TIDMYGEN
RNS Number : 2270I
Yourgene Health PLC
11 August 2021
Yourgene Health plc
("Yourgene" or the "Group" or the "Company")
Audited Final results and unaudited Q1 business update
Manchester, UK - 11 August 2021: Yourgene (AIM: YGEN), the
international molecular diagnostics group, announces its full year
financial results for the year ended 31 March 2021 ("FY21"), and
provides a business update after its first trading quarter of the
current financial year (Q1).
The FY21 results, delivered in-line with prior guidance, reflect
resilient revenue growth through the unprecedented challenges
brought by the Covid-19 pandemic. Despite these challenges, the
business evolved further with product mix changes, significant
M&A activity and capital and increased operating investments to
support key future growth drivers. As a result, the new financial
year has started more strongly, with significant growth in Q1
against a Covid-impacted comparable period but performing in line
with our growth plans which are enabled by these strategic
investments.
Financial headlines
-- As previously reported, revenues increased 10% to GBP18.3m
from GBP16.6m, with Covid-related revenues and strong European NIPT
growth offsetting international pandemic headwinds
-- Gross profit up 11% to GBP11.4m from GBP10.2m
-- Adjusted EBITDA* decreased to a negative GBP2.0m (FY20:
GBP1.3m positive adjusted EBITDA) after investing GBP2.4m of
additional expenditure in future growth projects, from which we are
already seeing substantial benefits in the new financial year
-- Total comprehensive loss increased to GBP12.2m reflecting a
goodwill impairment charge arising from pandemic-related challenges
in Asian markets (2020: loss of GBP2.3m)
-- Cash used by operations increased to GBP3.8m from GBP2.1m,
including a GBP1.6m inventory build primarily for Covid testing
products which have bolstered revenues in Q1 of FY22
-- GBP7.4m cash invested mainly in the acquisition of Coastal
Genomics, Inc., in the expansion of Genomic Services laboratory
facilities, in NIPT instrumentation for key clients transitioning
to IONA NX(R) and in internally generated intangible assets from
research and development activities (FY20: GBP9.0m invested, mainly
on acquisitions)
-- GBP15.5m generated from financing activities, principally an
equity raise in August 2020 to facilitate the acquisition of
Coastal Genomics and generate additional working capital (FY20:
generated GBP12.6m for acquisitions)
-- Net cash improved to GBP6.8m at 31 March 2021 from GBP2.4m at 31 March 2020
* Adjusted EBITDA is the operating profit/(loss) before
interest, tax, depreciation, amortisation, share-based payments and
acquisition-related expenses shown separately disclosed on the face
of the Income Statement
Operating headlines
-- Acquisition of Coastal Genomics in August 2020 adds Ranger(R)
Technology intellectual property portfolio in DNA fragment size
selection along with US-focused strategic client portfolio
o Integrating well, meeting first and second equity earn-out
milestones in March 2021 and April 2021 by delivery of strategic
commercial partnership
o Strong pipeline in place for additional new customers,
especially in North America
-- Non-invasive prenatal testing (NIPT) portfolio significantly
strengthened, despite pandemic challenges affecting international
markets and delaying new market penetration
o IONA(R) Nx NIPT Workflow CE-marked, launched and all key
European NIPT accounts transitioned
o IONA(R) Nx NIPT awarded contract with St George's NHS Hospital
(October 2020)
o New NIPT partnerships secured in Japan and USA, with launches
delayed due to pandemic
o IONA(R) Twin Study published
-- Appointment of VP Sales in March 2021 to drive commercial
penetration in North American markets for Ranger(R) and Next
Generation Sequencing (NGS) technologies such as NIPT
-- Launch of Yourgene Genomic Services, including new UK-based
Covid-19 and contract research service offerings
-- Adapted to the Covid-19 pandemic through the launch of
Covid-19 testing services in the UK and the CE-marked Clarigene(R)
SARS CoV-2 PCR assay
o Accredited for UK government travel-related testing
schemes
o Partnerships with Newcastle Premier Health Limited ("NPH") and
others for airport and community testing
o cGBP1m invested into laboratory testing capacity, now capable
of c100,000 tests per month and suitable for non-Covid services in
future
-- DPYD testing recommended by multiple UK and international health policy-making bodies
Current trading: Q1 business update (unaudited)
-- Q1 revenues over GBP6m, up 80% vs. Q1 FY20, driven by
Covid-related services and product sales as the UK reopens
-- Estimated Q1 adjusted EBITDA profit of c.GBP0.7m, to be
enhanced through a further GBP1.0m of identified, annualised
operating expense savings already being implemented via a business
refocus programme
-- Covid-19 testing routes to market strengthened in the travel
sector and expanded into consumer-facing partnerships
-- Secured entry into the UK's National Microbiology Framework
in all four framework areas within which we are now pursuing
multiple opportunities
-- US market penetration continues with a multi-year licence and
supply agreement for NGS-based reproductive health screening
-- Second strategic partnership for Coastal Genomics, again
US-focused mainly in the field of non-Covid-19 infectious diseases
demonstrating the versatility of the acquired technology
-- International distribution network being reinforced
Joint comment from Adam Reynolds, Chairman, and Lyn Rees, CEO: "
The last financial year presented many operational and financial
challenges to our business operations as a result of the Covid
pandemic. Despite a challenging year operationally, we have
maintained focus on our long-term objectives as well as effectively
navigating the pandemic in the short-term, and as a result have
established a broader platform with increased growth prospects to
deliver shareholder value in the medium term. A chieving double
digit growth was a significant achievement, and our accelerated
investment in existing and new technologies has positioned us very
well for the anticipated strong post-pandemic growth in the global
molecular diagnostics market. Despite the impact on group
profitability in FY21, this investment is already reaping rewards
as demonstrated by the momentum seen in Q1 which is continuing into
Q2. After strengthening our in-field commercial resources last
year, we have also identified opportunities to refocus our cost
base during the current financial year. As a result we look forward
to a resumption of profitable growth at Group level, with
continuing impetus in the US market specifically."
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation and the Directors of the Company
are responsible for the release of this announcement.
Yourgene Health plc Tel: +44 (0)161 669 8122
Lyn Rees, Chief Executive Officer investors@yourgene-health.com
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 plc
Yourgene Health is an international molecular diagnostics group
which develops and commercialises genomic services and
technologies. 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 infectious diseases.
The Group's flagship in vitro diagnostic products include
non-invasive prenatal tests (NIPT) for Down's Syndrome and other
genetic disorders, Cystic Fibrosis screening tests, invasive rapid
aneuploidy tests and DPYD genotyping.
Yourgene has a range of innovative DNA sample preparation
platforms, powered by Ranger(R) Technology, the Yourgene
LightBench(R) and Yourgene QS250, ideal for cell-free DNA
applications in NIPT and oncology including liquid biopsy.
Yourgene Genomic Services is 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 testing service.
Yourgene Health is headquartered in Manchester, UK with
facilities in Taipei, Singapore, the US and Canada, and is listed
on the London Stock Exchange's AIM market under the ticker "YGEN".
Follow us on LinkedIn and Twitter . Further information is
available at www.yourgene-health.com
JOINT STATEMENT FROM THE CHAIRMAN AND THE CEO
Significant progress has been achieved despite the reporting
period being aligned with the global Covid-19 pandemic. Despite the
many headwinds this has caused, the business has proved adaptable
and resilient. Our long-term strategy remains focused on creating
shareholder value by improving human health decisions. We have
delivered double digit revenue growth, acquired Coastal Genomics
and its differentiated Ranger(R) Technology for selecting DNA
fragments by size in sample preparation, and expanded our service
and product capabilities. In addition we have played our part in
the response to Covid-19 through the launch of our own Clarigene(R)
SARS-coV-2 assay and a high quality Covid-19 testing service. In
the midst of all this we have also launched our new NIPT solution
and transitioned it into our key European NIPT customers and
commenced its roll-out to new markets in the US and Asia.
Revenue Analysed by Geographical Market
Year ended Year ended
30 March 30 March
2020 2019 Growth
Regional segments GBPm % of total GBPm % of total / decrease
------------------ ---------- ---------- ---------- ---------- -----------
UK 5.4 30% 2.0 12% +174%
Europe 5.5 30% 4.1 25% +33%
* 30%
International 7.4 40% 10.5 63%
------------------ ---------- ---------- ---------- ---------- -----------
Total 18.3 100% 16.6 100% +10%
------------------ ---------- ---------- ---------- ---------- -----------
Revenue Analysed by Operating Segments
2021 2020 Growth
/ decrease
GBPm % of total GBPm % of total
====================== ===== =========== ===== =========== ============
Genomic Services
NIPT services 1.8 10% 2.6 15% -29%
Covid-19 services 1.7 10% - - n/a
Other services 2.8 15% 2.9 18% -4%
6.4 35% 5.5 33% +26%
---------------------- ----- ----------- ----- ----------- ------------
Genomic Technologies
NIPT 5.9 32% 7.4 45% -20%
Reproductive health 3.6 20% 3.7 22% -1%
Covid-19 related 1.4 8% - - n/a
Other technologies 1.0 5% - - n/a
---------------------- ----- ----------- ----- ----------- ------------
11.9 65% 11.1 67% +2%
Group Total 18.3 100% 16.6 100% +10%
---------------------- ----- ----------- ----- ----------- ------------
Genomic Services
In September 2020 we launched Yourgene Genomic Services as a
separate business segment covering our longstanding NIPT testing
services in the UK and Taiwan, our oncology and contract research
organisation (CRO) testing service in Taiwan, as well as new
UK-based Covid and CRO-focused testing services. Delivering
clinical and research testing services to consistently high
standards requires considerable focus and the new segment gives our
talented teams the necessary focus to compete effectively in this
space. Operating as our own in-house customer for our Genomic
Technologies offerings also gives the Group a fantastic insight
into our customers' needs.
Throughout the reporting period we have invested in the
capabilities of our new Genomic Services segment with considerable
expansion in our UK Citylabs facility and our new Taipei facility
is due to come on-stream in the second half of calendar year 2021.
Capacity expansion has at times run ahead of testing volumes,
however, particularly in light of the various UK lockdowns and
international travel constraints which affected Taiwan testing
volumes. The Taiwan challenges have given rise to an impairment on
the 2017 goodwill but we remain very positive about our prospects
for the new laboratory and the wider Asia Pacific region as the
pandemic constraints start to normalise.
Overall, despite these challenges the Genomic Services segment
delivered 26% revenue growth. Entering the 2021-22 financial year
we have a much expanded capacity, a strong pipeline of
opportunities, higher quality standards and better qualified teams,
aligned with our aim of creating a substantial service
business.
Genomic Technologies
The Genomic Technologies business segment encompasses our other
commercial activities including our NIPT range of assays, software
and automation, our PCR range of reproductive health and
chemotoxicity tests and our newly acquired Ranger(R) size selection
technology.
NIPT
In June 2020 we were delighted to announce the CE-IVD mark for
our Illumina-based IONA(R) test, which was then launched as the
IONA(R) Nx NIPT Workflow. This test runs on the Illumina NextSeq
550Dx Next Generation Sequencing ("NGS") instrument, and as well as
satisfying our 2018 legal settlement obligations is a major
advancement of our flagship NIPT solution given that Illumina's NGS
technology accounts for around 75% of the global NGS market. Since
its launch, the IONA(R) NX workflow has been implemented in our own
Manchester service laboratory and in all our key European
contracts, including at St George's Hospital in the UK who were
successful in winning a key role in NHS England's national NIPT
implementation strategy. The various components of our NIPT
solution, including the Flex Analysis software platform, are also
already starting to build a presence in our target markets of the
USA and Japan despite delays in contract completion, installation
and validation created by the pandemic. Our addressable market has
expanded significantly as a result of the IONA(R) NX launch.
NIPT testing was affected by the Covid-19 pandemic, in
particular in our international markets where health tourism slowed
significantly and diagnostic testing resources were diverted to
Covid-related activities. As a result of these challenges, we have
prudently booked an impairment on the goodwill arising from our
2017 share-for-share acquisition of Yourgene Bioscience in Asia,
but we remain confident that this region will bounce back strongly
once the pandemic impacts subside. These international challenges
did eclipse strong growth in our European markets where our NIPT
market position still has exciting growth potential.
PCR assays
Our reproductive health range of PCR assays proved more
resilient as it is more focused on the European healthcare markets,
but still experienced some headwinds from the pandemic. Our
chemotoxicity DPYD test however continued to make good traction and
is now recommended by NHS England, NHS Wales and Belgium amongst
others, to identify the risk of severe side effects in patients who
might otherwise receive certain chemotherapy treatments.
Clarigene(TM) SARS CoV-2 Test
The launch of our Clarigene(TM) SARS-CoV-2 test in June 2020,
and its subsequent CE marking in August 2020, was a significant
milestone for the business representing a very rapid new product
introduction and also a key mitigation against the risks Covid-19
posed to our core business. Since its launch we have focused its
usage in our service laboratory and with a select but growing
network of partners. Supply chains have been constrained during the
pandemic and we wanted to ensure we could maintain high standards
of service delivery. The assay has performed consistently well and
has proved reliable in detecting the additional variants that have
emerged since its launch. The test has been approved by various UK
government accreditations and has secured us a place in the UK's
National Microbiology Framework for the next 2 years.
Our testing partners are particularly focused in the travel and,
more recently, retail sectors which has made it very difficult to
predict volumes of business during the UK's capricious pattern of
lockdowns and international travel restrictions. Clarigene(R) did
however contribute GBP0.9m to FY21 revenues as well as underpinning
the GBP1.7m of Covid service testing revenues and we entered FY22
with substantial inventories in anticipation of the vaccine-led
reopening we are now seeing.
Ranger(R) size selection technology
In August 2020 we acquired Coastal Genomics Inc based in
Vancouver, Canada. Coastal has developed the strongly
differentiated Ranger(R) sample preparation technology which
enables the targeted size selection of DNA fragments in NIPT,
oncology, infectious disease and other clinical applications. Prior
to the acquisition, the Ranger(R) Technology had already been
selected as a key element in our IONA(R) NX NIPT workflow and we
were delighted to bring the Coastal team into the Yourgene Group.
Combining our commercial and operational capabilities with
Coastal's technology and US-focused sales pipeline will deliver an
enhanced penetration of the US market over time, and offers a
complementary technology in our other global markets. Coastal is an
early-stage business requiring additional investment to realise its
sizeable market opportunity and the team has blended in well to the
Yourgene family.
The acquisition was funded through a mixture of cash and equity
issued to the selling shareholders, along with some stretching
equity and cash earn-out milestones designed to align incentives
with delivery of the significant strategic benefits this
acquisition offers. It is pleasing to note that the first two
milestone payments of the earn-out have been triggered (one before
the period end and one shortly afterwards) as a result of their
strong momentum. The associated fundraise also generated
significant capital for investment into the wider business, and we
thank our shareholders for their continued support and confidence
in our long-term strategy.
The Yourgene Group
Board
The Board during this turbulent reporting period has been
resolute, with the addition of Dr Joanne Mason as Chief Scientific
Officer in November 2020. Jo brings a tremendous pedigree of
scientific achievements and was instrumental in the launch of our
Clarigene(R) PCR assay for testing for SARS-CoV-2, alongside the
completion of the IONA(R) NX NIPT development phase and its
subsequent launch.
Continued Expansion of People Talent
We have continued to invest in the future growth of our business
by acquiring talented individuals to the organization,
strengthening our team and developing our staff's expertise. Key
hires this year include a further senior US commercial recruit,
with considerable experience to lead our penetration of that
strategically critical market. In response to the restrictions on
international travel we have also invested in more localised
commercial resource with other senior hires in France, Germany and
in South-East Asia. In anticipation of further commercial growth,
we have also strengthened our product management function.
Conscious of the fact that it is our entire team that delivers
service and support to customers, growth in the business and value
to shareholders, we introduced a Share Incentive Plan in the UK to
ensure that the interests of our staff are aligned with those of
our shareholders. We hope to extend this equity participation to
colleagues in our other main employment centres once we have
reviewed their respective local tax situations.
Investing in long-term capabilities
Throughout the reporting period, we have maintained our focus on
our long-term strategy to deliver shareholder value by creating a
substantial global molecular diagnostics group. This focus,
alongside the expenditure in our Clarigene(R) SARS-CoV-2 assay and
our internal laboratory service capacity to support the Covid-19
pandemic response, has led to a reversal of recent EBITDA
improvements, but we remain confident that this is a temporary
feature of the Group's journey in scaling to achieve profitable
growth. Some of these investments manifest as administrative
expenses, but all are focused on creating revenue and supporting
value drivers for the Group in reporting periods to follow. The
strategic pillars to our growth remain unchanged: product
penetration, geographic expansion, new products and synergistic
M&A. Key to this growth strategy is our ability to scale our
activities in line with expanding our addressable markets and
commercial execution. We have invested significantly in our
business systems, the transition to the IONA(R) NX platform, our UK
and Taiwan laboratory service facilities, our US commercial
presence and in the Coastal Genomics acquisition. The benefits of
that investment are now being seen in FY22 where we expect to
return to more normalised trading patterns.
Outlook
As we progress into FY22, Yourgene is a much transformed group
with a more substantial global presence and a stronger team in
place in North America which is now winning significant contracts
with market-leading partners based on the enhanced technologies in
our portfolio including the Ranger(R) Technology acquired through
Coastal Genomics. The pandemic continues to affect many parts of
the world, but we are proud of our role in helping navigate through
it and we welcome the reopening of travel and the global economy.
We are very much looking forward to reconnecting in person with
customers, partners and colleagues across the world, and we firmly
believe our investments will better support them and deliver
accelerated growth in the years to come. We are also very
appreciative of the support of our shareholders in the last year
and in particular to our hard-working colleagues who have
maintained their entrepreneurial spirit and dedication to our
customers throughout this most challenging of times.
Adam Reynolds Lyn Rees
Non-executive Chairman Chief Executive Officer
11 August 2021 11 August 2021
FINANCIAL REVIEW
Income Statement
In the trading year revenues grew 10% to GBP18.3 million (2020:
GBP16.6 million) with pandemic-related challenges in some of our
core markets, especially the International segment, being offset by
the introduction of Covid-19 related products and services, the
full year benefit of the March 2020 acquisition of AGX-DPNI in
France and a contribution from the August 2020 acquisition of
Coastal Genomics Inc in Canada. Our Genomic Services operating
segment delivered revenue growth of 26% whilst our product-focused
segment, Genomic Technologies, held its own with 2% growth. Gross
profits grew slightly faster than revenues by 11% to GBP11.4m
(2020: GBP10.2m) with gross margins increasing slightly to 62.2%
(2020: 61.5%).
General administrative expenses increased to GBP13.5m (2020:
GBP9.0m). A more detailed breakdown of key administrative expenses
is shown in Note 6 and includes expenditure on projects which are
expected to generate significant financial improvements which the
pandemic deferred into future reporting periods. The main project
expenditures of this nature were GBP0.4m in cloud-based integrated
and scalable business systems, GBP0.8m in the transition of key
customers to IONA NX based on the Illumina NGS platform (a
condition of a 2018 legal settlement), GBP0.3m in market entry and
customer acquisition costs in the USA and an additional GBP0.9m in
increased laboratory capacity ahead of anticipated Covid-19 testing
revenues once UK-related travel opens up.
2021 2020
Genomic Genomic Total Genomic Genomic Total
Technologies Services Technologies Services
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- -------------- ---------- ------- -------------- ---------- ------
Revenues 11.9 6.4 18.3 11.1 5.5 16.6
Cost of Sales (4.7) (2.2) (6.9) (4.3) (2.1) (6.4)
---------------------- -------------- ---------- ------- -------------- ---------- ------
Gross Profit 7.2 4.2 11.4 6.8 3.4 10.2
Other income 0.1 0.1
Segmental expenses (5.3) (3.4) (8.7) (4.7) (2.2) (6.9)
Central expenses (4.8) (2.2)
---------------------- -------------- ---------- ------- -------------- ---------- ------
Adjusted EBITDA 1.9 0.8 (2.0) 2.1 1.2 1.3
Separately disclosed (9.7) (4.5)
Operating Profit
/ (Loss) 1.9 0.8 (11.7) 2.1 1.2 (3.2)
---------------------- -------------- ---------- ------- -------------- ---------- ------
The Group's two operating segments both delivered positive
adjusted EBITDA contributions after segment-specific expenses.
Genomic Services contributed GBP0.8m (2020: GBP1.2m) with Covid
testing services in the UK offsetting pandemic-related weakness in
our Taiwan laboratory services. Genomic Technologies contributed
GBP1.9m (2020: GBP2.1m) with headwinds and customer delays in the
Group's international markets masking strong performance in the UK
and Europe. Overall adjusted EBITDA after deducting central
expenses was a loss of GBP2.0m (2020: GBP1.3 million profit). The
increase in central expenses reflects the expansion of the Group
through acquisition and the Group's decisions to continue investing
in its future growth drivers despite the pandemic headwinds on
revenues which delayed the anticipated corresponding income.
Adjusted EBITDA is measured as the operating loss before
depreciation, amortisation, and separately disclosed items.
Underlying EBITDA without the forward-looking projects described
above would have been a profit of GBP0.4m.
Separately Disclosed Items
Significant items within administrative expenses are shown
separately in the Consolidated Statement of Comprehensive Income,
with further details in Note 5. These separately disclosed items
include non-cash accounting charges for share-based payments which
reflect the improved business performance (i.e. the likelihood of
achieving performance targets) and the increases in the Company's
share price in the second half of the reporting period. The costs
of acquisitions and the associated integration expenses are also
shown separately as non-trading expenses and for greater
transparency.
Within separately disclosed items is an impairment of goodwill
which arose in the 2017 acquisition of Yourgene Bioscience which
operates primarily in South East Asia. These markets were
particularly badly hit by the economic impacts of the Covid-19
pandemic despite generally managing the social impacts extremely
well. Early and extended national lockdowns restricted health
tourism into Taiwan, Singapore and Thailand and delayed a contract
launch in Japan. In addition many countries in Asia redirected
resources toward Covid-related health applications, for example
resulting in the cancellation of a sizeable oncology project that
Yourgene was supporting as funding was reallocated to Covid. The
Group is engaged in restructuring its Asian operations in response
to these structural changes and still sees significant value in
that region.
Operating Loss
There is a resultant operating loss after total administrative
expenses of GBP11.7 million (2020: GBP3.2 million).
Finance Income/(Expenses)
During the period the Group incurred net finance expenses of
GBP0.3m (2020: GBP0.1m) with only modest levels of debt on the
balance sheet, mostly related to property leases accounted for
under IFRS16.
Taxation and Foreign Exchange
The resulting loss on ordinary activities before taxation of
GBP12.0m (2020: GBP3.4m) reflects a GBP0.2m tax charge (2020:
GBP0.9m credit) which is described in note 12 and is primarily the
de-recognition of a deferred tax asset from historic losses to
mirror the amortisation of a matching deferred tax liability. There
are still significant historic tax losses in the UK which have not
yet been recognised which will help offset taxes arising on future
anticipated profits.
The Group made a small loss of GBP0.1 million (2020: gain of
GBP0.1 million) on translation of its foreign subsidiaries and
foreign currency balances to the presentational currency.
Total Comprehensive Loss
The Group recorded a total comprehensive loss of GBP12.2m (2020:
GBP2.3m).
Earnings per Share
Earnings per share were a loss of 1.8 pence (2020: 0.4 pence
loss).
Statement of Financial Position
At the reporting date the Group had total assets of GBP49.1m
(2020: GBP37.7m). Intangible assets increased to GBP14.8m (2020:
GBP10.2m) as a result of acquiring customer relationships and
intellectual property with Coastal Genomics and customer
relationships with Ex5 Genomics. Goodwill reduced to GBP9.2m (2020:
GBP10.8m) with the Yourgene Bioscience impairment offsetting
goodwill acquired with Coastal Genomics. Property, plant and
equipment increased to GBP4.1m (2020: GBP2.0m) with capital
expenditure on new laboratory facilities in Taiwan and the UK,
acquired assets in Vancouver and the deployment of IONA NX
workflows into key European accounts to facilitate their
transition. Right of use assets increased to GBP4.2m (2020:
GBP3.0m). The recognised deferred tax asset decreased to GBP1.1m
(2020: GBP1.2m) and the 2020 GBP0.5m non-current tax asset reduced
to zero in 2021 due to the receipt of relevant UK R&D tax
credit payments. The current tax asset remained stable at GBP0.5m
(2020: GBP0.5m).
Total current assets increased to GBP15.7m (2020: GBP10.0m) with
trade and other receivables slightly reduced after hopefully
prudent provisions against pandemic-related situations, and a
sizeable increase in inventories in anticipation of significant
Covid-19 service volumes early in the new financial year. There was
also an increase in cash and cash equivalents to GBP7.0m (2020:
GBP2.8m) as described below.
Total equity and liabilities increased to GBP49.1m (2020:
GBP37.7m) due to the equity-based fundraising to support the
Coastal Genomics acquisition, and acquisition related earn-out
liabilities as described in note 18.
Statement of Cash Flows
The Group had an opening cash position of GBP2.8m (2020:
GBP1.3m) and a net cash increase of GBP4.2m during the year (2020:
GBP1.5m increase). Cash and cash equivalents at the end of the
period were GBP7.0m (2020: GBP2.8m). During the period the Group
used GBP3.8m (2020: GBP2.1m) of cash in operating activities
including an increase in inventories of GBP1.6m, a GBP0.6m
reduction in receivables due to debt provisions and investment in
operating expenses for future growth drivers as described above,
both designed to support anticipated revenue growth in the 2022
reporting period. Cash used in investing activities was GBP7.4m
(2020: GBP9.0m) reflecting acquisitions during the year, capital
expenditure in the year on service capacity and revenue-generating
NIPT workflow instrumentation plus capitalisation of internally
generated intangible assets.
Financing activities generated a surplus of GBP15.5m (2020:
GBP12.6m), primarily due to an equity issuance in August 2020 to
support the acquisition of Coastal Genomics described in note 18,
along with a number of share options and warrant exercises as
described in Notes 28 and 29.
As with all businesses at this stage of development and with
high growth ambitions, the Board assesses carefully the Group's
ability to operate as a going concern and has detailed plans for
revenue growth, margin improvement and cash flow control which are
intended to achieve positive cash flows in the near future. More
detail on these plans can be found in the notes to the
accounts.
Dividends
No dividend is recommended (2020: GBPnil) due to the need to
preserve capital for investing in the Group's growth strategy,
which is designed to enhance value over the longer term.
Capital Management
The Board's objective is to maintain a balance sheet that is
both efficient for delivering long-term shareholder value and also
safeguards the Group's financial position in light of variable
economic cycles and the principal risks and uncertainties outlined
elsewhere in the Annual Report. The COVID pandemic presented
significant challenges during the reporting period but the
provision of COVID-related services has also provided some risk
mitigation against consequential instability in our core markets.
As at 31 March 2021, the Group had net cash of GBP6.8m (2020:
GBP2.4m) which is stated after borrowings of GBP0.2m (2020:
GBP0.4m) but before lease liabilities arising under IFRS16 (with
their offsetting Right of Use assets). Business growth and the
increased scale and revenue generating opportunities, especially
COVID-19 testing in the near-term and a range of services and
technologies in North America in the medium-term, supported by the
Coastal Genomics acquisition, are expected to enable the Group to
operate as a going concern for the foreseeable future.
Post-balance Sheet Events
After the end of the reporting period, the Group has continued
to expand its UK-based COVID testing routes to market including
into the retail pharmacy and travel sectors and through successful
entry into the UK Government's National Microbiology Framework. The
Group also entered into a second qualifying commercial agreement
for the Ranger(R) Technology acquired with Coastal Genomics,
triggering the second of two equity earn-out issuances, and
creating a commercial platform with leading US-based market
participants. In a separate announcement the Group also entered
into a multi-year licence and supply agreement with another leading
US diagnostic testing partner, furthering its US market
penetration.
Barry Hextall
Chief Financial Officer
11 August 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2021
2021 2020
--------------------------- --------------------------
Notes GBP GBP GBP GBP
------------------------------------------ ------ ------------ ------------- ------------ ------------
Revenue 18,288,028 16,612,779
Cost of sales (6,912,493) (6,387,837)
------------------------------------------ ------ ------------ ------------- ------------ ------------
Gross profit 11,375,535 10,224,942
Other operating income 60,313 67,530
Administrative expenses
General administrative expenses (13,483,114) (9,037,761)
Adjusted EBITDA (2,047,266) 1,254,711
Depreciation and amortisation 6 (3,246,887) (2,093,808)
Impairment of Goodwill 5 (4,788,747) -
Share-based payments expense 5 (951,983) (1,601,746)
Costs associated with subsidiary
acquisition 5 (286,044) (264,666)
Acquisition integration expense 5 (388,012) (533,358)
-
Total Depreciation, Amortisation
and separately disclosed items (9,661,673) (4,493,578)
Operating loss 6 (11,708,939) (3,238,867)
Financing income 10 1,850 19,960
Financing expenses 11 (301,547) (163,203)
------------------------------------------ ------ ------------ ------------- ------------ ------------
Profit (Loss) on ordinary activities
before taxation (12,008,636) (3,382,110)
Tax credit / (charge) on loss
on ordinary activities 12 (174,996) 948,186
------------------------------------------ ------ ------------ ------------- ------------ ------------
Profit (Loss) for the year (12,183,632) (2,433,924)
Other comprehensive expense
Exchange translation differences (57,790) 139,773
------------------------------------------ ------ ------------ ------------- ------------ ------------
Profit (Loss) and total comprehensive
profit (loss) for the Year (12,241,422) (2,294,151)
------------------------------------------ ------ ------------ ------------- ------------ ------------
Earnings per share pence 13
Basic: Profit (Loss) (1.8p) (0.4p)
Diluted: Profit (Loss) (1.7p) (0.4p)
Consolidated statement of financial
position
For the year ended 31 March 2021
2021 2020
Notes GBP GBP
-------------------------------------- ------ ------------- -------------
Assets
Non-current assets
Goodwill 14 9,180,767 10,805,783
Intangible assets 14 14,750,315 10,191,889
Property, plant and equipment 15 4,108,970 1,969,305
Right of use Asset 16 4,209,013 2,996,753
Tax Asset 23 - 532,691
Deferred tax asset 23 1,145,393 1,181,039
Total non-current assets 33,394,458 27,677,460
-------------------------------------- ------ ------------- -------------
Current assets
Inventories 17 2,897,480 1,152,308
Trade and other receivables 19 5,333,109 5,629,287
Tax asset 23 506,587 452,485
Cash and cash equivalents 6,995,438 2,764,117
-------------------------------------- ------ ------------- -------------
Total current assets 15,732,614 9,998,197
-------------------------------------- ------ ------------- -------------
Total assets 49,127,072 37,675,657
-------------------------------------- ------ ------------- -------------
Equity and liabilities attributable
to equity holders of the company
Equity
Called up share capital 28 32,668,033 32,561,451
Share premium account 28 67,259,741 51,179,685
Merger relief reserve 28 12,970,330 12,937,796
Reverse acquisition reserve 28 (39,947,033) (39,947,033)
Foreign exchange translation reserve 28 (65,914) (8,124)
Other reserves 28 4,914,314 3,069,382
Retained losses 28 (44,876,306) (33,494,558)
Total equity 32,923,165 26,298,599
-------------------------------------- ------ ------------- -------------
Current liabilities
Trade and other payables 20 5,238,721 4,907,813
Lease Liabilities 16 586,637 341,167
Current tax liabilities 542,877 433,337
Borrowings 21 118,705 277,508
Other Liabilities & Provisions 22 2,282,836 512,555
Total current liabilities 8,769,776 6,472,380
-------------------------------------- ------ ------------- -------------
Non-current liabilities
Borrowings 21 77,013 85,110
Deferred tax liability 23 2,172,899 1,153,121
Lease Liabilities 16 4,056,558 2,710,123
Other Long Term Liabilities &
Provisions 22 1,127,661 956,324
Total non-current liabilities 7,434,131 4,904,678
-------------------------------------- ------ ------------- -------------
Total equity and liabilities 49,127,072 37,675,657
-------------------------------------- ------ ------------- -------------
Statement of Changes in Equity
For the year ended 31 March 2021
Share Share Merger Other Reverse Foreign Retained Total
capital premium relief reserves acquisition exchange losses
account reserve reserve reserve
Notes GBP GBP GBP GBP GBP GBP GBP GBP
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Balance at 1
April 2019 32,403,969 37,971,265 10,012,644 3,069,382 (39,947,033) (147,897) (32,662,380) 10,699,950
Year ended 31
March 2020:
Profit (Loss)
for the year - - - - - - (2,433,924) (2,433,924)
Other
comprehensive
loss - - - - - 139,773 - 139,773
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Total
comprehensive
profit
for the year - - - - - 139,773 (2,433,924) (2,294,151)
Transactions
with owners
Issue of share
capital 28 132,901 14,197,534 - - - - - 14,330,435
Share issue
expenses - (989,114) - - - - - (989,114)
Issue of share
capital
on
acquisition 24,581 - 2,925,152 - - - - 2,949,733
Share-based
payments:
share
option
schemes 29 - - - - - - 1,601,746 1,601,746
Warrants 30 - - - - - - - -
issued
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Total
transactions
with
owners 157,482 13,208,420 2,925,152 - - - 1,601,746 17,892,800
Balance at 31
March 2020 32,561,451 51,179,685 12,937,796 3,069,382 (39,947,033) (8,124) (33,494,558) 26,298,599
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Balance at 1
April 2020 32,561,451 51,179,685 12,937,796 3,069,382 (39,947,033) (8,124) (33,494,558) 26,298,599
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Year ended 31
March 2021:
Loss for the
year - - - - - - (12,183,632) (12,183,632)
Other
comprehensive
loss - - - - - (57,790) - (57,790)
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Total
comprehensive
loss
for the year - - - - - (57,790) (12,183,632) (12,241,422)
Transactions
with owners
Issue of share
capital 28 106,403 17,148,527 - - - - - 17,254,930
Share issue
expenses - (1,068,471) - - - - - (1,068,471)
Issue of share
Capital
on
acquisition 179 - 32,534 - - - - 32,713
Issue of
Exchange
shares
on
acquisition - - - 1,844,932 - - - 1,844,932
Share-based
payments:
share
option
schemes 29 - - - - - - 801,884 801,884
Warrants 30 - - - - - - -
issued
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Total
transactions
with
owners 106,582 16,080,056 32,534 1,844,932 - - 801,884 18,865,988
Balance at 31
March 2021 32,668,033 67,259,741 12,970,330 4,914,314 (39,947,033) (65,914) (44,876,306) 32,923,165
--------------- ------ ----------- ------------ ----------- ---------- ------------- ---------- ------------- -------------
Consolidation statement of cash
flows
For the year ended 31 March 2021
2021 2020
GBP GBP GBP GBP
------------------------------------------- ------------ ------------- ------------ ------------
Cash flows from operating activities
Loss for the year before tax (12,008,636) (3,382,110)
Adjustments for:
Finance costs 301,547 163,203
Finance income (1,850) (19,960)
Depreciation and impairment of
property, plant and equipment 1,022,756 949,780
Depreciation and impairment of
right of use asset 698,511 467,724
Loss on disposal of property,
plant and equipment - 67,289
(Gain) on Revaluation of right
of use asset - (121,248)
Amortisation of intangible non-current
assets 1,525,620 676,304
Impairment of Goodwill 4,788,747 -
Impairment on financial assets
(IFRS9) (38,662) 106,511
Foreign exchange movements (204,275) 72,127
Share based payment and warrant
expense 801,884 1,601,746
Decrease in provisions (85,094) (206,353)
Tax (paid) / received 295,870 (16,210)
Movements in working capital:
(Increase)/decrease in inventories (1,528,302) 26,995
(Increase)/decrease in trade and
other receivables 645,792 (1,171,705)
Increase/(decrease) in trade and
other payables 44,299 (758,355)
Increase in tax asset (78,494) (529,307)
------------------------------------------- ------------ ------------- ------------ ------------
Cash used by operations (3,820,287) (2,073,569)
Investing activities
Purchase of subsidiaries (3,637,249) (8,369,742)
Cash acquired on purchase of subsidiaries 32,450 684,900
Purchase of property, plant and
equipment (3,003,847) (617,085)
Capitalisation of intangible assets (837,734) (745,520)
Proceeds on disposal of property,
plant and equipment - 13,505
Interest received 1,850 5,010
------------------------------------------- ------------ ------------- ------------ ------------
Net cash used in investing activities (7,444,530) (9,028,932)
Financing activities
Net proceeds from issue of shares 16,186,459 13,341,321
Proceeds from borrowings 160,497 -
Repayment of borrowings (320,860) (197,503)
Repayment of Lease liability obligations (318,628) (364,359)
Interest paid (211,330) (163,203)
------------------------------------------- ------------ ------------
Net cash generated from financing
activities 15,496,138 12,616,256
------------------------------------------- ------------ ------------- ------------ ------------
Net increase in cash and cash
equivalents 4,231,321 1,513,755
Cash and cash equivalents at beginning
of period 2,764,117 1,250,362
Cash and cash equivalents at end
of period 6,995,438 2,764,117
------------------------------------------- ------------ ------------- ------------ ------------
Notes to the Consolidated Financial Statements
For the year ended 31 March 2020
Notes to the financial statements are taken directly from the
Annual Report and Accounts, and Note numbering refers to that
document, which is now available to view in full here:
https://www.yourgene-health.com/investors/key-documents/financial-reports
1 Accounting policies
Basis of Preparation
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined by
section 434 and 435 of the Companies Acct 2006. The financial
information for the year ended 31 March 2021 has been extracted
from the Group's financial statements upon which the auditor's
opinion is unmodified and does not include any statement under
section 498(2) or (498(3) of the Companies Act 2006.
The financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS), adopted for use
in the United Kingdom and including IFRIC interpretations issued by
the International Accounting Standards Board (IASB) and the
Companies Act (2006).
The consolidated financial information has been prepared on the
basis of accounting policies set out in the Group's Annual Report
and Accounts for 2021 and selectively included in this
announcement.
Company information
Yourgene Health plc (the 'Company', the 'Group' or 'Yourgene')
is a public limited company incorporated and domiciled in the
United Kingdom. The address of its registered office is Citylabs
1.0, Nelson Street, Manchester M13 9NQ.
The principal activity of Yourgene Health PLC and its
subsidiaries is that of a molecular diagnostics business for
research into, and the development and commercialisation of gene
analysis techniques for prenatal screening and other clinical
applications in the early detection, monitoring and treatment of
disease.
The financial statements are presented in British Pounds
Sterling, the currency of the primary economic environment in which
the Company's headquarters is operated.
Going concern
In their assessment of the Group's ability to continue as a
going concern, the Directors have focused on the implications of
the Covid pandemic, underlying organic growth drivers and the cash
profiles of various in-year and prior year asset acquisitions and
business combinations.
The Covid pandemic has suppressed organic growth somewhat and
has also led to the creation of a significant revenue stream of its
own through the provision of Covid testing services in the UK and
sales of the Group's SARS-CoV-2 PCR test in the UK and
internationally. Looking forward as the pandemic hopefully recedes
the Group anticipates a return to organic growth of the existing
business plus the positive long-term benefits of recent
acquisitions, not least that of Coastal Genomics Inc which is an
early stage cash-consuming business at present but which is a
catalyst for the Group's accelerating penetration of the US
diagnostics market, the largest in the world. For the enlarged
Group the Directors have assessed the market dynamics in which it
operates, the historic and anticipated rate of growth of gross
profits, decisions available to them for management of the cost
base of the Group and the potential for future fundraising.
The Group operates a strategic planning process which has
historically delivered strong progress on its ambitious multi-year
business plan and which has proven resilient and agile in the face
of the Covid pandemic which ran concurrently with the reporting
period.
As described in the Strategic Report, the Group has been
investing heavily in future cashflow drivers as a result of a
successful equity issuance in August 2020. This fundraise enabled
the acquisition of Coastal Genomics Inc and has also facilitated
the significant expansion of the Group's UK laboratory testing
services activities, the underlying business systems and the
Group's laboratory in Taiwan, all of which are designed to drive
cash generative growth in the years to come. These investments,
coupled with the pandemic headwinds which affected the Group's
traditional customers and inhibited the penetration into new target
markets such as the USA and Japan, have meant that the Group
continues to use cash in its trading and that break-even trading
performance has not yet been reached. The Group's forecasts include
assumptions of further growth in revenue, which are key in
achieving positive cash flows. The Directors have also assessed the
Group's cost structure as part of the strategic planning process
and believe that an ongoing scalability programme will enable costs
growth to be contained below gross profit increases.
There remains an ongoing commitment to keep costs and working
capital under control so that increasing gross profits can drive
positive cash flows. Detailed sensitivity analysis has been
performed to assess the potential impact on the Group's liquidity
caused by any continuing delays in revenue growth against expected
levels along with potential mitigating actions which can be taken
to safeguard the Group's cash position. These include working
capital controls and reductions in discretionary spending.
If events transpire differently to this assessment, for example
if revenues fail to grow at the anticipated pace, there could be
lower cash headroom. To mitigate this scenario the existence of
significant share options and warrants are likely to generate
additional funds within the forecast horizon. The Group also has a
successful track record in raising funds from capital markets and
is exploring debt facilities. Taking all the above into account the
Directors believe there is sufficient cash available or accessible
to avoid a cash shortfall.
The Directors have concluded that considering the circumstances
described above and mitigation strategies in place, the Directors
have a reasonable expectation that the Group and Company will have
adequate resources to continue in operational existence for the
foreseeable future. For these reasons, they continue to adopt the
going concern basis in preparing the Annual Report and
Accounts.
Revenue
Revenue from the sale of goods, equipment and related services
is recognised in accordance with IFRS 15 Revenue from Contracts
with Customers in the Statement of Comprehensive Income when the
deemed Contractual Performance Obligations have been completed,
which is determined to be at the point of despatch of the product
or service unless there are specific provisions in the relevant
contract. Revenue from the provision of testing and reporting
services is recognised upon delivery of the report to the customer.
Invoices are typically raised upon delivery of the products or
reporting services, unless there is a different contractual
requirement, for payment according to credit terms which are
usually 30-75 days from date of invoice. For some contracts advance
invoices are raised and payments received. These are held on the
Statement of Financial Position as 'payments received on account'
(see note 20) and are only recognised as revenue once the
performance obligations have been deemed satisfied as described
above.
Grant income and income for research projects is recognised when
all conditions for receiving the grant or research income have been
satisfied.
Separately disclosed items
Separately disclosed items are those significant items, within
Total administrative expense which in management's judgement should
be highlighted on the face of the Statement of Comprehensive Income
by virtue of their size or incidence to enable a full understanding
of the Group's financial performance.
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. Cost includes the original purchase price, costs directly
attributable to bringing the asset to its working condition for its
intended use, dismantling and restoration costs. Depreciation is
provided on all items of property, plant and equipment to write off
the carrying value of items over their expected useful lives.
Depreciation is applied at the following rates:
Leasehold land and buildings 20% straight line
Plant and equipment 20-25% straight line
Computer software and hardware 25%-33% straight line
The gain or loss arising on the disposal of an asset is
determined as the difference between the sale proceeds and the
carrying value of the asset and is recognised in the Statement of
Comprehensive Income.
Leases and right-of-use assets (IFRS 16)
The Group adopted IFRS 16 from 1 April 2019. Leases are
recognised as a right-of-use asset and lease liability at the
transition date of 1 April 2019 or the date of any new leases after
1 April 2019. Right-of-use assets and lease liabilities are valued
on a present value basis of the lease payments over the lease term.
On adoption of IFRS 16 the right-of-use assets and lease liability
were measured at the present value of the remaining lease payments
and lease term. The right-of-use asset is depreciated over the term
or remaining term of the lease.
Where there is potential for future increases in lease payments,
amounts are not included in the lease liability until they
implemented. The leases are reviewed annually and where the lease
liability is increased the lease liability is reassessed and
adjusted against the right-of-use asset. When a lease is
terminated, or term amended the lease liability and right-of-use
asset are recalculated and adjusted accordingly.
Lease payments are divided between principal and interest
expense. The interest expense is charged to finance expense in the
statement of comprehensive income.
Cloud-based software applications
During the period ended 31 March 2021 the Company started
implementing and using cloud-based business and accounting software
applications. Following recently published IFRS guidance, the
Company has deemed these applications are not an intangible asset
under IAS38 Intangible assets, nor are they a lease under IFRS16
Leases. As such the company expenses the software subscription fees
and all the costs of implementing and configuring the software as
they are incurred. The costs of implementation and configuration
have initially been incurred in the period ended 31 March 2021 and
will continue into period ending 31 March 2022 as the software is
rolled out globally.
Accounting for Acquisitions
The Group assesses the acquisition of shares in a company under
IFRS 3 Business Combinations, to make an initial determination as
to whether the acquisition meets the test for the definition "a
business". This is defined as "An integrated set of activities and
assets that is capable of being conducted and managed for the
purpose of providing goods or services to customers, generating
investment income (such as dividends or interest) or generating
other income from ordinary activities." For acquisitions that meet
the test, the accounting treatment will follow IFRS 3 protocols to
arrive at fair values. Where the test for a business is not met,
then the assets of the acquired company will be accounted for as
acquired tangible or intangible assets as described in these
policies.
Where the acquisition includes future contingent consideration,
this is accrued based on management's judgement of the contingent
consideration it considers likely to be paid. Where the actual
consideration paid varies to this amount then the difference is
written off through General administrative expense in the Statement
of Comprehensive Income.
Goodwill
Goodwill represents the excess of the cost of acquisition of
unincorporated businesses over the fair value of net assets
acquired. It is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment
losses. Goodwill is not amortised but is tested annually for
impairment, or earlier if there is an indication of impairment.
Goodwill impairments are not reversed even if a subsequent fair
value assessment would ordinarily give rise to an upward
revaluation.
Acquired intangible assets
Intangible assets acquired directly or as part of business
combinations are capitalised at fair value at the date of
acquisition. Following the initial recognition, the carrying amount
of an intangible is its cost less accumulated amortisation and any
accumulated impairment losses. Amortisation is charged on the basis
of the estimated useful life on a straight-line basis and the
expense is taken to the Statement of Comprehensive Income.
The Group has recognised customer relationships as separately
acquired intangible assets. The useful economic life attributed to
each intangible asset is determined at the time of the acquisition
and ranges from 4 to 10 years as described in Note 14.
Impairment reviews are undertaken annually and whenever the
Directors consider that there has been a potential indication of
impairment.
Internally generated intangible assets
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
An internally generated intangible asset arising from the
Group's product and software development expenditure is recognised
only if all of the following criteria are satisfied:
-- The technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- The intention to complete the intangible asset and use or sell it;
-- The ability to use the intangible asset or to sell it;
-- The way in which the intangible asset will generate probable future economic benefits;
-- The availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
-- The ability to measure reliably the expenditure attributable
to the intangible asset during its development.
Internally generated intangible assets are stated at cost and
held at cost less accumulated amortisation and impairment losses,
and are recognised as an expense on a straight line basis over
their estimated useful lives. Useful life is determined with
reference to estimated useful life which varies according to the
nature of the asset, e.g. software or in vitro medical device. The
useful life of the Group's development expenditure is currently
assessed between 3 and 10 years. Amortisation of development
expenditure commences when development has been completed to
management satisfaction, in accordance with the Group's product
development governance methodology and the related project is ready
for its intended use. Where no internally generated intangible
asset can be recognised, development expenditure is recognised as
an expense in the period in which it is incurred.
Impairment of tangible and intangible assets
At each reporting end date, the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to
estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a
revaluation increase.
Inventories
Inventories are stated at the lower of cost and net realisable
value, after making allowance for obsolete and slow-moving items.
Cost includes expenditure incurred in acquiring the inventories and
other cost in bringing them to their existing location and
condition.
Operating segments
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. An operating
segment's operating results are reviewed regularly by the Group's
chief operating decision-maker ('CODM') to make decisions about
resources to be allocated to the segment and assess its
performance, and for which discrete financial information is
available. In accordance with IFRS 8 Operating Segments, the Group
determines and presents operating segments based on the information
that internally is provided to the Board of Directors. Accordingly,
the Board of Directors, which reviews internal monthly management
reports, budget and forecast information is deemed to be the
Group's CODM.
Research and development tax credits
The Group undertakes research and development activities in the
UK which potentially attract a tax credit. Where such activities
give rise to a tax credit, amounts receivable are recorded in the
Statement of Financial Position as a tax asset and the associated
credit is recorded within administrative expenses. The research and
development tax credit is recognised in the financial statements in
the same year in which the research and development expenditure
occurred. This treatment is in line with the recognition of
government grants to which the UK research and development tax
credits scheme approximates.
Critical judgements
Accounting for acquisitions of a business and intangible
assets
During the year the group acquired Ex5 Genomics Ltd (July 2020),
and Coastal Genomics Inc (August 2020). The acquisition of Coastal
Genomics Inc was deemed to meet the IFRS 3 criteria for a business
combination as it was a full standalone trading business. The
acquisition of Ex5 Genomics Ltd was deemed to be the acquisition of
assets in the form of plant and equipment and customer
relationships, as there were no significant trading activities.
The acquisition of Coastal Genomics also contained provisions
for earn-out payments to the vendors, based on achieving certain
sales performance and concluding contracts with strategic partners
post-acquisition. These targets were based on business forecasts
and if deemed sufficiently probable to be met that they are
recorded as provisions rather than contingent liabilities.
Note 14 Intangibles and Note 18 Subsidiaries provide further
information on these acquisitions including the basis on which fair
values were determined for the acquired intangible assets and their
carrying values.
Accounting for the capitalisation of development costs
The Group has now been in operation for several years and has
resolved some significant technical challenges in bringing its
products to market. In certain circumstances this leads to reduced
technical risk during the product development cycle. The Group has
also started to decouple some previously integrated components of
its products, for example its software applications. Development
costs are capitalised where it is judged that a development project
has met the IAS 38 criteria as described in the accounting policy
for internally generated intangible assets above.
Accounting for share-based payments
The Group's rapid growth in revenues and gross profits resulted
in its first adjusted EBITDA profit in the prior reporting period.
Despite the Covid-19 pandemic the Group has continued to increase
revenues and gross profits but continued investment in business
growth drivers has generated an adjusted EBITDA loss in the current
reporting period. The Directors assessment is that the external
context for this reporting period is exceptional and that future
business results will return to the historic sustained growth in
earnings per share, the key basis on which share based payments are
measured. This performance trajectory is forecast to continue which
increases the likelihood that share options will become exercisable
in the future. As a result the assumptions for share-based payments
have been increased and a significant charge recognised in the
Consolidated Income Statement.
Accounting for deferred tax
The Group has generated significant historic losses during its
development stage, which have not been recognised as a deferred tax
asset due to lack of visibility of future profitability within a
realistic time horizon. As the Group now moves towards
profitability, such visibility is becoming more likely in the near
term. The Group has therefore started to recognise some of these
losses where it deems it has a prudent basis on which to do so,
including where there are deferred tax liabilities arising on
acquisition that can be offset against historic tax losses.
Key sources of estimation uncertainty
Impairment of goodwill
The Group's management undertakes an impairment review annually,
or more frequently if events or changes in circumstances indicate
that the carrying value may not be recoverable. In respect of
impairment reviews, the key assumptions are as follows:
Growth rates
The value in use of the intangible assets is calculated from
cash flow projections for the relevant business activities based on
the latest financial projections covering the anticipated useful
economic life of the intangible assets.
Discount rates
The pre-tax discount rate used to calculate value is determined
in relation to the relevant business activities and their
geographic location, using external benchmarks where possible to
arrive at a relevant weighted average cost of capital.
Cash flow assumptions
The key assumptions for the value-in-use calculations are those
regarding discount rates, growth rates and expected cash flows.
Changes in revenues and expenditures are based on past experience
and expectations of future growth.
As a result of this exercise GBP4,788,747 of Goodwill was
impaired as described in Note 14.
4 Segment Reporting
In the opinion of the Directors, the Group has two business
segments; Genomic Technologies and Genomic Services which are
monitored by the Group's chief operating decision maker (CODM).
Strategic decisions are made on the basis of unadjusted operating
results. The Genomic Technologies segment represents the in vitro
diagnostic products, software and instrumentation manufactured by
the Group and distributed globally through the Group's direct and
indirect sales channels. These technologies are often integrated
with each other and require the support of the same internal and
external resources. The Genomic Services segment operates testing
laboratories in Taiwan and the UK and provides services to
clinicians, third party clinical service providers and contract
research organisations. These services require similar technical,
commercial and managerial competences in the two host countries,
and sometimes consume the output from the Genomic Technologies
segment, but also from third party suppliers where appropriate.
Genomic Technologies and Genomic Services are subject to different
regulatory requirements, registrations and assessment bodies. In
previous reporting periods the CODM deemed the Group was a single
operating segment. This new assessment reflects rapid business
growth in recent years both organically and through acquisitions.
Prior year figures have been restated to provide comparatives for
the two operating segments.
The Group also has three geographic regions, defined as UK,
Europe and International.
Revenue
Revenue analysed by geographical market
2021 2020
GBP GBP
--------------- ----------- -----------
UK 5,439,817 1,974,632
Europe 5,462,264 4,142,073
International 7,385,947 10,496,074
18,288,028 16,612,779
--------------- ----------- -----------
Revenue analysed by business segment :
2021 2020
(restated)
GBP GBP
---------------------- ----------- -------------
Genomic Services
NIPT services 1,832,643 2,568,459
Covid-19 services 1,730,093 -
Other services 2,819,582 2,933,897
6,382,318 5,502,356
---------------------- ----------- -------------
Genomic Technologies
NIPT 5,924,758 7,423,857
Reproductive health 3,602,506 3,649,028
Covid-19 related 1,436,805 -
Other technologies 941,641 37,538
---------------------- ----------- -------------
11,905,710 11,110,423
18,288,028 16,612,779
---------------------- ----------- -------------
During the reporting period no customers represented more than
10% of Group revenues (2020: none).
Non-current assets
The Group's non-current assets are located in the following
geographic regions:
2021 2020 (restated)
GBP GBP
--------------- ----------- ----------------
UK 15,811,975 15,145,289
Europe 4,205,914 3,595,904
International 13,376,569 8,936,267
33,394,458 27,677,460
--------------- ----------- ----------------
Operating Profit / (loss) by segment
2021 2020
(restated)
Genomic Genomic Central Total Genomic Genomic Central Total
Technologies Services Technologies Services
GBP GBP GBP GBP GBP GBP
-------------- ------------- ------------ ------------- ------------- ------------- ------------ ------------ ------------
Revenues 11,905,710 6,382,318 - 18,288,028 11,110,423 5,502,356 - 16,612,779
Cost of Sales (4,689,939) (2,222,554) - (6,912,493) (4,267,054) (2,120,783) - (6,387,837)
-------------- ------------- ------------ ------------- ------------- ------------- ------------ ------------ ------------
Gross Profit 7,215,771 4,159,764 - 11,375,535 6,843,369 3,381,573 - 10,224,942
Other
operating
income - - 60,313 60,313 - - 67,530 67,530
Segmental
expense (5,338,501) (3,399,624) - (8,738,125) (4,721,560) (2,165,229) - (6,886,789)
Central
overhead - - (4,744,989) (4,744,989) - - (2,150,972) (2,150,972)
-------------- ------------- ------------ ------------- ------------- ------------- ------------ ------------ ------------
Adjusted
EBITDA 1,877,270 760,140 (4,684,676) (2,047,266) 2,121,809 1,216,344 (2,083,442) 1,254,711
Depreciation
and
amortisation - - (3,246,887) (3,246,887) - - (2,093,808) (2,093,808)
Goodwill
impairment - - (4,788,747) (4,788,747) - - - -
Share-based
payments
expense - - (951,983) (951,983) - - (1,601,746) (1,601,746)
Costs
associated
with
subsidiary
acquisition - - (286,044) (286,044) - - (264,666) (264,666)
Acquisition
integration
expense - - (388,012) (388,012) - - (533,358) (533,358)
Operating
Profit
/ (Loss) 1,877,270 760,140 (14,346,349) (11,708,939) 2,121,809 1,216,344 (6,577,020) (3,238,867)
-------------- ------------- ------------ ------------- ------------- ------------- ------------ ------------ ------------
5 Separately Disclosed Items
2021 2020
GBP GBP
----------------------------------------------------- ------------ ------------
Impairment of goodwill (4,788,747) -
Share-based payment expense (951,983) (1,601,746)
Costs associated with the acquisition of subsidiary (286,044) (264,666)
Acquisition integration expense (388,012) (533,358)
-----------------------------------------------------
(6,414,786) (2,399,770)
----------------------------------------------------- ------------ ------------
Impairment of goodwill relates to the goodwill arising on the
acquisition of Yourgene Health Taiwan in 2017 (formerly Yourgene
Bioscience), see note 14 for further details
Share-based payment expense comprises GBP801,884 (2020:
GBP1,601,746) relating to the longstanding share option schemes and
GBP150,099 (2020: GBPnil) relating to the new share incentive plan,
both as detailed in note 29. The Share-based payment expense
relating to the option schemes is provided for in accordance with
IFRS 2 'Share-based payment' following the issue of share options
to employees under the Company's share option schemes, as set out
in note 29.
Costs associated with the acquisition of subsidiaries represents
costs incurred during the acquisition of Ex5 in July 2020, and
Coastal Genomics Inc in August 2020.
Acquisition Integration expense relates to the expense incurred
integrating Delta Diagnostics UK Ltd, Yourgene Health France SAS,
EX5 Ltd and Coastal Genomics Inc into the Yourgene Health
Group.
6 Operating Loss
2021 2020
GBP GBP
------------------------------------------------------------------- ---------- ----------
Operating loss for the year is stated after charging/(crediting):
Research and Development expense excluding salaries 406,165 518,378
Research and Development tax credit (78,494) (560,204)
Debtor provisions, impairment and bad debts 639,547 139,039
IONA(R) Nx Transition costs 766,510 -
Cloud ERP Services and Implementation costs 396,835 -
Acquisition contingent consideration adjustment (see (85,094) -
Notes 18 and 22)
UK Genomic Service laboratory expenses 1,181,172 245,150
US market entry expenses 316,172 -
IFRS16 Lease Liability adoption (gain) / loss - (131,548)
(Profit)/ Loss on disposal of property, plant and equipment - (7,564)
Depreciation of property, plant and equipment 1,022,756 949,780
Depreciation of right of use assets 698,510 467,724
Amortisation of intangible assets 1,525,620 676,304
------------------------------------------------------------------- ---------- ----------
8 Employees
The average monthly number of persons (including Directors)
employed by the Group during the year was:
2021 2020
Number Number
Directors 9 9
Administrative 117 81
Research and Development 54 46
-------------------------- ------- -------
180 136
-------------------------- ------- -------
Their aggregate remuneration comprised:
2021 2020 (restated)
GBP GBP
Wages and salaries 6,950,459 5,110,252
Social security cost 684,289 479,009
Pension cost 321,664 278,744
Share-based payments: share incentive plan (note 29) 150,099 -
Share-based payments: share option schemes (note 29) 801,884 1,601,746
---------- ----------------
8,908,395 7,469,751
------------------------------------------------------ ---------- ----------------
12 Income Tax Expense
2021 2020
GBP GBP
------------------------------------------------------ ---------- ------------
Current tax
UK corporation tax on profits for the current period 89,294 -
Foreign corporation tax 294,612 328,808
------------------------------------------------------ ---------- ------------
Current tax for period 383,906 328,808
------------------------------------------------------ ---------- ------------
Deferred tax
Origination and reversal of temporary differences:
UK (17,422) (1,024,489)
Origination and reversal of temporary differences:
Foreign (191,489) (252,505)
------------------------------------------------------
Deferred tax for period (208,910) (1,276,994)
------------------------------------------------------ ---------- ------------
Total tax charge / (credit) 174,996 (948,186)
------------------------------------------------------ ---------- ------------
As described in the critical accounting judgements section of
this report, deferred tax assets are recognised where there is
deemed to be a reasonable probability that future taxable profits
will be capable of being offset by historic tax losses.
The charge for the year can be reconciled to the loss per the
income statement as follows:
2021 2020
GBP GBP
Loss before taxation (12,008,636) (3,382,110)
---------------------------------------------------------- ------------- ------------
Expected tax credit based on a corporation tax rate
of 19% (2020: 19%) (2,281,641) (642,601)
Effect of expenses not deductible in determining taxable
profit 1,327,431 440,168
Unutilised tax losses carried forward 1,336,505 778,591
Change in unrecognised deferred tax assets 45,713 86,361
Prior year adjustment 89,294 -
Effect of overseas tax rates 8,501 16,105
R&D tax credit (141,897) (349,816)
Deferred tax (208,910) (1,276,994)
Taxation charge / (credit) for the year 174,996 (948,186)
---------------------------------------------------------- ------------- ------------
The UK R&D tax credit of GBP78,494 (2020: GBP560,204) is
shown as a deduction against general administrative expenses.
The Group is required to estimate the income tax in each of the
jurisdictions in which it operates. This requires an estimation of
the current tax liability together with an assessment of the
temporary differences which arise as a consequence of different
accounting and tax treatments. These temporary differences result
in deferred tax assets or liabilities which are included within the
Statement of Financial Position. Deferred tax assets and
liabilities are measured using substantially enacted tax rates
expected to apply when the temporary differences reverse.
Management judgement is required to determine the total provision
for income tax. Amounts accrued are based on management's
interpretation of country specific tax law and the likelihood of
settlement.
Factors that may affect future tax charges
The Group has estimated trading losses of GBP14,544,692 (2020:
GBP15,455,325), estimated excess management fees of GBP16,696,013
(2020: GBP13,193,592), non-trade loan relationship deficits of
GBP1,320,319 (2020: GBP1,328,796) and capital losses of
GBP1,934,399 (2020: GBP1,934,399).
The tax losses have resulted in a potential deferred tax asset
of approximately GBP6,554,130 (2020: GBP5,695,765). The tax losses
resulted in the partial recognition of a deferred tax asset in the
prior year to offset a deferred tax liability which should be
available to be sheltered by those losses. The deferred tax asset
has been increased, although not fully recognised, in the year
based upon management's forecast of future taxable profits arising
which will be available to offset those losses. Further recognition
in future reporting periods subject to the extent that future
taxable profits will be sufficient to utilise the losses, in
accordance with current and expected future UK tax rates.
13 Earnings Per Share
Basic
Basic earnings per share is calculated by dividing the loss for
the period of GBP12,183,632 (2020: loss GBP2,433,924) by the
weighted average number of ordinary shares in issue during the
period 685,643,605 (2020: 590,467,253).
Diluted
Diluted earnings per share dilute the basic earnings per share
to take into account share options, exchangeable shares and
warrants. The calculation includes the weighted average number of
ordinary shares that would have been issued on the conversion of
all the dilutive share options, exchangeable shares and warrants
into ordinary shares. The adjusted weighted average number of
shares used to calculate diluted earnings per share is 726,355,871
(2020: 608,687,226).
28,159,443 options and warrants (2020: 26,039,443) have been
excluded from this calculation as the effect would be
anti-dilutive.
After the reporting period end:
A further 550,000 new ordinary shares were issued against share
options, and 174,116 new ordinary shares against the first and
second earn-out payment milestones for the acquisition of Coastal
Genomics Inc.
In addition, following the issue of 10,001,775 unlisted shares
in Yourgene Health Canada Investments Ltd under the terms of the
Coastal Genomics Acquisition first and second earn-out payment
milestones there are now total of 20,251,399 unlisted Yourgene
Health Canada Investments Ltd shares issued which are exchangeable
on a one-for-one basis for Yourgene Health Plc shares, subject to
certain lock-in provisions over the next one to six years.
14 Intangible Assets
Goodwill Customer Product Trademarks Software Product Total
relationships IP & Brand Development Development
Names cost cost
GBP GBP GBP
-------------------- ----------- --------------- ---------- ----------- ------------- ------------- -----------
Cost
At 1 April
2019 7,014,447 1,552,328 - - - - 8,566,775
Additions 3,791,336 6,840,696 2,051,699 - 256,132 439,810 13,379,673
Exchange
differences - 51,206 - - - - 51,206
At 31 March
2020 10,805,783 8,444,230 2,051,699 - 256,132 439,810 21,997,654
-------------------- ----------- --------------- ---------- ----------- ------------- ------------- -----------
Additions - 389,840 47,516 - 147,357 642,861 1,227,574
Business
Combinations 3,097,398 1,453,939 3,354,990 23,626 - - 7,929,953
Exchange
differences 66,333 (56,731) 71,850 506 - - 81,958
At 31 March
2021 13,969,514 10,231,278 5,526,055 24,132 403,489 1,082,671 31,237,139
-------------------- ----------- --------------- ---------- ----------- ------------- ------------- -----------
Amortisation
and impairment
At 1 April
2019 - 323,400 - - - - 323,400
Charge for
the year - 488,232 188,073 - - - 676,305
Exchange
differences - 278 - - - - 278
At 31 March
2020 - 811,910 188,073 - - - 999,983
-------------------- ----------- --------------- ---------- ----------- ------------- ------------- -----------
Charge for
the year - 974,160 420,290 3,199 42,030 85,941 1,525,620
Impairment 4,788,747 - - - - - 4,788,747
Exchange
differences - (9,627) 1,315 19 - - (8,293)
At 31 March
2021 4,788,747 1,776,443 609,678 3,218 42,030 85,941 7,306,057
-------------------- ----------- --------------- ---------- ----------- ------------- ------------- -----------
Carrying amount
At 31 March
2021 9,180,767 8,454,835 4,916,377 20,914 361,459 996,730 23,931,082
-------------------- ----------- --------------- ---------- ----------- ------------- ------------- -----------
At 31 March
2020 10,805,783 7,632,320 1,863,626 - 256,132 439,810 20,997,671
-------------------- ----------- --------------- ---------- ----------- ------------- ------------- -----------
The intangible assets arose as part of the business combinations
of Yourgene Health Taiwan (March 2017). Delta Diagnostics UK Ltd
(April 2019), and Coastal Genomics Inc (August 2020), and also the
asset purchases of Yourgene Health France SAS (March 2020, formerly
AGX-DPNI SAS) and Ex5 Genomics Ltd (July 2020). The following
intangible assets are amortised over a useful economic life defined
upon acquisition:
Useful economic Remaining
life useful life
------------------------- --------------- ------------
Customer Relationships 10 years 6-10 years
------------------------- --------------- ------------
Product IP 10 years 8-10 years
------------------------- --------------- ------------
Trademarks & Brand Names 5 years 4-5 years
------------------------- --------------- ------------
Software Development cost 4 years 3-4 years
------------------------- --------------- ------------
Product Development cost 5 Years 3-5 years
------------------------- --------------- ------------
Goodwill is allocated to the Group's cash-generating units
(CGUs) identified as the Group's operating segments with Genomic
Technologies as a single CGU and Genomic Services as two CGUs,
representing the distinct local markets of Europe and Asia. Genomic
Services Europe has no goodwill assigned to it. Genomic Services
Asia goodwill is a revenue-based allocation of the goodwill
associated with the acquisition of Yourgene Health Taiwan (March
2017). Genomic Technologies goodwill represents a revenue-based
allocation of the goodwill arising on the acquisition of Yourgene
Bioscience (Taiwan) in March 2017, since renamed Yourgene Health
Taiwan; plus all the goodwill arising on the acquisitions of Delta
Diagnostics Ltd (April 2019) and Coastal Genomics Inc (August
2020). These CGU definitions are different to the single Group CGU
approach adopted in previous reporting periods, reflecting the
Group's expansion through organic growth and multiple acquisitions
in recent years.
2021 2020
GBP GBP
---------------------- --------- ----------
Genomic Technologies 8,708,678 5,544,948
---------------------- --------- ----------
Genomic Services Asia 472,088 5,260,835
---------------------- --------- ----------
9,180,767 10,805,783
---------------------- --------- ----------
Intangible assets are subject to an annual impairment review to
ascertain if the value in use is greater than the carrying value in
the financial statements. The intangible assets arising from the
acquisitions above are tested over a five-year forecast period plus
a terminal value to represent their remaining useful economic life
as deemed appropriate for the diagnostics sector in which the Group
operates which tends to see lifecycles for intangible assets which
are longer than 5 years. A cash flow model for each CGU is used
based on historical performance, in which future expectations of
growth are forecast based on internal budgets for 12 months, and
then on growth rates judged to be relevant to the respective CGUs.
Growth rates for Genomic Technologies range from 23% down to 16%
over the forecast period, Genomic Services Asia growth rates range
from 40% down to 29% reflecting an anticipated bounce back after
the pandemic reduced business levels in that CGU. Genomic Services
Europe revenues are expected to reduce by 44% after the Covid
pandemic recedes, with CGU revenues then growing at 5% per annum
thereafter. Growth rates for all CGUs reduce to 2% per annum for
the terminal value estimation. Pre-tax discount rates were set at
10%, being the representative cost of capital. These assumptions
are reviewed and benchmarked to ensure they remain appropriate.
Discount rates have been reduced from 13% in previous years due to
movements in the Company's preferred NYU Stern benchmark dataset
and the removal of specific risk associated with the Company's
historic IP issues with Illumina, now that all conditions for the
legal settlement have been met.
The impairment assessments for Genomic Technologies and for
Genomic Services Europe showed assessed values that exceeded the
carrying values with significant headroom. In both cases a discount
rate sensitivity of 25% did not give rise to an impairment.
However, using the assumptions described above, the recoverable
amount of the Genomic Services Asia CGU is deemed to give rise to
an impairment charge of GBP4,788,747 (2020: nil) recognised against
goodwill. The impairment charge within the Genomic Services Asia
CGU arose as a result of the impact of the COVID-19 pandemic which
reduced health tourism in the CGU's core South East and East Asian
markets. In addition certain key customers have reallocated
resources towards Covid-related initiatives and away from the
reproductive health and oncology services offered by the CGU.
Sensitivity analysis with respect to this impairment has been
performed, where a reasonably possible change in average revenue
growth rate has been modelled. Reducing the average growth rate by
5% per annum would result in an increase of GBP981,756 in the
impairment of the remaining intangible asset values for this CGU.
Similarly an increase in the discount rate to 25% would give rise
to an increase of GBP1,438,758 in the impairment of all this CGU's
remaining intangible asset carrying values. Conversely, increasing
the average growth rate by 5% per annum would reduce the impairment
charge by GBP1,054,814. Reducing the discount rate by 1% would
reduce the impairment charge by GBP332,171.
15 Property, Plant and Equipment
Leasehold Plant Computer Total
land and and equipment software
buildings
GBP GBP GBP GBP
----------------------------------------- ----------- --------------- ---------- ----------
Cost
At 1 April 2019 706,595 4,894,361 24,708 5,625,664
Additions 150,309 407,978 58,798 617,085
Business combinations 81,153 164,863 40,641 286,657
Disposals (206,353) (15,827) - (222,180)
Foreign currency adjustments 5,635 93,562 1,758 100,955
----------------------------------------- ----------- --------------- ---------- ----------
At 31 March 2020 737,339 5,544,937 125,905 6,408,181
Additions 480,363 2,682,049 1,595 3,164,007
Business combinations - 79,632 4,861 84,493
Foreign currency adjustments (9,920) (130,690) (1,044) (141,654)
----------------------------------------- ----------- --------------- ---------- ----------
At 31 March 2021 1,207,782 8,175,928 131,317 9,515,027
----------------------------------------- ----------- --------------- ---------- ----------
Accumulated depreciation and impairment
At 1 April 2019 541,790 3,010,160 19,551 3,571,501
Charge for the year 170,764 758,220 20,796 949,780
Eliminated on disposal (131,548) (9,838) - (141,386)
Foreign currency adjustments 4,697 52,722 1,561 58,980
----------------------------------------- ----------- --------------- ---------- ----------
At 31 March 2020 585,703 3,811,264 41,908 4,438,875
Charge for the year 60,481 933,501 28,774 1,022,756
Foreign currency adjustments (3,678) (50,756) (1,140) (55,574)
-----------------------------------------
At 31 March 2021 642,506 4,694,009 69,542 5,406,057
----------------------------------------- ----------- --------------- ---------- ----------
Carrying amount
At 31 March 2021 565,276 3,481,919 61,775 4,108,970
----------------------------------------- ----------- --------------- ---------- ----------
At 31 March 2020 151,636 1,733,673 83,997 1,969,306
Business combination refers to assets acquired in the
acquisition of Coastal Genomics Inc in August 2020, see note 18
17 Inventories
2021 2020
GBP GBP
Raw materials 980,247 406,472
Work in progress 712,282 405,158
Finished goods 1,204,951 340,678
------------------ ---------- ----------
2,897,480 1,152,308
------------------ ---------- ----------
Finished goods recognised at cost of sales in the year amounted
to GBP5,794,269 (2020: GBP6,123,807)
18 Subsidiaries
Details of the Group's subsidiaries at 31 March 2021 are shown
in the table below:
Name of undertaking Country Ownership Nature
of of
----------------------------------------
incorporation interest business
(%)
---------------------------------------- -------------- ---------- ------------
Yourgene Health UK Ltd UK 100 See below
Delta Diagnostics (UK) Ltd UK 100 See below
Ex5 Genomics Ltd UK 100 See below
Elucigene Ltd UK 100 Non trading
Yourgene Health GmbH Germany 100 See below
Yourgene Health France SAS France 100 See below
Yourgene Health Inc USA 100 See below
Yourgene Health Canada Ltd Canada 100 See below
Yourgene Health Canada Investments Ltd Canada 100 See below
Coastal Genomics Inc Canada 100 See below
Yourgene Health (Taiwan) Co. Ltd. Taiwan 100 See below
Kang Qiao Bioscience Co. Ltd Taiwan 100* See below
Jian Qiao Bioscience Co. Ltd Taiwan 100* See below
Yourgene Bioscience Co Ltd Taiwan 100* See below
Yourgene Health (Singapore) Pte Limited Singapore 100* See below
---------------------------------------- -------------- ---------- ------------
Yourgene Health UK Ltd principal activity is that of a molecular
diagnostics company employing next generation DNA analysis
technology to develop, manufacture and sell molecular diagnostic
products intended to have a major beneficial impact on human
health. The registered office is at Citylabs 1.0 Nelson Street,
Manchester, M13 9NQ. Yourgene Health UK Ltd was formerly named
Premaitha Ltd until 11 December 2019.
Delta Diagnostics (UK) Ltd trading as Elucigene is a molecular
diagnostics manufacturer and developer with a suite of in vitro
diagnostic CE marked products focused on reproductive health and
oncology. The registered office is at Citylabs 1.0 Nelson Street,
Manchester, M13 9NQ.
Ex5 Genomics Ltd provides research and extraction services to
the healthcare industry. The registered office is at Citylabs 1.0
Nelson Street, Manchester, M13 9NQ.
Yourgene Health Gmbh, formerly Premaitha GmbH is a German
subsidiary whose principal activity is that of a sales office for
Yourgene Health UK Ltd. The registered office is at
Speditionstrasse 15a 40221 Düsseldorf, Germany.
Yourgene Health France SAS, formerly AGX-DPNI S.A.S. is a French
subsidiary whose principal activity is that of a distributor for
Yourgene Health UK Ltd. The registered office is at 65 avenue
Kléber, Paris,75116, France.
Yourgene Health Inc is a US subsidiary whose principal activity
is that of a sales office and distributor for Yourgene Health UK
Ltd. The registered office is at 1680 Michigan Ave, Suite 700 #232,
Miami Beach FL 33139 USA.
Yourgene Health Canada Ltd is a wholly owned subsidiary of
Yourgene Health Plc, and is a holding company to facilitate the
acquisition of Coastal Genomics Inc. The registered office is
300-350 Lansdowne street, Kamloops, British Columbia V2C 1Y1,
Canada.
Coastal Genomics Inc is a wholly owned subsidiary of Yourgene
Health Canada Investments Ltd, which in turn a wholly owned
subsidiary of Yourgene Health Canada Ltd. Coastal Genomics Inc is a
manufacturer of genetic size selection instrumentation and
reagents. The registered office Coastal Genomics Inc is #182-4664
Lougheed Highway, Burnaby, British Columbia V5C 5T5, Canada. The
registered office of Yourgene Health Canada Investments Ltd is
300-350 Lansdowne street, Kamloops, British Columbia V2C 1Y1,
Canada.
Elucigene Ltd is a non-trading entity, formerly named Yourgene
Health UK Ltd until 6 December 2019. The registered office is at
Citylabs 1.0 Nelson Street, Manchester, M13 9NQ.
Yourgene Health (Taiwan) Co. Ltd was formerly named Yourgene
Bioscience Co. Ltd. It is a Taiwanese subsidiary where the
principal activities of the Group headed by this Company are within
the same sector as Yourgene Health UK Ltd. Its registered office is
No.376-5, Fuxing Rd., Shulin Dist., New Taipei City 23871, Taiwan
(R.O.C.).
* Yourgene Health (Taiwan) Co. Ltd owns a 100% interest in each
of Kang Qiao Bioscience Ltd, registered office 3F., No. 3, Ln. 160,
Junying St., Shulin Dist., New Taipei City 238, Taiwan (R.O.C.);
Jian Qiao Bioscience Co. Ltd, registered office No.376-5, Fuxing
Rd., Shulin Dist., New Taipei City 23871, Taiwan (R.O.C.); Yourgene
Bioscience Co. Ltd, registered office No.376-5, Fuxing Rd., Shulin
Dist., New Taipei City 23871, Taiwan (R.O.C.); and Yourgene Health
(Singapore) Pte Limited (formerly named Yourgene Bioscience
Singapore Pte Limited.), registered office 3 Fusionopolis Place
#05-54 Galaxis Singapore 138523.
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 GBP7,039,849 (US$9,222,203). Prior to the
acquisition the business was a supplier to the Group and Yourgene
had conducted significant evaluation of its technology after which
it was deemed sufficiently complementary to the Group's technology
portfolio to warrant acquisition. A summary of the net assets
acquired and the consideration paid is shown below. The Goodwill
acquired reflects the opportunity to benefit from synergies arising
from deeper technical integration with the Group's other offerings,
and also the commercial synergies expected to arise from combining
sales pipelines in the US and globally.
Book value Fair value
GBP GBP
Cash and cash equivalents 19,963 19,963
Intangible assets - 4,541,635
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 260,282 260,282
Inventories 216,870 216,870
Trade and other payables (245,470) (245,470)
Lease liability under IFRS16 (64,168) (64,168)
Deferred tax liability - (1,226,242)
----------- ------------
627,058 3,942,451
Goodwill 3,097,398
------------
Total Fair value 7,039,849
------------
Satisfied by:
Cash Paid 2,541,733
Issue of shares 32,712
Issue share options 1,844,932
Future performance consideration 2,620,472
Total Consideration 7,039,849
------------
Net cash outflow arising on acquisition:
Cash consideration (2,541,733)
Cash and cash equivalents acquired 19,963
------------
(2,521,770)
------------
The acquisition consideration will include both upfront and
deferred payments to the shareholders of Coastal Genomics Inc..
Additional consideration will be payable in tranches of shares and
cash based on the achievement of accelerated growth objectives. The
contingent share consideration can be paid in cash at the Company's
discretion in certain circumstances. The fair values for the
consideration components reflect the monetary values committed to
in the share purchase agreement at the time of the acquisition
which are deemed to be financial liabilities (recognised or
contingent). Exchange shares issued have a fixed conversion ratio
to Yourgene Health plc shares and so are not deemed to be financial
instruments.
The total consideration payable by the Group will be up to
US$13.5m, depending on the acquired business performance, and will
comprise the following:
-- US$3.0m cash consideration on completion;
-- US$2.5m consideration payable by the issuance on completion
of initial consideration shares in Yourgene Health Canada
Investments Ltd, exchangeable for shares in Yourgene Health Plc,
subject to a 3 year lock-up period;
-- two further elements of consideration of US$1.0m each for
early strategic customer wins, payable in Yourgene Health Canada
Investment Ltd shares, exchangeable for shares in Yourgene Health
Plc, and subject to lock-up periods of 12 months;
-- cash consideration of US$2.0m should Coastal Genomics
generate revenues of at least US$4.0m for the year ended 31 March
2022, which would become payable in April 2022, or rolled over to
the year ended 31 March 2023 which would become payable in April
2023; and
-- contingent cash consideration of US$4.0m should Coastal
Genomics generate revenues of at least US$8.5m in the financial
year to 31 March 2023, which would become payable in April 2023.
The Group has deemed this a stretch target which is not included in
the fair value assessment above which is based on more cautious
cashflows than would trigger this stretch target payment. This
consideration will either be earned or not and there is no
contractual provision for partial payment. As such, this amount is
disclosed as a contingent liability.
The first US$1.0m additional consideration condition was
satisfied on 1 March 2021 and the resulting shares were issued on
12 April 2021. The condition for the second US$1.0m additional
consideration was satisfied on the 21 June 2021 and the shares will
be issued in August 2021. As disclosed in this note, the
acquisition of Coastal Genomics Inc. resulted in the recognition of
newly identified intangible assets principally relating to the
Ranger(R) Technology as well as strategic customer relationships.
As set out in the Strategic Report, the acquisition was completed
as part of the Group's strategic plan to expand the Group's global
reach and supplement the Group's product portfolio with new
technological capabilities. As such, Coastal Genomics will support
the activities of other Yourgene Group entities as well as
generating its own external revenues. The Board therefore consider
that the post-acquisition performance of Coastal Genomics as a
standalone entity is not relevant or material to users.
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 extend the Group's geographic reach for
partnering with research organisations from Taiwan and into the UK,
and have now been grouped together into Yourgene Genomic Services
which was launched in September 2020.
Acquisition of Yourgene Health France SAS
The Group acquired 100% of the equity interest in Yourgene
Health France SAS, formerly AGX-DPNI SAS in March 2020 for an
initial cash consideration of EUR2,355,000 and up to a maximum of
EUR1,655,000 in performance consideration payments based on sales
growth performance criteria. The acquisition purpose was to give
the Group greater presence in the French market where its
distributor had built a strong competitive position. This rationale
has been successful as reflected in the achievement of
performance-related earn-out consideration milestones resulting in
a payment of EUR577,500 which was made in October 2020, and as at
the period end date a further earn-out liability of EUR977,500 was
held, which was paid in April 2021. The total performance
consideration payments made were EUR1,555,000. The stretch criteria
for the remaining EUR100,000 was not met and has been written off
through Administrative expenses in the Statement of Comprehensive
Income as detailed here and in Note 22.
19 Trade and Other Receivables
2021 2020
---------- ---------- ---------- ----------
GBP GBP
---------- ---------- ---------- ----------
Trade receivables 4,523,117 4,808,174
Provision for doubtful trade receivables (459,007) (83,161)
Loss allowance due to expected
credit losses under IFRS 9 adoption (62,532) (101,836)
------------------------------------------ ---------- ---------- ----------
Net Trade Receivables 4,001,578 4,623,177
Other receivables 597,618 131,010
Provision for doubtful Other receivables (269,111) -
VAT recoverable 148,398 284,628
Other loans and receivables at
amortised cost - 11,588
Net other loans and receivables
at amortised cost 476,905 427,226
Prepayments 854,626 578,884
------------------------------------------
5,333,109 5,629,287
------------------------------------------ ---------- ---------- ---------- ----------
An amount of GBP459,007 (2020: GBP83,161) has been provided for
doubtful receivable amounts overdue from specific customers. A bad
debt of GBP29,698 (2020 GBPnil) has been written off in the year as
unrecoverable. An amount of GBP269,111 (2020: GBPnil) has been
provided for against a specific amount in other receivables, where
the company is taking legal action to recover this amount.
A loss allowance against trade receivables of GBP62,532 (2020:
GBP101,836) for expected credit losses has been provided for as
required under IFRS 9. These expected credit losses were calculated
after analysing the Group's receivable risks in geographic
groupings which are deemed to reflect appropriate credit risk
categories. Delinquency rates are deemed to be very low in Asia
Pacific with high political stability leading to no impairment of
receivables. In Europe and America increased risk due to COVID-19
issues is reflected in a 2.5% (2020 2.5%) expected credit loss
risk. In the Middle East and Africa region COVID-19 and general
political instability have been deemed to give an expected credit
loss risk rating of 5% (2020 5%). In India expected credit loss
risk has been estimated to be greater at 15% (2020: 15%) due to
specific customer delays and Covid-19 issues.
20 Trade and Other Payables
2021 2020
GBP GBP
Trade payables 3,124,671 2,674,449
Payments received on account 373,376 1,170,017
Accruals 1,208,751 612,554
Social Security, taxation and pensions 383,729 167,235
VAT Payable 135,004 -
Other payables 13,190 283,557
---------------------------------------- ---------- ----------
5,238,721 4,907,813
---------------------------------------- ---------- ----------
The book value of trade and other payables approximates to the
fair values. See note 26 for maturity analysis.
21 Borrowings
2021 2020
GBP GBP
---------------------------------------- -------- --------
Unsecured borrowings at amortised cost
Bank loans 195,718 362,618
Other loans - -
---------------------------------------- -------- --------
195,718 362,618
---------------------------------------- -------- --------
Analysis of borrowings
Borrowings are classified based on the amounts that are expected
to be settled within the next 12 months and after more than 12
months from the reporting date, as follows:
2021 2020
GBP GBP
------------------------- -------- --------
Current liabilities 118,705 277,508
Non-current liabilities 77,013 85,110
------------------------- --------
195,718 362,618
------------------------- -------- --------
The continuing borrowings as at 31 March 2021 are:
During the year Yourgene Health (Taiwan) Co. Ltd refinanced its
bank loan repaying the loan (1.97% rate) due December 2021 in
September 2020. This was replaced by a loan repayable in September
2023 at an interest rate of 0.66%
Borrowings incurred by Delta Diagnostics (UK) Ltd are payable by
October 2021. The loan incurs interest at 4.94% pa over Base Rate.
The borrowings have covenants attached to them and the Group has
been compliant with these covenants throughout the year.
22 Provisions for Liabilities
2021 2020
GBP GBP
---------------------------------------- ---------- ----------
Acquisition - additional consideration 3,410,497 1,468,878
---------------------------------------- ---------- ----------
Analysis of provisions:
Provisions are classified based on the amounts that are expected
to be settled within the next 12 months and after more than 12
months from the reporting date, as follows:
2021 2020
GBP GBP
------------------------- ---------- ----------
Current liabilities 2,282,836 512,554
Non-current liabilities 1,127,661 956,324
------------------------- ----------
3,410,497 1,468,878
------------------------- ---------- ----------
Movements on provisions:
Acquisition Dilapidation Total
Additional provision
consideration
GBP GBP GBP
--------------------------- --------------- ------------- ----------
At 1 April 2019 - 206,353 206,353
Release of provision - (206,353) (206,353)
Increase in provision 1,468,878 - 1,468,878
--------------------------- --------------- ------------- ----------
At 31 March 2020 1,468,878 - 1,468,878
At 1 April 2020 1,468,878 - 1,468,878
Release of provision (85,094) - (85,094)
Increase in provision 2,710,689 - 2,710,689
Foreign currency variance (163,485) - (163,485)
Payment made (520,491) - (520,491)
---------------------------
At 31 March 2021 3,410,497 - 3,410,497
--------------------------- --------------- ------------- ----------
Dilapidation provision
As part of the Group's property leasing arrangements there was
an obligation to return certain premises in the same state that
they were received and repair damages which incur during the life
of the lease, such as wear and tear. The Group has adopted IFRS 16
and these costs have now been recognised as part of the cost of the
right-of-use asset and lease liability - please see note 16.
Acquisitions - additional consideration
The March 2020 acquisition of the Group's French distribution
channel gave rise to a provision for two cash payments dependent on
NIPT sales growth during the current reporting period. Of these
payments EUR0.6m (GBP0.5m) was paid in April 2020. At the period
end EUR1.0 (GBP0.8m) was accrued to meet these obligations - see
note 18.
Following the acquisition of Coastal Genomics Inc three
additional contractual consideration payments of an aggregate
US$4.0m (GBP2.9m) are deemed payable based on estimated performance
on certain performance criteria and is accrued at the period end,
see note 18. The third of these additional consideration payment
for US$2m is expected to be paid in 2023, and has been discounted
to present value in these financial statements, and provided for as
total additional consideration of US$3.5m (GBP2.6m). A fourth
consideration payment of US$4.0m is contractually payable in April
2023 if the acquired company's revenues achieve a stretch target in
the financial year to 31 March 2022. This stretch target is not
deemed probable to be achieved and the liability for the fourth
payment is deemed a contingent liability.
31 Analysis of Changes in Net Cash/(Debt)
Acquisitions Exchange
01-Apr-20 Cash Flow and disposals movements 31-Mar-21
GBP GBP GBP GBP GBP
------------------------ ---------- ---------- --------------- ----------- ----------
Cash and bank balances 2,764,117 4,231,321 - - 6,995,438
Bank Loan see note 21 (362,618) 320,860 (160,497) 6,537 (195,718)
Net cash / (debt) 2,401,499 4,552,181 (160,497) 6,537 6,799,720
------------------------ ---------- ---------- --------------- ----------- ----------
34 Events After the Reporting Date
After the end of the reporting period the Group has continued to
expand its UK-based Covid testing routes to market including into
the retail pharmacy and travel sectors and through successful entry
into the UK Government's National Microbiology Framework. The Group
also entered into a second qualifying commercial agreement for the
Ranger Technology acquired with Coastal Genomics, triggering the
second of two equity earn-out issuances, and creating a commercial
platform with leading US-based market participants. In a separate
announcement the Group also entered into a multi-year licence and
supply agreement with another leading US diagnostic testing
partner, furthering its US market penetration.
Post period end additional ordinary shares of 81,899 (April
2021) and 85,124 (August 2021) were issued as consideration shares
in relation to the Coastal Genomics Inc acquisition first and
second earn out targets. As part of satisfying the same earn-out
conditions shares in Yourgene Health Canada Investments Ltd were
issued which are exchangeable for 4,696,055 ordinary shares in the
Company at an exchange price of 14.8 pence (April 2021) and for
4,880,971 ordinary shares in the Company at an exchange price of
14.3 pence (August 2021). A further 550,000 ordinary shares were
issued when employee share options were exercised in June 2021.
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
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