TIDMABDX
RNS Number : 7567S
Abingdon Health PLC
18 November 2021
Abingdon Health plc
("Abingdon" or "the Company")
Preliminary Results
York, U.K. 18 November 2021: Abingdon Health plc (AIM: ABDX), a
leading international developer and manufacturer of high quality
and effective rapid tests, announces its preliminary results for
the year ended 30 June 2021.
Financial highlights
-- Revenue of GBP11.6m (2020: GBP5.2m), representing growth of 123%
- Excluding Department of Health and Social Care ("DHSC")
revenues, revenues increased by 138% to GBP6.5m compared with the
previous financial year
-- Adjusted(*) EBITDA loss of GBP3.3m (2020: GBP0.8m profit)
-- Operating Loss of GBP6.7m (2020: profit GBP3.3m)
-- Gross margin of 36% (2020: 78%, 58% when adjusted for one-time DHSC Research Fee)
-- Cash as at 30 June 2021: GBP5.0m (2020: GBP4.4m)
-- Net cash outflow from operating activities of GBP12.9m (2020:
inflow of GBP2.1m), reflecting the increase in working capital
requirements of trade and other receivables predominantly related
to the overdue invoices from DHSC totalling GBP7.7m (including VAT)
as at 30 June 2021
(*) Adjusted EBITDA stated before deduction of non-recurring
costs, impairment of intangibles and share based payment
Operational highlights
-- Successful admission to AIM in December 2020 raising GBP20m
(net) to further build operational capacity
-- Appointment of Mary Tavener as a Non-Executive Director on the Board
-- GBP8.9m invested in expanding manufacturing capabilities in York and Doncaster
-- Manufacturing and supply agreement with Bioporto A/S,
manufacturing the lateral flow strips for Bioporto's Generic Rapid
Assay Device (gRAD)
-- Exclusive lateral flow manufacturing agreement with BioSure
-- Completed delivery of 1m units of AbC-19(TM) COVID-19 rapid
antibody test to the DHSC - p ayment for these tests is still
outstanding at this time, but the Group has held positive recent
discussions with DHSC regarding collection of the amount due
Post-period end
-- Completion of the technical transfer of the BioSure COVID-19 IgG antibody self-test
-- Transfer of the Bioporto A/S lateral flow product for its gRAD platform
-- Currently in the process of transferring two COVID-19 Antigen
tests into routine manufacture - Avacta plc's AffiDx(R) SARS-CoV-2
lateral flow test, and Vatic Health's KnowNow(TM) saliva COVID-19
antigen test
-- Having regard to the Group's growth plans, working capital
shortfall expected to arise in Q1 2022 ahead of any collection of
sums due from DHSC
-- Indications of funding support provided by certain of the
Group's directors and the Group is investigating options to raise
further capital
Chris Yates, Chief Executive Officer, Abingdon Health plc,
commented:
"It has been a significant and challenging year for Abingdon,
against the backdrop of a constantly evolving situation with
regards to the COVID-19 pandemic. Following our successful
admission to AIM and raise of GBP20m, we have invested heavily in
expanding our manufacturing facilities in order to meet the growing
demand for lateral flow tests, with our current manufacturing
capacity now totalling 150 million tests in card format and 85
million foiled device format per year.
"Whilst the COVID-19 market environment remains uncertain, the
Group is well placed to support our global customers, having
expanded the range of COVID-19 rapid tests under manufacture. We
now have a range of COVID-19 antigen and antibody lateral flow
tests with manufacturing agreements or in the late stages of
technical transfer, with our capabilities meaning we are also able
to support any changes in product specification in the event of new
variants.
"We are optimistic about the opportunities that lateral flow
tests can play across multiple disease areas, as well as within the
COVID-19 pandemic, and we also look forward to the conclusion of
the DHSC Dispute Resolution Process, where constructive talks have
taken place in recent weeks. I would like to thank all of our
employees for their hard work during the past year."
Enquiries:
Abingdon Health plc www.abingdonhealth.com/investors/
Chris Yates, Chief Executive Officer Via Walbrook PR
Melanie Ross , Chief Financial Officer
Chris Hand, Non-Executive Chairman
Singer Capital Markets (Sole Broker Tel: +44 (0)20 7496
and Nominated Adviser) 3000
Shaun Dobson, Peter Steel, Alex Bond
(Corporate Finance)
Tom Salvesen (Corporate Broking)
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or abingdon@walbrookpr.com
Paul McManus Mob: +44 (0)7980 541
893
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement
via the Regulatory Information Service, this inside information is
now considered to be in the public domain.
About Abingdon Health
Abingdon Health is a world leading developer and manufacturer of
high-quality rapid tests across all industry sectors, including
healthcare and COVID-19. Abingdon is the partner of choice for a
growing global customer base and takes projects from initial
concept through to routine and large-scale manufacturing and has
also developed and marketed its own labelled tests.
The Company offers product development, regulatory support,
technology transfer and manufacturing services for customers
looking to develop new assays or transfer existing laboratory-based
assays to a lateral flow format. Abingdon Health aims to support
the increase in need for rapid results across many industries and
locations and produces lateral flow tests in areas such as
infectious disease, clinical testing including companion
diagnostics, animal health and environmental testing. Faster access
to results allows for rapid decision making, targeted intervention
and can support better outcomes. This ability has a significant
role to play in improving life across the world. To support this
aim Abingdon Health has also developed AppDx(R) , a customisable
image capturing technology that transforms a smartphone into a
self-sufficient, standalone lateral-flow reader.
Founded in 2008, Abingdon Health is headquartered in York,
England.
For more information visit: www.abingdonhealth.com
Chairman and CEO Joint Statement
We are pleased to present Abingdon Health Plc's ("Abingdon's")
maiden set of results as a listed Group. In December 2020 the Group
was admitted to trading on the AIM market of the London Stock
Exchange and raised GBP20m net.
Against the backdrop of significant global economic disruption
as a result of the pandemic, the fundraising and flotation were
completed in the context of the growing need and use cases for
lateral flow testing as a leading diagnostic in the fight against
COVID-19. Consequently, Abingdon has been active in supporting its
customers in bringing innovative products and solutions to market
to mitigate the impact of the pandemic.
Abingdon has invested circa GBP8.9m since the start of 2020 in
the expansion of its manufacturing facilities in York and Doncaster
to meet the growing demand within the lateral flow market. The
Group's current manufacturing capacity now totals over 150m tests
in card format and up to 85m tests to foiled device format per
annum.
We remain confident that the lateral flow market will continue
to grow through continued need for both antigen and antibody
testing for COVID-19 as well as the wider adoption of lateral flow
testing which is driving its expansion across a range of clinical,
animal health, plant and environmental testing sectors. The Group
remains well placed to support our global customers in developing
and manufacturing at scale diagnostic tests.
Strategy
Our mission at Abingdon is to improve life by making rapid
results accessible to all. We can achieve this by delivering our
vision to be a leading global automated manufacturer of lateral
flow tests.
Our long-term strategic objective is to become the largest
automated manufacturer of lateral flow tests globally, providing
development and contract manufacturing services to clients spanning
a range of applications across the healthcare and non-healthcare
sectors.
We focus on providing our contract service customers with a
comprehensive, large-scale, end-to-end contract development and
manufacturing capability. In addition, we will continue to utilise
our development and manufacturing capabilities to develop our own
products, typically in partnership with knowledge leaders in their
field.
Our dedicated contract service team provides our customers with
access to significant lateral flow expertise in developing lateral
flow tests and scaling-up the production, through our technical
transfer process, into high-throughput automated manufacture. Our
contract development process manages product development through
our quality management system and works closely with our
customer(s) to develop and optimise their product(s) to design
freeze (where all design work is complete and the product is
capable of scalable manufacture) in a manner that meets the
customer's, and the end-users' requirements, and importantly with
the ability for the product to be manufactured at scale. Our
technical transfer team takes this design frozen product and
manufactures three batches on our automated equipment to ensure the
product can be manufactured in a consistent and robust way.
Following successful completion of technical transfer, our
manufacturing team will work with our customers to meet their
production
requirements on an ongoing basis and will manufacture batches on
our automated equipment.
In addition to our contract service business, we will continue
to develop, manufacture and commercialise, our own products. We
believe that COVID-19 is a catalyst for the expansion of
self-testing across a range of other clinical areas and we will
focus on developing and launching a range of complementary
infectious disease products targeting the consumer market. Our
route to market will be through commercial partners and we will
focus our efforts on leveraging our development and manufacturing
engine to launch innovative, high quality, easy-to-use infectious
disease self-tests.
Since IPO, we have further enhanced our short-term strategic
objectives which are focused on the following areas:
-- Expanding our automated manufacturing capability;
-- Investing in our technical transfer capability and knowledge leadership;
-- Improving our processes & systems with a focus on scalability;
-- Building close and effective partnerships with our customers; and
-- Retaining, developing and engaging our people.
To maintain a competitive advantage in the lateral flow market
we will continue to offer a comprehensive service proposition but
believe it also critical to continue to innovate and invest in our
operations and people. We strongly believe that we are at the start
of a paradigm-shift in the use and application of rapid testing,
initially within the COVID-19 area and this will transfer over time
to other sectors such as infectious disease, animal health, plant
and environmental testing.
Performance in period
Revenue for the full year was GBP11.6m (2020: GBP5.2m) which
represented growth of 123% compared to the prior year. Excluding
revenue from the Department for Health & Social Care ("DHSC"),
revenue was GBP6.5m (2020: GBP2.7m) representing normalised growth
of 138% and highlighting the strong underlying performance of the
business.
We launched the AbC-19(TM) antibody test in July 2020 and sold 1
million tests to DHSC (GBP5.15m of revenue) with the order
completed in January 2021. Payment for these tests is still
outstanding at this time, but the Board is encouraged by positive
recent discussions with DHSC regarding substantial collection of
the amounts due (further detail on this can be found in note 5). We
saw limited sales traction with AbC-19(TM) during the financial
year as Governments across the world focused on antigen lateral
flow testing and PCR testing. However, with the levels of immunity
increasing due to previous infection and an increase in the
vaccinated population we are confident that the "right to know"
your antibody status will become increasingly important to, for
example, stratify the patient population to focus on booster jabs
for those that need them. We have submitted registrations for
AbC-19(TM) in over 50 territories and the regulatory pathway in
many of these territories are in differing stages of completion,
which, once passed, is expected to unlock order volumes.
Excluding DHSC revenues from both 2020 and 2021 our revenues
increased by 138% to GBP6.5m compared with the previous financial
year. This was due to an increase in other COVID-19 development
service revenue of GBP0.5m (884% increase compared with 2020),
non-COVID-19 contract manufacturing activity of GBP0.5m (54%
increase compared with 2020) and other COVID-19 product revenues of
GBP2.8m (540% increase compared with 2020), which was due
principally to increased sales of our PCRD lateral flow
products.
Order Book
Much of our development work outside of AbC-19(TM) was focused
on scaling-up our customers' antigen and antibody COVID-19 test
production. We were pleased to announce in August 2021 the
completion of the technical transfer of the BioSure COVID-19 IgG
antibody self-test, the first antibody test that has been approved
by a Notified Body and CE marked for self-test home use. Technical
transfer is the process whereby three or more independent
production runs are manufactured, at increasing scale, and
validated to illustrate the product is suitable for mass
manufacture.
In addition, in July 2021 we announced the completion of the
transfer of the Bioporto A/S lateral flow product for its Generic
Rapid Assay Device (gRAD) platform, Bioporto's proprietary patented
technology for rapid lateral flow test development. The 10-year
manufacturing agreement provide Bioporto with immediate access to
high volume manufacturing to meet their anticipated global demand
for its product.
As announced on 12 August 2021 we are in the process of
transferring two COVID-19 Antigen tests into routine manufacture.
On 30 September 2021 Avacta PLC ("Avacta") as part of their full
year results presentation noted that their AffiDx(R) SARS-CoV-2
lateral flow test was in the process of transfer to Abingdon to
allow commercial product to be manufactured and released. In
October 2021 Vatic Health Limited ("Vatic") announced the strategic
partnership with Abingdon for the development and manufacture of
the Vatic KnowNow(TM) saliva COVID-19 antigen test.
We have received significant purchase orders for manufacturing
batches from Vatic and Avacta, in advance of completion of
technical transfer of their products, and we are putting in place
the required component stock to allow us to seamlessly move into
manufacturing in due course. The transfer of these antigen tests is
timely given the move towards private-sector testing in the UK, the
transition to cost-effective lateral flow testing from PCR testing
for travel as well as the increased focus on antigen testing
starting to emerge in the United States.
Pipeline
The pipeline of opportunities behind these technical transfers
is encouraging and we have an additional two technical transfer
contracts signed which we anticipate commencing in the second
quarter of FY 2022. These opportunities are non-clinical lateral
flow tests. Our priority is to focus on products in the late-stage
of development which require transfer and scale-up to
manufacturing.
Capacity
We made significant strides in expanding our manufacturing
capabilities in both York and Doncaster during the financial year,
with GBP8.9m committed to expanding the footprint at both sites and
our investment in automated equipment. Our Doncaster site is
focused on primary production, effectively the production of
laminated lateral flow cards and has been expanded to include three
new clean rooms. Our York site is focused on primary and secondary
production, which involves cutting cards and placing them in housed
devices which are then individually foiled and packaged and we
built seven new cleanrooms in this facility this year. Our overall
capacity is currently over 150 million tests in laminated card
format and up to 85 million foiled devices and we have the space to
bring in additional automation taking our secondary production
capacity to over 140 million foiled devices. This dual-site
capability provides significant flexibility as we can manufacture
the same products on both sites and offers our customers assurance
from a risk management perspective in the event that one site is
unable to operate for a period (e.g. due to a COVID-19
outbreak).
Team
During the financial year we increased our average staff numbers
from 51 to 151. In our August 2021 trading statement, we noted the
impact that the dispute with DHSC was having on our business and
the need to manage cash and reduce our workforce through a
combination of redundancy and natural attrition. As at 31 October
2021 our headcount was 132, with our highest headcount during the
year being 192.
Governance and People
Mary Tavener was appointed senior-independent Non-Executive
Director in November 2020 prior to flotation. Abingdon's other
non-executive Directors Dr Chris Hand and Lyn Rees (independent)
are both experienced healthcare diagnostics professionals with a
strong understanding of the AIM market.
Our Audit Committee comprises Mary Tavener (Chair) and Lyn Rees;
and our Remuneration Committee comprises Lyn Rees (Chair) and Mary
Tavener. The Board has concluded that at this time the Group does
not currently require a Nominations Committee but will review this
assessment on a regular basis including discussing the matter with
its Nominated Advisor.
The Board remains focused on ensuring its own effectiveness and
that of the governance processes throughout the Group, and that
these governance structures remain fit for purpose as the Group
develops and grows over time.
Save As You Earn Scheme ("SAYE")
All eligible members of staff were invited to join the HMRC
approved SAYE scheme which launched in April 2021 and allows
employees to save up to GBP500 per month over a three-year vesting
period. The employee then has the option at the end of that period
to convert into shares and become shareholders in the Group or
funds can be returned, providing flexibility to the employees.
COVID-19
The pandemic impacted the Group from the outset in March 2020.
Initially our focus was predominantly on supporting the UK
Government's requirement for a COVID-19 antibody test. This test
was developed during the last quarter of FY20 and then transferred
into manufacturing during the early part of FY21. The Group, along
with its consortium partners in the UK Rapid Test Consortium
("UK-RTC"), produced one million AbC-19(TM) tests for the DHSC by
January 2021.
During the Summer/Autumn 2020 the UK Government's priority
shifted towards antigen and PCR testing and away from antibody
testing. It is our understanding that the requirement for a
COVID-19 antibody test in the initial period of the pandemic was
due to the UK Government's initial focus on herd immunity which
would have been gained at the time from high levels of infection.
However, herd immunity has returned to the agenda again, due to
high levels of vaccination as well as immunity derived from
infection. Throughout the financial year we have also engaged with
our contract customers on developing their COVID-19 antigen and
antibody tests. We now have a range of tests being manufactured or
in the late-stages of technical transfer that cover a range of
different lateral flow COVID-19 applications and provide the Group
with a number of material revenue generating opportunities over
this and future financial years.
DHSC Dispute and Judicial Review Process
The Good Law Project ("GLP") is currently engaged in judicial
review proceedings brought against the Secretary of State for
Health and Social Care, which is due to be heard in May 2022. The
DHSC is resisting the claims by the GLP. It is noted that the Group
is an interested party, not a defendant in this case. The Group set
out on its website on 9 August 2021 its detailed Grounds of
Resistance as well as publishing the letter issued to the GLP via
their solicitors, which corrected factual inaccuracies the GLP had
continued to publish as part of its case. The Group continues to
engage in this process to ensure that its reputation and good
standing are not impugned and to ensure accurate information is
made available to the judicial review.
As at the signing of these accounts the Group is owed GBP8.9m by
DHSC for a combination of tests delivered (GBP5.2m), components
bought on behalf of DHSC (GBP3.3m), plus a further commitment of
(GBP0.4m) for goods not yet delivered to which DHSC retain legal
title (this is further broken down in note 5). The Group believes
that there are no legal grounds as to why these monies are not
being paid in full and as such is following the Dispute Resolution
Process as outlined in the contracts with DHSC. There have been two
separate meetings with DHSC in an effort to find a resolution
through mediation to this issue. During the second mediation both
parties reached a non-binding agreement in principle which would,
if concluded, lead to the outstanding monies being substantially
collected and resolve all outstanding disputes with DHSC. The delay
in these monies being paid has had a material impact on the Group,
as previously announced to the market and has led the Board to
conclude that there is a material uncertainty in relation to the
going concern of the Group in the near term, linked to the
non-recovery of these funds in line with the contractual
obligations. We look forward to the conclusion of the dispute
resolution process in due course so we can focus our efforts on
building our business, creating jobs in the Northern Powerhouse
region and supporting our customers' innovation and growth
plans.
Outlook
The COVID-19 market environment remains uncertain and there is
no clear understanding of the direction that the pandemic will
take.
In this uncertain environment Abingdon has sought to expand the
range of COVID-19 rapid tests under manufacture to enable it to
support Governments and private sector companies in dealing with
the impact of the pandemic. Abingdon has a range of antigen and
antibody lateral flow tests with manufacturing agreements in place
or in the late stages of technical transfer.
Importantly, our significant technical transfer and
manufacturing capability means we are ideally placed to support any
changes in product specification of existing products if new
variants emerge which require product changes. We remain optimistic
on the opportunities for AbC-19(TM) and COVID-19 antibody testing
in general, and this is now starting to lead to material
orders.
DHSC non-payment has, as previously disclosed, put pressure on
the Group's cash position. The Group could take action aimed at
preserving cash, albeit the Board is reluctant to take such
measures, as these would have an adverse impact on the Group's
longer term prospects. Given the Board's growth plans for the Group
and the likely timing of recovery of any monies due from DHSC, the
Board anticipates that a working capital shortfall could arise
during Q1 2022 if sufficient amounts from the DHSC are not
collected. Certain Directors have indicated that they would be
prepared to advance further funding to the Group and the Board is
investigating options to raise further capital for the Group. The
Board will provide further updates as appropriate.
It has been a challenging start to life as a listed Group;
however, we remain excited by the opportunity for the part that
lateral flow tests can play as a key diagnostic tool across
multiple disease areas. We also look forward to the conclusion of
the DHSC Dispute Resolution Process where good progress has been
made in recent weeks. We would like to thank all our employees for
their hard work, dedication and commitment during the past year
despite the challenges we have faced in an uncertain economic
climate. We are confident with our contract services customer base
and our current pipeline means we are well positioned to grow our
business and deliver shareholder value going forward.
Stakeholder Engagement
The Board of Directors of the Group considers that, individually
and collectively, it has acted in the way which in good faith would
be most likely to promote the success of the Group for the benefit
of its stakeholders, employees, customers, suppliers, local
government and communities in accordance with the stakeholder and
matters noted in S172(1)(a-f) of the Act in the decisions taken
during the year reported on, having regard to:
-- The likely consequences of any decision in the long term;
-- The interests of the Group's employees;
-- The need to foster the Group's business relationships with
suppliers, customers and others;
-- The need to regularly communicate with our shareholders;
-- The impact of the Group's operations on the community and the
environment;
-- The desirability of the Group in maintaining a reputation for
high standards of business conduct; and
-- The need to act fairly between members of the Group.
The Board looked to promote the success of the Group, having
regard to the long term, whilst considering the interests of all
stakeholders. Our strategy is designed to secure the long-term
financial viability of the Group to the benefit of its members and
all stakeholders. A main feature of this is to continue to operate
the business within tight budgetary controls and in line with
regulatory requirements. During the year this was done by reference
to:
-- our response to the Covid-19 pandemic;
-- our continued and ongoing communication with our
employees;
-- our continued and ongoing communication with our
shareholders
-- our continued priority for health and safety improvement
measured through ongoing risk assessments;
-- the approval of our strategic objectives ('our strategy') for
the Group; and
-- the business plan for the next financial year ('our
plan').
Stakeholder interests are considered by the Board through a
combination of methods.
Shareholders
We communicate with our shareholders through planned investor
relation activities, Regulatory News Service ("RNS") announcements
and the publication of our annual and half year reports. Through
this we ensure our shareholders are provided with insight into the
Group strategy and how we create value that will generate strong
and sustainable results. We also engage with shareholders through
the AGM, one on one investor meetings and discussions with
shareholders where appropriate. Prior to the IPO the Board
discussed the merits of completing an IPO through regular
engagement with existing shareholders including discussion at Board
meetings with shareholder representatives. After asserting that the
shareholders were all supportive of the admission, the Board
proceeded with the process. Throughout this process, the Board
considered the benefits to the Company's shareholders and its wider
stakeholders such as improving the ability of Abingdon to raise
capital in the future to both fund investment in organic growth
opportunities and acquisitions, improving the liquidity of the
Company's shares, raising the profile of the Group as a plc and a
listed company and increasing the opportunities to incentivise
employees, for example by the Save As You Earn Scheme. The Board
considered carefully the additional workload that being a listed
Group would bring and the impact that would have on the Board and
employees. Consideration was also given to the fact that the
fundraising on IPO would dilute existing shareholders but when
weighed against the potential benefits the Board determined that
the IPO was on balance more beneficial to the shareholders and
other stakeholders.
Customers
Our customers are central to the strategic goals of the Group,
and we strive to deliver products that meet not only their specific
needs, but the highest applicable regulatory standards. We engage
regularly with our customer base and conduct annual customer
experience surveys, taking action where appropriate. We also meet
our customers' needs by maintaining facilities that are compliant
to appropriate quality and regulatory standards.
Employees
We appreciate the value of diversity within our employee base
and recognise that the skills and knowledge of our employees is a
key part of creating value within the organisation. We strive to
create a friendly and open culture within the Group, holding
regular all-staff calls led by either the CEO, CFO or COO and
encourage career progression within the Group. Employees were a key
consideration during the IPO process, which is covered in the
Shareholder section above.
Making the working environment safe is critical and is of even
higher importance during the current pandemic environment. The
Group conducts an annual employee feedback survey, the results of
which are reported to the Board and fed back to the employees along
with any resulting actions. The Group has also encouraged the
creation of an Employee Forum to more directly communicate both
employee thoughts, considerations and needs to the Senior
Management.
Open door sessions have also been conducted during the year to
ensure open communication regarding matters such as health and
safety, COVID-19 concerns and the launch of the SAYE scheme.
As a result of the DHSC dispute and the delay in receiving
monies owed, the Group undertook a series of cost saving measures.
The final measure taken was to review all departments and reduce
headcount where possible. The business reluctantly entered
redundancy consultations with employees in roles that were
identified 'at risk'. At every stage of the process employees were
kept informed and provided with appropriate support.
Dr Chris Hand Chris Yates
Non-Executive Chairman Chief Executive Officer
18 November 2021
Operating and Financial Review
Revenue and Margins
In the year revenue grew 123% to GBP11.6m (2020: GBP5.2m) with
GBP5.15m (2020: GBP2.5m) of this being related to the sales and
development of the AbC-19(TM) antibody test to the DHSC. Underlying
sales growth was 138% when removing DHSC revenues from both
comparative periods.
Revenue by Geographical Market
2021 2020
Geographical Market GBPm % GBPm % Growth/decrease
------------------------ ------- ------ ------- ------ -----------------
UK 6.6 57% 4.0 78% 61%
USA/Canada 3.4 29% 0.3 5% 1,220%
Europe 1.5 13% 0.8 16% 94%
ROW 0.1 0% 0.1 1% -16%
Total 11.6 100% 5.2 100% 123%
------------------------ ------- ------ ------- ------ -----------------
Revenue by Operating Segment
2021 2020
Operating Segment GBPm % GBPm % Growth/decrease
------------------------- ------- ------ ------- ------ -----------------
Products 8.3 72% 0.6 22% 1,282%
Contract Manufacturing 1.7 15% 0.9 34% 83%
Contract Development 1.6 13% 3.7 44% -58%
Total 11.6 100% 5.2 100% 123%
------------------------- ------- ------ ------- ------ -----------------
Contract Manufacturing (manufacture of products to a defined
specification leading to recurring revenues, secured by customer
contracts) grew 83% over the period, mainly in the Animal Health
and Environmental sectors.
Product sales (own products that are part of our product
catalogue that can be ordered via the website or through a network
of distributors) comprised sales of non-covid products to the
customer base, with growth year-on-year of 431%. New customers made
up 88% of those sales but these speculative devices have yet to be
proven in their chosen markets and so recurrent sales are difficult
to predict at this time. Revenue in this segment also reflected
sales generated from the launch of AbC-19(TM), which was the key
driver of the total year-on-year increase of 1,282%.
Contract Development (R&D activity based on a day rate,
developing and scaling up customer products as a fee for service)
decreased 58% year-on-year with the comparative period including
the GBP2.5m development fee from DHSC for AbC-19(TM). Excluding
this contract, the underlying contract development revenue grew by
30%.
Other income (Grant Income) relates to Innovate UK Projects
undertaken by the R&D team in the period.
Gross margin in the financial year was 36%. Gross margin in the
prior year was inflated due to the GBP2.5m DHSC AbC-19(TM) research
contract and normalised margin in FY20 excluding this contract was
58%. The main driver of this fall in margin was labour overhead, as
we built and carried a larger headcount ramping up manufacturing
capability to deliver beyond the 1m units delivered initially to
DHSC.
Adjusted EBITDA
The Group uses adjusted EBITDA as this excludes items which can
distort comparability as well as being the measure of profit that
most accurately reflects the cash generating activities of the
Group. The reconciliation of these adjustments is as follows:
Year Ended Year Ended
30 June 2021 30 June 2020
GBP'000 GBP'000
Adjusted EBITDA (3,256) 844
--------------- ---------------
Impairment charges - (3,528)
--------------- ---------------
Share based payment expense (1,367) (36)
--------------- ---------------
Non-recurring legal fees (257) -
--------------- ---------------
Non-recurring employee (188) -
costs
--------------- ---------------
Listing costs (903) -
--------------- ---------------
Finance costs (234) (64)
--------------- ---------------
Statutory EBITDA (6,205) (2,784)
--------------- ---------------
Amortisation (42) (369)
--------------- ---------------
Depreciation (707) (222)
--------------- ---------------
Operating Loss (6,954) (3,375)
--------------- ---------------
Adjusted EBITDA loss in the period was GBP3.3m (2020: profit
GBP0.8m).
Headcount in the Group increased to an average of 151 (2020: 51)
peaking at 192 in the reporting period. Consequently, staff costs
overall increased to GBP7.4m (2020: GBP2.8m) reflecting the
investment of the business in building a sustainable, people
infrastructure.
Further to the Group listing on the AIM market, its professional
costs also increased to GBP1.9m (2020: GBP0.4m) with other
increases being related to legal costs incurred in contract
drafting. Other cost increases mainly relate to capacity growth.
The footprint of the York site increased by 13,000 sq ft and the
full year cost effect of the Doncaster site following the
acquisition of the site in April 2020.
Non-recurring items are related to the costs associated with
listing, employee termination payments and legal costs associated
with the ongoing contract dispute discussions with the DHSC. Legal
costs within the financial year relating to the contractual dispute
with the DHSC totalled GBP120k, and a further GBP81k has been
invoiced to 31 October 2021 with further costs likely to be
incurred before these matters are concluded.
Obsolescence provisions totalling GBP1.0m have been made in the
period. These predominantly fall into two categories, being those
non AbC-19(TM) raw materials (GBP0.1m) that fall into ageing
categories under which we automatically provide against and certain
finished goods and semi-finished goods relating to AbC-19(TM)
(GBP0.9m) which are flagged as an obsolescence risk due to the
slower than anticipated take up of the product in the market,
relating to regulatory clearance.
Cash Resources
Net cash outflow from operating activities was GBP12.9m (2020:
inflow GBP2.1m) mainly due to the increase in working capital
requirements of trade and other receivables predominantly related
to the overdue invoices from DHSC totalling GBP7.7m. This amount
has subsequently increased to GBP8.9m due to further invoicing
relating to the component procurement contract with the DHSC as
purchase orders placed on behalf of the DHSC, which could not be
subsequently cancelled, were fulfilled.
The net proceeds from financing activities were from the
completion of the IPO process in December 2020 when the Group was
listed on the AIM market. Altogether this represented a net cash
increase of GBP0.6m when compared to the prior year, with a closing
cash position of GBP5.0m (2020: GBP4.4m).
Financing
The principal source of funding of GBP20m (net of fees) came
from the issue of new equity shares on completion of the IPO on 15
December 2020.
Earnings per Share
Earnings per share was a loss of 2.65p in the period and
adjusted EPS was a loss of 1.25p in the same period.
EPS
Basic
EPS (2.65)p
Loss attributable to Shareholders (GBP7.0m)
Add: Share Based
Payments GBP1.4m
Add: Non recurring
legal fees GBP0.3m
Add: Non recurring employment
costs GBP0.2m
Add: Listing
Costs GBP0.9m
Add: Depreciation and Amortisation GBP0.7m
Add: Finance
Costs GBP0.2m
Adjusted Loss attributable
to Shareholders (GBP3.3m)
Adjusted EPS (1.25)p
-------------------------------------- -----------
Principal Risks and Uncertainties
Indication
Risk of risk on Impact and description Mitigating actions
prior year
Funding risk Risk increase The Group currently Fundraising options are
and material vs prior year has a mixture of cash being considered to ensure
uncertainty GBP5.0m and borrowings that the trajectory of the
in relation GBP0.5m. business can continue as
to Going Concern planned.
The cash position as
at 30 September 2021 The business had identified
is GBP1.5m due to a several areas where more
cash burn and the delta severe cuts could be made
of the total GBP8.9m to costs to preserve funds.
due from DHSC with no
confirmed date of funds With GBP8.9m of cash from
clearance. DHSC received, no cash concerns
would be prevalent in any
The Board is confident of the forecasting scenarios.
that these monies are
recoverable, but due
to the timeframes being
uncertain are considering
fundraising options
to bridge the working
capital gap and continue
to grow the business
and access recurring
revenues from Contract
Manufacturing through
Technical Transfer in
the next 6-12 months.
A material uncertainty
in relation to the Group's
ability to continue
to trade for a period
of at least 12 months
from the approval of
this Annual Report has
been identified due
to the uncertainty in
relation to the timing
of collection of the
DHSC receivable.
------------------- ------------------------------ -----------------------------------
Infectious Risk remains A future escalation Dual site manufacturing
Diseases the same vs in the spread of COVID-19 capability across the primary
and prior year in the UK poses a threat manufacturing process in
business to the continuation both York and Doncaster.
interruption of business operations
if there is a widespread Cross functional teams and
infection in any of shift rotations creating
our facilities or amongst bubble environments to mitigate
the workforce. the risk of people being
unable to complete activities
in either R&D or Operations.
This would also apply
to risk in the Customer Supply chain activities
and Supplier profiles are focused on managing
where crucial components both our relationships with
and raw materials become suppliers, as well as these
scarce and difficult risks through supply chain
to import. diversification and dual
sourcing considerations.
------------------- ------------------------------ -----------------------------------
Indication
Risk of risk on Impact and description Mitigating actions
prior year
Regulatory Risk increase As a business that supplies We have a team of Quality
Approval vs prior year to international Customers and Regulatory specialists
a significant proportion in house who can work on
of the products where multiple registrations in
we are acting as Legal parallel to increase the
Manufacturer require likelihood of approvals.
registration from multiple
regulatory bodies prior Our EU representative for
to being offered for our products, Advena, have
sale. offices in Malta and the
UK and advise on EU specific
There is no guarantee matters and IVDR.
that any product registration
by the Group will be Our international product
successful and failure launch of AbC-19(TM) has
to do so could have pending registrations in
a major impact upon over 50 countries and each
the Group's ability territory has a different
to sell products in process. As AbC-19(TM) is
the relevant country. a COVID-19 related product
these can be registered
using Emergency Use Authorisation
("EUA") in some territories,
however each territory could
have a different COVID-19
screening programme. Therefore
it is difficult to confirm
exact timelines to regulatory
approval given each process
is discretely different.
------------------- --------------------------------- -------------------------------------
Revenue Risk remains If Revenue Growth is Strategic plan to bring
Growth the same vs not continuously achieved more Technical Transfer
prior year there is a risk that stage projects through the
capacity will be under R&D Team and reduce the
utilised. number of earlier stage
Development Projects in
the pipeline, accelerating
the number moving into routine
manufacturing creating recurring
revenues and utilising the
capacity increase.
Use of automated lateral
flow assembly equipment
with versatile equipment
which can changeover product
types and increase the throughput
in Operations.
------------------- --------------------------------- -------------------------------------
Indication
Risk of risk on Impact and description Mitigating actions
prior year
Key Employees Risk increase The Group operates in The Group offers competitive
vs prior year an industry where recruitment salary and benefits packages
and retention of talented to employees.
employees is crucial
in being able to deliver There are training programmes
the strategic objectives. in place which can identify
talented individuals and
Talent pools in the offer them development,
industry are not as which will aid in retention.
immediately available
as they may have been There is monitoring of trends
12-24 months ago so in industry and the local
the Group must be proactive area to ensure we have identified
in talent attraction. the correct talent pools
which can improve our overall
Recent redundancies workforce management.
have meant that the
Group have had to work
harder to retain and
attract in an already
difficult market.
----------------- --------------------------------- -------------------------------------
Supply Chain Risk increase The supply chain is Contractual arrangements
vs prior year subject to price movements in place offer some mitigation
due to inflationary for component pricing.
pressure as well as
other potential factors Supply chain activities
such as COVID related focused on supplier management
transport cost increases and dual sourcing where
or further impacts from possible as well as identifying
Brexit. the highest risk areas and
managing this stock supply
This may lead to increasing and lead times accordingly.
prices for goods as
well as increased lead New supply chain activities
times for critical components recognise the risk inherent
in offshore purchasing and
balance this against the
benefits of any price reductions
achieved ensuring that there
is a recognition of risk
earlier and the supplier
can be managed accordingly.
----------------- --------------------------------- -------------------------------------
Going concern
The Directors have prepared cash flows for the foreseeable
future, being a period of at least 12 months from the expected date
of approval of the financial statements and continue to evaluate
financial forecasts. The Group continues to focus on gaining
regulatory approvals and securing sales of existing and new
products but the GBP8.9m of monies owed by the DHSC means that
there may be a need to investigate further funding as well as
reduce costs further to ensure that the Group has adequate
financial resources to meet its obligations for the next
twelve-month period with reasonable certainty. Based on the
forecasts and the various sensitivities applied to this
information, as well as consideration of the risks and mitigations
that can also be applied, there is a material uncertainty in
relation to going concern, with the business having a cash
requirement in the near-term.
The Group has received an offer of funding support from some of
its existing shareholders, although this is non-binding at this
stage and continues to also investigate other fundraising options
available to the Group as well as considering more severe cost
saving initiatives it can implement, whilst being mindful of the
longer-term impact that these may have. As noted further
immediately below in the Events after the reporting date section,
the Group is also progressing matters with the DHSC to seek
collection of the overdue amounts.
As a result of the above, we continue to adopt a going concern
basis for the preparation of the accounts, but the above factors
represent a material uncertainty that may cast significant doubt on
the Group's ability to continue as a going concern.
Events after the reporting date
Following the second mediation meeting between the Directors and
the DHSC on 9 November 2021, both parties reached a non-binding
agreement in principle, which would, if concluded, lead to the
outstanding monies being substantially collected and resolve all
outstanding disputes with the DHSC.
Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2021
As Restated
Notes Year ended Year ended
30 June 30 June
2021 2020
GBP'000 GBP'000
Revenue 1 11,618 5,235
Cost of sales (7,475) (1,149)
-------------- -------------
Gross profit 4,143 4,086
Administrative expenses (7,547) (3,367)
Other income 148 125
--------------------------------------- --------- -------------- -------------
Adjusted EBITDA (before adjusting
items) (3,256) 844
Amortisation (42) (369)
Depreciation (707) (222)
Impairment charges - (3,529)
Share based payment expense (1,367) (36)
Non-recurring legal fees (257) -
Listing costs (903) -
Non-recurring redundancy costs (188) -
--------------------------------------- --------- -------------- -------------
Operating loss (6,720) (3,312)
Finance income - 2
Finance costs (234) (65)
-------------- -------------
Loss before taxation (6,954) (3,375)
Taxation credit 2 (19) 1
Loss for the financial period (6,973) (3,374)
-------------- -------------
Other comprehensive income for the
year net of tax - -
-------------- -------------
Total comprehensive loss for the
year (6,973) (3,374)
-------------- -------------
Attributable to:
Equity holders of the parent (6,973) (3,374)
-------------- -------------
Basic earnings per share (pence) 4 (2.65) (1.38)
-------- --------
Diluted earnings per share (pence) 4 (2.65) (1.38)
-------- --------
Consolidated Statement of Financial Position
As at 30 June 2021
Notes 30 June 30 June
2021 2020
GBP'000 GBP'000
Non-current assets
Goodwill 763 763
Other intangible assets 465 16
Property, plant, and equipment 9,041 3,006
Deferred tax asset - -
10,269 3,785
Current assets
Inventories 7,888 779
Trade and other receivables 9,978 1,875
Income tax debtor 115 141
Cash and cash equivalents 4,977 4,388
--------- ----------
22,958 7,183
Total assets 33,227 10,968
--------- ----------
Current liabilities
Trade and other payables 10,405 3,447
Borrowings 125 3,318
Obligations under leases 227 221
10,757 6,986
Non-current liabilities
Borrowings 367 229
Obligations under leases 776 1,004
--------- ----------
1,143 1,233
Total liabilities 11,900 8,219
Net assets 21,327 2,749
--------- ----------
Equity
Attributable to the owners of the
parent:
Share capital 6 69 15
Share premium 6 24,180 13,195
Share based payment reserve 44 70
Retained earnings (2,966) (10,531)
--------- ----------
Total equity 21,327 2,749
--------- ----------
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2021
Share Share premium Share Retained Total equity
Capital based earnings attributable
payment to owners
reserve of the parent
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 July
2019 15 13,195 34 (7,157) 6,087
Year ended 30 June
2020:
Profit and loss - - - (3,374) (3,374)
---------- --------------- ---------- ----------- ----------------
Total comprehensive
loss for the year - - - (3,374) (3,374)
Other movements:
Share option expenses - - 36 - 36
Balance at 30 June
2020 15 13,195 70 (10,531) 2,749
Year ended 30 June
2021:
Profit and loss - - - (6,973) (6,973)
---------- --------------- ---------- ----------- ----------------
Total comprehensive
loss for the year - - - (6,973) (6,973)
Other movements:
Capital reduction (13,145) - 13,145 -
Bonus share allotment 46 (46) - - -
Share option expenses - - 1,367 - 1,367
Share options vested 1 - (973) 973 1
Share options cancelled - - (420) 420 -
Conversion of loan
notes 1 3,481 - - 3,482
Shares issued on listing 6 21,994 - - 22,000
Cost of issue of shares - (1,299) - - (1,299)
Deferred tax OCI movement - - - - -
---------- --------------- ---------- ----------- ----------------
Balance at 30 June
2021 69 24,180 44 (2,966) 21,327
---------- --------------- ---------- ----------- ----------------
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2021
Notes 30 June 30 June
2021 2020
GBP'000 GBP'000
Cash flows from operating activities:
(Loss) for the year (6,973) (3,374)
Adjustments for:
Other income (148) (125)
Net finance costs 234 63
Tax charge/(credit) 19 (1)
Amortisation and impairment of intangible
assets 42 3,898
Share based payments 1,367 36
Depreciation of property, plant and
equipment 707 222
(Profit)/ loss on disposal of property, - -
plant and equipment
Changes in working capital:
(Increase) in inventories (7,109) (373)
(Increase) in trade and other receivables (8,103) (1,115)
Increase in trade and other payables 7,033 2,690
Cash (used in)/from operations (12,931) 1,921
Interest paid (51) (33)
Income taxes received 106 207
Net cash (outflow)/inflow from operating
activities (12,876) 2,095
Interest received - 2
Purchase of intangible assets (71) (10)
Internally capitalised development (419) -
costs
Purchase of property, plant and equipment (6,761) (1,650)
Proceeds on disposal of property, 8 -
plant and equipment
Business combinations, net of cash
received - (175)
Payment of deferred consideration (32) (105)
Net cash used in investing activities (7,275) (1,938)
---------- ---------
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2021
Notes 30 June 30 June
2021 2020
GBP'000 GBP'000
Financing activities
Proceeds from issue of own shares
(net of costs *) 20,702 -
Cash withheld for SAYE scheme 9 -
Proceeds from new bank loans and
borrowings 250 250
Payment of loans (19) -
Payment of lease obligations (222) (137)
Proceeds from issue of loan notes 20 3,252
--------- ---------
Net cash generated from financing 20,740 3,365
--------- ---------
Net increase in cash and cash equivalents 589 3,522
Cash and cash equivalents at beginning
of the year 4,388 866
--------- ---------
Cash and cash equivalents at end
of the year 4,977 4,388
========= =========
Recognised in the Statement of
Financial Position as:
Cash at bank and in hand 4,977 4,388
Overdrafts - -
--------- ---------
4,977 4,388
--------- ---------
* Net of costs set against the share premium account only.
Additional costs of admission to AIM are included within the
Statement of Comprehensive Income and are shown as Operating
cashflows.
Abingdon Health PLC
Notes to the Financial Statements
For the Year Ended 30 June 2021
Company information
Abingdon Health PLC ("the Company") is a public limited company
domiciled and incorporated in England and Wales. The Company is
quoted on the London Stock Exchange's Alternative Investment Market
("AIM"). The registered office is York Biotech Campus, Sand Hutton,
York, YO41 1LZ. The consolidated financial information (or
"financial statements") incorporates the financial information of
the Company and entities (its subsidiaries) controlled by the
Company (collectively comprising the "Group").
The principal activity of the Group is to develop, manufacture
and distribute diagnostic devices and provide consultancy services
to businesses in the diagnostics sector.
Basis of preparation
The financial information for the year ended 30 June 2021 and
the year ended 30 June 2020 does not constitute the Company's
statutory accounts for those years. Statutory accounts for the year
ended 30 June 2020 have been delivered to the Registrar of
Companies. The statutory accounts for the year ended 30 June 2021
were approved by the Board on 17 November 2021 and will be
delivered to the Registrar of Companies in due course. The
statutory accounts for the period ended 30 June 2021 will be posted
to shareholders at least 21 days before the Annual General Meeting
and made available on the Group's website .
The Group's statutory financial statements for the year ended 30
June 2021, from which the financial information presented in this
announcement has been extracted, were prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. The financial statements
have been prepared on the historical cost basis with the exception
of certain items which are measured at fair value as disclosed in
the principal accounting policies set out in the Group's Annual
Report. These policies have been consistently applied to all years
presented except for as disclosed in note 8.
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from these
estimates.
The auditor's reports on the accounts for 30 June 2021 and 30
June 2020 were unqualified and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006. The auditor's report
for the year ended 30 June 2020 did not draw attention to any
matters by way of emphasis. The auditor's report for the year ended
30 June 2021 did include reference to a material uncertainty
related to going concern, drawing attention to the fact that the
company is dependent on the recoverability of amounts owed by the
Department of Health and Social Care which is currently being
pursued through the dispute resolution process in the Contract, or
is required to investigate further funding and reduce costs further
in the near term without qualifying their report. The opinion was
not modified in respect of this matter.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with
IFRS requires management to make judgments, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods
affected.
Critical judgements
The following judgements (apart from those involving estimates)
have had the most significant effect on amounts recognised in the
financial statements:
Trade receivable recoverability
The Group is subject to a contract with the Department of Health
and Social Care ("DHSC"), to which it has significant exposure at
the year end. The Directors expect full recovery of this receivable
based on evidence available to them. Further details are given in
note 5.
Right of use asset recognition
Management have assessed each lease liability for recognition
under IFRS 16 and recognised a right of use asset where
appropriate.
One lease includes a material component of service charge by
comparison to the headline rental payments, where this service
charge partially covers shared areas and facilities which would
normally form part of a rental price. The Directors have applied
judgement in splitting this service charge into rent-like
components of GBP24,000 per annum (which qualify for capitalisation
as a right of use asset), utility fees of GBP104,000 per annum, and
ongoing shared costs of GBP72,000 per annum (which the latter two
do not qualify for capitalisation as a right of use asset, nor
recognition as a lease liability). The lease runs for a 7-year term
and the total value of rent-like components capitalised is
GBP161,000.
Revenue recognition
In line with IFRS 15 management are required to determine
appropriate revenue recognition points for all revenue streams.
Where multiple contracts are entered into with a single
counterparty any instalment payments are not considered to be a key
indicator of the satisfaction of a performance obligation, although
linked contracts with a counterparty are considered in conjunction
when identifying the appropriate point for revenue recognition.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of
causing a material adjustment to the carrying amount of assets and
liabilities are as follows:
Valuation of intangible assets (Group 2021: GBP465,000; 2020: GBP16,000)
Management judgements are required to estimate the useful lives
of intangible assets, having reference to future economic benefits
expected to be derived from use of the asset. Economic benefits are
based on the fair values of estimated future cash flows.
In the current year management have reviewed the useful life of
the capitalised development assets to be the same period as the
commercialisation agreement is for. As such, the capitalised
development costs are amortised over the period from which sales
began until the agreement ends in August 2025.
Valuation and impairment of goodwill (Group carrying values - 2021: GBP763,000; 2020: GBP763,000)
Goodwill is tested annually for impairment. The test considers
future cash flow projections of cash-generating units that give
rise to the goodwill. Where the discounted cash flows are less than
the carrying value of goodwill, an impairment charge is recognised
for the difference.
Share based payments
The determination of the fair values of EMI and SAYE options has
been made by reference to the Black-Scholes model with the inputs
set out in note 7. The key inputs to this model include the
estimated value of the group as at July 2020 and October 2020 when
two significant schemes were incepted, prior to the Group having an
observable market price.
Going concern
The Directors have considered the principal risks and
uncertainties facing the business, along with the Group's
objectives, policies and processes for managing its exposure to
financial risk. In making this assessment the Directors have
prepared cash flows until June 2023, being a period of at least 12
months from the expected date of approval of the financial
statements (as dated on the Statement of Financial Position) and
continue to evaluate financial forecasts.
The Group continues to focus on gaining regulatory approvals and
securing sales of existing and new products, but the delay in
recovery of monies owed by DHSC, which are described more fully in
note 5, means that there may be a need to investigate further
funding as well as reduce costs further in the near term to ensure
that the Group has adequate financial resources to meet its
obligations as they fall due for the next twelve month period with
reasonable certainty. Along with the potential timing of achieving
regulatory approvals required to develop the level of turnover of
the Group, the above factors represent a material uncertainty that
may cast significant doubt on the Group's ability to continue as a
going concern and therefore, that it may be unable to realise its
assets and discharge its liabilities in the normal course of
business .
As explained in note 5, the Group is in the process of
contractual dispute resolution negotiations with DHSC and through
this process expects that the monies owed will be recovered,
however the exact timing of this is uncertain as at the date of
approval of the financial statements. In the event that this
receivable is recovered in full in the near term, then the
financial forecasts evidence that the Group remains a going concern
without the potential funding requirement noted above.
In case the DHSC receivable remains unpaid for an extended
period, the Directors have looked at alternative sources of funding
and have received an initial offer of funding support from a number
of existing shareholders, although this is non-binding at this
stage. The Directors are of the opinion that this indication of
support provides further comfort that the Group will have access to
the funds that will permit it to remain a going concern, and as
such the Directors continue to adopt a going concern basis for the
preparation of these financial statements.
Non-recurring income and costs
The Group seeks to highlight certain items as exceptional
operating income or costs. These are considered to be exceptional
in size, frequency and/or nature rather than indicative of the
underlying day to day trading of the Group. These may include items
such as acquisition costs, restructuring costs, obsolescence costs,
employee exit and transition costs, legal costs, profits or losses
on the disposal of subsidiaries, and loan impairments. All of these
items are charged or credited before calculating operating profit
or loss.
The Directors apply judgement in assessing the particular items,
which by virtue of their size and nature are disclosed separately
in the Statement of Comprehensive Income and the notes to the
financial statements as non-recurring income and costs. The
Directors believe that the separate disclosure of these items is
relevant to understanding the Group's financial performance.
Events after the reporting date
The Group is at present negotiating for payment on a key
contract, as described further in note 5. As at the date of signing
these accounts, Abingdon have met with the DHSC on two occasions in
an effort to mediate a resolution to this issue and during the
second mediation meeting both parties signed a non-binding heads of
agreement which would, if concluded, lead to the outstanding monies
being substantially collected and resolve all outstanding disputes
with DHSC.
Guarantees, commitments and contingent liabilities
The Group as at 30 June 2021 had no contingent liabilities (2020
- none); and had contracted for capital commitments of
approximately GBP0.8 million (2020 - GBP1.7 million). These amounts
have not been reflected in the financial statements.
1. Revenue
The Group applies IFRS 15 'Revenue from contracts with
customers'. Under IFRS 15, the Group applies the 5-step method to
identify contracts with its customers, determine performance
obligations arising under those contracts, set an expected
transaction price, allocate that price to the performance
obligations, and then recognises revenues as and when those
obligations are satisfied.
Segmental analysis of revenue
2021 2020
GBP'000 GBP'000
Product sales 8,360 605
Contract Manufacturing 1,690 923
Contract Development 1,568 3,707
Total revenue from contracts with customers 11,618 5,235
--------- ---------
Revenue analysed by geographical market
2021 2020
GBP'000 GBP'000
United Kingdom 6,596 4,103
Europe 1,560 806
USA & Canada 3,405 258
Rest of World 57 68
--------- ---------
11,618 5,235
--------- ---------
All revenue received in the current and comparative years has
been recognised at a point in time in accordance with the Group's
revenue recognition policy.
2. Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
2021 2020
GBP'000 GBP'000
Current tax
UK Corporation tax on profits for the
current year 19 (16)
Adjustments in respect of prior years - -
Total current tax 19 (16)
Deferred tax
Origination and reversal of temporary
differences - 16
--------- ---------
Impact of change in tax rates - (1)
--------- ---------
Total deferred tax - 15
--------- ---------
Total tax charge/(credit) 19 (1)
--------- ---------
The charge for the year can be reconciled to the profit per the
Consolidated Statement of Comprehensive Income as follows:
2021 2020
As
A
GBP'000 GBP'000
(Loss) before taxation (6,954) (3,375)
--------- ---------
Expected tax (credit)/charge based on a corporation
tax rate of 19% (2020 - 19%)
(2019 - 19%) (1,321) (641)
Tax effect of expenses that are not deductible
in determining taxable profit 228 4
Depreciation on assets not qualifying for
tax allowances 94 105
Impairment of goodwill - 566
Change in unrecognised deferred tax asset 1,629 (238)
Unrecognised tax losses - 204
Share based payments (705) 7
Research and development tax credits - (7)
Effect of change in local corporation tax
rate - (1)
Other differences 94 -
Total tax charge/(credit) 19 (1)
--------- ---------
The UK corporation tax rate was 19% throughout the year.
A reduction in the UK corporation tax rate from 19% to 17%
(effective from 1 April 2020) was enacted in March 2017. A change
to the main UK corporation tax rate, announced in the Budget on 11
March 2020, was substantially enacted on 17 March 2020. The rate
applicable from 1 April 2020 remains at 19%, rather than the
previously enacted reduction to 17%.
The UK budget on 3 March 2021 announced the intention to
increase the tax rate from the current rate of 19% to 25%, with
effect from April 2023. Therefore, deferred tax balances at the
reporting date are measured at 25% (2020: 19%, 2019: 17%).
3. Dividends
No dividends were paid in the current or prior year.
4. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2021 2020
Earnings used in calculation (GBP'000) (6,973) (3,374)
Weighted average number of ordinary
shares 262,926,110 245,172,416
Basic EPS (pence/share) (2.65) (1.38)
Weighted average number of dilutable
shares 262,926,110 250,346,736
Diluted EPS (pence/share) (2.65) (1.38)
The diluted EPS is the same as the Basic EPS as there is a loss
for each of the periods concerned.
In each period there were share options outstanding. As at 30
June 2021, all of these options are out of the money and as such
the calculation of the weighted average number of dilutable shares
is equal to the non-diluted shares.
The Directors use adjusted earnings before certain non-recurring
costs ("Adjusted Earnings") as a measure of ongoing performance and
profitability. These non-recurring costs are presented as separate
items on the face of the Consolidated Income Statement.
The calculated Adjusted Earnings for the current and comparative
periods are as follows:
2021 2020
GBP'000 GBP'000
Loss before taxation attributable to
equity owners of the Parent (6,954) (3,375)
Share-based payment costs 1,367 36
Impairment charges - 3,528
Non-recurring legal fees 257 -
Listing costs 903 -
Non-recurring employee redundancy costs 188 -
Depreciation and amortisation 749 591
Finance costs 234 64
Adjusted Earnings (3,256) 844
--------- ---------
Basic and diluted Adjusted Earnings
per share (pence/share) (1.25) 0.34
The calculation of Adjusted Earnings is consistent with the
presentation of Adjusted Earnings before Interest, Tax,
Depreciation, and Amortisation, as presented on the face of the
Statement of Comprehensive Income. This adjusted element also
removes non-recurring items, as explained further above. The
Directors have presented this Alternative Performance Measure
("APM") because they feel it most suitably represents the
underlying performance and cash generation of the business, and
allows comparability between the current and comparative period in
light of the rapid changes in the business (most notably its
admission to AIM and associated costs), and will allow an ongoing
trend analysis of this performance based on current plans for the
business.
5. Impact of Department of Health and Social Care ("DHSC")
Contract on the Statement of Financial Position ("SFP")
As at 30 June 2021 the Group retained a significant exposure to
a number of transactions and balances under contracts with DHSC.
These contracts ultimately related to two elements:
1. Component procurement, where the Group procures raw
materials; DHSC retain legal title for the raw materials but where
those materials are under the control of the Group; and
2. The manufacturing of tests which is enacted through the
deemed purchase of those raw materials from DHSC, which are then
sold to DHSC in final format and the sale price to the DHSC is
discounted to represent the contractual value of those free issued
materials.
Under the first element, the raw materials are purchased in the
name of the Group, which incurs a contractual liability in its own
name with third parties. The inventories acquired are recognised as
assets of the Group on the Statement of Financial Position ("SFP")
because management has assessed that the Group controls the
inventories at this point. In forming this judgement, management
have considered that although the DHSC hold legal title to the raw
materials, the Group retains physical possession of the goods and
may have further obligations under element two of the contract to
transform the raw materials into finished tests meaning the Group
continues to direct the use of the raw materials as it determines
the manufacturing process. At this point the Group controls
inventories which it does not have legal title to under the DHSC
contract, and as such it recognises a liability to DHSC in respect
of those inventories (equivalent to a contract liability), and a
receivable for amounts due. No revenue is recognised at this stage
due to control of the goods having not deemed to have passed to
DHSC.
When the Group manufactures tests, raw material plus
manufacturing costs are recognised within work-in-progress or
finished goods balances as appropriate. When the final tests are
dispatched to DHSC and all contractual revenue recognition criteria
have been fulfilled, the Group recognises revenue at contractually
agreed rates, and a cost of sale equal to the cost of inventories
used in delivering those tests. It also recognises a trade
receivable from DHSC which reflects the normal commercial sale of
those tests.
The Group delivered one million AbC-19(TM) tests to DHSC during
the financial year, a receivable for which remains outstanding as
at the year end and as at the date of approval of the financial
statements, contrary to the contractual provisions of the DHSC
contracts. As at 30 June 2021 Abingdon was owed a total of GBP6.4m
(excluding VAT) and GBP7.7m (including VAT), plus interest from the
DHSC for:
1. Components that Abingdon procured on the DHSC's behalf of GBP2.1m (excluding VAT).
2. AbC-19(TM) kits totalling GBP4.3m (excluding VAT); net of the
DHSC material discount noted in point 2 above, which the Group has
delivered to the DHSC in the period November 2020 through to
January 2021.
The Component Contract was signed on 2 June 2020, and this
allowed the Group to procure, on behalf of DHSC, the components
needed to produce AbC-19(TM) Tests. The total value of the
components expected to be purchased under the Component Contract
was GBP8.6m (excluding VAT). In the event, fewer components were
procured such that total expenditure is expected to be circa
GBP7.2m (excluding VAT). The Group managed the procurement of these
components and approximately GBP0.4m (excluding VAT) of component
orders have yet to be received by the Group or billed on to DHSC,
but are included in the GBP7.2m (excluding VAT).
As at 30 June 2021 the Group had paid suppliers GBP4.0m (net of
VAT) for components, which it has invoiced to DHSC and for which it
has received payment from DHSC. It had paid suppliers for GBP2.1m
(excluding VAT) of components, which had been invoiced to DHSC, but
in respect of which it has not received payment from DHSC. The
component procurement receivable has subsequently increased to
GBP2.7m (excluding VAT) as at the date of approval of the financial
statements, as a result of additionally invoiced inventories where
non-cancellable orders were placed by the Group prior to the
conclusion of the contract with DHSC. As at November 2021, the
Group has incurred commitments to pay, or paid, a further GBP0.4m
(excluding VAT) to companies from which it procured components on
behalf of the DHSC and for which it would expect reimbursement
under the terms of the contract.
The Group therefore has the following overall carrying amounts
on the SFP as at 30 June 2021 and as at the date of approval of the
financial statements:
SFP Heading
At approval
of financial
At 30 June 2021 statements (3)
(Excluding (Excluding
VAT) GBP'000 VAT) GBP'000
Inventories - title with DHSC 3,987 4,514
Trade receivables - recharge of *2,116 *2,745
inventories (1)
Trade receivables - sale of tests *4,294 *4,294
(including profit margin)
Contract liability (2) (5,308) (5,936)
------------------- ------------------
Net impact on SFP 5,089 5,617
------------------- ------------------
(1) After deduction of GBP4.0m (excluding VAT) of cash received
from DHSC for purchase of inventories.
(2) This is net of GBP0.9m (excluding VAT) of inventories which
have been utilised in delivering 1 million tests now recognised
within Revenue and Trade Receivables.
(3) Subsequent to the year end the Group has raised a number of
inventory recharge invoices to DHSC, which have not been
settled.
* These balances are held in Trade receivables including VAT
which total GBP7.7m as at 30 June 2021 and GBP8.4m at the date of
approval of these financial statements.
The Group is contractually entitled to late payment interest on
the overdue trade receivables, which is to be calculated at 8%
above base rate. This has not been recognised in the current year's
Group Income Statement, or on the SFP, as it remains uncertain as
to the settlement of this or certainty
of ultimate cash inflows. Any such element will be recognised in
full once the Group's entitlement to receipt is confirmed.
The Directors of the Group are of the opinion that all balances
are recoverable in full and have placed into the public domain a
number of documents and statements which justify and support this
position. These financial statements have been prepared on the
explicit assumption that all contractual provisions of the DHSC
contract have been met, and that DHSC will uphold their legal
responsibilities under this contract in respect of full cash
settlement of the contractually due balances. In this outcome, the
Group would receive full settlement of its receivables in cash,
plus late payment interest. The Directors, as at 30 June 2021,
consider that this balance is recoverable within one year and have
therefore presented it as a Debtor due in <1 year. No expected
credit loss provision is held against this balance for the reasons
set out above. Consideration was given as to whether any
discounting of the trade receivable should take place, but, based
on the Effective Interest Rate for the Trade Receivable being zero,
when billed, no discounting has been performed.
However, should any element of the trade receivable become
irrecoverable the Group would be entitled to recover the VAT paid
on that balance, equal to 20% of the net amount not recovered. Any
remaining balance would be recognised as an impairment to the Group
Income Statement, which would be entirely recognised within future
reported profits and losses. Any adjustments to inventories would
likely not impact the Group Income Statement as a result of the
Contract liability shown above, however this may bring certain
elements of those inventories into the Group's ownership. Such
inventories are expected to be utilisable in other product
production by the Group, but in the event that no such utilisation
can occur this may result in an inventory impairment for those
materials. The Directors have not attempted to quantify the
financial impact of such a scenario as they consider these events
to be unlikely to materialise.
The Group is at present following the Dispute Resolution Process
("DRP") set out in the DHSC contract, which as at the date of
approval of the financial statements is taking the form of a
mediation process. This mediation does not change the Directors'
opinion of the balances recognised on the SFP as at the year end.
As noted earlier in the Strategic Report and Directors Report,
mediation has currently resulted in both parties reached a
non-binding agreement in principle which would, if concluded, lead
to the outstanding monies being substantially collected and resolve
all outstanding disputes with DHSC.
We note the impact the non-collection of this Trade Receivable,
to date, has had on the Group, in our Strategic Review and also the
impact of the timing of collection of this Trade Receivable has had
for our assessment of Going Concern, which is explained further in
the Strategic Review section above.
6. Share capital and reserves
2021 2020
Ordinary share capital
Authorised Number Number
Ordinary shares of 0.025p each (2020 - 0.1p
each) 95,699,114 12,906,826
A Ordinary shares of 0.1p each - 3,916,450
Deferred shares of 0.025p each 182,316,812 -
------------- ------------
278,015,926 16,823,276
------------- ------------
Allotted and fully paid Number Number
Ordinary shares of 0.1p each 95,699,114 11,406,826
A Ordinary shares of 0.1p each - 3,916,450
Deferred shares of 0.025p each 182,316,812 -
------------- ------------
278,015,926 15,323,276
GBP'000 GBP'000
Ordinary shares of 0.025p each 24 11
Ordinary 'A' shares of 0.1p each - 4
Deferred shares of 0.025p each 45 -
69 15
------------- ------------
On 22 October 2020 the Group undertook a 3 for 1 bonus issue of
shares for all existing shareholders with 45,969,828 new shares of
GBP0.001 being issued and GBP45,970 transferred from share premium
to share capital. Immediately after the bonus issue these shares
were redesignated as deferred shares which carry no voting
rights.
On 14 December various reorganisation steps were taken in
advance of the IPO, as follows:
- Exercise of options over 1,322,440 ordinary shares of GBP0.001 each;
- Conversion of all convertible loan notes and accrued interest
into 1,159,271 ordinary shares of GBP0.001;
- Re-designation of 390,625 deferred shares into ordinary shares of GBP0.001;
- Re-designation of all A ordinary shares into ordinary shares of GBP0.001;
- Division of each deferred shares of GBP0.001 into 4 deferred
shares of GBP0.00025 each and each ordinary shares of GBP0.001 into
4 ordinary shares of GBP0.00025 each.
On 15 December 2020 the Company announced the admission of its
entire issued and to be issued ordinary share capital to trading on
the AIM market of the London Stock Exchange. The Company raised
GBP22 million (before expenses) by way of a placing of 22,916,666
ordinary shares of 0.025 pence each.
Reconciliation of movements during the year:
Number
At 1 July 2020 15,323,276
Allotment of bonus shares 45,969,828
Exercise of share options 1,322,440
Conversion of loan notes 1,159,271
Division of deferred shares 137,737,609
Division of ordinary shares 54,586,836
Shares issued on listing 22,916,666
At 30 June 2021 278,015,926
-------------
Reserves of the Company represent the following:
Share capital - Shares in the Company held by shareholders at a
proportional level with equal voting rights per share.
Share premium - Excess over share capital of any
investments.
Retained earnings - This comprises the accumulated trading
results of the Group.
Share-based payment reserve - This reserve comprises the fair
value of options share rights recognised as an expense. Upon
exercise of options or performance share rights, any proceeds
received are credited to share capital .
7. Share options
Group & Company Number of share Weighted average
options exercise price
30 June 30 June 30 June 30 June
2021 2020 2021 2020
Number Number GBP GBP
Outstanding at 1 July 2020 287,440 287,440 0.0010 0.001
Granted 2,049,275 - 0.2191 -
Forfeited (204,808) - 0.3355 -
Lapsed (80,000) - 0.0010 -
Exercised (1,322,440) - 0.0080 -
Outstanding at 30 June
2021 729,467 287,440 0.5071 0.001
------------- --------- --------- ---------
Exercisable at 30 June - - - -
2021
------------- --------- --------- ---------
1,322,440 options were exercised during the year, as part of the
Group's admission to AIM.
The options outstanding at 30 June 2021 had an exercise price
ranging from GBP0.00025 to GBP0.70 and a remaining contractual life
of between 2 years 9 months and 9 years 9 months. The options exist
at 30 June 2021 across the following share option schemes:
Number Exercise Fair value Vesting
of shares price per of scheme period
share (GBP)
Options issued in April
2021 201,065 0.00025 215,449 1 year
SAYE scheme commenced in
March 2021 528,402 0.70 368,211 3 years
------------ ------------
729,467 583,710
------------ ------------
The fair value of the scheme is being expensed over the vesting
period. All share options expire 10 years after the date of
issue.
Group Company
30 June 30 June 30 June 30 June
2021 2020 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Expenses recognised in the
year
Arising from equity settled
share-based payment transactions 1,367 36 1,238 36
---------- ---------- ---------- ----------
8. Restatement
During the current period the directors have re-analysed
expenditure that was previously classified as an administrative
expense. As a consequence, GBP340k was identified which was
previously included within administrative expenses whereas it
should have been classified as a cost of sale. The expense items
reflect staff used in manufacturing of products, and the costs of
rental for premises space used for manufacturing. The adjustment
has no impact on reported loss for the year.
The following adjustment has been made to the prior periods
filed accounts:
As filed Adjustment As restated
Year to 30 June 2020 GBP'000 GBP'000 GBP'000
Cost of sales (809) (340) (1,149)
Gross profit 4,426 (340) 4,086
Administrative expenses & impairment
charges (7,863) 340 (7,523)
Other income 125 - 125
Operating loss (3,312) - (3,312)
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END
FR EAEFPFEAFFEA
(END) Dow Jones Newswires
November 18, 2021 02:00 ET (07:00 GMT)
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