TIDMYGEN
RNS Number : 8391T
Yourgene Health PLC
27 July 2022
Yourgene Health plc
("Yourgene", the "Company" or the "Group")
Audited Final Results
Manchester, UK - 27 July 2022: Yourgene (AIM: YGEN), the
international molecular diagnostics group, announces its final
results for the financial year ended 31 March 2022 ("FY22"), and
provides an unaudited update on trading for the first quarter of
the current financial year ("Q1 FY23").
The Group's performance in FY22 reflects the significant revenue
growth delivered from COVID-related products and services, as well
as a return to growth in the Company's core business. The strong
financial performance has allowed Yourgene to invest further in
creating a broader platform or products and services to serve a
wider, global customer base, focussed on accelerating growth across
Genomic Services, NIPT, Ranger(R) Technology and PCR testing.
Financial highlights
-- Record revenues of GBP37.6m (FY21: GBP18.3m), up 105% and ahead
of previously upgraded expectations
- Genomic Services up 238% to GBP21.6m, dominated by COVID-19
testing
- Genomic Technologies up 34% to GBP16.0m including +9% year-on-year
growth in non-COVID sales
-- Gross profit up 88% to GBP21.4m (FY21: GBP11.4m)
-- Adjusted EBITDA* of GBP3.4m (FY21: loss of GBP2.0m)
-- Reported pre-tax loss of GBP3.2m (FY21: loss of GBP12m)
-- Reported loss after tax of GBP1.9m, following GBP1.3m tax credit
(FY21: GBP12.2m)
-- EPS loss of 0.3p (FY21: 1.8p loss)
-- GBP1.3m cash generated from operating activities (FY21: GBP3.8m
used), despite a net working capital outflow of GBP1.7m (FY21:
GBP0.9m outflow)
-- GBP3.5m of cash used in investing activities (FY21: GBP7.4m) -
reflecting investment in growth strategy
-- GBP5.0m term loan secured in January 2022 from Silicon Valley
Bank to support growth strategy
-- Cash improved to GBP8.4m (31 March 2021: GBP7.0m)
* 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
Operational highlights
-- National Microbiology Framework awards for COVID-19 PCR testing
and variant sequencing services
-- DPYD screening contract for NHS Wales and DPYD screening recommended
in Spain
-- Opening of new Yourgene Health Canada facilities to support future
growth of Ranger(R) Technology
-- US strategic partnership for NIPT with Ambry Genetics and expanded
market access to oncology portfolio for Yourgene Genomic Services
-- Secured two supply contracts with US diagnostic majors for Ranger(R)
Technology (announced in March and June 2021 respectively) are
-- now validated and using the technology in routine clinical testing)
Launch of IONA(R) Care - our NIPT service with expanded clinical
-- menu including sex chromosome aneuploidies
Expansion of geographical reach with indirect distribution channels
-- strengthened in Middle East, Africa and Eastern Europe and commercial
teams strengthened in APAC, Americas and EMEA
New customers for IONA(R) Nx NIPT Workflow with strong installed
base in the USA, Mexico and Singapore
Post period end developments
-- Strategic partnership with Ambry Genetics extended to oncology
services portfolio offering in Europe
-- Launch of Yourgene's Accelerator Phase for its Microdeletions
Plugin, which expands on the clinical menu and capabilities of
IONA(R) Nx NIPT Workflow offering
-- Yourgene Genomic Services receive ISO 15189:2012 accreditation
for UK laboratory
-- Ranger(R) technology offering expanded with launch of LightBench(R)
Detect - clinical platform for liquid biopsy applications including
NIPT with the use of EDTA blood collection tubes
-- Business restructuring is now complete, the Group's platform has
been reshaped to deliver growth within the core portfolio across
Yourgene's operating footprint
-- Q1 FY23 trading returns to pre-pandemic growth rates (20% year-on-year)
for non-COVID revenue streams
Lyn Rees, Chief Executive Officer of Yourgene, commented: "We
are greatly encouraged by the performance of the business over the
last 12 months. We have delivered record revenues as a result of
high demand for our COVID-related products and services, and we
have been able to invest the resultant proceeds towards enhancing
the growth drivers for our core markets opportunities. Yourgene has
progressed significantly over the last few years, and we remain
focused on our long-term growth strategy despite some of the
challenges faced over the last two years.
"Looking forward we are now established as a growing force in
genomic testing with a team of nearly 200 staff with a strong and
increasing presence in key overseas geographies including North
America, Europe and Asia. We have diverse revenue streams built on
proprietary technologies and growth opportunities across cell-free
DNA applications such as NIPT, oncology, reproductive health and
infectious disease. Our core business is now back to being a stable
platform from which to deliver growth, building on the progress in
the first quarter. Yourgene has a unique opportunity to benefit
from the more significant growth rates available from the expanded
range of market segments in which we operate."
Q&A with CEO, Lyn Rees:
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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
Singer Capital Markets (Joint Corporate Tel: +44 (0)20 7496 3000
Broker)
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Tzimas
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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)
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About Yourgene Health
Yourgene Health is an international molecular diagnostics group
which develops integrated genomic technologies and services
enabling precision medicine. The group works in partnership with
global leaders in DNA technology to advance diagnostic science.
Yourgene primarily develops, manufactures, and commercialises
simple and accurate molecular diagnostic solutions, for
reproductive health, precision medicine and now infectious
diseases. The Group's flagship products include non-invasive
prenatal tests (NIPT) for Down's Syndrome and other genetic
disorders, Cystic Fibrosis screening tests, invasive rapid
aneuploidy tests, and a recent extension into the oncology space
with DPYD genotyping.
The Yourgene Genomic Services team works with healthcare
professionals, researchers and pharmaceutical organisations to
support and accelerate scientific advances in genomic medicine. The
division's specialist services guide decisions about abnormalities,
hereditary risk and treatment in addition to providing novel
insights in research and discovery. Accredited clinical services
are provided in Oncology and Reproductive Health within the UK and
worldwide. The team of scientific experts offer consultative
services to help guide partners in selecting the right technology
and approach for their applications.
In August 2020, Yourgene acquired Coastal Genomics , Inc., a
sample preparation technology company based in Vancouver, Canada,
enabling the Company to extend its offering and IP portfolio in the
DNA sample preparation sector. The acquisition increased Yourgene's
geographical penetration into the US and Canada, supplementing
existing coverage in the UK, Europe, MEA and Asia.
Yourgene Health is headquartered in Manchester, UK with offices
in Taipei, Singapore, the US and Canada, and is listed on the
London Stock Exchange's AIM market under the ticker "YGEN". For
more information visit www.yourgene-health.com and follow us on
twitter @Yourgene_Health.
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.
Chairman's statement
The foundations for growth are stronger than ever.
Yourgene has come on a considerable journey over the last six
years since I became Chairman. Despite current market conditions
the business has weathered the pandemic and delivered its best ever
results. More importantly it has used the income generated from
COVID testing to strengthen the growth drivers for the business in
the future. At the same time, we have continued to build a strong
Board and appropriate governance as we build a business of
scale.
At the IPO in 2014 we were a UK focused pre-revenue business
with a headcount of 10, and a single product due to launch into the
NIPT space. Today we have established ourselves as a growing force
in genomic testing and technologies: we are a team of approximately
200 staff with more direct presence in key overseas geographies
than ever before. On behalf of the Board, I would like to thank the
management team and all Yourgene colleagues for their considerable
efforts and outstanding contribution to the national pandemic
response.
During the year Nick Mustoe left the Board after eight years and
Mary Tavener joined the Board as a Non-executive Director. I would
like to take this opportunity to thank Nick for all of his time and
support during his tenure with Yourgene and to welcome Mary to the
Board for the next phase of the Group's journey.
As announced in April 2022 I will be stepping back from my role
as Non-executive Chairman of Yourgene to return to being a
Non-executive Director and Dr John Brown CBE will assume the role
as Non-executive Chairman, which I totally support. John has over
20 years capital markets experience in the healthcare and life
sciences sector and has significant relevant Board experience. I
look forward to working with John and the rest of the Board as we
strive to leverage these strong foundations and deliver the
shareholder returns we all desire.
Adam Reynolds
Non-executive Chairman
27 July 2022
Chief Executive's report
We have achieved record results through agility and
resilience
Over the last 12 months Yourgene has been both agile and
resilient in equal measure. We have achieved record revenues as a
result of high demand for our COVID-related products and services,
and we have also seen a return to growth in many of our core
markets as the year progressed. This success has provided us with
additional funds to invest across our Genomic Services and Genomic
Technologies businesses, both of which offer strong growth
potential. We are very excited about the broader service offering
that we now have, as well as the growth opportunities available
from our Genomic Services business, the NIPT markets in the
Americas, and in particular the disruptive potential of our
Ranger(R) Technology.
First and foremost, I must offer a huge thanks to all our staff
for their hard work over the last 12 months. The application of our
skill-base to meet the demands and challenges of the COVID-19
pandemic, and to now redeploy those skills into other growth areas,
has been remarkable. Last year's success is a testimony to the
commitment of the whole team and there is no doubt that they have
helped ensure that Yourgene is in a much better position now than
we were going into the pandemic.
We enter the new financial year with a strong platform to meet
the needs of a wider customer-base via an adaptable mixture of
technologies and services, with the aim of delivering improved
profitable growth from our core business in FY23 and beyond.
Full year trading overview
Revenues for FY22 were GBP37.6m, up 105% on the previous year,
with the vast majority of this revenue derived from UK focused
COVID PCR testing and variant sequencing services, as well as sales
of our own Clarigene(R) COVID-19 PCR assay. Going forward we expect
to see these geographical splits normalise and in particular a
greater contribution from sales in North America, a key growth area
for Yourgene.
Revenue by Geographical 2022 % of Group 2021 % of Group Growth/
Market GBPm GBPm decrease
------------------------ ----- ---------- ----- ---------- ---------
UK 26.5 71% 5.5 30% 387%
Europe 5.5 14% 5.5 30% 0%
International 5.6 15% 7.4 40% -24%
------------------------ ----- ---------- ----- ---------- ---------
Group 37.6 100% 18.3 100% 105%
------------------------ ----- ---------- ----- ---------- ---------
Genomic Services
Our Genomic Services business delivers clinical and research
testing services to consistently high standards, incorporating our
longstanding NIPT testing services, our oncology and CRO (contract
research organisations) testing services, as well as
high-throughput COVID testing services. We have an established
international laboratory network with upgraded facilities in the UK
(Manchester) and Taiwan (Taipei).
2022 % of Group 2021 % of Group Growth/
Genomic Services revenue mix GBPm GBPm decrease
----------------------------- ----- ---------- ----- ---------- ---------
COVID-19 services 18.7 50% 1.7 10% +981%
NIPT services 1.6 4% 1.9 10% -12%
Other services 1.3 3% 2.8 15% -55%
----------------------------- ----- ---------- ----- ---------- ---------
Genomic Services 21.6 57% 6.4 35% +238%
----------------------------- ----- ---------- ----- ---------- ---------
COVID-19 Testing Services
The significant growth in Genomic Services revenues to GBP21.6m
can be attributed to a very strong performance from the team in
delivering the highest-quality COVID PCR testing and variant
sequencing for the Department of Health and Social Care and
non-Government customers. Whilst private COVID-19 testing continues
these are at more modest levels and we continue to repurpose our
testing capacity in this area.
One of the many examples of how we are now stronger as a
business coming out of the pandemic is the recognition of the high
quality of performance and competence that our Genomic Services
provide. Following assessments by the UK accreditation service, our
Manchester labs received ISO 15189:2012 accreditation for its
COVID-19 testing and sequencing services, one of the few
independent UK labs to have attained this globally recognised ISO
standard. It is also a testament to our team that our labs also
passed the rigorous assessments required to support the
Government's COVID-19 testing programme and provide genetic
sequencing services to the UK Health Security Agency.
Our expertise in preparing for successful contract tenders was
also developed further during the pandemic as was evidenced by
Yourgene's inclusion in the Public Health England National
Microbiology Framework Agreement and then subsequent awards granted
under it. We have a number of submissions for tenders in place
currently where we believe we are well-placed to compete, and we
will update shareholders on those that are successful.
Non-Invasive Prenatal Testing (NIPT) services
NIPT and research testing services stabilised in H2 after a
challenging first half of the financial year. Whilst the pandemic
had a negative effect on birth rates globally, trading at the end
of the financial year indicates an encouraging recovery in NIPT
services towards previous pre-pandemic growth rates.
Expansion into oncology testing services
We also continue to expand our range of genomic testing
services, and in April 2022 we announced an extension of our
strategic partnership with Ambry Genetics, part of REALM IDx, Inc
(previously Konica Minolta Precision Medicine), which adds a range
of leading oncology products to our services offering.
Genomic Technologies
Our Genomic Technologies business encompasses a wide range of
instruments, reagents, consumables and software including screening
and diagnostic products in the areas of NIPT, Cystic Fibrosis,
chemotoxicity (DPYD) and COVID-19 as well as our Ranger(R)
Technology, used in DNA applications such as liquid biopsy
including; NIPT, infectious diseases and oncology. Our Ranger(R)
Technology offers clinical and research laboratories with an
automated DNA target enrichment solution to enrich and purify DNA
samples with a low overall level of target present which improves
the performance of DNA test. This provides a clear economic benefit
to labs when incorporated into sample preparation.
Genomic Technologies revenues were up 34% to GBP16.0m (FY21:
GBP11.8m).
Genomic Technologies revenue 2022 % of Group 2021 % of Group Growth/
mix GBPm GBP 000 decrease
------------------------------- ----- ---------- -------- ---------- ---------
NIPT 5.4 15% 5.9 32% -9%
COVID-19 related assays 4.5 12% 1.4 8% +216%
Reproductive health 3.9 10% 3.6 20% +7%
Precision Medicine (Ranger(R),
DPYD and other) 2.2 6% 1.0 5% +135%
------------------------------- ----- ---------- -------- ---------- ---------
Genomic Technologies 16.0 43% 11.9 65% +34%
------------------------------- ----- ---------- -------- ---------- ---------
NIPT
Whilst we have grown our portfolio considerably into areas
beyond NIPT we remain very excited about the growth opportunity
this market offers. We saw a recovery in the second half of the
year to double digit growth, recording 11% growth year-on-year
compared to H2 2021, and a 19% improvement against H1 2022
sales.
Our UK and European NIPT customer base is now firmly established
on our IONA(R) Nx NIPT workflow using Illumina's next generation
sequencing technology, and we have added new partners across the
region. Internationally, the launch of IONA(R) NX and its component
technologies opened up many new markets to us and we are building a
strong installed base for IONA(R) NX in the USA, Mexico and
Singapore. This installed base is starting to build clinical
volumes and offers significant growth potential in the coming
years.
We remain active in R&D to ensure we continue to offer class
leading products to the NIPT market. Post-period end we announced
the launch of the accelerator phase for clinical menu expansion for
our IONA(R) Nx NIPT Workflow offering, the Microdeletions Plugin.
The expansion offers customers the ability to detect chromosomal
microdeletions, an abnormality that occurs when a piece of a
chromosome is missing, with a number of microdeletion patterns
being associated with a number of clinically categorised syndromes.
Yourgene is one of a small group of NIPT providers to include
microdeletions in the NIPT workflow and we are pleased to be
working alongside leading genomics partners in Asia and Europe.
Looking forward, we are confident that we can exploit
commercially the significant opportunity that Yourgene has to
influence and disrupt the NIPT market in the Americas by leveraging
our Ranger(R) technology for size selection into established
competitor NIPT workflows. The Ranger(R) Technology is already
integrated as a key element in the IONA(R) Nx NIPT workflow, but
the technology can be integrated into other NIPT workflows, and
immediately offers laboratories a clear value proposition with
unrivalled fetal fraction enrichment, thus improving the success
rates of testing and reducing the number of false positives. It
also offers potential customers clear economic benefits by
simplifying the sample preparation process, allowing considerably
lower cost sample tubes to be used and potentially halving the
number of sample tubes required. Given that the Ranger(R)
Technology can be used with existing NIPT workflows it allows the
Yourgene sales team to begin dialogue with potential customers at
any time during the sales cycle, not only when longer term service
contracts are approaching renewal. Over time we expect to gain
entry to subsequent tender processes via the adoption of the
Ranger(R) Technology into NIPT workflows currently using competing
sample testing or reporting workflows.
Across the NIPT landscape in the Americas we have already
demonstrated that our technology offering is attractive to all of
the various market segments: from the high volume 'Mega Labs', to
large private screening labs, as well as to smaller regional
reference labs. The fact that we have attracted a key strategic
partner such as Ambry Genetics, a leading US laboratory services
provider, reinforces the credibility our Ranger(R) Technology has
in the NIPT market.
COVID-19 related assays
Clarigene(R) COVID-19 PCR assay reported revenues of GBP4.5m
(FY21: GBP1.4m). Sales are continuing into the new financial year
through private testing channels, although ongoing sales are
expected to reduce in line with a global reduction in mandatory
COVID testing requirements.
Reproductive Health
The reproductive health PCR portfolio of tests such as Cystic
Fibrosis, male factor infertility, QST*R rapid aneuploidy analysis
and pregnancy loss test has seen a 7% year on year growth. This
growth has been with our CE-IVD kits through our existing direct
sales and distributor network for predominantly UK, European,
Canada and Australian markets. We are now making research use only
(RUO) versions that we can take to non IVD regulated markets.
Ranger(R) technology, DPYD and other technologies
Revenues in this category more than doubled year-on-year and now
represent 15% of core Group revenues (i.e.
non-COVID-related revenues) and we continue to invest in
developing additional complementary precision medicine
products.
We are very pleased with the growth being delivered by our DPYD
chemotoxicity genotyping test, which is being used increasingly
across Europe to determine which cancer patients (those with a
specific genetic deficiency) will be subject to severe, or
sometimes lethal, side effects after being treated with a widely
used chemotherapy drug, 5-Fluorouracil ("5-FU"). DPYD test revenues
increased to GBP1.2m for the financial year (FY21: GBP0.7m)
reflecting the wider adoption of this screening test, which is now
recommended in Wales, England, Germany, Spain and Belgium.
Ranger(R) Technology is applicable beyond NIPT and this
disruptive technology can be applied to all types of DNA testing
where automated size selection can bring considerable benefits to
labs by enriching the DNA interest in a sample with considerable
precision and speed. We have the unique opportunity to take
advantage of multiple market segments, addressing needs in areas
that use liquid biopsy (such as NIPT, oncology and infectious
disease) as well as the gene synthesis and RNA size selection
markets. We have a significant pipeline of opportunities for
Ranger(R) Technology which are at various stages of feasibility and
validation.
Operational improvements and right sizing
With a return to focusing on growth acceleration in our core
activities, we have ensured the business has an appropriate
resource allocation moving forward. As COVID-testing activities
have receded we have reduced our variable cost base in that domain
and have started to consolidate our UK activities through a
programme of co-location and shared support services between both
segments of the business. We believe that, once complete, these
actions will reduce the Group's annual operating cost base to a
more appropriate post-COVID level. At the same time, we are also
undertaking a strategic review of our Taiwan business unit which
was badly hit by the pandemic with key CRO customer business
continuing to fluctuate while the region remains subject to ongoing
travel restrictions. The restructuring process is largely complete
at the date of this Annual Report and the UK facilities
consolidation is very well advanced.
Strengthening global routes to market
During the year we have invested in developing our commercial
team to ensure we are best placed to deliver on the growth
opportunities we have ahead of us. This has meant that we have
strengthened our team in key regions, in particular across the
Americas, Asia and Europe. Yourgene now has more teams in local
settings and in closer dialogue with our customers and potential
customers on the ground. I am delighted to be taking the
opportunity to meet these teams over the next few months and to
support them to deliver our next stage of commercial growth.
During the pandemic, we also benefitted from a fast-tracked
experience curve whereby our Genomic Services team were tested
under exceptional circumstances, in terms of delivering to
accelerated timelines and unprecedented testing volumes. I am very
proud of the team as they have adapted and developed during
challenging times whilst ensuring that we continue to operate to
the highest quality standards. Our best-of-breed approach to
solving customer challenges remains a key differentiator.
As part of our continued investment in growth and the wider
drive for operational improvement we opened our new Yourgene Health
Canada facilities in Vancouver in January 2022. The new facility,
approximately four times larger than our previous facility, will
support the scale up of manufacturing for our Ranger(R) Technology
platforms, reagents and consumables.
Outlook
As we realign our business to focus on post-pandemic growth
drivers the strategic pillars for this growth are unchanged:
product penetration, geographic expansion, new products and
targeted synergistic M&A.
Within Genomic Services we expect to see recovery in NIPT and
research services as we also broaden our portfolio to provide whole
exome and whole genome sequencing services. We continue to
repurpose our testing capacity towards non-COVID testing and our
extension of our partnership with Ambry Genetics provides us with
an oncology testing range that broadens the Genomic Service
offering considerably.
For Genomic Technologies we expect to maintain the momentum that
is building in the adoption of the IONA(R) Nx NIPT solution and we
will continue to enhance this technology with new innovations to
complement the recently launched Microdeletions Plugin. We also
believe that the commercial adoption of our Ranger(R) Technology
provides an exciting opportunity for the business, whether as part
of our IONA(R) Nx NIPT Workflow offering or as an enabler for
third-party NIPT workflows. It also has the potential to be a
hugely disruptive technology bringing the advantage of Ranger(R)
size selection to adjacent markets of liquid biopsy, RNA and gene
synthesis. We believe the offering we have has a number of
unique-selling points that will support continued market adoption
across all market segments, from the largest "Mega-labs" to smaller
regional testing facilities. We also anticipate further growth in
our DPYD chemotoxicity test as screening becomes adopted more
widely and we continue to invest in developing further
complementary content.
Overall, I believe we have a stable business platform and a
number of exciting routes to deliver future growth across the core
business, along with a unique opportunity to benefit from the
significant growth that is expected from the segments of the
molecular diagnostic market in which we operate.
Lyn Rees
Chief Executive Officer
27 July 2022
FINANCIAL REVIEW
Strengthened financial position despite pandemic turbulence
Income Statement
In the reporting period revenues more than doubled to GBP37.6
million (2021: GBP18.3 million) as Covid-related products and
services delivered significant revenues and core markets started to
return to pre-pandemic growth levels. Our Genomic Services
operating segment delivered revenue growth of 240% whilst our
product-focused segment, Genomic Technologies, delivered 33%
growth. Gross profits grew by 88% to GBP21.4m (2021: GBP11.4m) with
gross margins decreasing slightly to 57% (2021: 62%) due to the mix
bias towards lower margin COVID testing services in a highly
competitive market.
Administrative expenses increased to GBP18.0m (2021: GBP13.5m).
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, such as expanding Genomic
Services capabilities for post-Covid opportunities, continued
investment in the Group's North American commercial presence and
the acquired Coastal Genomics business (now renamed Yourgene Health
Canada). Long-term projects standardising cloud-based business
systems and transitioning to the IONA(R) Nx NIPT workflow continued
and made significant progress during the reporting period.
2022 2021
----------------------------------------- -----------------------------------------
Genomic Genomic Genomic Genomic
Technologies Services Central Total Technologies Services Central Total
GBP m GBP m GBP m GBP m GBP m GBP m GBP m GBP m
------------------------ ------------- --------- ------- ------ ------------- --------- ------- ------
Revenues 16.0 21.6 - 37.6 11.9 6.4 - 18.3
Cost of sales (6.6) (9.6) - (16.2) (4.7) (2.2) - (6.9)
------------------------ ------------- --------- ------- ------ ------------- --------- ------- ------
Gross profit 9.4 12.0 - 21.4 7.2 4.2 - 11.4
Other operating - - - -
income - - - -
Segmental expenses (5.6) (6.6) - (12.2) (5.3) (3.4) - (8.7)
Central overheads - - (5.8) (5.8) - - (4.7) (4.7)
------------------------ ------------- --------- ------- ------ ------------- --------- ------- ------
Adjusted EBITDA
* 3.8 5.4 (5.8) 3.4 1.9 0.8 (4.7) (2.0)
Depreciation and
amortisation - - (4.6) (4.6) - - (3.2) (3.2)
Goodwill impairment - - (1.0) (1.0) - - (4.8) (4.8)
Share-based payments
expense - - (0.3) (0.3) - - (1.0) (1.0)
Costs associated
with subsidiary
acquisition - - - - - - (0.3) (0.3)
Acquisition integration
expense - - - - - - (0.4) (0.4)
------------------------ ------------- --------- ------- ------ ------------- --------- ------- ------
Operating profit/(loss) 3.8 5.4 (11.7) (2.5) 1.9 0.8 (14.4) (11.7)
------------------------ ------------- --------- ------- ------ ------------- --------- ------- ------
* Adjusted EBITDA is measured as the operating loss before
depreciation, amortisation, and separately disclosed items.
The Group's two operating segments both delivered positive
adjusted EBITDA contributions after segment-specific expenses.
Genomic Services contributed GBP5.6m (2021: GBP0.8m) with COVID
testing services in the UK offsetting pandemic-related weakness in
our Taiwan laboratory services. Genomic Technologies contributed
GBP3.6m (2021: GBP1.9m) with sales of Clarigene(R) COVID-19 PCR
test augmenting a return to growth in core product lines. Overall
adjusted EBITDA after deducting central expenses was a profit of
GBP3.4m (2021: GBP2.0m loss). The increase in central expenses
reflects the expansion of the Group through previous acquisitions
and the Group's decisions to continue investing in its future
growth drivers despite the pandemic headwinds in its core
markets.
Separately Disclosed Items
Significant items within administrative expenses are shown
separately in the Consolidated Statement of Comprehensive Income,
with further details in note 6. These include non-cash accounting
charges for share-based payments of GBP312k (2021: GBP952k) which
reflect lower awards in recent years as the Company has moved
towards a Share Incentive Plan for general staff participation.
Acquisition related expenses were GBPnil (2021: GBP674k) reflecting
the Group's focus on organic growth and driving the benefits from
acquisitions made in earlier reporting periods.
Within separately disclosed items is a GBP1,045k (2021:
GBP4,789k) impairment of goodwill and other intangibles relating to
the Genomic Services Taiwan cash-generating unit. These intangibles
arose from the 2017 acquisition of Yourgene Health Taiwan (Yourgene
Bioscience at the time of acquisition). The markets in which
Genomic Services Taiwan operates were particularly badly hit by the
COVID-19 pandemic and these restrictions have continued throughout
the reporting period. The Group has announced a strategic review of
this operation and this impairment writes down to nil the value of
the acquired intangibles.
Operating Loss
The business growth in the reporting period has resulted in a
significantly reduced operating loss of GBP2.5m (2021: GBP11.7m
loss).
Finance Income/(Expenses)
During the period the Group incurred net finance expenses of
GBP0.7m (2021: GBP0.3m) which reflects the additional term loan
secured with Silicon Valley Bank as well as increased lease
liability interest charges arising from new leases on the Group's
upgraded facilities in Taiwan, Vancouver and Manchester.
Taxation and Foreign Exchange
The resulting loss on ordinary activities after taxation of
GBP1.9m (2021: GBP12.2m) reflects a GBP1.3m tax credit (2021:
GBP0.2m charge) which is described in note 12 and is primarily the
recognition of a deferred tax asset. This tax asset arises from
previously unrecognised historic losses based on the Group's
expectation of profitability in its UK operations over the next 5
years. There are still significant historic tax losses in the UK
which have not yet been recognised and which will help offset taxes
arising on any additional future profits.
Total Comprehensive Loss
After accounting for exchange differences arising on
consolidation the Group recorded a much-reduced total comprehensive
loss of GBP1.8m (2021: GBP12.2m).
Earnings per Share
Earnings per share were a loss of 0.3 pence (2021: 1.8 pence
loss).
Statement of Financial Position
At the reporting date the Group had total assets of GBP64.1m
(2021: GBP49.1m). Intangible assets reduced to GBP12.9m (2021:
GBP14.8m) as a result of the impairment of the Taiwanese assets and
ongoing amortisation of previously acquired or capitalised
intangible assets. Goodwill reduced to GBP8.9m (2021: GBP9.2m) due
to the Genomic Services Taiwan impairment. Property, plant and
equipment increased to GBP4.8m (2021: GBP4.1m) with capital
expenditure on new laboratory facilities in the UK and expansion of
the Group's facility in Vancouver. Right of use assets increased to
GBP13.5m (2021: GBP4.2m) due to the relocation to a new long-term
leased facility in Vancouver. In the UK the Group is in the process
of relocating from multiple sites to a single facility leading to
some temporary duplication of property leases until the relocation
completes by March 2023. The recognised deferred tax asset
increased slightly to GBP2.3m (2021: GBP1.1m) in light of improved
business forecasts for the Group's UK operations which have
significant unrecognised historic tax losses available.
Total current assets increased to GBP21.7m (2021: GBP15.7m) with
inventories increased significantly (to GBP6.0m from GBP2.9m) for
extra resilience in response to global supply chain challenges
experienced during the pandemic, and also to support planned
business growth. Trade and other receivables also increased (to
GBP7.0m from GBP5.3m) reflecting a strong second half of the
reporting period. There was also an increase in cash and cash
equivalents to GBP8.4m (2021: GBP7.0m).
Total equity and liabilities increased to GBP64.1m (2021:
GBP49.1m) with the principal increases being due to the new
property lease liabilities in Vancouver and Manchester (IFRS16
lease liabilities up to GBP13.9m from GBP4.6m) and also a GBP5m
term loan facility entered into in January 2022 with Silicon Valley
Bank. This funding was secured to support growth for the Group.
After an initial 3-month interest free period the loan is repayable
over the remainder of a 3-year term (see note 21 for more
details).
Statement of Cash Flows
The Group had an opening cash position of GBP7.0m (2021:
GBP2.8m) and a net cash increase of GBP1.4m during the year (2021:
GBP4.2m increase). Cash and cash equivalents at the end of the
period were GBP8.4m (2021: GBP7.0m). During the period the Group's
improved performance generated GBP1.3m (2021: used GBP3.8m) of cash
in operating activities despite a net working capital outflow of
GBP1.7m (2021: GBP0.9m outflow). Cash used in investing activities
was GBP3.5m (2021: GBP7.4m) reflecting capital expenditure in the
year on service capacity, new facilities in Vancouver plus
capitalisation of internally generated intangible assets.
Financing activities generated a surplus of GBP3.6m (2020:
GBP15.5m surplus) primarily due to the Silicon Valley Bank term
loan entered into in January 2022 (see note 21).
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 (2021: GBPnil) in order to invest 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 also provided some risk
mitigation against consequential instability in our core markets.
As the COVID pandemic recedes the Group is restructuring itself to
better reflect its underlying business model and to capitalise on
the significant growth opportunities available in its core markets.
As at 31 March 2022 the Group had net cash of GBP3.2m (2021:
GBP6.8m) which is stated after borrowings of GBP5.2m (2021:
GBP0.2m) but before lease liabilities arising under IFRS16 (with
their offsetting Right of Use assets). Business growth in the
Group's Genomic Services and Genomic Technologies segments 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 undertaken a
restructuring of its operations, primarily in the UK and Taiwan, to
better reflect its post-COVID model and to direct resources at its
primary growth drivers of NIPT, Ranger(R) technology, Genomic
Services and DPYD assets.
Barry Hextall
Chief Financial Officer
27 July 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2022
2022 2021
----------------- -----------------
Notes GBP 000 GBP 000 GBP 000 GBP 000
----------------------------------- ----- ------- -------- ------- --------
Revenue 37,562 18,288
Cost of sales (16,197) (6,912)
----------------------------------- ----- ------- -------- ------- --------
Gross profit 21,365 11,376
Other operating income 7 60
Administrative expenses 6 (17,967) (13,483)
----------------------------------- ----- ------- -------- ------- --------
Adjusted EBITDA 3,405 (2,047)
Depreciation and amortisation 6 (4,588) (3,247)
Impairment of goodwill 5 (1,045) (4,789)
Share-based payments expense 5 (312) (952)
Costs associated with acquisitions
and integration 5 - (674)
Total depreciation, amortisation
and separately disclosed items 5 (5,945) (9,662)
Operating loss 6 (2,540) (11,709)
Financing income 10 5 2
Financing expenses 11 (656) (302)
----------------------------------- ----- ------- -------- ------- --------
Loss on ordinary activities before
taxation (3,191) (12,009)
Tax credit/(charge) on loss on
ordinary activities 12 1,275 (175)
----------------------------------- ----- ------- -------- ------- --------
Loss for the year (1,916) (12,184)
Other comprehensive expense: to
be subsequently reclassified to
profit or loss
Exchange translation differences 68 (57)
----------------------------------- ----- ------- -------- ------- --------
Loss and total comprehensive loss
for the year (1,848) (12,241)
----------------------------------- ----- ------- -------- ------- --------
Earnings per share (pence) 13
Basic: Loss (0.3p) (1.8p)
Diluted: Loss (0.3p) (1.7p)
----------------------------------- ----- ------- -------- ------- --------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 March 2022
2022 2021
-------- --------
Notes GBP 000 GBP 000
Assets
Non-current assets
Goodwill 14 8,881 9,181
Intangible assets 14 12,932 14,750
Property, plant and equipment 15 4,752 4,109
Right-of-use assets 16 13,475 4,209
Deferred tax assets 23 2,282 1,145
Total non-current assets 42,322 33,394
Current assets
Inventories 17 5,987 2,897
Trade and other receivables 19 6,982 5,333
Tax asset 23 343 507
Cash and cash equivalents 8,429 6,995
Total current assets 21,741 15,732
Total assets 64,063 49,127
Equity and liabilities attributable to equity
holders of the Company
Equity
Called up share capital 28 32,672 32,668
Share premium account 28 67,786 67,260
Merger relief reserve 28 12,994 12,970
Reverse acquisition reserve 28 (39,947) (39,947)
Foreign exchange translation reserve 28 2 (66)
Other reserves 28 5,833 4,914
Retained losses 28 (46,595) (44,876)
Total equity 32,745 32,923
Current liabilities
Trade and other payables 20 8,403 5,239
Lease liabilities 16 1,250 587
Current tax liabilities 405 543
Borrowings 21 2,193 119
Other liabilities and provisions 22 - 2,283
Total current liabilities 12,251 8,771
Non-current liabilities
Borrowings 21 3,027 77
Deferred tax liability 23 2,060 2,173
Lease liabilities 16 12,641 4,057
Other long-term liabilities and provisions 22 1,339 1,128
Total non-current liabilities 19,067 7,435
Total equity and liabilities 64,063 49,127
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
Share Merger Reverse Foreign
Share premium relief Other acquisition exchange Retained
capital account reserve reserves reserve reserve losses Total
Notes GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Balance at 1
April 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,298
Year ended 31
March 2021:
Loss for the
year - - - - - - (12,184) (12,184)
Other comprehensive
loss - - - - - (58) - (58)
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Total comprehensive
loss for the (12,24
year - - - - - ( 58 ) (12,184) 2 )
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Issue of share
capital 28 106 17,149 - - - - - 17,255
Share issue (1,06
expenses - (1,069) - - - - - 9 )
Issue of share
capital on acquisition - - 33 - - - - 33
Issue of exchange
share on acquisition - - - 1,845 - - - 1,845
Share-based
payments: share
option schemes 29 - - - - - - 802 802
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Balance at 31 32,66 12,97 (44,87
March 2021 7 67,260 1 4,914 (39,947) (66) 7 ) 32,923
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Balance at 1 32,66 12,97 (44,87
April 2021 7 67,260 1 4,914 (39,947) (66) 7 ) 32,923
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Year ended 31
March 2022:
Loss for the
year - - - - - - (1,916) (1,916)
Other comprehensive
gain - - - - - 68 - 68
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Total comprehensive
loss for the
year - - - - - 68 (1,916) (1,848)
Issue of share
capital 28 4 526 24 919 - - - 1,472
Share-based
payments: share
option schemes 29 - - - - - - 198 198
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
Balance at 31
March 2022 32,672 67,786 12,994 5,833 (39,947) 2 (46,595) 32,745
------------------------ ----- -------- -------- -------- --------- ------------ --------- -------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2022
2022 2021
---------------- -----------------
GBP 000 GBP 000 GBP 000 GBP 000
--------------------------------------------- ------- ------- ------- --------
Cash flows from operating activities
Loss for the year before tax (3,190) (12,009)
Adjustments for:
Finance costs 656 302
Finance income (5) (2)
Depreciation and impairment of property,
plant and equipment 1,755 1,023
Depreciation and impairment of right-of-use
asset 959 699
Loss on disposal of property, plant and
equipment 1 -
Loss on revaluation of right-of-use asset 25 -
Amortisation of intangible non-current
assets 1,874 1,526
Impairment of goodwill and intangible
non-current assets 1,044 4,789
Impairment on financial assets (IFRS
9) 13 (39)
Non-cash foreign exchange movements (421) (204)
Share-based payment and warrant expense 198 802
Release of provisions - (85)
Tax received 144 296
Movements in working capital:
(Increase) in inventories (3,089) (1,528)
(Increase)/Decrease in trade and other
receivables (1,661) 646
Increase in trade and other payables 3,165 44
(Increase) in tax asset (158) (78)
Cash used by operations 1,309 (3,820)
Investing activities
Purchase of subsidiaries (832) (3,637)
Cash acquired on purchase of subsidiaries - 32
Purchase of property, plant and equipment (2,334) (3,004)
Capitalisation of intangible assets (324) (838)
Finance income 5 2
--------------------------------------------- ------- ------- ------- --------
Net cash used in investing activities (3,484) (7,445)
Financing activities
Net proceeds from issue of shares 55 16,186
Proceeds from borrowings 5,286 160
Loan arrangement fee (159) -
Repayment of borrowings (289) (321)
Decrease or repayment of lease liability
obligations (935) (319)
Finance expense (349) (211)
--------------------------------------------- ------- ------- ------- --------
Net cash generated from financing activities 3,609 15,496
--------------------------------------------- ------- ------- ------- --------
Net increase in cash and cash equivalents 1,434 4,231
Cash and cash equivalents at beginning
of period 6,995 2,764
--------------------------------------------- ------- ------- ------- --------
Cash and cash equivalents at end of period 8,429 6,995
--------------------------------------------- ------- ------- ------- --------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 March 2022
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 2022 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 2022 and selectively included in this
announcement.
Company information
Yourgene Health PLC 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.
1. Going concern
In their assessment of the Group's ability to continue as a
going concern, the Directors have looked at the business prospects
for the business as it adjusts to a post-pandemic operating model.
These forecasts are largely based on recurring organic growth
drivers including the cash profiles of various prior year asset
acquisitions and business combinations.
The COVID pandemic suppressed organic growth somewhat and the
forecasts reflect a transition period during which these
longer-term growth drivers regain momentum as the pandemic recedes.
The Group anticipates a return to organic growth of the non-Covid
business streams including the 2020 acquisition of Coastal Genomics
(now renamed Yourgene Health Canada) which has secured some
strategic customers but remains an early-stage cash-consuming
business. The acquired company's Ranger(R) technology has multiple
competitive advantages in NIPT testing, oncology, liquid biopsy
more generally and adjacent markets such as gene synthesis. The
more speculative applications for this technology are not factored
into business forecasts at this stage and the technology is still
highly regarded and is expected to act as 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, including
in the face of the COVID pandemic which continued to significantly
impact the reporting period but which is noticeably receding, at
least in the Company's home and Western hemisphere markets. There
are early signs that Eastern hemisphere markets are also starting
to reopen to non-Covid diagnostics activity.
As described in the Strategic Report, the Group has been
leveraging Covid-generated funds inflows to invest in more
recurring cashflow drivers. The August 2020 fundraise enabled the
acquisition of Coastal Genomics Inc and has also continued to
facilitate 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, coupled with a
significant cost base restructure to adjust to the expected absence
of Covid-related revenues, 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 up to -10%
against expected levels along with potential mitigating actions
which can be taken to safeguard the Group's cash position if
revenues are in a range of -10% to -20% against expected levels.
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 could potentially generate
additional funds within the forecast horizon. The Group also has a
successful track record in raising funds from capital markets and
has new debt facilities which could potentially be restructured or
expanded. 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.
Adjusted EBITDA
Earnings before interest, tax, depreciation and amortisation
(EBITDA) is a recognised measure for shareholders and investor
analysts when comparing the performance of different companies in
their investment portfolios. The Company reports on this measure
after excluding certain separately disclosed items which are shown
on the face of the Statement of Comprehensive Income and in Note 5,
and recognises these exclusions by using the term Adjusted
EBITDA.
Separately disclosed items
Separately disclosed items are those significant items, within
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)
Right-of-use assets and lease liabilities are valued on a
present value basis of the lease payments over the 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 are
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 a 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.
The Group has also elected not to reassess whether a contract is
or contains a lease at the date of initial application. Instead,
for contracts entered into before the transition date, the Group
relied on its assessment made in applying IAS 17 and IFRIC 4,
'Determining whether an Arrangement contains a Lease'.
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 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 where it
is recognised within Depreciation & Amortisation.
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.
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. Where the recoverable amount is determined by
reference to fair value less costs to sell, the recoverable value
is assessed by analysing publicly listed peer group revenue
multiples, deemed a relevant basis for the sector in which Yourgene
operates. 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.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition of other assets and
liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each
reporting end date and reduced to the extent that it is not
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered, or to the extent that
there are deferred tax liabilities recognised that would not fall
due as a result of previously unrecognised deferred tax assets.
Where deferred tax assets not recognised in prior periods begin to
meet the criteria for recognition, their value is assessed based on
a discounted view of five-year profit forecasts for the relevant
taxable entity or Group deferred tax is calculated at the tax rates
that are expected to apply in the period when the liability is
settled, or the asset is realised. Deferred tax is charged or
credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity. Deferred tax assets and
liabilities are offset when the Group has a legally enforceable
right to offset current tax assets and liabilities and the deferred
tax assets and liabilities relate to taxes levied by the same tax
authority.
Leases
Leases are classified under IFRS 16 'Leases' as lease
liabilities with corresponding right-of-use assets in most
circumstances except for leases of low value or a lease term of
less than 12 months, in which circumstances the lease payments are
expensed as incurred.
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
In the prior reporting period the Group acquired Ex5 Genomics
Ltd (July 2020; now renamed Yourgene Genomic Services Ltd), and
Coastal Genomics Inc (August 2020; now renamed Yourgene Health
Canada Inc). In the prior period 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. Also in
the prior period, 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. Those targets were based on business forecasts
and deemed sufficiently probable to be met such that they are
recorded as provisions rather than contingent liabilities.
Note 14 Intangibles and note 18 Subsidiaries provide further
information on these acquisitions.
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. The triggers for
capitalisation are assessed by reference to the completion of
specific design review stages as defined by the Group's product
development methodology.
Accounting for share-based payments
The Group's rapid growth in revenues and gross profits resulted
in a significant swing to an adjusted EBITDA profit in the
reporting period. This was largely due to commercial revenues
generated through COVID-19 related products and services. The
pandemic in the UK is now receding and the UK Government has
significantly reduced testing levels. Whilst the Group expects to
see a reduction in revenues and margins as a result of this, there
has been significant investment in the Group's non-Covid revenue
generation capabilities. The Directors assessment is that these
enhanced revenue generation capabilities will return the Group
quickly to 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 remain likely to
meet the relevant performance conditions.
Accounting for deferred tax
The Group has generated significant historic losses during its
development stage, which have largely not been recognised as a
deferred tax asset due to lack of visibility of future
profitability within a 5 year 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 and customer relationship intangible
assets
The Group's management undertakes impairment reviews of its cash
generating units (CGUs) 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, GBP472k of Goodwill and GBP572k of
Customer relationships were impaired as described in note 14 where
the relevant growth and discount rates are detailed.
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.
The Group also has three geographic regions, defined as UK,
Europe and International.
Revenue
Revenue analysed by geographical market:
2022 2021
GBP 000 GBP 000
-------------- --------------------- --------
UK 26,503 5,440
Europe 5,436 5,462
International 5,630 7,386
-------------- --------------------- --------
37,569 18,288
-------------- --------------------- --------
Revenue analysed by business segment:
2022 2021
GBP 000 GBP 000
------------------ --------------------- --------
Genomic Services
NIPT services 1,609 1,833
COVID-19 services 18,714 1,730
Other services 1,259 2,820
------------------ --------------------- --------
21,582 6,382
------------------ --------------------- --------
2022 2021
GBP 000 GBP 000
------------------------------------ --------------------- --------
Genomic Technologies
NIPT 5,385 5,925
Reproductive health 3,841 3,603
COVID-19-related 4,537 1,437
Ranger, DPYD and other technologies 2,217 942
------------------------------------ --------------------- --------
15,980 11,906
------------------------------------ --------------------- --------
37,562 18,288
------------------------------------ --------------------- --------
During the reporting period two customers represented more than
10% of Group revenues (2021: none). These customers generated
revenue of GBP7,803k and GBP4,218k respectively, both within the
Genomic Services business segment and arose due to increased
activity in COVID-19 testing.
Non-current assets
The Group's non-current assets are located in the following
geographic regions:
2022 2021
GBP 000 GBP 000
-------------- -------- --------
UK 25,409 15,812
Europe 3,550 4,206
International 13,364 13,377
-------------- -------- --------
42,322 33,394
-------------- -------- --------
Operating profit/(loss) by segment
2022 2021
-------------------------------------------- --------------------------------------------
Genomic Genomic Genomic Genomic
Technologies Services Central Total Technologies Services Central Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
------------------------ ------------- --------- -------- -------- ------------- --------- -------- --------
Revenues 15,980 21,582 - 37,562 11,906 6,382 - 18,288
Cost of sales (6,557) (9,640) - (16,197) (4,690) (2,223) - (6,912)
------------------------ ------------- --------- -------- -------- ------------- --------- -------- --------
Gross profit 9,423 11,942 - 21,365 7,216 4,160 - 11,376
Other operating
income 7 - - 7 - - 60 60
Segmental expenses (5,657) (6,540) - (12,197) (5,339) (3,400) - (8,738)
Central overheads - - (5,770) (5,770) - - (4,745) (4,745)
------------------------ ------------- --------- -------- -------- ------------- --------- -------- --------
Adjusted EBITDA 3,773 5,402 (5,770) 3,405 1,877 760 (4,685) (2,047)
Depreciation and
amortisation - - (4,588) (4,588) - - (3,247) (3,247)
Goodwill impairment - - (1,045) (1,045) - - (4,789) (4,789)
Share-based payments
expense - - (312) (312) - - (952) (952)
Costs associated
with acquisitions
and integration - - - - - - (286) (286)
Acquisition integration
expense - - - - - - (388) (388)
------------------------ ------------- --------- -------- -------- ------------- --------- -------- --------
Operating profit/(loss) 3,773 5,402 (11,715) (2,540) 1,877 760 (14,346) (11,709)
------------------------ ------------- --------- -------- -------- ------------- --------- -------- --------
Central costs are those costs which are not directly
attributable to either of the Group's trading business
segments.
5. Separately Disclosed Items
2022 2021
GBP 000 GBP 000
--------------------------------------------------- -------- --------
Impairment of goodwill and intangibles (1,045) (4,789)
Share-based payments expense (312) (952)
Costs associated with acquisitions and integration - (674)
(1,317) (6,415)
--------------------------------------------------- -------- --------
Impairment of goodwill and intangibles relates to the residual
unimpaired value of goodwill and customer relationships that arose
on the acquisition of Yourgene Bioscience in March 2017 (now
Yourgene Health Taiwan) and have been attributed to the Genomic
Services Asia CGU. The COVID-19 pandemic has created significant
headwinds for this CGU and a review was announced in April to
determine the appropriate strategic direction for
this business unit. See note 34 for further details.
Share-based payment expense comprises GBP198k (2021: GBP802k)
relating to the longstanding share option schemes and GBP114k
(2021: GBP150k) 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 Genomics in July 2020,
and Coastal Genomics Inc in August 2020.
Acquisition integration expense relates to the expense incurred
integrating Delta Diagnostics UK Ltd (acquired April 2019, now
integrated into Yourgene Health UK Ltd), AGX-DPNI SAS (acquired
March 2020, now Yourgene Health France SAS), EX5 Genomics Ltd
(acquired May 2020, now Yourgene Genomic Services Ltd) and Coastal
Genomics Inc (acquired August 2020, now Yourgene Health Canada Inc)
into the Group.
6. Operating Loss
2022 2021
GBP 000 GBP 000
------------------------------------------------------------- -------- --------
Operating loss for the year is stated after charging
the following within Administrative Expenses:
UK Genomic Service laboratory expenses 3,157 1,181
Research and Development expenditure net of capitalisations,
grants and tax credits 1,845 1,777
Yourgene Health Canada operating expenses (formerly
Coastal Genomics Inc) 1,675 495
US market entry expenses 1,068 316
Depreciation of property, plant and equipment 1,755 1,023
Depreciation of right-of-use assets 959 699
Amortisation of intangible assets 1,874 1,526
------------------------------------------------------------- -------- --------
8. Employees
The average monthly number of persons (including Directors)
employed globally by the Group during the year was:
2022 2021
Number Number
------------------------- ------- -------
Directors 10 9
Administrative 182 117
Research and development 61 54
------------------------- ------- -------
253 180
------------------------- ------- -------
Their aggregate remuneration comprised:
2022 2021
GBP 000 GBP 000
----------------------------------------------------- -------- --------
Wages and salaries 10,588 6,950
Social security cost 1,054 684
Pension cost 374 322
Share-based payments: share incentive plan (note 29) 114 150
Share-based payments: share option schemes (note 29) 198 802
----------------------------------------------------- -------- --------
12,328 8,908
----------------------------------------------------- -------- --------
10. Finance Income
2022 2021
GBP 000 GBP 000
---------------------- --------- --------
Interest income:
Bank deposits 5 1
Loans and receivables - 1
---------------------- --------- --------
Total finance income 5 2
---------------------- --------- --------
11. Finance Expense
2022 2021
GBP 000 GBP 000
--------------------------------- -------- --------
Interest on loans and borrowings 214 101
IFRS 16 Interest 283 201
Loan arrangement fee 159 0
--------------------------------- -------- --------
Total finance expense 656 302
--------------------------------- -------- --------
Interest on loans and borrowings increased during the reporting
period due to the parent company entering into a term loan
agreement with Silicon Valley Bank as described in Note 21.
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 GBP9,798k (2021:
GBP14,545k), excess management fees of GBP20,075k (2021:
GBP16,696k), non-trade loan relationship deficits of GBP1,320k
(2021: GBP1,320k) and capital losses of GBP1,934k (2021:
GBP1,934k). In recognising a UK deferred tax asset of GBP1,831k in
the reporting period the company is utilising UK trading losses of
GBP7,623k out of GBP33,128k of its cumulative UK losses.
The tax losses have resulted in a potential deferred tax asset
of approximately GBP8,282k (2021: GBP6,554k), which has been
partially recognised based on conservative estimates of future
taxable profits in line with Group policy. Further recognition in
future reporting periods is subject to the extent that future
taxable profits will be sufficient to utilise the losses, in
accordance with current and expected future UK tax rates which are
due to increase to 25% from 1 April 2023.
13. Earnings/Loss Per Share
Basic
Basic loss per share was 0.3 pence (2021: loss of 1.8 pence) by
dividing the loss for the period of GBP1,916k (2021: loss
GBP12,184k) by the weighted average number of ordinary shares in
issue during the period 724,248,137 (2021: 685,643,605).
Diluted
Diluted loss per share was 0.3 pence (2021: loss of 1.7 pence)
after diluting 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 739,276,004 (2021: 726,355,871).
69,314,463 options and warrants (2021: 28,159,443) have been
excluded from this calculation as the effect would be
anti-dilutive.
After the reporting period end:
A further 1,130,000 new performance-based share options were
issued in April 2022 which would have no material impact on the
above calculations.
14. Intangible Assets
Trademarks Software Product
Customer Product & brand development development
Goodwill relationships IP names cost cost Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
Cost
At 1 April 2020 10,806 8,444 2,052 - 256 440 21,998
Additions - 390 47 - 147 643 1,227
Business combinations 3,098 1,454 3,355 24 - - 7,931
Exchange differences 66 (57) 72 - - - 81
At 31 March 2021 13,970 10,231 5,526 24 403 1,083 31,237
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
Additions - - - - - 324 324
Exchange differences 173 82 280 1 - - 536
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
At 31 March 2022 14,143 10,313 5,806 25 403 1,407 32,097
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
Amortisation and
impairment
At 1 April 2020 - 812 188 - - - 1,000
Charge for the
year - 974 420 3 42 86 1,525
Impairment 4,789 - - - - - 4,789
Exchange differences - (10) 2 - - - (8)
At 31 March 2021 4,789 1,776 610 3 42 86 7,30 7
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
Charge for the
year - 1,027 535 5 118 189 1,874
Impairment 472 573 - - - - 1,045
Exchange differences - 12 47 - - - 59
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
At 31 March 2022 5,261 3,388 1,192 8 160 275 10,285
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
Carrying amount
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
At 31 March 2022 8,881 6,925 4,614 17 243 1,132 21,813
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
At 31 March 2021 9,181 8,455 4,916 21 361 997 23,931
---------------------- -------- -------------- -------- ---------- ------------ ------------ --------
Certain 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; now renamed Yourgene Health Canada Inc), and also the asset
purchases of Yourgene Health France SAS (March 2020, formerly
AGX-DPNI SAS) and Ex5 Genomics Ltd (July 2020; now renamed Yourgene
Genomic Services Ltd). 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;
now renamed Yourgene Health Canada Inc).
2022 2021
Goodwill attribution by cash generating unit GBP 000 GBP 000
--------------------------------------------- -------- --------
Genomic Technologies 8,882 8,709
Genomic Services Asia - 472
--------------------------------------------- -------- --------
8,882 9,181
--------------------------------------------- -------- --------
Intangible assets other than goodwill are subject to an annual
test to determine if indicators of impairment are present. Where
indicators are present, an impairment test is performed to
determine the recoverable amount. Goodwill is tested for impairment
annually. Impairment tests 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 24 months, and then on growth rates
judged to be relevant to the respective CGUs. Growth rates for
Genomic Technologies range from 28% down to 2% over the forecast
period, reflecting maturation in certain key markets and
anticipated continued pricing pressure on NIPT solutions. Genomic
Services Asia growth rates range from 30% down to 10% reflecting an
anticipated bounce back after the pandemic reduced business levels
in that CGU. Genomic Services Europe revenues are expected to
reduce by 56% after the COVID pandemic recedes, with CGU revenues
then growing at 30% in FY24 due to the introduction of new revenue
streams and then 5% per annum thereafter as growth becomes more
organic. 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.
The impairment assessments for Genomic Technologies and for
Genomic Services Europe showed assessed values that exceeded the
carrying values with significant headroom in excess of GBP45m for
each of these CGUs. For Genomic Technologies a revenue growth
reduction of 13 percentage points in each year, which almost
eliminates the assumed growth in the latter part of the forecast
period, resulted in an impairment of that CGU. For Genomic Services
Europe a revenue growth reduction of 21 percentage points in each
year, which gives rise to revenue declines of 16% in the latter
part of the forecast period, resulted in an impairment of that CGU.
For both Genomic Technologies and Genomic Services Europe a
discount rate sensitivity of 24% did not give rise to an
impairment.
For Genomic Services Asia, using the assumptions described
above, the recoverable amount of the Genomic Services Asia CGU is
deemed to give rise to an impairment charge of GBP1,045k (2021:
GBP4,789k) with GBP472k recognised against previously unimpaired
goodwill and GBP572k recognised against an intangible asset
relating to acquired customer relationships. The impairment charge
within the Genomic Services Asia CGU arose as a result of the
continued impact of the COVID-19 pandemic which reduced health
tourism in the CGU's core South East and East Asian markets and the
redirection of resources by a large customer from their
Yourgene-supported research programme. Sensitivity analysis with
respect to this impairment has been performed. Increasing the
average growth rate by 5 percentage points in each year would
reduce the impairment charge by GBP902k. The Genomic Services Asia
impairment assessment is based on the realisable value for that
CGU, calculated based on revenue multiples for similar companies,
which is higher than the forecast discounted cashflows. Therefore,
sensitivities to reduce forecast revenue or to increase the
discount rate will not give rise to any further impairment.
15. Property, Plant and Equipment
Leasehold
land and Plant and Computer
buildings equipment software Total
GBP 000 GBP 000 GBP 000 GBP 000
---------------------------------------- ---------- ---------- --------- --------
Cost
At 1 April 2020 738 5,545 126 6,409
Additions 480 2,682 2 3,164
Business combinations - 80 5 85
Foreign currency adjustments (10) (131) (1) (142)
---------------------------------------- ---------- ---------- --------- --------
At 31 March 2021 1,208 8,176 13 2 9,515
Additions 989 1,280 65 2,334
Disposals (150) (32) - (182)
Foreign currency adjustments 37 84 2 123
---------------------------------------- ---------- ---------- --------- --------
At 31 March 2022 2,084 9,508 198 11,790
---------------------------------------- ---------- ---------- --------- --------
Accumulated depreciation and impairment
At 1 April 2020 586 3,811 42 4,439
Charge for the year 61 934 29 1,024
Foreign currency adjustments (4) (51) (1) (56)
---------------------------------------- ---------- ---------- --------- --------
At 31 March 2021 643 4,694 70 5,406
Charge for the year 149 1,576 30 1,755
Disposals (150) (32) - (182)
Foreign currency adjustments 5 50 1 57
---------------------------------------- ---------- ---------- --------- --------
At 31 March 2022 647 6,288 101 7,036
---------------------------------------- ---------- ---------- --------- --------
Carrying amount
---------------------------------------- ---------- ---------- --------- --------
At 31 March 2022 1,437 3,218 97 4,753
---------------------------------------- ---------- ---------- --------- --------
At 31 March 2021 565 3,482 62 4,109
---------------------------------------- ---------- ---------- --------- --------
Business combination refers to assets acquired in the
acquisition of Coastal Genomics Inc (now renamed Yourgene Health
Canada Inc) in August 2020, see note 18.
16. Leases
Lease liabilities
The Group has a number of leases for property in the UK, Taiwan,
Singapore and Canada. The incremental borrowing rate applied to the
lease liabilities is based on comparable loan interest rates in the
relevant jurisdiction where the lease is operable.
Motor
Property vehicles Equipment Total
GBP 000 GBP 000 GBP 000 GBP 000
----------------------------- -------- --------- --------- --------
At 1 April 2020 3,051 - - 3,051
Additions 1,690 83 143 1,916
Business combinations 64 - - 64
Lease payments (417) (29) (74) (520)
Interest expense 193 3 4 200
Foreign currency adjustments (69) - - (68)
----------------------------- -------- --------- --------- --------
At 31 March 2021 4,51 2 57 73 4,643
----------------------------- -------- --------- --------- --------
Additions 10,066 - 90 10,156
Lease payments (1,030) (25) (90) (1,145)
Interest expense 274 3 7 284
Terminations and amendments (74) - - (74)
Foreign currency adjustments 27 - - 27
----------------------------- -------- --------- --------- --------
At 31 March 2022 13,776 35 80 13,891
----------------------------- -------- --------- --------- --------
2022 2021
GBP 000 GBP 000
----------------------------- -------- --------- --------- --------
Current 1,250 587
Non-current 12,641 4,056
----------------------------- -------- --------- --------- --------
At 31 March 13,891 4,643
----------------------------- -------- --------- --------- --------
Right-of-use assets
There were no onerous lease contracts that would have required
an adjustment to the right-of-use assets at the date of initial
application.
Motor
Property Equipment vehicles Total
GBP 000 GBP 000 GBP 000 GBP 000
---------------------------------------- -------- --------- --------- --------
Cost
At 1 April 2020 3,248 - - 3,248
Additions 1,690 142 83 1,915
Business combinations 64 - - 64
Terminations and amendments (44) - - (44)
Foreign currency adjustments (74) - - (74)
---------------------------------------- -------- --------- --------- --------
At 31 March 2021 4,884 142 83 5,1 09
---------------------------------------- -------- --------- --------- --------
Additions 10,081 90 - 10,171
Terminations and amendments (159) - - (159)
Foreign currency adjustments 108 - - 108
---------------------------------------- -------- --------- --------- --------
At 31 March 2022 14,914 232 83 15,230
---------------------------------------- -------- --------- --------- --------
Accumulated depreciation and impairment
At 1 April 2020 252 - - 252
Charge for the year 653 24 23 700
Eliminated on termination and amendment (44) - - (44)
Foreign currency adjustments (6) - - (6)
---------------------------------------- -------- --------- --------- --------
At 31 March 2021 853 24 23 900
---------------------------------------- -------- --------- --------- --------
Charge for the year 871 63 24 958
Eliminated on termination and amendment (134) - - (134)
Foreign currency adjustments 29 - - 29
---------------------------------------- -------- --------- --------- --------
At 31 March 2022 1,619 87 47 1,754
---------------------------------------- -------- --------- --------- --------
Carrying amount
At 31 March 2022 13,294 145 36 13,475
---------------------------------------- -------- --------- --------- --------
At 31 March 2021 4,030 11 8 60 4,2 10
---------------------------------------- -------- --------- --------- --------
Changes to property leases
New leases have been entered into during the reporting period
for new long-term facilities in Vancouver and the UK (Manchester).
In Vancouver the new lease replaced a short-term lease on a
facility acquired with Coastal Genomics Inc (now Yourgene Health
Canada Inc). In the UK the Group is in the process of exiting
multiple existing facilities with varying lease commitments and
relocating to a single facility in the same vicinity with
significant expansion potential. At the reporting date the new
facility lease had been entered into and the existing facility
leases were also still in place creating a degree of duplication
which will reverse when all legacy facilities have been exited.
Operating lease commitments
In addition to the property leases disclosed above under IFRS 16
the Group has a small number of low-value asset operating
leases.
2022 2021
GBP 000 GBP 000
-------------------------------------------------------- -------- --------
Minimum lease payments expensed in the Income Statement
under operating leases 51 60
-------------------------------------------------------- -------- --------
At the reporting period date, the Group had outstanding
commitments for future minimum lease payments under non-cancellable
operating leases, which fall due as follows:
2022 2021
GBP 000 GBP 000
--------------------------- -------- --------
Within one year 50 25
Between one and five years 4 9
In over five years - -
--------------------------- -------- --------
54 34
--------------------------- -------- --------
19. Trade and Other Receivables
2022 2021
----------------- ----------------
GBP 000 GBP 000 GBP 000 GBP 000
--------------------------------------------- -------- ------- ------- -------
Trade receivables 5,447 4,523
Provision for doubtful trade receivables (924) (459)
Loss allowance due to expected credit
losses under IFRS 9 (76) (63)
--------------------------------------------- -------- ------- ------- -------
Net trade receivables 4,447 4,001
Other receivables 561 598
Provision for doubtful other receivables (269) (269)
VAT recoverable 852 148
Other loans and receivables at amortised -
cost -
--------------------------------------------- -------- ------- ------- -------
Net other loans and receivables at amortised
cost 1,144 477
Prepayments 1,391 855
--------------------------------------------- -------- ------- ------- -------
6,982 5,333
--------------------------------------------- -------- ------- ------- -------
20. Trade and Other Payables
2022 2021
GBP 000 GBP 000
--------------------------------------- -------- --------
Trade payables 4,325 3,125
Payments received on account 516 373
Accruals 1,576 1,209
Social security, taxation and pensions 569 384
VAT payable 1,391 135
Other payables 26 13
--------------------------------------- -------- --------
8,403 5,239
--------------------------------------- -------- --------
The book value of trade and other payables approximates to the
fair values. See note 26 for maturity analysis.
21. Borrowings
2022 2021
GBP 000 GBP 000
--------------------------------------- -------- --------
Unsecured borrowings at amortised cost
Bank loans 5,220 196
5,220 196
--------------------------------------- -------- --------
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:
2022 2021
GBP 000 GBP 000
------------------------ -------- --------
Current liabilities 2,193 119
Non-current liabilities 3,027 77
------------------------ -------- --------
5,220 196
------------------------ -------- --------
The continuing borrowings as at 31 March 2022 are:
In January 2022 the Group entered into a GBP5m 3-year term loan
facility with Silicon Valley Bank secured against the Group's
intangible and tangible assets in the UK, USA and Canada. The
facility provides access to non-dilutive funding to enable the
Group to capitalise on future accretive growth opportunities
including potential licensing and M&A activity, allowing for
faster deal execution and lower transaction costs.
The Facility is repayable over three years with an interest-only
period until April 2022 after which interest is payable at a
commercially competitive rate of 4.65% above Bank of England base
rates. Covenants are based on a target trailing quarterly revenue
basis compared to internal forecasts and were met within the
reporting period. The loan is secured against UK IP and fixed
assets and a first priority line over IP in the USA and Canada and
represents the only material bank debt and third party security
borne by Yourgene.
In addition Yourgene Health (Taiwan) Co. Ltd has an asset
finance facility which is repayable in equal instalments until
September 2023 at an fixed interest rate of 0.66%. At the reporting
date the balance on this facility was GBP80k (2021: GBP128k).
Borrowings incurred by Delta Diagnostics (UK) Ltd were fully
paid off by October 2021. The covenants attached to these
borrowings were all met and the associated security charge has been
cancelled.
22. Provisions for Liabilities
2022 2021
GBP 000 GBP 000
--------------------------------------- -------- --------
Acquisition - additional consideration 1,339 3,411
--------------------------------------- -------- --------
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:
2022 2021
GBP 000 GBP 000
------------------------ -------- --------
Current liabilities - 2,283
------------------------ -------- --------
Non-current liabilities 1,339 1,128
------------------------ -------- --------
1,339 3,411
------------------------ -------- --------
23. Deferred Taxation and Current Taxation Assets and
Liabilities
The deferred tax liabilities and assets recognised by the Group
and movements thereon during the current and prior reporting period
are shown below.
The deferred tax assets and deferred tax liabilities are not
offset and are both deemed non-current.
GBP 000
---------------------------------------- -------
Deferred tax liability at 1 April 2020 1,153
Deferred tax movements
Acquired in business combination 1,226
Credit to profit or loss (232)
Foreign exchange revaluation 26
---------------------------------------- -------
Deferred tax liability at 31 March 2021 2,173
---------------------------------------- -------
Deferred tax movements
Credit to profit or loss (172)
Foreign exchange revaluation 59
---------------------------------------- -------
Deferred tax liability at 31 March 2022 2,060
---------------------------------------- -------
GBP
------------------------------------ -----
Deferred tax asset at 1 April 2020 1,181
Deferred tax movements
Charge to profit or loss (23)
Foreign exchange revaluation (11)
------------------------------------ -----
Deferred tax asset at 31 March 2021 1,145
------------------------------------ -----
Deferred tax movements
------------------------------------ -----
Credit to profit or loss 1,112
Foreign exchange revaluation 25
------------------------------------ -----
Deferred tax asset at 31 March 2022 2,282
------------------------------------ -----
Tax assets are sums arising from enhanced R&D reliefs
available in the UK and tax prepayments in Germany. UK R&D tax
credits are allocated between current and non-current according to
the Company's view on when the benefits will arise.
31. Analysis of Changes in Net Cash/(Debt)
Accrued
01-Apr-21 Acquisitions Exchange interest
GBP Cash flow and disposals movements charges 31-Mar-22
000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
------------------------- --------- --------- -------------- ---------- --------- ---------
Cash and bank balances 6,995 1,434 - - - 8,429
Bank loans - see note 21 (196) 289 (5,286) (5) (22) (5,220)
------------------------- --------- --------- -------------- ---------- --------- ---------
Net cash/(debt) 6,799 1,723 (5,286) (5) (22) 3,209
------------------------- --------- --------- -------------- ---------- --------- ---------
34. Events After the Reporting Date
The Company issued 1,130,000 EPS-based share options to non-UK
staff and some UK-based managers, and the purchase by Lyn Rees,
Chief Executive Officer, of 1,000,000 ordinary shares in the
Company. Mr Rees' interest in the Company increased to 0.3% of the
issued share capital as a result.
In April 2022 a strategic review was announced into the Group's
Taiwanese operations in light of ongoing COVID-19 restrictions in
the region and the resulting impairments to intangible assets (see
note 14).
Also in April 2022 the Group announced it was undertaking a
realignment of its global cost base to adapt to the post-pandemic
commercial landscape.
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END
FR UNOARUVUBUUR
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July 27, 2022 02:00 ET (06:00 GMT)
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