs and other testing
outlets. We are solely using Clarigene(R), our high precision PCR
assay for detecting Sars-CoV-2. Clarigene is also being adopted in
near-patient testing locations to create biobubbles, provide
reassurance to individuals and to facilitate workplace and
transportation return to work activities.
Our core business was impacted by the first two COVID-19 waves
but is now making considerable progress on a global scale and we
are progressing towards our strategic goals. NIPT is a key
foundation for this strategy and, despite private NIPT laboratory
customers diverting resources towards COVID-19 testing, we have
successfully launched the Illumina-based version of the IONA(R)
test in Europe and this promises to be a strong platform for growth
in a much expanded addressable market for us. Reproductive health
revenues have held up well with their public hospital focus, and
the molecular genetics segment performed strongly due to Flex
software revenues augmenting research service and COVID-19-related
income.
The reorientation of the business to focus on our four key
strategic growth drivers continues to bear fruit and remains a key
priority in our business planning. We are very appreciative of the
trust placed in us by our shareholders and we are utilising the
extra liquidity raised in August to be at the forefront of the new
wave of diagnostic technologies. While these are proving so
valuable at the current time, we believe these technologies also
provide substantial growth opportunities over the years to
come.
Lyn Rees
Chief Executive Officer
17 December 2020
Consolidated Statement of Comprehensive
Income
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30-Sep 30-Sep 31-Mar
2020 2019 2020
GBP'000 GBP'000 GBP'000
Revenue 8,181 7,767 16,613
Cost of sales (3,265) (3,056) (6,388)
Gross profit 4,916 4,711 10,225
Other operating income 59 46 68
Administrative expenses
General administrative expenses (5,225) (4,328) (9,038)
----------------------------------------------- ---------- ---------- ----------
Adjusted EBITDA (250) 429 1,255
Depreciation and amortisation (1,308) (1,112) (2,094)
Share-based payments expense (453) (83) (1,602)
Costs associated with the acquisition of
subsidiary (280) (195) (265)
Acquisition integration expense (219) (315) (533)
Total depreciation, amortisation & separately
disclosed items (2,260) (1,706) (4,494)
Operating loss (2,510) (1,277) (3,239)
Financing income 1 10 20
Financing expenses (96) (75) (163)
Loss on ordinary activities before taxation (2,605) (1,342) (3,382)
Tax credit/(charge) on loss on ordinary
activities 47 (80) 948
Loss for the period (2,558) (1,422) (2,434)
Other comprehensive income
Exchange translation differences 41 42 140
Loss and total comprehensive loss for the
period (2,517) (1,380) (2,294)
----------------------------------------------- ---------- ---------- ----------
Earnings per share pence
Basic: Loss per share (0.4p ) (0.2p ) (0.4p )
Diluted: Loss per share (0.4p ) (0.2p ) (0.4p )
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30-Sep 30-Sep 31-Mar
2020 2019 2020
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 12,987 10,806 10,806
Intangible assets 17,621 6,378 10,192
Property, plant and equipment 3,427 1,936 1,969
Right of Use Asset 3,069 2,969 2,997
Tax Asset 132 - 533
Deferred tax asset 1,131 - 1,181
Total non-current assets 38,367 22,089 27,677
Current assets
Inventories 1,804 1,128 1,152
Trade and other receivables 5,647 4,050 5,629
Tax asset 541 777 452
Cash and cash equivalents 12,204 4,073 2,764
Total current assets 20,196 10,028 9,998
Total assets 58,563 32,117 37,676
---------------------------------------------- ---------- ---------- ---------
Equity and liabilities attributable to equity holders
of the company
Equity
Called up share capital 32,666 32,544 32,561
Share premium account 67,057 48,734 51,180
Merger relief reserve 14,815 12,938 12,938
Reverse acquisition reserve (39,947) (39,947) (39,947)
Foreign exchange translation reserve 33 (106) (8)
Warrants reserve 3,069 3,069 3,069
Retained losses (35,600) (34,001) (33,495)
Total equity 42,093 23,231 26,299
Current liabilities
Trade and other payables 4,848 3,991 4,908
Lease liability 388 196 341
Current tax liabilities 320 234 433
Borrowings 171 321 278
Other Liabilities & Provisions 3,404 43 513
Total current liabilities 9,131 4,785 6,472
Non-current liabilities
Borrowings 108 139 85
Deferred tax liability 2,849 1,195 1,153
Lease Liability 2,835 2,691 2,710
Long term provisions 1,548 76 956
Total non-current liabilities 7,340 4,101 4,905
Total equity and liabilities 58,563 32,117 37,676
---------------------------------------------- ---------- ---------- ---------
Consolidated Statement of Changes in Equity
Share Share Merger Warrants Reverse Foreign Retained Total
capital premium relief reserve acquisition exchange losses
account reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 30
September
2019 (unaudited)
Balance at 1 April 2019 32,404 37,971 10,013 3,069 (39,947) (148) (32,662) 10,700
Loss for the period - - - - - (1,422) (1,422)
Other comprehensive
income - - - - - 42 42
Total comprehensive loss
for
the period - - - - - 42 (1,422) (1,380)
Transactions with owners
Issue of share capital 115 11,715 11,830
Share issue expenses (952) (952)
Issue of share capital on
acquisition 25 2,925 2,950
Share-based payments 83 83
Warrants issued - - - - - - - -
Total transactions with
owners 140 10,763 2,925 - - - 83 13,911
Balance at 30 September
2019 32,544 48,734 12,938 3,069 (39,947) (106) (34,001) 23,231
========================== ========= ========= ========= ========= ============= ========== ========= ========
Consolidated Statement of Changes in Equity
Share Share Merger Warrants Reverse Foreign Retained Total
capital premium relief reserve acquisition exchange losses
account reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
12 months ended 31 March
2020
(audited)
Balance at 1 April 2019 32,404 37,971 10,013 3,069 (39,947) (148) (32,662) 10,700
Loss for the year - - - - - - (2,434) (2,434)
Other comprehensive
income - - - - - 140 - 140
Total comprehensive loss
for
the year - - - - - 140 (2,434) (2,294)
Transactions with owners
Issue of share capital 133 14,198 - - - - - 14,330
Share issue expenses - (989) - - - - - (989)
Issue of share capital on
acquisition 25 - 2,925 - - - - 2,950
Share-based payments - - - - - - 1,602 1,602
Warrants issued - - - - - - - -
Total transactions with
owners 157 13,208 2,925 - - - 1,602 17,893
Balance at 31 March 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,299
========================== ========= ========= ========= ========= ============= ========== ========= ========
Consolidated Statement of Changes in Equity
Share Share Merger Warrants Reverse Foreign Retained Total
capital premium relief reserve acquisition exchange losses
account reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 30
September
2020 (unaudited)
Balance at 1 April 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,299
Loss for the period (2,558) (2,558)
Other comprehensive
income 41 41
Total comprehensive loss
for
the period - - - - - 41 (2,558) (2,517)
Transactions with owners
Issue of share capital 104 16,945 - - - - - 17,049
Share issue expenses - (1,068) - - - - - (1,068)
Issue of share capital on
acquisition 1 - 1,877 - - - - 1,878
Share-based payments - - - - - - 453 453
Warrants issued - - - - - - - -
Total transactions with
owners 104 15,877 1,877 - - - 453 18,311
Balance at 30 September
2020 32,666 67,057 14,815 3,069 (39,947) 33 (35,600) 42,093
========================== ========= ========= ========= ========= ============= ========== ========= ========
Consolidation Statement of Cash
Flows
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30-Sep 30-Sep 31-Mar
2020 2019 2020
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss for the year before tax (2,605) (1,342) (3,382)
Adjustments for:
Finance costs 96 75 163
Finance income (1) (10) (20)
Depreciation and impairment of property,
plant and equipment 414 536 950
Depreciation and impairment of right
of use asset 249 275 468
Loss on disposal of property, plant
and equipment - 68 67
(Gain) on revaluation of right of
use asset - - (121)
Amortisation of intangible non-current
assets 645 301 676
Impairment on financial assets (IFRS9) 25 61 107
Foreign exchange movements (134) 9 72
Share based payment and warrant
expense 453 83 1,602
Decrease in provisions - (208) (206)
Tax received / (paid) 333 20 (16)
Movements in working capital:
(Increase)/decrease in inventories (435) 51 27
(Increase)/decrease in trade and
other receivables 264 (567) (1,172)
Increase/(decrease) in trade and
other payables (344) (612) (758)
Decrease/(increase) in tax asset (132) (362) (529)
------------------------------------------- ---------- ---------- ----------
Cash used by operations (1,173) (1,622) (2,074)
Investing activities
Purchase of subsidiaries (2,765) (6,331) (8,370)
Cash acquired on purchase of subsidiaries 32 627 685
Purchase of property, plant and
equipment (1,615) (177) (617)
Capitalisation of intangible assets (690) (88) (746)
Proceeds on disposal of property,
plant and equipment - 12 14
Interest received 1 - 5
------------------------------------------- ---------- ---------- ----------
Net cash (used in)/generated from
investing activities (5,036) (5,956) (9,029)
Financing activities
Net proceeds from issue of shares 15,981 10,878 13,341
Proceeds from borrowings 160 - -
Repayment of borrowings (247) (96) (198)
(Decrease) in lease liability - (163) -
Repayment of Lease liability obligations (148) (152) (364)
Interest paid (96) (65) (163)
------------------------------------------- ---------- ---------- ----------
Net cash generated from financing
activities 15,649 10,401 12,616
------------------------------------------- ---------- ---------- ----------
Net increase in cash and cash equivalents 9,440 2,823 1,514
Cash and cash equivalents at beginning
of period 2,764 1,250 1,250
Cash and cash equivalents at end
of period 12,204 4,073 2,764
------------------------------------------- ---------- ---------- ----------
Notes to the interim financial statements
General information
The principal activity of Yourgene Health plc (the "Company")
and its subsidiaries (together, the "Group") is that of a molecular
diagnostics business for the development and commercialisation of
gene analysis techniques for non-invasive prenatal screening,
reproductive health and oncology diagnostics, and the provision of
DNA sequencing services for the early detection, monitoring and
treatment of disease. The Company is incorporated and domiciled in
the United Kingdom. The address of its registered office is
Citylabs 1.0, Nelson Street, Manchester, M13 9NQ. The registered
number is 03971582.
As permitted, this Interim Report has been prepared in
accordance with the AIM rules and not in accordance with IAS 34
"Interim Financial Reporting". The consolidated financial
statements are prepared under the historical cost convention.
This Consolidated Interim Report and the financial information
for the six months ended 30 September 2020 does not constitute full
statutory accounts within the meaning of section 434 of the
Companies Act 2006 and are unaudited. This unaudited Interim Report
was approved by the Board of Directors on 16 December 2020.
The Group's financial statements for the period ended 31 March
2020 have been filed with the Registrar of Companies. The Group
auditor's report on these financial statements was unqualified and
did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
Electronic communications
The Company is not proposing to bulk print and distribute hard
copies of this Interim Report for the six months ended 30 September
2020 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, Citylabs 1.0, Nelson
Street, Manchester, M13 9NQ 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 2021. These are consistent with the accounting
policies used in the Financial Statements for the year ended 31
March 2020.
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
August 2020 acquisition of Coastal Genomics Inc, the related net
fundraise of GBP15.1m (of which GBP2.3m was used as gross cash
consideration) and the enlarged Group's rate of growth of revenue,
opportunities pipeline, decisions available to them for management
of the cost base of the Group and the potential for future
fundraising.
The Group continues to make progress towards achieving positive
operating cashflows through growth in revenues and gross profits
which is outstripping growth in administrative expenses. The Group
however continues to use cash in its trading activities albeit at
much reduced levels; which reflects that breakeven 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 as part of the regular
strategic planning process, and continue to implement cost
reduction measures where appropriate, for example during the
integration of the Elucigene business into the Group.
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.
Given the successful fundraise which accompanied the Coastal
Genomics acquisition, and the much-reduced cash consumption rates,
the directors believe there is sufficient cash available to avoid a
cash shortfall.
The directors have concluded that considering the circumstances
described above and mitigation strategies in place, the directors
have a reasonable expectation that the Group and 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 6 months 12 months
to to to
30-Sep-2020 30-Sep-2019 31-Mar-2020
GBP000 GBP000 GBP000
Revenue analysed by geographical
market
UK 1,521 1,095 1,975
Europe 2,877 1,602 4,142
International 3,783 5,070 10,496
----------------------------------
Revenue 8,181 7,767 16,613
Revenue analysed by product
segments
NIPT 4,166 4,783 10,144
Reproductive Health 1,661 1,633 3,651
Molecular Genetics 2,354 1,351 2,818
----------------------------------
Revenue 8,181 7,767 16,613
Operating loss for the period is stated after charging /
(crediting)
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30-Sep 30-Sep 31-Mar
2020 2019 2020
GBP000 GBP000 GBP000
Research and development costs excluding
salaries 192 382 518
Research and development tax credit (133) (346) (560)
Depreciation of property, plant and equipment 414 536 950
Depreciation of right of use assets 249 275 468
Amortisation of intangible assets 645 301 676
(Profit)/Loss on disposal of property,
plant and equipment - 68 (8)
Share-based payments expense 453 83 1,602
Lease liability adoption (gains)/losses
(IFRS16) - (132) (132)
Impairment (gains)/losses on financial
assets (IFRS9) (25) 61 107
IONA(R) Nx transition expenses 281 - -
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 6 months 12 months
to to to
30-Sep 30-Sep 31-Mar
2020 2019 2020
GBP000 GBP000 GBP000
--------------------------------------- ---------- ---------- ----------
Current tax
UK corporation tax on profits for the - 137 -
current period
Foreign corporation tax - - 329
--------------------------------------- ---------- ---------- ----------
Current tax for period - 137 329
--------------------------------------- ---------- ---------- ----------
Deferred tax
Origination and reversal of temporary
differences: UK (3) (57) (1,024)
Origination and reversal of temporary
differences: Foreign (44) - (253)
---------------------------------------
Deferred tax for period (47) (57) (1,277)
--------------------------------------- ---------- ---------- ----------
Total tax (credit)/charge (47) 80 (948)
--------------------------------------- ---------- ---------- ----------
The research and development tax credit of GBP133k (H1 2019-20:
GBP346k; 31 March 2020: GBP560k) is shown as a deduction against
general administrative expenses.
Deferred tax liability of GBP2,849k (30 Sept 2019: GBP1,195k; 31
March 2020: GBP1,153k) is recognised in respect of the intangible
fixed assets acquired in business combinations in March 2017, April
2019 and August 2020.
Earnings/Loss per share
Basic
Basic loss per share is calculated by dividing the loss for the
period of GBP2,588k (30 Sept 2019: loss GBP1,422k; 31 March 2020:
loss GBP2,434k) by the weighted average number of ordinary shares
in issue during the period 650,842,212 (30 Sept 2019: 572,940,742;
31 March 2020: 590,467,253).
Diluted
Diluted earnings per share dilute the basic earnings per share
to take into account share options and warrants. The calculation
includes the weighted average number of ordinary shares that would
have been issued on the conversion of all the dilutive share
options and warrants into ordinary shares. The adjusted weighted
average number of ordinary shares used to calculate diluted
earnings / loss per share is 681,646,876 (30 Sept 2019:
588,881,240; 31 March 2020: 608,687,226).
26,759,443 options and warrants (30 Sept 2019: 60,958,207; 31
March 2020: 26,039,443) have been excluded from this calculation as
the effect would be anti-dilutive.
Acquisitions of Subsidiaries
Acquisition of Coastal Genomics Inc
The Group acquired 100% of the equity interests in Coastal
Genomics Inc, a Canadian manufacturer of genetic size selection
instrumentation and reagents, on 6 August 2020 for an expected
total consideration of GBP7,468,332 (US$9,783,515). A summary of
the net assets acquired and the consideration paid is shown
below.
Book value Fair value
GBP GBP
Cash and cash equivalents 19,963 19,963
Intangible assets - 6,469,121
Property, plant and equipment 84,492 84,492
Licences and Patents 290,920 290,920
Right of use asset (IFRS16) 64,169 64,169
Trade and other receivables 254,516 254,516
Inventories 216,870 216,870
Trade and other payables (244,172) (244,172)
Lease liability under IFRS16 (64,169) (64,169)
Deferred tax liability - (1,746,663)
----------- ------------
622,589 5,345,047
Goodwill 2,123,285
------------
Total Fair value 7,468,332
------------
Satisfied by:
Cash Paid 2,290,076
Further consideration for net working
capital 247,177
Direct issue of shares 32,712
Indirect Issue of shares through exchangeable
options 1,844,932
Cash- and equity- based performance related
earn-outs 3,053,435
Total Consideration 7,468,332
------------
Net cash outflow arising on acquisition:
Cash consideration (2,290,076)
Cash and cash equivalents acquired 19,963
------------
(2,270,113)
------------
A further US$4m is payable depending on an additional future
performance condition, namely if the acquired business generates
revenues in excess of US$ 8.5m in the financial year 2022-23. The
Group has deemed this a stretch target which is not included in the
fair value assessment above which is based on more cautious
cashflows than would trigger this stretch target payment. As such,
this amount is disclosed as a contingent liability
Acquisition of Ex5 Genomics Ltd
On 3 July 2020, Yourgene Health plc completed the acquisition of
Ex5 Genomics Ltd for an initial cash consideration of GBP275,000
plus earn-outs of GBP275,000 which have all subsequently
crystallised and a modest working capital adjustment. The
acquisition was primarily of laboratory equipment and customer
relationships without contract backing and as such has been treated
as an acquisition of assets rather than a business combination.
This equipment has been relocated to Yourgene's Citylabs facility
and brought into service. In parallel the customer relationships
are being converted to active work packages, crystallising the
earn-outs and supplementing existing NIPT and COVID-19 testing
activities. These services have now been grouped together into
Yourgene Genomic Services which was launched in September 2020.
Share capital
On 20 May 2020 the Company announced the exercise of the
following options and warrants:
-- Options over 6,437,565 ordinary shares at a price of 10 pence, with proceeds of GBP643,756
-- Warrants over 1,411,427 ordinary shares at a price of 11 pence, with proceeds of GBP155,257
On 5 August 2020, the Company announced completion of a gross
fundraising of GBP16.1m via the issuance of 95,000,000 new ordinary
shares at a price of 17 pence.
On 25 September 2020 the Company announced the exercise of the
following options:
-- Options over 1,000,000 ordinary shares at a price of 10 pence, with proceeds of GBP100,000
Total shares in issue after these transactions is 720,509,950
ordinary shares at the end of the reporting period and at the date
of this report.
As at 30 September 2020 there are 62,029,232 outstanding
options, of which 44,362,560 are exercisable. During the 6 month
period to 30 September 2020; 7,437,565 options were exercised,
1,220,00 new were options issued, and 100,000 options were
forfeited.
Contingent liabilities
The Company has two contingent liabilities. The first arose as
part of a February 2019 capital restructure which created a GBP6.5
million liability, payable to Thermo Fisher only in the event of a
sale of the Company or an insolvency event before February 2022.
The second arose upon the August 2020 acquisition of Coastal
Genomics Inc. The consideration for the acquisition of Coastal
Genomics included performance-based earn-out payments, the last of
which is a US$ 4 million payment in the event of the acquired
company achieving stretch target revenues of US$ 8.5 million in
financial year 2022-23. This final payment is not included in the
fair valuation of the acquired company which is based on more
conservative cashflows than would trigger this final earn-out
payment, and it is therefore regarded as a contingent
liability.
Events after the reporting period
Since the reporting period end the Group has announced a number
of commercial partnerships including a successful NIPT tender award
from St George's NHS Trust in England and a number of commercial
partnerships in Asia and the UK.
In October 2020 the Company paid the first performance payment
(earn-out) of EUR577,500 to the former shareholders of AGX-DPNI
SAS, a French distribution company acquired on 9 March 2020. The
performance payment was based on sales volumes achieved in the
French market. There are remaining performance payments up to
EUR1,077,500 payable in April 2021 subject to achievement of tiered
sales volume thresholds.
On 5 November 2020 the Company announced the appointment of Dr
Joanne Mason as Chief Scientific Officer, with Dr Bill Chang moving
to the executive position of Chief Entrepreneur.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the
date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
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END
IR DQLFFBLLEFBV
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