TIDMNCYT
RNS Number : 5589W
Novacyt S.A.
02 August 2018
Half Year Revenue Update
Primerdesign revenues up 18% to EUR3m
Strong pipeline of B2B and tender prospects
Decision to undertake a strategic review of the
NOVAprep(R) business
Paris, France and Camberley, UK - 2 August 2018 - Novacyt
(EURONEXT GROWTH: ALNOV; AIM: NCYT), an international specialist in
clinical diagnostics, announces an unaudited half year revenue
update for the six months to 30 June 2018.
Unaudited revenues for the first half of 2018 were EUR7.0m, with
a strong performance in Primerdesign and Lab21 offset by lower than
expected sales in NOVAprep(R) . Group revenues, excluding
NOVAprep(R) , increased 8% (11% at constant exchange rates
CER).
NOVAprep(R) revenues, representing less than 9% of the
consolidated revenue, reflect the previously announced strategic
decision to further optimise the platform, and also reflect
unexpected supply chain issues. As a result of the recent poor
sales performance and the continued investment needs of the
business unit, the Board has decided to undertake a strategic
review of the NOVAprep(R) business and will now explore ways to
maximize the future value of the assets. The Company will continue
to focus on maximizing the value of the NOVAprep(R) Asian business,
particularly the profitable operations in China.
Unaudited Group gross margin has improved to 64%, an increase of
three percentage points compared to the same period last year. The
Board expects the Group's full year profitability will be higher
than previously anticipated excluding the NOVAprep business.
Double digit sales growth in molecular diagnostics business
Primerdesign revenues increased 15% to EUR3.0m, 18% CER versus
H1 2017, as a result of strong growth in its core research use only
(RUO) markets. In addition, business-to-business (B2B) activity
grew with ten new customers compared with three customers during
the prior year period, underpinning the rich pipeline of B2B
partnerships, which are expected to accelerate growth during the
second half of 2018. The R&D pipeline of CE-Mark assays
continues to make progress and two new product launches are planned
at the end of the year.
Robust tender pipeline in protein diagnostics business
Lab21 revenue of EUR3.4m represents growth of 3% - 6% CER -
versus H1 2017, which is a solid start to the year that does not
reflect the strength of the order book, which is currently at a
record high. With recent awards of significant tenders, the current
order book stands at EUR1.2m, this business unit is expected to
meet or exceed the Board's growth expectations for the year.
On 28 June 2018, Novacyt announced that it had entered into an
asset purchase agreement to acquire the infectious disease (ID)
business from Omega Diagnostics Ltd. The ID business brings a
highly complementary product range, increasing the offering and
global reach of Novacyt's protein diagnostics business through new
sales channels. This business delivered unaudited results for the
twelve months to 31 March 2018 of GBP2.49 million in revenues and
EBITDA profitability of GBP310,000. Novacyt expects to see a
similar level of revenue in the first twelve months of ownership
but material cost synergies are anticipated immediately as a result
of leveraging existing commercial and manufacturing infrastructure
within Novacyt, leading to operating margin expansion.
Strategic review of whole cell diagnostics business
The NOVAprep(R) business has enjoyed high revenue growth in the
past three years as Novacyt invested in rolling out the system into
developed and the developing markets in Asia where there is a
significant market opportunity for further growth.
In H1 2018, revenue was EUR0.6m versus EUR1.1m in H1 2017. For
the financial year 2017, NOVAprep(R) reported revenue of EUR2.2m,
with an EBITDA loss of EUR1.2m impacting the profitability of the
wider Group. As previously guided, NOVAprep(R) revenues were
expected to be lower in H1 2018 but additional supply chain issues
have further impacted the first half performance, which will also
impact performance in the second half of the year. In addition, the
Board has resolved to undertake a strategic review of the business
and consider the optimal way to maximise value for the technology.
The outcome of the review is expected to be completed within the
next six months.
Outlook
The performance of the Primerdesign and Lab21 businesses remains
strong entering the second half of the year with significant sales
pipelines but, as a result of underperformance of the NOVAprep(R)
business, Group revenue for the full year will now be lower than
envisaged at the start of the year. However, with a reduction of
the operating costs of NOVAprep combined with the strength of the
remaining business, Group EBITDA profitability is expected to be be
higher than previously anticipated in 2018 following the conclusion
of the strategic review.
Cash at the end of the period was EUR2.2m and trade receivables
are at EUR2.9m. The receivable associated with the large
Primerdesign sale to China in late 2017 for EUR0.9m remains
unchanged but the Board is confident of its collection.
The Group will continue to build on the organic sales progress
made in 2017 in its molecular and protein reagent businesses and
will evaluate the potential for further accretive acquisitions, as
well as continuing to integrate the ID business to unlock the
identified cost and growth synergies.
Graham Mullis, Group CEO of Novacyt, commented:
"Group sales, excluding NOVAprep(R) , increased 11% as a result
of significant core sales growth in Primerdesign and further
progress in securing tenders in Lab21. The strategic review of
NOVAprep(R) operations is expected to improve the current and
future profitability of the Group.
The rest of the Group performed well and we continue to make
good progress across our strategic objectives. This includes
completing the acquisition of the infectious disease assets from
Omega diagnostics. Integration activities have begun and we are
focused on expanding sales and delivering the anticipated material
synergies.
"We have a strong order book going into the second half of the
year, which is traditionally stronger than the first half of the
year, and we remain committed to achieving profitability for the
full year on an organic basis. The profitability of the recent ID
business from Omega will add to the underlying EBITDA profitability
of the Group and we will continue to evaluate selected accretive
acquisition opportunities and expect to provide an update on the
NOVAprep(R) business unit review in due course."
Key dates for the company's results disclosure include:
-- Half-year 2018 results - 26 September 2018
Inside Information
This announcement contains inside information. The person
responsible for arranging for the release of this announcement on
behalf of the Company is Anthony Dyer.
- End -
Contacts
Novacyt SA
Graham Mullis, Chief Executive Officer
Anthony Dyer, Chief Financial Officer
+44 (0)1223 395472
Stifel Nicolaus Europe Limited (Nominated Advisor and Joint
Broker)
Jonathan Senior / Fred Walsh / Ben Maddison
+44 (0)20 7610 7600
WG Partners (Joint Broker)
Nigel Birks / Chris Lee / Claes Spång
+44 (0) 203 705 9330
FTI Consulting (International)
Brett Pollard / Victoria Foster Mitchell
+44 (0)20 3727 1000
brett.pollard@fticonsulting.com /
victoria.fostermitchell@fticonsulting.com
FTI Consulting (France)
Arnaud de Cheffontaines / Astrid Villette
+33 (0)147 03 69 47 / +33 (0)147 03 69 51
arnaud.decheffontaines@fticonsulting.com /
astrid.villette@fticonsulting.com
About Novacyt Group
The Novacyt Group is a rapidly growing, international
diagnostics group with a growing portfolio of cancer and infectious
disease products and services. Through its proprietary technology
platform, NOVAPrep(R), and molecular platform, genesig(R), Novacyt
is able to provide an extensive range of oncology and infectious
disease diagnostic products across an extensive international
distributor network. The Group has diversified sales from
diagnostic reagents used in oncology, microbiology, haematology and
serology markets, and its global customers and partners include
major corporates.
For more information please refer to the website:
www.novacyt.com
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END
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