06 March 2024
THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Oxford Nanopore Technologies
plc
Preliminary results for the
year ended 31 December 2023
Oxford Nanopore Technologies plc
(LSE: ONT) ("Oxford Nanopore" or the "Group"), the company behind a new generation of molecular sensing
technology based on nanopores, today
announces its preliminary results for the year ended 31 December
2023.
Gordon Sanghera, Chief Executive Officer,
commented:
"We delivered strong underlying revenue growth of 39% in
2023, driven by the strength of our differentiated technology,
commercial model, and strategic investments in infrastructure. Last
year we also delivered breakthroughs in our platform performance,
achieving record accuracy, expanded end-to-end workflows and
increased access to high output applications with the PromethION 2
(P2) product rollout, with 700 P2 Solos sold or leased through
starter packs in FY23.
"As we look forward, our highly differentiated platform and
substantial market opportunity, positions us well to deliver
long-term, sustainable growth. We are focused on key strategic
initiatives to drive value, including disciplined investments in
our technology and commercial operations where appropriate to
unlock key opportunities in priority markets. We also remain
mindful of end-market conditions, with sales cycles lengthening at
the same time as we have expanded our commercial and operational
infrastructure to support future growth. These factors have led us
to revise our forecast for achieving adjusted EBITDA breakeven to
the end of 2027 as we continue to focus on delivering against the
huge commercial opportunity ahead of us.
"We are confident that we can deliver underlying revenue
growth of 20 to 30% in 2024 and greater than 30% in the medium
term."
Summary financial performance
|
£
million
Unless otherwise stated
|
FY23
|
FY22
|
Change
reported
|
Change
CC2
|
|
Life Science Research Tools (LSRT)
revenue
|
169.7
|
146.8
|
+15.6%
|
+15.3%
|
|
Legacy Covid Testing
Revenue
|
-
|
51.8
|
(100)%
|
(100)%
|
|
Total revenue
|
169.7
|
198.6
|
(14.6)%
|
(14.7)%
|
|
Underlying1 LSRT revenue
|
149.7
|
107.5
|
+39.3%
|
+39.1%
|
|
Gross profit
|
90.5
|
123.8
|
(26.9)%
|
|
|
Gross margin
|
53.3%
|
62.3%
|
(900)bps
|
|
|
LSRT gross profit
|
90.5
|
82.7
|
+9.4%
|
|
|
LSRT gross margin
|
53.3%
|
56.3%
|
(300)bps
|
|
|
Adjusted
EBITDA3
|
(104.9)
|
(78.6)
|
(26.3)
|
|
|
Loss for the period
|
(154.5)
|
(91.0)
|
(63.5)
|
|
Notes:
Certain numerical figures included
herein have been rounded. Discrepancies in between totals and the
sums may occur due to such rounding.
1 Underlying revenue excludes revenue from COVID sequencing and
revenue from the Group's largest customer, The Emirati Genome
Program (EGP). All references to underlying growth in this document
have been adjusted for COVID sequencing and EGP
revenues.
2 Constant currency applies the same rate to the FY23 and FY22
non-GBP results based on FY22 rates.
3 Adjusted
EBITDA is the EBITDA adjusted for i) Share-based payment expense on
founder LTIP ii) Employer's social security taxes on Founder LTIP
and pre-IPO awards, iii) Revenue and expenses associated with the
settlement of the COVID testing contract with the DHSC iv) Gain on
the sale of property and v) impairment of investment in associate -
see note 5(b).
FY23 Financial highlights
· Life
Science Research Tools (LSRT) revenue increased by 15.6% to
£169.7million; underlying revenue excluding revenue from the
Emirati Genome Program (EGP) and COVID sequencing of £12.0 million
and £8.0 million respectively, was £149.7 million, an increase of
39% in the period.
· LSRT
revenue growth led by the Americas with revenue up 27% (48% on an
underlying basis) and EMEAI with revenue up 16% (50% on an
underlying basis).
· Strong underlying growth was achieved across all LSRT
customer groups, with the highest-spending S3 customers increasing
the most, growing 69% in the period.
· Underlying revenue, excluding EGP and COVID, grew fastest
across the PromethION franchise, representing all devices and flow
cell sales from the PromethION product range, up 83% in the period
to £48.8 million (FY22 £26.6 million). Underlying revenue from the
MinION franchise, representing all sales of MinION flow cells and
devices that run MinION flow cells (including GridION and MinION)
grew 14% to £58.8 million (FY22: £51.5 million). Other revenues,
representing kits, services revenues and other devices grew 44% on
an underlying basis to £42.2 million (FY22: from £29.4
million).
· Total revenue and gross margin decline of 14.6% and (900)
basis points respectively, reflects:
o The previously announced conclusion of the Group's legacy
Covid testing contract with the Department of Health and Social
Care (DHSC) in 2022, plus
o 300 bps decrease in LSRT gross margin to 53.3%, predominantly
reflecting the one off and short term impacts from i) the G42
contract (the Group's agreement to the supply of sequencing tools
in support of, the EGP was amended in December 2023) ii) the write
off of excess COVID sequencing kits and legacy devices alongside;
and iii) upgrading the compute on large PromethION devices, an
investment that enables real time basecalling. These headwinds were
partially offset by underlying improvements in flow cell margins,
particularly across the MinION range, in relation to both yields
and recycling rates.
o Excluding these one-off items the underlying LSRT gross
margin was 58.8% (FY22: 58.0%).
· Adjusted EBITDA loss of £(104.9) million (FY22: £(78.6
million)); higher LSRT gross profit offset by increased operating
expenses, reflecting investment in commercial and marketing teams,
in innovation to support new product development and manufacturing
and logistics infrastructure, to support long term sustainable
growth.
· Increase in loss year-on-year to £(154.5) million (FY22:
£(91.0) million). Taking into consideration that the result for
FY22 included i) the income from the conclusion of the Group's
Covid testing contract with the DHSC as described above, a net
benefit of £37.9 million and ii) the impact of the gain on disposal
of property of £18.6 million; the balance of the increase in loss
was primarily due to increases in operating expenditure in the
year, offset partially by a reduction in the share based payment
and associated costs, an increase in finance income as well as the
increase in Gross profit from LSRT.
· Strong balance sheet; cash, cash equivalents and other liquid
investments of £472.1 million[1] as at 31
December 2023, compared to £558.0 million as of 31 December
2022. In October 2023, bioMérieux SA
(bioMérieux) agreed to subscribe for 29,025,326 shares at a
subscription price of 238.08p per share which equated to a total
investment of nearly £70 million.
See the financial review for
further detail.
FY23 Business highlights
· Delivered a net increase of more than 750 active customer
accounts in the period, taking total active accounts to more than
7,600 in 2023; new customers will be key driver of consumables
sales in future years.
· Execution of 2023 innovation goals including higher accuracy
chemistry, PromethION 2 (P2) Solo launch, direct
RNA upgrades, basecalling acceleration and expansion of our
informatics products, further differentiating our platform and
broadening demand for our technology.
· Approximately 2,800 peer-reviewed research papers published
by users of Oxford Nanopore technology in 2023, bringing the total
to approximately 11,000 to date, showcasing breakthrough research across cancer, human
genetics and infectious disease and
demonstrating continued opportunity for growth in the genomics
research market.
· New
strategic collaborations added to develop and access
new growth markets in clinical and industrial
applications, including collaborations
with the Mayo Clinic to advance research in cancer and bioMérieux
to develop products that serve the infectious disease diagnostics
market.
· Strategic investment from bioMérieux, strengthens existing
collaboration, which is accelerating expansion of Oxford
Nanopore's technology into infectious disease
diagnostics.
· Expansion of commercial teams, including strategic leadership
hires to increase traction in key markets across the Americas,
EMEAI and APAC. Commercial infrastructure is capable of supporting
the Group's development over the coming years to drive long-term
sustainable growth.
· Expansion of the leadership team, post period end, to support
the business in its next phase of growth: Nick Keher appointed as
CFO and Director of Oxford Nanopore, adding significant financial
leadership experience and a deep understanding of global capital
markets. Nick succeeds Tim Cowper, who moves into a new role as
Chief Operating Officer and will lead Oxford Nanopore's continuous
improvement programmes and expanding international footprint and
operations.
· Expansion of the Board with three new Non-Executive
Directors, including Kate Priestman who adds extensive experience
as a biopharma executive, Dr Sarah Fortune, an academic focused on
infectious disease including TB, and Dr Heather Preston, a
long-time biotech and life sciences investor, with significant
experience as a director of technology-based healthcare
companies
· Post
year end, the Group announced the retirement of Dr James ("Spike")
Willcocks, Clive Brown, and Tim Cowper from the Board as part of
normal Board evolution and in line with best practice governance.
As part of the Group's commitment to board diversity, this
evolution will support progress towards fulfilling the goal of
reaching 40% female Board representation. Following the AGM in June
2024, the Board will include two executive Directors and seven
Non-Executive Directors, three of whom are women.
See the business review for
further detail.
FY24 Financial guidance
We expect full year 2024 LSRT
revenue of between 6-15% growth on a constant currency basis,
equating to £180 million to £195 million at current exchange rates
which is 20-30% growth on an underlying basis, when excluding known
headwinds from COVID sequencing of approximately £8 million as well
as a year‐over-year headwind of up to £12 million from the revised
amendment to the Group's agreement with G42 in
supply of sequencing tools in support of the EGP. EGP and
COVID sequencing are not expected to contribute meaningfully to
group revenue in 2024 and as such any revenue will be reported as
underlying growth from 2024 onwards.
Whilst revenues are expected to
increase across each customer segment, we expect to see faster
growth among S2 and S3 customers, driven by continued roll out of
the PromethION franchise, alongside growth across indirect
channels. Geographically, it is expected that growth will be
highest across the Americas and EMEAI regions in 2024.
There continues to be a material
opportunity for Oxford Nanopore to penetrate, reshape and expand
the market, leading to above end market growth. However, this is
balanced against the backdrop of a subdued funding environment for
some of our end markets due to macroeconomic factors, specific
dynamics within the LSRT market alongside geopolitical concerns
that have amplified since 2022.
We expect LSRT gross margin to be
approximately 57% in FY24 reflecting continued operational
improvements including, automation, improved manufacturing process
and recycling of electrical components expected to be offset by i)
growth in the installed base across the PromethION franchise as
customers utilise the inclusive consumables in advance of
converting to higher margin regular flow cell orders, and ii)
changes to pricing across our MinION franchise to drive further
adoption, with planned improvements on margin to offset this impact
in future years.
There are a number of higher
value, pioneering project opportunities the Group is prospecting
that could accelerate growth to the top end or above FY24 revenue
guidance. However, these would also likely be dilutive to gross
margin in the short term as initial phases of projects complete
before becoming longer term, higher margin consumable reorders
thereafter as Oxford Nanopore technologies become embedded within
customer workflows. The impact of these potential wins have been
considered in the short and medium term margin guidance.
During 2024 we will see the
annualised cost from investment in our headcount and infrastructure
to support our ambitions. In order to
support improving profitability going forwards, we are assessing
current and future investments with a focus on greater
prioritisation of activities to deliver on our growth objectives
whilst supporting a strong ROI.
Revised medium term guidance
Given the end-market dynamics
previously discussed and reflected in our 2024 guidance, we have
revised our medium- term adjusted EBITDA breakeven target to FY27
from FY26. This guidance reflects:
· Revenue growth of more than 30% on a compound annual growth
rate at constant currency between FY24 and FY27, in-line with
historical performance
· Gross margins to continue to improve and exceed 62% by FY27
as we incorporate the potential mix impact from driving top line
growth
· An
increased focus on financial discipline to leverage the
infrastructure the company has already built and to modulate
investment relative to the outlook.
The Group remains strongly
capitalised with adequate resources to implement our business plan
to and through EBITDA breakeven in 2027 and deliver on the
significant growth opportunity in front of us.
Presentation of results
Management will host a conference call and webcast today, 6 March, at 8:00am GMT. For details,
and to register, please visit https://nanoporetech.com/about-us/investors/reports.
The webcast will be recorded and a replay will be
available via the same link shortly after the
presentation.
For further details please
contact ir@nanoporetech.com
-ENDS-
This announcement contains inside information for the
purposes of the UK version of the market abuse regulation
(EU no. 596/2014), which forms part of English law by virtue of the
European Union (Withdrawal) Act 2018. The person responsible for
arranging the release of this announcement on behalf of the Company
is Hannah Coote, Company Secretary of Oxford Nanopore Technologies
plc.
For further information, please
contact:
Oxford Nanopore Technologies plc
Investors:
ir@nanoporetech.com
Media:
media@nanoporetech.com
Teneo (communications adviser to the
Company)
Tom Murray, Olivia
Peters
+44 (0) 20 7353 4200
OxfordNanoporeTechnologies@teneo.com
About Oxford Nanopore Technologies plc:
Oxford Nanopore Technologies' goal
is to bring the widest benefits to society through enabling the
analysis of anything, by anyone, anywhere. The company has
developed a new generation of nanopore-based sensing technology
that is currently used for real-time, high-performance, accessible,
and scalable analysis of DNA and RNA. The technology is used
in more than 120 countries, to understand the biology of humans,
plants, animals, bacteria, viruses and environments as well as to
understand diseases such as cancer. Oxford Nanopore's
technology also has the potential to provide broad, high impact,
rapid insights in a number of areas including healthcare, food and
agriculture.
For more information please
visit: www.nanoporetech.com
Forward-looking statements
This announcement contains certain
forward-looking statements. For example, statements regarding
expected revenue growth and profit margins are forward-looking
statements. Phrases such as "aim", "plan", "expect", "intend",
"anticipate", "believe", "estimate", "target", and similar
expressions of a future or forward-looking nature should also be
considered forward-looking statements. Forward-looking statements
address our expected future business and financial performance and
financial condition, and by definition address matters that are, to
different degrees, uncertain. Our results could be affected by
macroeconomic conditions, the COVID pandemic, delays in our receipt
of components or our delivery of products to our customers,
suspensions of large projects and/or acceleration of large products
or accelerated adoption of pathogen surveillance. These or other
uncertainties may cause our actual future results to be materially
different than those expressed in our forward-looking
statements.
Business review
Last year marked our second as a
listed company - and 10 years since we launched the MinION. Since
our IPO two years ago, we've delivered strong, resilient growth and
expanded our customer base to more than 7,600 active accounts by 31
December 2023. Last year marked a further milestone for Oxford
Nanopore as we detailed our medium-to-long term strategy at our
first Capital Markets Day, designed to address unmet needs in the
clinical and applied markets, building on our commitment to deliver
value in the Life Science Research Tools (LSRT) sector for the
short-to-long term.
Today, the majority of our
customers are engaged in research, which is foundational for the
emerging translational and future clinical and applied uses of our
technology. The pace of innovation on our platform - and
developments in system performance, including accuracy and data
output - continue to support our impact across a variety of
research sectors such as human genetics, cancer research,
infectious disease, applied industrial, plant and animal biology,
food and more. The thriving community of scientists who are using
our technology understand that "what you're missing matters" in
sequencing, as they leveraged the richer insights and capabilities
unique to nanopore sequencing. We are proud to enable them to
perform breakthrough science such as native DNA and RNA sequencing,
including methylation detection without the need for additional
steps, all of which is now possible at speeds faster than any
other sequencing device. These scientists published 2,800
peer-reviewed papers in 2023 alone, showcasing the versatility and
value of our technology across a spectrum of fields. This brings
the total number of nanopore-based publications to more than
11,000, a testament to the robust and engaged nanopore community
and the transformative potential of this
technology.
Clinical and applied industrial
customers are now building on these scientific discoveries and are
developing emerging applications that have the potential to drive
broad value across health and industrial markets. Our early
partnerships have highlighted the benefits of our platform to serve
a variety of applied contexts, including richer insights, and
real-time results in an accessible and affordable form factor. Our
strategy in pursuing these applied markets is, in the short term,
to support our translational customers at the intersection of
research and clinical care or biologics manufacturing. In the
longer-term, it is to enable our customers to develop novel
applications, analogous to the 'apps' model for mobile phones, in
which we share in future revenues as our partners reach
commercialisation. Last year we started to realise meaningful
momentum for this approach, signing on new strategic commercial
partners and collaborators including bioMérieux and the Mayo
Clinic, alongside our growing and vibrant customer base. The range
and scope of applications being currently developed is truly
remarkable, from cancer testing during surgical operations, to mRNA
vaccine manufacturing.
Despite global supply chain
constraints, and other challenging market conditions, we've
continued to innovate, deliver new technologies through expanded
operations and broaden our reach. Our user base, spread across more
than 125 countries, demonstrates the global appeal and
applicability of our technology, from traditional laboratory
environments to the most remote locations on Earth. The adoption of
our platform in diverse research areas-from human genetics to
environmental monitoring-underscores the vital role Oxford Nanopore
can play in driving forward scientific discovery and application.
As we look ahead, we are inspired by the achievements of our
community and dedicated to realising our bold vision to serve
healthcare and industrial markets of the future.
Building the right team for success
Our people are vital to the
success of our business. The cohesion and longevity of our
executive team epitomise our shared commitment. It's been a
lifelong journey for all of us. The multi-disciplinary expertise of
our team is one of the hallmarks of our success and in 2023, we
continued to build on the diversity and breadth of the leadership
talent needed to expand our commercial presence and meet our
ambitious global growth goals.
In the past year, we grew our
leadership team both in size and talent, strategically enhancing
our capabilities to navigate our global growth trajectory. We
attracted seasoned commercial leaders within the LSRT sector to
support our commercial expansion in the US and globally. In the
Americas, we hired Julie Collens, a formidable commercial leader in
genomics, to head commercial operations in the Americas. In
addition, we also brought on Kathleen Barnes, an established expert
in precision medicine, to join our clinical team as SVP of
Population Health and Precision Medicine, a new vertical for us
that will be critical to our success as we pursue this new market
globally, with initial focus on the Americas. We also convened a
comprehensive search for a new CFO, resulting in the appointment of
Nick Keher in January 2024, replacing Tim Cowper who moved into a
new role as Chief Operating Officer after performing both the role
of CFO and fulfilling most of the responsibilities typically
assigned to a COO for the past five years.
Finally, we brought on three
prestigious new Non-Executive Directors, Kate Priestman, Dr Sarah
Fortune and Dr Heather Preston, with expertise in human genetics,
infectious disease and company building, all of whom will support
our ambitious growth in complementary ways. Post year-end, we also
announced the retirement of Dr James ("Spike") Willcocks, Clive
Brown, and Tim Cowper from the Board as part of normal Board
evolution and in line with best practice governance. As part of our
commitment to board diversity, this evolution will support our
progress towards fulfilling our goal of reaching 40% female Board
representation. Following the AGM in June 2024, the Board will
include two executive Directors and seven Non-Executive Directors,
three of whom are women. Beyond our leadership team, we supported
our rapid growth in 2023 through significant investments in our
global organisation. Total headcount reached 1,238 (FTE) at the end
of the year, up 22.7% from the prior year
end.
Improved onboarding and talent
development through initiatives such as leadership training,
mentoring programmes, six-sigma programmes in production and
operations, and challenger sales training for our commercial teams
have helped to ensure that we are building a solid foundation
for the future.
Delivering high accuracy, addressing new market
needs
Our relentless pursuit of
innovation led to significant advancements in our kit 14 chemistry
and basecalling in 2023, setting new standards to become among the
most accurate sequencing platforms on the market. Last year we
announced further platform improvements to provide another step in
DNA/RNA sequencing performance to drive scientific research, as
well as springboard into clinical and applied markets seeking
richer data, fast turnaround and accessible and affordable
sequencing technology.
With the rollout out of Q20+
chemistry achieving completion, our innovation teams are preparing
for their next breakthrough performance in DNA/RNA nanopore
sequencing. At our NCM conference the team demonstrated raw read
DNA sequencing accuracy - reaching a record of Q28 (99.8%) in
simplex single molecule accuracy - powered by machine
learning-guided enzyme engineering and improved models. The longest
Q30 (99.9%) read in the dataset was 1.1 Megabases. The team also
detailed a novel method to overcome errors in homopolymer regions
that, when combined with other platform updates, pushed human
consensus accuracy up to approximately Q50 and indel f1 accuracy to
99%. Throughout the year, customers joined us at various
community events to showcase how comprehensive mapping of the human
genome, telomere-to-telomere (T2T), is now possible using only
nanopore sequencing having previously been assembled with multiple
sequencing technologies.
In response to increasing demand
for RNA sequencing, we announced additional platform improvements
in direct RNA to support the emergence of RNA-based therapies,
introducing a new flow cell and kit for direct RNA sequencing that
increased accuracy and output. Since the launch of this flow cell
at London Calling, it is already enabling significant advancements
in the RNA research market alongside novel applications of direct
single molecule sensing such as mRNA vaccine
research.
With our platform consistently
performing at a high level, our focus has now shifted towards
refining end-to-end workflows, a testament to our commitment to
addressing the evolving needs of growing customer base alongside
newer applied and clinical market customers.
We announced several partnerships
with tertiary analysis providers for comprehensive interpretation
of nanopore sequencing to support the push-button analysis of
nanopore sequencing data and enable end-to-end workflows. We
believe this will significantly help drive adoption, in particular
by those customers new to running their own sequencing
systems.
We also announced Project TurBOT,
our benchtop solution designed to offer integrated and automated
extraction, library preparation, sequencing, basecalling, and data
analysis for multiple samples, all within a single device. This
device will enable users to perform a hands-free, simplified
workflow from raw sample to analysis though an intuitive interface,
eliminating manual interventions and enhancing efficiency, reducing
errors, and significantly accelerating the workflow. This will not
only increase throughput but also ensure reproducible and reliable
results, as well as expand the appeal to particular customer types
in need of rapid, easy, sample-to-answer systems.
Finally, we established dedicated
teams for regulated product development to deliver our
'Q line' platform that will accelerate nanopore sequencing
adoption in regulated applied markets such a clinical labs and
biopharma QC/QA labs. These products will be released throughout
2024.
Breakthrough community science highlights the evolution from
bench to bedside
In 2023, we saw further growth in
foundational research in human genetics, cancer research and
infectious disease, alongside 'translational' method development to
take research discoveries from the bench into distributed applied
testing markets.
Our thesis continues to be that
the benefits of the nanopore platform - real-time,
information-rich, affordable and accessible sequencing - will
address unmet needs in health as well as industrial sectors such as
agriculture, food and environmental
applications.
Human genetics:
In September, the NIH Centre for Alzheimer's and
Related Dementias (CARD) showcased a pioneering nanopore-based
sequencing approach in Nature, with comprehensive, high accuracy in
SNP, structural variant, and methylation calls. Notably, this
method proved to be both cost-effective and scalable for extensive
projects, making a significant stride in large-scale, native DNA
sequencing.
The protocol is being used to
sequence thousands of human genomes as part of the NIH CARD
initiative, which aims to unravel the mysteries underlying
Alzheimer's disease and related dementias. Its emphasis on base
modification analysis reveals high concordance in methylation
calls, offering reliable, haplotype-resolved methylation data
during the standard sequencing run itself, without the need for a
separate process.
Cancer: Characterisation of cell-free DNA (cfDNA) is an emerging
approach for identifying many diseases. In May, a team from
Stanford University published
research focusing on methylation
profiling of cell-free DNA and its potential for monitoring cancer
during treatment. They chose nanopore sequencing because of its
ability to detect methylation directly. The approach involved
single-molecule sequencing to profile the methylomes of cell-free
DNA samples collected from patients with cancer. For one sample,
the technique generated as many as 200 million reads, which the
scientists note was "an order of magnitude improvement over
existing nanopore sequencing methods." Such an analysis could also be useful in drug discovery
efforts focused on methylation biomarkers, as well as in drug
development where noninvasive sample collection can be important to
maximize data gathered in a clinical trial.
Researchers also applied nanopore
sequencing toward Personalised Oncogenomics to show the potential
for long-read sequencing to resolve complexities in the cancer
genome, supporting more effective strategies for personalised
treatment and care. At our London Calling conference in May, Dr
Janessa Laskin at the University of British Columbia in
Vancouver
spoke about how her team is using
nanopore sequencing to integrate whole-genome and transcriptome
analysis into the clinical care of people with advanced cancers in
British Columbia. Her team recently published a
preprint highlighting the results of a
study showing how nanopore sequencing is addressing limitations
noted with traditional short-read methods.
Infectious disease:
Nanopore-based sequencing, which can be used to
measure long or short fragments of DNA or RNA as needed, can also
produce data very quickly. In a pilot project at the Guy's and St.
Thomas' Hospital NHS Foundation Trust in London, a clinical
laboratory team evaluated nanopore sequencing to support a rapid
respiratory metagenomics workflow. They tested nearly 130 samples
from more than 85 individuals with lower respiratory infections,
setting detection thresholds equivalent to culture-based testing to
avoid reporting microbes that were unlikely to be clinically
relevant. For most samples, results were reported to the clinical
care team on the same day the sample was collected. Interestingly,
nearly half of the results led to shifts in antimicrobial selection
(in some cases escalating and in others de-escalating the initial
treatment choice). Several unexpected organisms and cases of
co-infections were reported; these would not have been found with
conventional tests. The results
highlighted the value of metagenomic testing in
ICU settings - a process uniquely suited for the features of the
nanopore platform.
mRNA manufacturing QC:
Beyond clinical applications, research
published this year from the
University of Queensland demonstrated the utility of nanopore
sequencing in biomanufacturing contexts, harnessing the latest
platform improvements to analyse mRNA vaccines and therapies. The
researchers showed how nanopore sequencing can accurately assess
the quality of mRNA vaccines and therapies by directly analysing
each individual mRNA vaccine molecule as it passes through a
protein nanopore, providing a real-time measurement of the mRNA
sequence identity and integrity. Researchers noted that approach
could also provide a useful research tool to better understand how
mRNA vaccines work by studying how they behave within cells.
Crucially, the impact of this technology could result in the
real-time analysis of mRNA vaccines during production, providing
testing within hours of mRNA manufacture so quality control issues
could be quickly detected. Such rapid analysis is critical during
the rapid manufacture of mRNA vaccines needed during a pandemic -
or to support the future development of personalised
therapies.
Embracing Clinical and Applied
Markets
This year marked a strategic
expansion towards clinical and applied markets (>$150 billion in
2032), building on our strong foundation in Life Sciences Research
Tools (a market valued at $6.2 billion). Our ongoing product
development efforts, particularly with Q-Line, alongside the
expansion of our regulatory team, further underscore our commitment
to meeting the evolving needs of clinical and applied customers.
On the morning of our first-ever
Capital Market Day in October we announced two significant
developments that demonstrated our readiness to capture the vast
opportunities in these emerging sectors. bioMérieux SA, a world
leader in the field of in vitro diagnostics (IVD), announced a
strategic investment in Oxford Nanopore to support development for
infectious disease testing products in our portfolio that serve IVD
markets in conjunction with bioMérieux's commitment to advancing
global public health. Through this partnership and investment, the
two companies intend to leverage our ground-breaking IVD solution
and bioMérieux's IVD expertise in R&D, Regulatory, Medical and
Market Access.
Meanwhile, a joint development
collaboration with the Mayo Clinic in the US involves integrating
nanopore sequencing in the Mayo's labs to help develop new clinical
tests for human diseases, starting with breast cancer. Also in
cancer, we signed an agreement with Swiss company
4bases to permit them to employ nanopore
sequencing devices with 4bases kits per their self-certification to
support rapid, high-accuracy analyses in human and cancer genetics
in Italy and Switzerland, with a first target of same-day BRCA1 and
BRCA2 analysis.
In the applied markets, we
announced a partnership with BASE to use the latest and improved
nanopore-based sequencing technology to optimise performance and
reduce the time needed to measure mRNA vaccine quality attributes.
Researchers at the University of Queensland have developed a faster
way to put mRNA vaccines through quality control testing using
nanopore technology. The BASE team at UQ's Australian Institute for
Bioengineering and Nanotechnology is recognised as the biggest
supplier of research-use mRNA in Australia. In September, they
showcased a new protocol in Nature to expedite the quality control
processes, enabling rapid detection of issues during manufacturing,
which is particularly useful in pandemic
scenarios. We also signed a
collaboration with Pathoquest to co-develop the first
sequencing-based QC test solutions targeting the biopharma genetic
characterisation and safety market.
Financial Review
2023 performance
The Group delivered total revenue
of £169.7 million (FY22: £198.6 million) a decline of 14.6%, as
there was no Covid testing revenue in FY23 (FY22: £51.8
million).
Revenue from our core LSRT business grew 15.6% in the year, 15.3% on a
constant currency basis. Underlying
LSRT revenue
growth, excluding
the Emirati
Genome Program (EGP) and COVID-19
sequencing, grew approximately 39.3% and approximately 39.1%
on a constant currency
basis.
Results at a glance
|
|
2023
£m
|
2022
£m
|
% change
|
|
Year ended 31 December:
|
|
|
Total revenue
|
169.7
|
198.6
|
(14.6)%
|
|
- LSRT revenue
|
169.7
|
146.8
|
+15.6%
|
|
- Covid testing revenue
|
-
|
51.8
|
(100)%
|
|
Underlying LSRT
|
149.7
|
107.5
|
+39.3%
|
|
Gross profit
|
90.5
|
123.8
|
(26.9)%
|
|
Gross margin (%)
|
53.3%
|
62.3%
|
(900)bps
|
|
LSRT gross profit
|
90.5
|
82.7
|
+9.4%
|
|
LSRT gross margin (%)
|
53.3%
|
56.3%
|
(300)bps
|
|
Operating loss
|
(168.6)
|
(98.5)
|
(71.2)%
|
|
Adjusted EBITDA1
|
(104.9)
|
(78.6)
|
(26.3)
|
|
Loss for the year
|
(154.5)
|
(91.0)
|
(63.5)
|
|
|
|
|
|
|
Cash, cash equivalents and other
liquid investments1
|
472.1
|
558.0
|
(15.4)%
|
|
Net assets at period end
|
643.9
|
693.6
|
(7.2)%
|
1Alternative Performance Measures (see note 25)
During the year our global
customer base expanded from 6,839 to 7,615 active accounts; an
increase of 11%. We saw particularly strong revenue growth in our
S2 (+20%) and S3 (+19%) customer groups. S2 revenue grew by 42% and
S3 by 69%, on an underlying basis.
Performance across the broader
customer base in FY23 was driven by consumable sales of £124.9
million, which grew by 11% (FY22: £112.5m), which accounted for
approximately 74% of revenue.
In December 2023, the original EGP
agreement was revised to provide greater flexibility to achieve the
programme objectives and reflected both parties desire to refocus
on clinical uses of the platform, that can utilize the platform's
unique benefits of richer and faster data. The new agreement
removes the outstanding purchase commitment from the original
agreement and extends the expiration date to 31 December
2026. EGP revenue in 2024 and beyond is
not anticipated to be a material portion of revenue and as such,
the Group will cease reporting EGP revenue separately following
these results. Revenue related to the EGP in 2023 (under the
original and revised agreement) was approximately £12 million
(2022: £13.2m).
The Group's gross profit and gross
margin reduced in FY23 - gross profit by
26.9% to £90.5 million (FY22: £123.8 million) and gross margin by
900 bps to 53.3% (FY22: 62.3%) - primarily due to
gross margin generated from the DHSC contract in FY22, the adverse
performance of the EGP contract and several specific inventory
write downs in FY23.
LSRT gross profit increased to
£90.5 million (FY22: £82.7 million) in the period up 9.4% on
FY22.
Group operating loss increased to
£168.6 million (FY22: £98.5 million), reflecting the reduction in
revenue and gross profit and increase in operating
expenditure.
During 2023, we continued to
invest in research and development to drive both continuous
improvement in the performance and usability of our technology, and
to deliver new products and technologies that address a broader
range of applications and users' needs. We also continued to expand
our global sales and marketing team during 2023. Commercial and
marketing headcount grew to 416 employees at 31 December, up by 43%
during the year.
Despite continuing investment in
innovation and sales and marketing, we finished the year with cash,
cash equivalents and other liquid investments of £472.1 million
(FY22: £558.0 million) reflecting a total reduction of £85.9
million. In October 2023, bioMérieux
agreed to subscribe for 29,025,326 shares at a subscription price
of 238.08p per share which equated to a total investment of nearly
£70 million.
Alternative performance measures
The Group has identified Alternative
Performance Measures (APMs) that it believes provide additional useful
information on
the performance
of the
Group. These
APMs are
not defined
within International Financial
Reporting Standards (IFRS) and are not considered to be a substitute for, or superior to, IFRS measures. These APMs may not be necessarily comparable to similarly titled measures used by other companies. All adjusted measures
are reconciled
to the
most directly
comparable measure prepared in accordance with IFRS in note 25 of the
preliminary information.
Directors and management use these APMs alongside IFRS measures when budgeting and planning, and when reviewing business
performance.
Revenue
Whilst our reportable segments are
LSRT and Covid testing, we continue to look at revenue by size of
customer (e.g. S1, S2, etc.) and geography. In addition we also
analyse revenues by franchise i.e. PromethION and MinION
franchises, which represent revenues generated by each range of our
product groups.
Underlying revenue by
franchise
Underlying revenues grew fastest
across the PromethION franchise, representing all devices and flow
cell sales from the PromethION range, reaching £48.8 million from
£26.6 million in 2022, representing underlying growth of 83% when
stripping out the impact of EGP.
Revenues of our MinION franchise,
representing all sales of MinION flow cells and devices that run
MinION flow cells (including GridION and MinION) grew 14% to £58.8
million (FY22: £51.5 million) when stripping out the impact of
COVID sequencing.
Other revenues, representing kits,
services revenues and other devices grew
44% underlying to £42.2 million from £29.4 million when stripping
out the impact of EGP and COVID sequencing.
|
|
2023
(£m)
|
2022
(£m)
|
%change
actual
|
|
PromethION franchise
|
59.2
|
38.6
|
53.2%
|
|
Less EGP
|
(10.4)
|
(12.1)
|
|
|
Underlying PromethION franchise
|
48.8
|
26.6
|
83.4%
|
|
|
|
|
|
|
MinION franchise
|
63.4
|
68.2
|
(7.0)%
|
|
Less COVID Sequencing
|
(4.6)
|
(16.7)
|
|
|
Underlying MinION franchise
|
58.8
|
51.5
|
14.1%
|
|
|
|
|
|
|
Other
|
47.1
|
40.0
|
17.8%
|
|
Less EGP
|
(1.5)
|
(1.1)
|
|
|
Less COVID Sequencing
|
(3.3)
|
(9.4)
|
|
|
Underlying Other
|
42.2
|
29.4
|
43.5%
|
|
|
|
|
|
|
Total LSRT Revenue
|
169.7
|
146.8
|
15.6%
|
|
Less EGP
|
(12.0)
|
(13.2)
|
|
|
Less COVID Sequencing
|
(8.0)
|
(26.1)
|
|
|
Total underlying revenue
|
149.7
|
107.5
|
39.3%
|
Revenue by customer
group
At a customer group level (with
groups based on size of revenue by customer), revenue growth was
driven by S2 and S3 customers, excluding EGP, as well as strong
growth through our most significant distributor, Avantor (included
in Indirect).
Our commercial partnership with
Avantor (signed in 2021) helps expand our reach and improve
accessibility for entry level products such as MinION. We continue
to focus on driving indirect revenue growth through both rapid
expansion and diversification of the customer base, as well as
increasing revenue per customer account. Avantor is performing equally
in the EMEAI and Americas regions, with over 90%
of revenue attributable to consumables.
|
|
2023
£m
|
20222
£m
|
% change
|
|
S1
|
29.4
|
26.4
|
11.2%
|
|
Less COVID Sequencing
|
(0.8)
|
(2.5)
|
|
|
Underlying S1 Revenue
|
28.6
|
23.9
|
19.6%
|
|
|
|
|
|
|
S2
|
62.3
|
51.7
|
20.5%
|
|
Less COVID Sequencing
|
(3.1)
|
(10.0)
|
|
|
Underlying S2 Revenue
|
59.2
|
41.7
|
42.0%
|
|
|
|
|
|
|
S3
|
55.3
|
46.7
|
18.6%
|
|
Less EGP
|
(12.0)
|
(13.2)
|
|
|
Less COVID Sequencing
|
(2.4)
|
(9.2)
|
|
|
Underlying S3 Revenue
|
41.0
|
24.3
|
68.8%
|
|
|
|
|
|
|
Indirect
|
22.6
|
22.0
|
2.8%
|
|
Less COVID Sequencing
|
(1.7)
|
(4.4)
|
|
|
Underlying Indirect Revenue
|
21.0
|
17.6
|
18.9%
|
|
|
|
|
|
|
Total underlying LSRT Revenue
|
149.7
|
107.5
|
39.3%
|
|
EGP
|
12.0
|
13.2
|
(9.2)%
|
|
COVID Sequencing
|
8.0
|
26.1
|
(69.2)%
|
|
Total LSRT revenue
|
169.7
|
146.8
|
15.6%
|
|
COVID-19 testing
revenue
|
-
|
51.8
|
(100)%
|
|
Total revenue
|
169.7
|
198.6
|
(14.6)%
|
2 FY22 numbers by customer group have been reclassified to
reflect Avantor revenue within the Indirect customer
group
NB S1 customers generate revenue
of up to $25,000 per year per customer account. S2 customers
generate revenue between $25,000 and $250,000 per year per customer
account. S3 customers generate revenue of more than $250,000 per
year per customer account.
Total S3 revenue increased by 19%
to £55.3 million. Underlying S3 revenue grew by 69% in 2023,
reflecting an increase in the number of active customers in this
group (excluding EGP) from 72 to 84 during the period with average
revenue per customer of approximately $641,900 (FY22: $581,000).
This group consists mostly of customers performing human disease
and cancer research.
S2 revenue grew by 20% during the
period to £62.3 million. Active customers in this group grew by 25%
to 1,210 in 2023, with an average annual revenue of approximately
$64,000 per customer (FY22: $66,800). S2 customers are key to our
expansion over the medium term, as we
provide localised high-quality sequencing
capabilities at competitive prices.
These customers
are able
to manage
their own projects rather than continuing
to be dependent on centralised sequencing services, where they have
to wait for their samples to be
processed.
S1 revenue grew by 11% during the
period to £29.4 million, reflecting
continued demand for our entry-level and portable sequencing devices.
Active customers
in this
group grew
by 9% to 6,298 in 2023, with an average
annual revenue of approximately $5,800 per customer (FY22: $5,700).
Growth across the S1 customer base came from two areas, expansion of end users within organisations and
new accounts in new organisations, with
Mk1B being the most popular device. To date we have had less direct
contact with this customer group with most
conversations taking place at conferences, in forums and in
our Nanopore Community.
Geographical trends
The Group aims to make its
technology available to a broad range of scientific users, and
currently supports users in more than 125 countries.
|
|
2023
(£m)
|
2022
(£m)
|
%change
actual
|
|
Americas
|
61.5
|
48.3
|
27.4%
|
|
Less COVID Sequencing
|
(3.1)
|
(8.9)
|
|
|
Underlying Americas Revenue
|
58.4
|
39.4
|
48.2%
|
|
|
|
|
|
|
APAC
|
34.1
|
34.8
|
(2.1)%
|
|
Less COVID Sequencing
|
(1.2)
|
(5.6)
|
|
|
Underlying APAC Revenue
|
32.9
|
29.2
|
12.7%
|
|
|
|
|
|
|
EMEAI
|
74.0
|
63.7
|
16.2%
|
|
Less EGP
|
(12.0)
|
(13.2)
|
|
|
Less COVID Sequencing
|
(3.6)
|
(11.6)
|
|
|
Underlying EMEAI Revenue
|
58.4
|
38.9
|
50.2%
|
|
|
|
|
|
|
Total LSRT Revenue
|
169.7
|
146.8
|
15.6%
|
|
Covid Testing
|
-
|
51.8
|
(100)%
|
|
Total Revenue
|
169.7
|
198.6
|
(14.6)%
|
At a regional level, revenues were
predominantly driven by growth in our two largest regions, EMEAI
(Europe, Middle East, Africa and India) and the
Americas.
Revenue in APAC declined by 2%,
reflecting a reduction in revenue from China, which reduced by 12%.
However on an underlying basis (excluding COVID sequencing) China
grew by 5%. A new logistics hub in Singapore went live during the
period - our distribution hub for Asia Pacific - creating further
revenue opportunities in this region.
Revenue in EMEAI increased by 16%,
50% on an underlying basis, reflecting the growing success of our
commercial team in this region.
In some territories the Group
works with Channel Partners whom have the commercial and technical
expertise to enhance our geographic reach, engaging customers in
their country and local language. The Group currently works
with:
· Avantor in the European Union and United States.
· A
network of Channel Partners across 53 countries in Asia, Africa,
India, Latin America, Middle East and The Gulf, and non-EU European
territories.
· We
are expanding this to include a further 40+ countries including the
remainder of Africa and Latin America, today we rely on specialist
logistics brokers who can work directly with the Group's customers
in these territories to ship our platform.
Gross margins
|
Year ended 31 December
|
2023
|
2022
|
Change
|
|
Gross Margin (%)
|
53.3%
|
62.3%
|
(900)
bps
|
|
LSRT Gross margin (%)
|
53.3%
|
56.3%
|
(300)
bps
|
Overall gross margin declined by
900 bps in 2023. This was due to a number of factors:
· FY22
gross margin benefitted from the DHSC contract accounting for 600
bps
· Impacts on the FY23 gross margin include adverse performance
of the EGP and the impact of write down of excess inventory in
Covid sequencing kits and devices that became end-of-life during
the year. Excluding these one-off items, the FY23 gross margin
would have been 58.8% (FY22: 58.0%)
We remain committed to continual
margin improvement across all products and will continue to invest
in manufacturing innovation, to deliver this goal.
Impact of headcount
|
Average headcount (FTEs)
|
2023
|
2022
|
Change
(%)
|
|
Research and Development
|
464
|
380
|
+22%
|
|
Manufacturing
|
156
|
149
|
+5%
|
|
Selling, General &
Administration
|
513
|
393
|
+31%
|
|
Total
|
1,133
|
922
|
+23%
|
In 2023, the average number of
employees across all functions increased by 23%. The Group invested
in bringing onboard new Research and Development staff to execute
on our platform and product roadmap. Our Research and Development
teams work on fundamental research for novel sensing applications,
sequencing chemistry, nanopores, enzymes, algorithms, software
electronics and arrays to deliver future platforms and improvement
on current products. A significant investment of
2023 was in the establishment of our regulatory development teams
and expansion of our platform development groups as we support a
growing product portfolio of sample to answer.
The Group's manufacturing team
expanded by 5%, primarily in our biologics production facilities,
which expanded during the year providing more robustness and
resilience to our manufacturing capabilities.
Overall selling, general and
administration headcount grew by 31%, primarily within the
commercial team, which grew globally by 49% in the year supporting
the Group's growth objectives.
Research and development
expenses
The Group's research and
development expenditure is recognised as an expense in the period
as it is incurred, except for development costs that meet the
criteria for capitalisation as set out in IAS 38 (intangible
assets). Capitalised development costs principally comprise
qualifying costs incurred in developing the Group's core technology
platform.
As amortisation related to
internally generated assets has increased over time, management now
consider that it is a more appropriate presentation to present
amortisation and the R&D tax credit within research and
development expenses, rather than as previously presented within
selling, general and administration expenses. The comparative
numbers have been re-presented to be consistent with the current
period presentation.
|
|
2023 (£m)
|
*2022
(£m)
|
|
Research and development
expenses
|
103.8
|
69.2
|
|
Adjusting items:
|
|
|
|
Employer's social security taxes
on pre-IPO share awards
|
0.6
|
9.9
|
|
Adjusted R&D expenses
|
104.4
|
79.1
|
|
Amortisation of capitalised
development costs
|
(18.4)
|
(11.4)
|
|
Capitalised development
costs
|
19.5
|
19.2
|
|
Total R&D expenses and capitalised development
costs
|
105.5
|
86.8
|
* See note 8 for details regarding
the re-presentation
Adjusted research and development
expenses increased by £25.3 million to £104.4 million in FY23
(FY22: £79.1 million). This increase was principally due to a 22%
increase in headcount (FY22: 31% increase) leading to a £7.0
million increase in payroll costs (FY22: £7.1 million).
Amortisation of capitalised
development costs increased by £7.0 million to £18.4 million. There
is now £77.2 million of costs that have been capitalised as at 31
December 2023 (31 December 2022: £57.7 million), so driving the
increase in amortisation.
Capitalised development costs
increased by £0.3 million to £19.5 million in FY23 (FY22: £19.2
million). This included £11.3m of internal staff costs (FY22: £10.4
million) and £8.2 million of third-party costs (FY22: £8.8
million), across a number of projects that occurred during the
year.
Overall investment in research and
development was £105.5 million (FY22: £86.8 million); an increase
of £18.7 million (FY22: £9.4 million) over
the prior year.
Selling, general and
administration expenses
The Group's selling, general and
administrative expenses in FY23 increased by £2.1 million to £155.2
million (FY22: decreased by £3.7 million to £153.1
million).
On an adjusted basis
selling, general and administrative expenses in
FY23 increased by £22.9 million to £134.6 million (FY22: increased
by £13.8 million to £111.7 million).
|
|
2023
(£m)
|
2022
(£m)
|
|
Selling, general and administration
expenses
|
155.2
|
153.1
|
|
Adjusting items:
|
|
|
|
Share-based payment expense on
Founder Long Term Incentive Plan (LTIP)
|
(20.9)
|
(53.2)
|
|
Employer's social security taxes on
Founder LTIP and pre-IPO share awards
|
0.3
|
11.7
|
|
Adjusted selling, general and administration
expenses
|
134.6
|
111.7
|
The main changes were:
· a 49%
increase in average headcount of staff within the Group's sales,
marketing and distribution functions (FY22: 48% increase), leading
to a £14.4 million increase in payroll costs (FY22: £11.7 million
increase). This is in line with our plan to expand our global sales
team
· a 4%
increase in average headcount of corporate staff within the Group's
Human Resources (HR), finance, central administration, legal,
applied functions and certain corporate executives to support
business growth (FY22: 30% increase), contributing to a £1.7
million increase in payroll costs (FY22: £7.9 million)
· an
increase in depreciation of £1.6 million (FY22: increase of £ 4.8
million); partially offset by a decrease in share-based payments
(non-Founder LTIP) of £1.5 million (FY22: decrease of £6.9
million)
Balance sheet
Our balance sheet remains strong,
with £472.1 million of Cash, cash equivalents and other liquid
investments at 31 December 2023. Key movements during the year are
outlined below:
|
|
2023
(£m)
|
2022
(£m)
|
|
Property, plant and equipment
|
49.9
|
37.3
|
|
Intangible assets
|
32.9
|
30.0
|
|
Right-of-use assets
|
32.5
|
25.9
|
|
Net deferred tax asset
|
5.5
|
7.7
|
|
Working capital
|
84.6
|
70.4
|
|
Other assets and liabilities
|
21.0
|
11.6
|
|
Provisions
|
(13.0)
|
(13.3)
|
|
Cash and cash equivalents and other
liquid investments
|
472.1
|
558.0
|
|
Lease liabilities
|
(41.7)
|
(34.1)
|
|
Net assets
|
643.9
|
693.6
|
Property, plant
and equipment
Property, plant and equipment
additions of £34.9 million were made in the year (FY22: £23.1
million). This included:
· £25.6 million on devices with customers (FY22: £12.6
million), of which £14.9 million was on compute upgrades,
and
· £5.7
million was spent on manufacturing facilities and laboratories
across our sites in the UK (FY22: £8.1 million).
Intangible assets
Intangible asset additions of
£21.4 million (FY22: £19.2 million) were made in the year relating
to capitalised development costs and patent and license
purchases.
Right-of-use assets
During the year right-of-use asset
additions were £12.0 million (FY22: £15.5 million), resulting in a
net book value at 31 December 2023 of £32.5 million (2022: £25.9
million). As at 31 December 2023, the outstanding balance sheet
liability in respect of the right-of-use assets was £41.7 million
(2022: £34.1 million).
Working capital
The working capital balance of
£84.6 million (2022: £70.4 million) predominantly reflects
inventory of £101.5 million (2022: £87.7 million), trade and other
receivables of £61.5 million (2022: £62.9 million) and trade and
other payables of £78.4 million (2022: £80.1 million).
The increase in working capital
was due primarily to increased inventory due to our long-term
agreements with key suppliers focused on electric components. In
particular, inventories related to flow cells and devices have
increased by £7.8 million and by £5.2 million respectively in the
year.
Provisions
Provisions of £13.0 million at 31
December 2023 (2022: £13.3 million), primarily relates to a
provision for employer social security taxes on share awards of
£9.9 million (2022: £10.8 million). The provision is estimated at
each reporting period with reference to both the expected number of
awards vesting and their expected value, using the share price at
the reporting date. The release of the provision during the year is
reflective of the reduction in share price from £2.47 at 31
December 2022 to £2.08 at 31 December 2023.
Cash, cash equivalents and other liquid
investments
Cash, cash equivalents and other
liquid investments were £472.1 million at 31 December 2023, a
decrease of £85.9 million in the period. See note
25.
Cash flow
In 2023, there was a net cash
outflow of £137.3 million from operations (FY22: £63.8 million *),
the difference is primarily driven by the FY22 cash flow including
the benefit of the DHSC income.
Cash outflows from investing
activities were £61.8 million (2022: £51.4 million *). This
includes:
• the
purchase of financial assets of £150.0 million (2022: £130.0
million), offset by the proceeds of other financial assets of
£104.6 million (2022: £60.5 million)
• the
purchase of property, plant and machinery of £5.9 million (2022: £8.6 million *)
• the
purchase of IP licences of £1.9 million (2022: £nil)
• the
investment in associate of £3.0 million (2022: £nil)
• the
capitalisation of development costs of £19.5 million (2022: £19.2 million); offset partially
by
• interest received of £13.9 million (2022:
£3.4 million).
Cash inflows from financing
activities were £64.7 million (2022: outflow of £13.7 million), which
includes:
• proceeds from issue of shares of £71.6 million (2022: £3.8 million) less costs of share
issue of £0.4 million (2022: £2.4 million). This was primarily
generated by the investment of nearly £70 million made by
bioMérieux, and
• lease and interest payments of £6.5 million (2022: £5.6
million).
*restated - see notes 8 and
22
Outlook
We remain focused on our vision to
bring the widest benefits to society through the analysis of
anything, by anyone, anywhere. The continuous strengthening of our
team, the establishment of strategic partnerships across the globe,
together with significant investment in platform development,
bespoke electronics, IP and infrastructure, combined with the
strength of our balance sheet, puts us in a strong position to
achieve this goal and continue to deliver strong growth.
Consolidated Statement of
Comprehensive Income
for the year ended 31 December
2023
|
|
Note
|
2023
£000
|
2022
Restated
*
£000
|
|
Revenue
|
4
|
169,668
|
198,603
|
|
Cost of sales
|
|
(79,187)
|
(74,793)
|
|
Gross profit
|
|
90,481
|
123,810
|
|
|
|
|
|
|
Research and development expenses
*
|
|
(103,842)
|
(69,186)
|
|
Selling, general and administrative
expenses *
|
|
(155,248)
|
(153,103)
|
|
Loss from operations
|
|
(168,609)
|
(98,479)
|
|
|
|
|
|
|
Finance income
|
|
18,853
|
5,941
|
|
Finance expense
|
|
(2,206)
|
(1,628)
|
|
Other gains and losses
|
9
|
2,278
|
13,186
|
|
Share of loss in
associate
|
|
(228)
|
(238)
|
|
Write-back/(impairment) of
investment in associate
|
|
144
|
(2,193)
|
|
Loss before tax
|
6
|
(149,768)
|
(83,411)
|
|
|
|
|
|
|
Taxation
|
10
|
(4,739)
|
(7,614)
|
|
Loss for the year
|
|
(154,507)
|
(91,025)
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
Items that may be reclassified subsequently to profit or
loss
|
|
|
|
|
Fair value movements on investment
bonds
|
9
|
4,024
|
936
|
|
Exchange (losses)/gains arising on
translation of foreign operations
|
|
(3,880)
|
4,021
|
|
Taxation
|
10
|
(1,240)
|
-
|
|
Other comprehensive income for the year, net of
tax
|
|
(1,096)
|
4,957
|
|
|
|
|
|
|
Total comprehensive loss
|
|
(155,603)
|
(86,068)
|
|
|
Note
|
2023
Pence
|
2022
Pence
|
|
Loss per share
|
7
|
19
|
11
|
* See note 8 for details regarding
the restatement of comparatives.
Consolidated Statement of Financial
Position
as at 31 December 2023
|
|
Note
|
2023
£000
|
2022
Restated
*
£000
|
|
Assets
|
|
|
|
|
Non‑current assets
|
|
|
|
|
Property, plant and
equipment
|
12
|
49,890
|
37,294
|
|
Intangible assets
|
11
|
32,910
|
30,039
|
|
Investment in associate
|
|
742
|
826
|
|
Right‑of‑use assets
|
13
|
32,526
|
25,906
|
|
Other financial assets
|
16
|
208,325
|
84,144
|
|
Deferred tax assets
|
|
5,486
|
7,681
|
|
|
|
329,879
|
185,890
|
|
Current assets
|
|
|
|
|
Inventories
|
14
|
101,548
|
87,698
|
|
Trade and other
receivables
|
15
|
61,475
|
62,905
|
|
Current tax assets
|
|
1,030
|
-
|
|
R&D tax credit
recoverable
|
|
12,819
|
9,148
|
|
Other financial assets
|
16
|
49,514
|
119,411
|
|
Derivative financial
assets
|
17
|
261
|
2,060
|
|
Cash and cash
equivalents
|
22
|
220,536
|
356,778
|
|
|
|
447,183
|
638,000
|
|
Total assets
|
|
777,062
|
823,890
|
|
Liabilities
|
|
|
|
|
Non‑current liabilities
|
|
|
|
|
Lease liabilities *
|
20
|
37,333
|
30,042
|
|
Share‑based payment
liabilities
|
|
141
|
108
|
|
Provisions
|
19
|
6,538
|
8,645
|
|
|
|
44,012
|
38,795
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
18
|
78,447
|
80,249
|
|
Current tax liabilities
|
|
-
|
1,639
|
|
Lease liabilities *
|
20
|
4,322
|
4,056
|
|
Derivative financial
liabilities
|
17
|
-
|
962
|
|
Provisions
|
19
|
6,430
|
4,633
|
|
|
|
89,199
|
91,539
|
|
Total liabilities
|
|
133,211
|
130,334
|
|
Net assets
|
|
643,851
|
693,556
|
|
Issued capital and reserves attributable to owners of the
parent
|
|
|
|
|
Share capital
|
|
86
|
83
|
|
Share premium reserve
|
|
698,553
|
627,557
|
|
Share‑based payment
reserve
|
21
|
203,099
|
168,200
|
|
Translation reserve
|
|
(173)
|
3,707
|
|
Accumulated deficit
|
|
(257,714)
|
(105,991)
|
|
Total Equity
|
|
643,851
|
693,556
|
* See note 8 for details regarding
the restatement of comparatives.
Consolidated Statement of Changes
in Equity
as at 31 December 2023
|
|
Share
capital
£000
|
Share
premium
£000
|
Share-based payment reserve
£000
|
Translation reserve
£000
|
Accumulated deficit
£000
|
Total
equity
£000
|
|
At
1 January 2022
|
82
|
623,760
|
96,350
|
(314)
|
(15,902)
|
703,976
|
|
Loss for the year
|
-
|
-
|
-
|
-
|
(91,025)
|
(91,025)
|
|
Exchange gain on translation of
foreign operations
|
-
|
-
|
-
|
4,021
|
-
|
4,021
|
|
Fair value movements on investment
bonds
|
-
|
-
|
-
|
-
|
936
|
936
|
|
Comprehensive gain/(loss) for the year
|
-
|
-
|
-
|
4,021
|
(90,089)
|
(86,068)
|
|
Issue of share capital
|
1
|
3,796
|
-
|
-
|
-
|
3,797
|
|
Cost of share issue
|
-
|
1
|
-
|
-
|
-
|
1
|
|
Employee share‑based
payments
|
-
|
-
|
71,165
|
-
|
-
|
71,165
|
|
Tax in relation to share‑based
payments
|
-
|
-
|
685
|
-
|
-
|
685
|
|
Total contributions by and distributions to
owners
|
1
|
3,797
|
71,850
|
-
|
-
|
75,648
|
|
At
31 December 2022
|
83
|
627,557
|
168,200
|
3,707
|
(105,991)
|
693,556
|
|
Loss for the year
|
-
|
-
|
-
|
-
|
(154,507)
|
(154,507)
|
|
Other comprehensive
income
|
-
|
-
|
-
|
(3,880)
|
2,784
|
(1,096)
|
|
Comprehensive loss for the year
|
-
|
-
|
-
|
(3,880)
|
(151,723)
|
(155,603)
|
|
Issue of share capital
|
3
|
71,562
|
-
|
-
|
-
|
71,565
|
|
Cost of share issue
|
-
|
(566)
|
-
|
-
|
-
|
(566)
|
|
Employee share‑based
payments
|
-
|
-
|
34,995
|
-
|
-
|
34,995
|
|
Tax in relation to share‑based
payments
|
-
|
-
|
(96)
|
-
|
-
|
(96)
|
|
Total contributions by and distributions to
owners
|
3
|
70,996
|
34,899
|
-
|
-
|
105,898
|
|
At
31 December 2023
|
86
|
698,553
|
203,099
|
(173)
|
(257,714)
|
643,851
|
|
Note
|
|
|
21
|
|
|
|
Consolidated Statement of Cash
Flows
for the year ended 31 December
2023
|
|
Note
|
2023
£000
|
2022
Restated
*
£000
|
|
Net cash outflow from operating activities
|
22
|
(137,302)
|
(63,826)
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Purchase of property, plant and
equipment *
|
|
(5,906)
|
(8,632)
|
|
Proceeds from sale of
property
|
12
|
-
|
42,500
|
|
Capitalisation of development
costs
|
11
|
(19,522)
|
(19,163)
|
|
Purchases of IP licences
|
|
(1,862)
|
-
|
|
Investment in associate
|
|
(3,000)
|
-
|
|
Interest received
|
|
13,898
|
3,443
|
|
Purchase of other financial
assets
|
|
(150,000)
|
(129,962)
|
|
Proceeds from sale of other
financial assets
|
|
104,598
|
60,459
|
|
Net cash outflow from investing activities
|
|
(61,794)
|
(51,355)
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Proceeds from issue of
shares
|
|
71,597
|
3,751
|
|
Costs of share issue
|
|
(366)
|
(2,378)
|
|
Principal elements of lease
payments
|
|
(4,291)
|
(4,111)
|
|
Repayment of bank
borrowings
|
|
-
|
(9,500)
|
|
Interest paid
|
|
(1)
|
(221)
|
|
Interest paid on leases
|
|
(2,205)
|
(1,256)
|
|
Net cash inflow/(outflow) from financing
activities
|
|
64,734
|
(13,715)
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents before foreign
exchange movements
|
|
(134,362)
|
(128,896)
|
|
Effect of foreign exchange rate
movements
|
|
(1,880)
|
(2,166)
|
|
Cash and cash equivalents at beginning of
year
|
|
356,778
|
487,840
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
22
|
220,536
|
356,778
|
* See note 8 for details regarding
the restatement of comparatives.
Notes to the Consolidated Financial
Statements
for the year ended 31 December
2023
1. General information
Oxford Nanopore Technologies plc
(the "Company") is a public limited company incorporated in the
United Kingdom under the Companies Act 2006 and is registered in
England and Wales. The Company's registered office is at Gosling
Building, Edmund Halley Road, Oxford Science Park, Oxford,
Oxfordshire, OX4 4DQ. The Group is primarily involved in
researching, developing, manufacturing and commercialising a novel
generation of deoxyribonucleic acid ("DNA") or ribonucleic acid
("RNA") sequencing technology that provides rich data, is fast,
accessible and easy to use, and which allows the real-time analysis
of DNA or RNA. This enables our customers to perform
scientific/biomedical research in a range of areas, including human
genetics, cancer research, outbreak surveillance, environmental
analysis, pathogens/antimicrobial resistance, microbiome analysis
and crop science. These emerging uses may include applications in
healthcare, agriculture, biopharma production, food/water supply
chain surveillance, and education or consumer markets; anywhere
where DNA information can tell a user about a sample: for example
its identity, whether it is changing, healthy or
diseased.
The Company is the parent entity
and the ultimate parent company of the Group. The unaudited preliminary financial information comprises the
consolidated income statement, consolidated statement of
comprehensive income, consolidated balance sheet, consolidated
statement of changes in equity, consolidated cash flow statement
and extracts from the notes to the financial statements for the
year ended 31 December 2023. The unaudited preliminary
financial information should be read in conjunction with the Annual
Report 2022, which has been prepared in accordance with
International Accounting Standards, in conformity with the
Companies Act 2006. The financial information incorporates the
results of the Company and the entities under its control (together
the "Group" and individually "Group
companies").
The unaudited preliminary financial information has been presented
in Pounds Sterling because that is the currency of the primary
economic environment in which the Group operates, and are rounded
to the nearest thousand pounds. Foreign operations are included in
accordance with the policies set out in the accounting
policies.
2 Going
concern
As at 31 December 2023, the Group
held £472.1 million in cash, cash equivalents and other liquid
investments (note 25).
The going concern assessment period
is the twelve months to the end of March 2025. In order to satisfy
the going concern assumption, the Directors of the Group review its
budget periodically, which is revisited and revised as appropriate
in response to evolving market conditions.
The Directors have considered the
budget and forecast prepared through to the end of March 2025, the
going concern assessment period, and the impact of a range of
severe, but plausible, scenarios, including supply chain issues
driven by demand, logistics interruptions, the pandemic, heightened
geopolitical tension; particularly between the United States of
America and the People's Republic of China and the war in
Ukraine. In particular, the impact of key business risks on
revenue, profit and cash flow are as follows:
· Reduced revenues due to customer, regulatory and research and
development ("R&D") delays; and
· Increased costs due to supply chain
restrictions, rising utilities costs, rising wages & salary
costs, additional R&D requirements and rising costs of
component parts.
Under all scenarios, the Group had
sufficient funds to maintain trading before taking into account any
mitigating actions that the Directors could take. Accordingly, the
Directors have a reasonable expectation that the Group has adequate
resources to continue in operation for the foreseeable future and
at least one year from the date of approval of the financial
statements. On the basis of these reviews, the Directors consider
it remains appropriate for the going concern basis to be adopted in
preparing these financial statements.
3. Critical accounting judgements and
sources of estimation uncertainty
In applying the Group's accounting
policies, the Directors are required to make judgements, estimates
and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The 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 if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
Critical judgements in applying the Group's accounting
policies
The following are the critical
judgements and estimates that the Directors have made in the
process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in the
financial statements.
Judgements
i. Internally generated
intangible assets research and development expenditure
("R&D")
Critical judgements are required in
determining whether development spend meets the criteria for
capitalisation of such costs as laid out in IAS 38 "Intangible
Assets," in particular whether any future economic benefit will be
derived from the costs and flow to the Group. The Directors believe
that the criteria for capitalisation as per IAS 38 paragraph 57 for
specific projects were met during the period and accordingly all
amounts in relation to the development phase of those projects have
been capitalised as an intangible asset during the period. All
other spend on R&D projects has been recognised within R&D
expenses in the income statement during the period.
Management does not have a formal
timesheet process for monitoring time spent by employees on
projects in their development stage. Instead, management consults
with the relevant project leaders on a regular basis to understand
and estimate the time spent on projects in their development stage.
When a percentage allocation has been agreed, in line with the
estimation process described below, this is then applied to other,
non-employee related development costs to ensure that costs are
consistently and appropriately capitalised. The net book value of
internally generated capitalised assets at 31 December 2023 was
£30.8 million (2022: £29.7 million).
Estimates
Key sources of estimation uncertainty
i.
Inventory
The Group holds inventory across a
number of locations for the purposes of fulfilling sales orders and
contractual obligations. Additionally, certain components of
inventory are held for use within research and development. Net
inventory at 31 December 2023 was £101.5 million (2022: £87.7
million). In line with the requirements of IAS 2 Inventories,
inventory is stated at the lower of cost and net realisable
value.
Management is required to make a
number of estimates around the net realisable value of inventory,
which represents the estimated selling price less all estimated
costs of completion. In cases where the net realisable value is
below cost, management records a provision such that inventory is
held at the lower of cost and net realisable value.
To estimate the inventory
provision, management uses inputs based on the location and status
of inventory held by the Group. This includes the intended use of
the inventory, including whether it is expected to be sold or used
for research and development purposes.
Management makes assumptions around
the net realisable value of each category of inventory. These
estimates are then applied to the inventory balance, based on its
cost, location and intended use, to record a provision in cases
where the net realisable value is below cost.
If the net realisable value had
increased by 5%, then the value of inventory would have increased
by £1.5 million and the revised stock value would have been £103.0
million (2022: £1.2 million and £88.9 million respectively). If the
net realisable value had decreased by 5%, then the value of
inventory would have decreased by £1.5 million and the revised
stock value would have been £100.0 million (2022: £1.2 million and
£86.5 million respectively).
ii. Share-based
payments
In June 2021, awards were granted
to the Executive Directors of the Company under the Oxford Nanopore
Technologies Limited Long Term Incentive Plan 2021 (Founder LTIP).
Half of the awards are subject to a non‑market revenue performance
condition which drives number of awards expected to vest depending
on when certain revenue targets are met. At each reporting date,
management makes an estimate as to the extent to which
the revenue condition is expected to be achieved by the end of
each future reporting period. This is driven by revenue forecasts.
Whilst management may make an appropriate estimate of the annual
revenue target on grant date, this estimate might change in future
periods. If the annual revenue forecast to 31 December 2024
decreased by 10%, the Group recognised total expenses of £35.0
million relating to equity‑settled share‑based payment transactions
would decrease by £2.7 million.
In addition, the Founder LTIP
awards in issue give rise to an associated employer's social
security liability. Management updates the estimate for this
liability at each reporting period with reference to both the
expected number of awards vesting and their expected value, using
the share price at the period end date. Half of the Founder LTIP
awards are linked to a share price condition, which is a
market-based performance condition incorporated into the fair value
calculation and to which no subsequent adjustments can be made from
an IFRS 2 charge perspective. However, management has estimated the
proportion likely to vest for the purposes of assessing the
employer's social security contributions to accrue at each period
end using a Monte Carlo simulation model which calculates the
average expected vesting based on a large number of randomly
generated projections of the Company's future share price. At
31 December 2023, the expected vesting of the share price linked
awards was estimated at 50.8% (2022: 56.3%).
Other sources of estimation uncertainty
iii. Internally generated intangible
assets research and development expenditure
("R&D")
Estimates are made in determining
the capitalisation of costs in relation to the development phase of
R&D projects. Management capitalises development costs in
respect of R&D projects based on an estimate of the percentage
of time spent on the project by employees while the project is in
its development phase. Development costs capitalised in 2023
amounted to £19.5 million (2022: £19.2 million). If the estimated
time spent on these projects had varied by up to 5% then the
development costs capitalised in 2023 would have been in the range
£18.5 million to £20.5 million (2022: £18.2 million to £20.2
million).
iv. Non-standard customer
contracts
As noted in the revenue recognition
accounting policy, revenue contracts for the sale of bundled goods
and services require the allocation of the total contract price to
individual performance obligations based on their stand-alone
selling prices. The Group occasionally enters into larger bespoke
contracts which might include a clause linked to the performance of
the products and options on the total units of certain consumables
to be purchased under the contract. This requires management to
estimate the number of items likely to be delivered under the
contract.
4. Revenue
The Group derives revenue from the
transfer of goods and services over time and at a point in time in
the following categories and geographical regions:
|
|
2023
£000
|
2022
£000
|
|
Geographical region
|
|
|
|
Americas
|
61,542
|
48,300
|
|
EMEAI
|
74,037
|
115,498
|
|
APAC
|
34,089
|
34,805
|
|
Total revenue from contracts with customers
|
169,668
|
198,603
|
|
|
2023
£000
|
2022
£000
|
|
Category
|
|
|
|
Sale of goods
|
141,907
|
177,672
|
|
Rendering of services
|
17,445
|
9,902
|
|
Lease income
|
10,316
|
11,029
|
|
Total revenue from contracts with customers
|
169,668
|
198,603
|
|
|
2023
£000
|
2022
£000
|
|
Timing of revenue recognition
|
|
|
|
At a point in time
|
141,907
|
177,672
|
|
Over time
|
27,761
|
20,931
|
|
Total revenue from contracts with customers
|
169,668
|
198,603
|
Notes 15 and 18 disclose assets and
liabilities the Group has recognised in relation to contracts with
customers.
Revenue recognised in relation to
contract liabilities:
|
|
2023
£000
|
2022
£000
|
|
Revenue recognised that was
included in the contract liability balance at the beginning of the
year
|
15,848
|
17,670
|
5. Segment information
Products and services from which
reportable segments derive their revenues are set out
below.
The information reported to the
Group's senior management team, which is considered the chief
operating decision maker ("CODM"), for the purposes of resource
allocation and assessment of segment performance is defined by
market rather than product type. The segment measure of profit
evaluated by the CODM is Adjusted EBITDA, as this is considered to
give the most appropriate information in respect of profitability
of the individual segments.
The Directors consider that the
Group reportable segments in accordance with IFRS 8 Operating
Segments are as set out below:
|
Reportable segments
|
Description
|
|
Life Science Research Tools
("LSRT")
|
Oxford Nanopore's core business,
generating revenue from providing products and services for
research use, including research and development expenditure and
corporate expenditure.
|
|
Covid Testing
|
Revenue from providing products for
SAR‑Cov‑2 testing. No revenues were expected in this segment after
2022, and none were reported in the current year. We do not expect
this segment to continue after this year's results.
|
The accounting policies of the
reportable segments are the same as the Group's accounting
policies.
(a) Information about major
customers
In the year there were no
individual customers representing more than 10% of the Group's
total revenue. In 2022, the Group had one major customer, the
Department of Health and Social Care ("DHSC"). Revenue from this
customer was £51.8 million, which represented 26.0% of Group
revenue and was reported within the Covid testing
segment.
The following is an analysis of the
Group's revenue, results, assets and liabilities by reportable
segment.
|
|
LSRT
£000
|
Covid
Testing
£000
|
2023
£000
|
LSRT
£000
|
Covid
Testing
£000
|
2022
£000
|
|
Revenue
|
|
|
|
|
|
|
|
Americas
|
61,542
|
-
|
61,542
|
48,300
|
-
|
48,300
|
|
EMEAI
|
74,037
|
-
|
74,037
|
63,710
|
51,788
|
115,498
|
|
APAC
|
34,089
|
-
|
34,089
|
34,805
|
-
|
34,805
|
|
Total revenue
|
169,668
|
-
|
169,668
|
146,815
|
51,788
|
198,603
|
(b) Adjusted EBITDA
|
|
LSRT
£000
|
Covid
Testing
£000
|
2023
£000
|
LSRT
£000
|
Covid
Testing
£000
|
2022
£000
|
|
(Loss)/profit after tax
|
(154,507)
|
-
|
(154,507)
|
(128,824)
|
37,799
|
(91,025)
|
|
Tax expense
|
4,739
|
-
|
4,739
|
7,614
|
-
|
7,614
|
|
Finance income
|
(18,853)
|
-
|
(18,853)
|
(5,941)
|
-
|
(5,941)
|
|
Finance expense
|
1
|
-
|
1
|
221
|
-
|
221
|
|
Interest on lease
|
2,205
|
-
|
2,205
|
1,382
|
25
|
1,407
|
|
Depreciation and
amortisation
|
41,627
|
-
|
41,627
|
31,799
|
72
|
31,871
|
|
Share-based payments (Founder
LTIP)
|
20,886
|
-
|
20,886
|
53,182
|
-
|
53,182
|
|
Employer's social security taxes on
Founder LTIP and pre-IPO share awards
|
(888)
|
-
|
(888)
|
(21,634)
|
-
|
(21,634)
|
|
Gain on sale of property
|
-
|
-
|
-
|
(18,620)
|
-
|
(18,620)
|
|
Settlement of COVID-19 testing
contract
|
-
|
-
|
-
|
-
|
(37,896)
|
(37,896)
|
|
(Write-back)/impairment of
investment in associate
|
(144)
|
-
|
(144)
|
2,193
|
-
|
2,193
|
|
Adjusted EBITDA
|
(104,934)
|
-
|
(104,934)
|
(78,628)
|
-
|
(78,628)
|
Adjusted EBITDA is defined as loss
for the year before income tax expense, finance income, loan
interest, interest on lease, depreciation and amortisation,
adjusted for: i) share-based payment expense on Founder LTIP
awards; ii) employer's social security taxes on Founder LTIP and
pre-IPO share awards; iii) impairment of investment in associate;
iv) gain on sale of property; and v) settlement of the COVID-19
testing contract.
Adjusted EBITDA is used as a key
profit measure because it shows the results of core operations
exclusive of income or charges that are not considered to represent
the underlying operational performance.
(c) Supplementary
information
|
|
LSRT
£000
|
Covid
Testing
£000
|
2023
£000
|
LSRT
£000
|
Covid
Testing
£000
|
2022
£000
|
|
Depreciation of property, plant and
equipment
|
18,105
|
-
|
18,105
|
15,968
|
-
|
15,968
|
|
Depreciation of right‑of‑use
assets
|
5,031
|
-
|
5,031
|
4,403
|
72
|
4,475
|
|
Amortisation of internally
generated intangible assets
|
18,419
|
-
|
18,419
|
11,378
|
-
|
11,378
|
|
Amortisation of acquired intangible
assets
|
72
|
-
|
72
|
50
|
-
|
50
|
|
Additions to non‑current
assets*
|
68,259
|
-
|
68,259
|
57,775
|
-
|
57,775
|
|
|
|
|
|
|
|
|
|
Segment assets
|
|
|
|
|
|
|
|
Investment in associate
|
742
|
-
|
742
|
826
|
-
|
826
|
|
Acquired intangible
assets
|
2,136
|
-
|
2,136
|
346
|
-
|
346
|
|
Other segment
assets**
|
276,213
|
-
|
276,213
|
243,496
|
-
|
243,496
|
|
Total segment assets
|
279,091
|
-
|
279,091
|
244,668
|
-
|
244,668
|
|
Deferred tax assets
|
|
|
5,486
|
|
|
7,681
|
|
R&D tax credit
recoverable
|
|
|
12,819
|
|
|
9,148
|
|
Current tax asset
|
|
|
1,030
|
|
|
-
|
|
Derivative financial
assets
|
|
|
261
|
|
|
2,060
|
|
Other financial assets
|
|
|
257,839
|
|
|
203,555
|
|
Cash and cash
equivalents
|
|
|
220,536
|
|
|
356,778
|
|
Total assets
|
|
|
777,062
|
|
|
823,890
|
|
Segment liabilities
|
|
|
|
|
|
|
|
Total segment
liabilities
|
(133,211)
|
-
|
(133,211)
|
(127,733)
|
-
|
(127,733)
|
|
Derivative financial
liabilities
|
|
|
-
|
|
|
(962)
|
|
Current tax liabilities
|
|
|
-
|
|
|
(1,639)
|
|
Total liabilities
|
|
|
(133,211)
|
|
|
(130,334)
|
|
Net assets
|
|
|
643,851
|
|
|
693,556
|
|
|
|
|
|
|
|
|
|
|
* Additions to non-current
assets include all non-current assets except for investments, and
deferred tax assets.
** Other segment assets
include inventory, trade and other receivables and non-current
assets except for investments, acquired intangible assets, other
financial assets and deferred tax assets.
The Group's non-current assets,
excluding deferred tax assets, by geographical location are
detailed below:
|
|
LSRT
£000
|
Covid
Testing
£000
|
2023
£000
|
LSRT
£000
|
Covid
Testing
£000
|
2022
£000
|
|
Americas
|
13,130
|
-
|
13,130
|
11,255
|
-
|
11,255
|
|
EMEAI
|
310,208
|
-
|
310,208
|
166,572
|
-
|
166,572
|
|
APAC
|
1,055
|
-
|
1,055
|
382
|
-
|
382
|
|
|
324,393
|
-
|
324,393
|
178,209
|
-
|
178,209
|
6. Loss before tax
|
|
2023
£000
|
2022
£000
|
|
This is after charging/(crediting):
|
|
|
|
Non‑staff research and development
costs
|
35,671
|
32,651
|
|
Amortisation of intangible
assets
|
18,491
|
11,428
|
|
Depreciation of property, plant and
equipment
|
18,105
|
15,968
|
|
Depreciation of right‑of‑use
assets
|
5,031
|
4,475
|
|
Loss/(gain) on disposal of
property, plant and equipment
|
3,663
|
(16,740)
|
|
Cost of inventories
|
49,162
|
42,559
|
|
Write‑down of
inventories
|
9,839
|
6,045
|
|
Short-term lease costs
|
928
|
602
|
|
Impairment of intangible
assets
|
-
|
736
|
|
(Write-back)/impairment of
investment in associate
|
(144)
|
2,193
|
|
Net foreign exchange
gain
|
(1,385)
|
(2,490)
|
All amounts relate to continuing
operations.
7. Loss per share
|
|
2023
Pence
|
2022
Pence
|
|
(a) Basic and diluted loss per
share
|
|
|
|
Total basic and diluted loss per
share attributable to the ordinary equity holders of the Group from
continuing operations
|
19
|
11
|
|
|
2023
£000
|
2022
£000
|
|
(b)
Reconciliation of earnings used in calculating earnings per
share
|
|
|
|
Loss attributable to the ordinary
equity holders of the Group used in calculating basic and diluted
loss per share from continuing operations
|
(154,507)
|
(91,025)
|
|
|
2023
Number
|
2022
Number
|
|
(c) Weighted average number of shares
used as the denominator
|
|
|
|
Weighted average number of ordinary
shares and potential ordinary shares used as the denominator in
calculating basic and diluted earnings per share
|
833,960,358
|
823,742,709
|
Options
Options granted to employees under
the Oxford Nanopore Technologies Share Option Scheme and the Oxford
Nanopore Technologies Limited Share Option Plan 2018 are considered
to be potential ordinary shares. These options have not been
included in the determination of the basic and diluted loss per
share as shown above, because they are anti-dilutive for the years
ended 31 December 2023 and 31 December 2022. These options could
potentially dilute basic earnings per share in the
future.
8. Re-presentation and
restatements
(a) Re-presentation of development-related
costs
As amortisation related to
internally generated assets has increased over time, management now
considers that it is more appropriate to present amortisation and
the R&D tax credit within research and development expenses,
rather than as previously presented within selling, general and
administration expenses. The comparative income statement has been
re-presented to be consistent with the current year presentation.
The net effect on the statement of comprehensive income is nil as
shown below:
|
|
2023
£000
|
2022
£000
|
|
Research and development expenses
|
|
|
|
Before re-presentation
|
95,509
|
64,842
|
|
Re-presentation of amortisation and
R&D tax credit
|
8,333
|
4,344
|
|
After re-presentation
|
103,842
|
69,186
|
|
Selling, general and administrative expenses
|
|
|
|
Before re-presentation
|
163,581
|
157,447
|
|
Re-presentation of amortisation and
R&D tax credit
|
(8,333)
|
(4,344)
|
|
After re-presentation
|
155,248
|
153,103
|
|
Total operating expenses
|
|
|
|
Before re-presentation
|
259,090
|
222,289
|
|
After re-presentation
|
259,090
|
222,289
|
(b)
Restatement of current and non-current lease
liabilities
In 2023, the Group identified a
misclassification of £10.9 million of non-current lease liabilities
incorrectly presented as current lease liabilities in the financial
statements for the year ended 31 December 2022. The
misclassification has been corrected by restating the 2022 current
and non-current lease liabilities line items within the 2023
financial statements as shown below. There is no effect on the
total liabilities of the Group.
|
|
2022
£000
|
Increase/(decrease)
£000
|
2022
Restated
£000
|
|
Non‑current liabilities
|
|
|
|
|
Lease liabilities
|
19,049
|
10,993
|
30,042
|
|
Current liabilities
|
|
|
|
|
Lease liabilities
|
15,049
|
(10,993)
|
4,056
|
|
Total liabilities
|
130,334
|
-
|
130,334
|
(c) Restatement of assets subject to
operating leases in operating cash flows
In 2023, the Group identified that
the cash outflows associated with additions to assets subject to
operating leases of £14.4 million had been incorrectly classified
in the cashflow statement within the 2022 financial statements as
cash used within investing activities. Following a review of
relevant accounting requirements, the Group has restated these 2022
cash outflows to be presented as cash used in operations to correct
the presentation in the 2023 financial statements. The presentation
of the cash flow in 2023 is consistent with the restated
presentation. See below for details regarding this restatement of
comparatives. There is no effect on the net cash position or total
cash outflow of the Group.
|
|
2022
£000
|
Increase/(decrease)
£000
|
2022
Restated
£000
|
|
Cash used in operations
|
|
|
|
|
Increase in inventory
|
(24,717)
|
(14,439)
|
(39,156)
|
|
Total cash used in
operations
|
(50,621)
|
(14,439)
|
(65,060)
|
|
Net cash outflow from investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
(23,071)
|
14,439
|
(8,632)
|
|
Total cash outflow from investing
activities
|
(65,794)
|
14,439
|
(51,355)
|
|
Total cash outflow
|
(128,896)
|
-
|
(128,896)
|
9. Other gains and losses
|
|
2023
£000
|
2022
£000
|
|
Gain/(loss) on derivative financial
instruments
|
2,125
|
(5,434)
|
|
Gain on investment bonds
|
153
|
-
|
|
Gain on sale of property
|
-
|
18,620
|
|
|
2,278
|
13,186
|
|
|
2023
£000
|
2022
£000
|
|
Fair value movements on investment
bonds (included in other comprehensive income)
|
4,024
|
936
|
10. Taxation
Income tax recognised in statement of comprehensive
income
Income tax recognised in profit and loss
|
|
2023
£000
|
2022
£000
|
|
Current tax
|
|
|
|
Notional tax on R&D expenditure
credit
|
2,446
|
1,187
|
|
Prior year adjustment in respect of
notional tax on R&D expenditure credit
|
(48)
|
159
|
|
Prior year adjustment in respect of
current tax
|
(822)
|
519
|
|
Tax payable on foreign
subsidiary
|
2,949
|
6,059
|
|
Total current tax
|
4,525
|
7,924
|
|
Deferred tax
|
|
|
|
Origination and reversal of
temporary differences
|
214
|
(310)
|
|
Total deferred tax
|
214
|
(310)
|
|
Total tax
|
4,739
|
7,614
|
Income tax recognised in OCI
|
|
2023
£000
|
2022
£000
|
|
Deferred tax on investment
bonds
|
1,240
|
-
|
|
Total tax
|
1,240
|
-
|
Current tax balances have been
calculated at the rates enacted for the period. The effective rate
of Corporation Tax is -3.16% (2022: -9.13%) of the loss before tax
for the Group.
The reasons for the difference
between the actual tax charge for the year and the standard rate of
Corporation Tax in the United Kingdom applied to losses for the
year are as follows:
|
|
2023
£000
|
2022
£000
|
|
Loss for the year
|
(154,507)
|
(91,025)
|
|
Income tax expense
|
4,739
|
7,614
|
|
Loss before income taxes
|
(149,768)
|
(83,411)
|
|
Tax rate in the UK for period as a
percentage of losses at 23.5% (2022: 19.0%)
|
(35,196)
|
(15,848)
|
|
R&D incentives
|
2,067
|
813
|
|
Adjustment in respect of overseas
tax rates
|
410
|
1,104
|
|
Adjustments to tax charge in
respect of prior year
|
133
|
62
|
|
Impact of share options
|
6,634
|
12,337
|
|
Movement on unrecognised deferred
tax
|
29,775
|
7,845
|
|
Other timing differences
|
(1,160)
|
287
|
|
Expenses not deductible for tax
purposes
|
2,076
|
1,014
|
|
Total tax expense
|
4,739
|
7,614
|
11. Intangible assets
|
|
Capitalised development costs
£000
|
Patents
and licenses
£000
|
Total
£000
|
|
Cost
|
|
|
|
|
At 1 January 2022
|
38,464
|
446
|
38,910
|
|
Additions
|
19,163
|
-
|
19,163
|
|
Foreign exchange
movements
|
36
|
-
|
36
|
|
At
31 December 2022
|
57,663
|
446
|
58,109
|
|
Additions
|
19,522
|
1,862
|
21,384
|
|
Foreign exchange
movements
|
(22)
|
-
|
(22)
|
|
At
31 December 2023
|
77,163
|
2,308
|
79,471
|
|
Accumulated amortisation and impairment
|
|
|
|
|
At 1 January 2022
|
15,856
|
50
|
15,906
|
|
Charge for the year
|
11,378
|
50
|
11,428
|
|
Impairment
|
736
|
-
|
736
|
|
At
31 December 2022
|
27,970
|
100
|
28,070
|
|
Charge for the year
|
18,419
|
72
|
18,491
|
|
At
31 December 2023
|
46,389
|
172
|
46,561
|
|
Net book value
|
|
|
|
|
At 31 December 2022
|
29,693
|
346
|
30,039
|
|
At
31 December 2023
|
30,774
|
2,136
|
32,910
|
Development costs have been
capitalised in accordance with IAS 38 Intangible Assets and are
therefore not treated as a realised loss until recognised as an
amortisation or impairment charge in the statement of comprehensive
income.
12. Property, plant and
equipment
|
|
Land
& Buildings
£000
|
Leasehold
improvements
£000
|
Plant and
machinery
£000
|
Assets
under construction
£000
|
Assets
subject to operating leases
£000
|
Equipment
£000
|
Total
£000
|
|
Cost or valuation
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
15,057
|
8,908
|
19,557
|
1,982
|
30,075
|
13,762
|
89,341
|
|
Additions
|
-
|
350
|
1,249
|
6,897
|
12,627
|
1,985
|
23,108
|
|
Disposals
|
(15,057)
|
(1,607)
|
(317)
|
(691)
|
(3,921)
|
(87)
|
(21,680)
|
|
Transfers between
classes
|
-
|
2,822
|
2,059
|
(5,356)
|
-
|
475
|
-
|
|
Foreign exchange
movements
|
-
|
20
|
49
|
-
|
1,064
|
130
|
1,263
|
|
At
31 December 2022
|
-
|
10,493
|
22,597
|
2,832
|
39,845
|
16,265
|
92,032
|
|
Additions
|
-
|
161
|
679
|
4,828
|
25,600
|
3,583
|
34,851
|
|
Disposals
|
-
|
-
|
(63)
|
-
|
(9,785)
|
(4)
|
(9,852)
|
|
Transfers between
classes
|
-
|
1,106
|
4,982
|
(6,162)
|
-
|
74
|
-
|
|
Foreign exchange
movements
|
-
|
(27)
|
(26)
|
-
|
(902)
|
(88)
|
(1,043)
|
|
At
31 December 2023
|
-
|
11,733
|
28,169
|
1,498
|
54,758
|
19,830
|
115,988
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
At 1 January 2022
|
1,231
|
3,939
|
11,158
|
-
|
15,866
|
9,915
|
42,109
|
|
Charge for the year
|
149
|
1,276
|
3,112
|
-
|
9,086
|
2,345
|
15,968
|
|
Disposals
|
(1,380)
|
(640)
|
(114)
|
-
|
(2,036)
|
(46)
|
(4,216)
|
|
Impairments
|
-
|
28
|
117
|
-
|
-
|
-
|
145
|
|
Foreign exchange
movements
|
-
|
5
|
41
|
-
|
588
|
98
|
732
|
|
At
31 December 2022
|
-
|
4,608
|
14,314
|
-
|
23,504
|
12,312
|
54,738
|
|
Charge for the year
|
-
|
1,609
|
3,477
|
-
|
10,213
|
2,806
|
18,105
|
|
Disposals
|
-
|
-
|
(63)
|
-
|
(6,122)
|
(4)
|
(6,189)
|
|
Foreign exchange
movements
|
-
|
(8)
|
(22)
|
-
|
(462)
|
(64)
|
(556)
|
|
At
31 December 2023
|
-
|
6,209
|
17,706
|
-
|
27,133
|
15,050
|
66,098
|
|
Net book value
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
-
|
5,885
|
8,283
|
2,832
|
16,341
|
3,953
|
37,294
|
|
At
31 December 2023
|
-
|
5,524
|
10,463
|
1,498
|
27,625
|
4,780
|
49,890
|
The Group leases some of its
devices to customers. Lease payments in relation to these devices
are received in full either in advance or on shipping of the
device, meaning that there are no undiscounted future lease
payments expected to be received on these devices.
On 8 July 2022, the Company sold
its interest in the Gosling Building (the "Property") to The Oxford
Science Park (Properties) Limited ("TOSP") for £42.5 million. TOSP
immediately granted to the Company an occupational lease of the
Property for ten years at a rent of £1.8 million per annum (for
which a right-of-use asset and related lease liability were
recognised). Overall, in 2022 the transaction resulted in a
reduction in net property, plant and equipment of £15.6 million,
and a gain on disposal of £18.6 million.
13. Right-of-use assets
|
|
Total
£000
|
|
Cost
|
|
|
At 1 January 2022
|
20,302
|
|
Additions
|
15,504
|
|
Disposals
|
(973)
|
|
Foreign exchange
movements
|
586
|
|
At
31 December 2022
|
35,419
|
|
Additions
|
12,024
|
|
Disposals
|
(1,336)
|
|
Foreign exchange
movements
|
(332)
|
|
At
31 December 2023
|
45,775
|
|
|
|
|
Accumulated depreciation
|
|
|
At 1 January 2022
|
5,615
|
|
Charge for the year
|
4,475
|
|
Disposals
|
(782)
|
|
Foreign exchange
movements
|
205
|
|
At
31 December 2022
|
9,513
|
|
Charge for the year
|
5,031
|
|
Disposals
|
(1,142)
|
|
Foreign exchange
movements
|
(153)
|
|
At
31 December 2023
|
13,249
|
|
|
|
|
Net book value
|
|
|
At 31 December 2022
|
25,906
|
|
At
31 December 2023
|
32,526
|
14. Inventories
|
|
2023
£000
|
2022
£000
|
|
Raw materials
|
50,888
|
41,852
|
|
Work in progress
|
39,154
|
34,960
|
|
Finished goods
|
11,506
|
10,886
|
|
|
101,548
|
87,698
|
The carrying amount of inventories
was not materially different from their replacement
cost.
The cost of inventory recognised as
an expense includes £9.8 million (2022: £6.0 million) in respect of
write-downs of inventory to net realisable value. There were no
reversals of write-downs in either year.
15. Trade and other receivables
|
|
2023
£000
|
2022
£000
|
|
Trade receivables
|
33,626
|
38,097
|
|
Contract assets
|
204
|
3,084
|
|
Accrued income and other
debtors
|
7,750
|
4,724
|
|
Accrued interest income
|
746
|
1,065
|
|
Other taxes
|
6,351
|
5,262
|
|
Prepayments
|
12,798
|
10,673
|
|
|
61,475
|
62,905
|
The ageing of trade receivables and
the loss allowance calculated using the Group's provision matrix
was as follows:
|
|
Not past
due
£000
|
30‑60
days
£000
|
61‑90
days
£000
|
91+
days
£000
|
Total
£000
|
|
At 31 December 2023
|
28,495
|
2,238
|
1,036
|
2,804
|
34,573
|
|
Loss allowance
|
(227)
|
(87)
|
(55)
|
(578)
|
(947)
|
|
|
28,268
|
2,151
|
981
|
2,226
|
33,626
|
|
|
|
|
|
|
|
|
At 31 December 2022
|
28,654
|
3,390
|
2,696
|
5,971
|
40,711
|
|
Loss allowance
|
(930)
|
(262)
|
(315)
|
(1,107)
|
(2,614)
|
|
|
27,724
|
3,128
|
2,381
|
4,864
|
38,097
|
The following table shows the
movement in lifetime Expected Credit Loss that has been recognised
for trade receivables in accordance with the simplified approach
set out in IFRS 9:
|
|
£000
|
|
At 1 January 2022
|
2,955
|
|
Net charges and releases to
statement of comprehensive income
|
(464)
|
|
Foreign exchange
movement
|
123
|
|
At
31 December 2022
|
2,614
|
|
Net charges and releases to
statement of comprehensive income
|
(1,425)
|
|
Foreign exchange
movement
|
(242)
|
|
At
31 December 2023
|
947
|
16. Other financial assets
|
|
2023
£000
|
2022
£000
|
|
Treasury deposits
|
-
|
101,274
|
|
Investment bonds
|
256,534
|
100,898
|
|
Other financial assets
|
1,305
|
1,383
|
|
|
257,839
|
203,555
|
These items were analysed as
follows:
|
|
2023
£000
|
2022
£000
|
|
Current
|
49,514
|
119,411
|
|
Non-current
|
208,325
|
84,144
|
|
|
257,839
|
203,555
|
Investment bonds are classified as
financial assets at fair value through other comprehensive income
(FVOCI).
17. Derivative financial assets and
liabilities
|
|
2023
£000
|
2022
£000
|
|
Derivative financial assets
|
|
|
|
Foreign currency forward
contracts
|
261
|
2,060
|
|
|
261
|
2,060
|
|
Derivative financial liabilities
|
|
|
|
Foreign currency forward
contracts
|
-
|
962
|
|
|
-
|
962
|
18. Trade and other payables
|
|
2023
£000
|
2022
£000
|
|
Trade payables
|
25,184
|
23,103
|
|
Share-based payments
|
504
|
460
|
|
Payroll taxation and social
security
|
4,507
|
2,585
|
|
Accruals
|
33,096
|
33,801
|
|
Contract liabilities
|
15,156
|
20,300
|
|
|
78,447
|
80,249
|
Trade payables and accruals
principally comprise amounts outstanding for trade purchases and
ongoing costs. The average credit period taken for trade purchases
by the Group is 50 days (2022: 59 days).
The Group has financial risk
management policies in place to ensure that all payables are paid
within the pre-agreed credit terms.
The Directors consider that the
carrying amount of trade payables approximates their fair
value.
Contract liabilities primarily
relate to performance obligations on customer contracts which were
not satisfied at 31 December. In 2023 they decreased by £5.1
million (2022: decrease of £1.3 million). Management expects that
most of the transaction price allocated to unsatisfied performance
obligations as at 31 December 2023 will be recognised as revenue
during the following year.
19. Loans and provisions
Provisions
|
|
Dilapidation provisions
£000
|
Employer
taxes
£000
|
Other
£000
|
Total
provisions
£000
|
|
|
|
|
|
|
|
At 31 December 2022
|
2,346
|
10,772
|
160
|
13,278
|
|
Movement in provision for the
year
|
52
|
(168)
|
590
|
474
|
|
Payments
|
-
|
(736)
|
(69)
|
(805)
|
|
Foreign exchange
movements
|
(14)
|
45
|
(10)
|
21
|
|
At
31 December 2023
|
2,384
|
9,913
|
671
|
12,968
|
|
|
|
|
|
|
|
Current
|
-
|
5,759
|
671
|
6,430
|
|
Non‑current
|
2,384
|
4,154
|
-
|
6,538
|
|
At
31 December 2023
|
2,384
|
9,913
|
671
|
12,968
|
|
Current
|
-
|
4,473
|
160
|
4,633
|
|
Non‑current
|
2,346
|
6,299
|
-
|
8,645
|
|
At
31 December 2022
|
2,346
|
10,772
|
160
|
13,278
|
The dilapidation provision relates
to the leased properties, representing an obligation to restore the
premises to their original condition at the time the Group vacates
the related properties. The provision is non-current and expected
to be utilised in between two and 21 years.
Employer's social security taxes
relates to the expected employer's taxes on share-based payments.
This is expected to be utilised between one and ten
years. The provision is based on the best estimate of the
liability, which is reviewed and updated at each reporting period.
The provision is accrued over the vesting period to build up to the
required liability at the point it is ultimately due.
20. Lease liabilities
|
|
2023
£000
|
2022
Restated
*
£000
|
|
Current *
|
4,322
|
4,056
|
|
Non‑current *
|
37,333
|
30,042
|
|
Lease liabilities included in the statement of financial
position
|
41,655
|
34,098
|
|
|
2023
£000
|
2022
£000
|
|
Maturity analysis ‑ contractual undiscounted cash
flows
|
|
|
|
Up to one year
|
6,865
|
6,459
|
|
Two to five years
|
28,057
|
22,996
|
|
Greater than five years
|
21,358
|
17,705
|
|
Total undiscounted lease liabilities at 31
December
|
56,280
|
47,160
|
* See note 8 for details regarding
the restatement of comparatives.
Information on the associated
right-of-use assets is included in note 13.
21. Share-based payment reserve
|
|
2023
£000
|
2022
£000
|
|
At 1 January
|
168,200
|
96,350
|
|
Equity settled share‑based payment
transactions
|
34,995
|
71,165
|
|
Tax in relation to share‑based
payment transactions
|
(96)
|
685
|
|
At
31 December
|
203,099
|
168,200
|
Share-based payment transactions
|
|
2023
£000
|
2022
£000
|
|
Expense arising from share‑based payment
transactions:
|
|
|
|
Included in research &
development expenses
|
5,897
|
6,883
|
|
Included in selling, general &
administrative expenses
|
29,179
|
63,126
|
|
|
35,076
|
70,009
|
|
|
|
|
|
Equity settled share‑based payment
transactions
|
34,995
|
71,165
|
|
Cash settled share‑based payment
transactions
|
81
|
(1,156)
|
|
|
35,076
|
70,009
|
22. Notes to the cash flow
statements
|
|
2023
£000
|
2022
£000
|
|
Cash and cash
equivalents
|
220,536
|
356,778
|
Cash and cash equivalents comprise
cash and short-term bank deposits with an original maturity of
three months or less. The carrying amount of these assets is
approximately equal to their fair value.
|
|
2023
£000
|
2022
£000
|
|
Loss before tax
|
(149,768)
|
(83,411)
|
|
Depreciation on property, plant and
equipment
|
18,105
|
15,968
|
|
Depreciation on right‑of‑use
assets
|
5,031
|
4,475
|
|
Amortisation on intangible
assets
|
18,491
|
11,428
|
|
Loss on disposal of property, plant
and equipment
|
3,854
|
1,880
|
|
Research and development expense
tax credit
|
(10,157)
|
(7,084)
|
|
Foreign exchange
movements
|
(519)
|
5,556
|
|
Interest on leases
|
2,205
|
1,407
|
|
Bank interest income
|
(18,853)
|
(5,941)
|
|
Bank interest expense
|
1
|
221
|
|
Movements on investment
bonds
|
337
|
-
|
|
Movements on derivatives
|
836
|
(1,203)
|
|
(Write-back)/impairment of
investment
|
(144)
|
2,193
|
|
Impairment of operating
assets
|
-
|
1,173
|
|
Share of losses in
associate
|
228
|
238
|
|
Gain on sale of property
|
-
|
(18,620)
|
|
Employee share benefit costs
including employer's social security
taxes
|
34,908
|
48,784
|
|
Operating cash flows before movements in working
capital
|
(95,445)
|
(22,936)
|
|
Increase in receivables
|
118
|
(7,402)
|
|
Increase in inventory and assets
subject to operating leases *
|
(43,060)
|
(39,156)
|
|
Increase in payables
|
1,502
|
4,434
|
|
Cash used in operations
|
(136,885)
|
(65,060)
|
|
R&D tax credit
received
|
4,088
|
10,864
|
|
Foreign tax paid
|
(4,505)
|
(9,630)
|
|
Net cash outflow from operating activities
|
(137,302)
|
(63,826)
|
* See note 8 for details regarding
the restatement of comparatives.
23. Events after the reporting
date
The Group performed a review of
events subsequent to the balance sheet date through to the date the
financial statements were issued and determined that there were no
such events requiring recognition or disclosure in the financial
statements.
24. Controlling party
There is no ultimate controlling
party of the Group as ownership is split between the Company's
shareholders. The most significant shareholders at 31 December 2023
were as follows: IP Group (10%), Tencent Holdings (7%), Baillie
Gifford (7%), bioMérieux SA (7%), G42 (5%) and GIC Asset Management
(5%).
25. Alternative performance
measures
The Group's performance is assessed
using a number of financial measures which are not defined under
IFRS and are which therefore comprise alternative (non-GAAP)
performance measures. These are as follows:
Underlying LSRT revenue growth:
LSRT revenue growth excluding EGP and COVID sequencing revenue - in
order to understand ongoing performance of the core business,
management considers it appropriate to exclude revenues from
contracts that are not expected to recur. We also report underlying
LSRT revenue performance within each of our customer groups and
franchises;
Underlying LSRT revenue growth on a constant currency
basis: LSRT revenue growth excluding
EGP and COVID sequencing revenue, on a constant currency
basis;
Adjusted research and development expenses:
research and development expenses after adjusting
for employer's social security taxes on pre-IPO share
awards;
Adjusted selling, general and administrative
expenses: selling, general and
administrative expenses after adjusting for share-based payments
expense (Founder LTIP) and employer's social security taxes on
Founder LTIP and pre-IPO share awards;
EBITDA: loss for the year
before income tax expense, finance income, loan interest, interest
on lease, depreciation and amortisation;
Adjusted EBITDA: EBITDA
adjusted for: i) share-based payment expense on Founder LTIP
awards; ii) employer's social security taxes on Founder LTIP and
pre-IPO share awards; iii) impairment of investment in associate;
iv) gain on sale of property; and v) settlement of the COVID-19
testing contract; and
Cash and cash equivalents and other liquid
investments: cash and cash
equivalents comprise cash in hand, deposits held at call and
other short-term highly liquid investments with a maturity of three
months or less at the date of acquisition; other liquid investments
comprise investment bonds in which a fixed sum is invested in an
asset-backed fund, and treasury deposits, which comprise deposits
held with banks that do not meet the IAS 7 definition of a cash
equivalent.
The following table presents the
adjusted underlying LSRT revenue growth:
|
|
2023
£000
|
2022
£000
|
|
LSRT Revenue
|
169,668
|
146,815
|
|
Adjusting Items:
|
|
|
|
EGP revenue
|
(11,956)
|
(13,172)
|
|
COVID sequencing revenue
|
(7,966)
|
(26,112)
|
|
Underlying LSRT revenue
|
149,746
|
107,531
|
|
Growth
|
+39.3%
|
+36.4%
|
|
Impact of foreign exchange
|
(140)
|
(5,370)
|
|
Underlying LSRT revenue on a constant currency
basis
|
149,606
|
102,161
|
|
Growth
|
+39.1%
|
+29.6%
|
The following table presents the
adjusted research and development:
|
|
2023
£000
|
2022
£000
|
|
Research and development expenses
|
103,842
|
69,186
|
|
Adjusting Items:
|
|
|
|
Employer's social security taxes on
pre-IPO share awards
|
604
|
9,890
|
|
Adjusted research and development expenses
|
104,446
|
79,076
|
|
Amortisation of capitalised
development costs
|
(18,419)
|
(11,400)
|
|
Capitalised development
costs
|
19,522
|
19,163
|
|
Adjusted R&D expenses and capitalised development
costs
|
105,549
|
86,839
|
The following table presents the
adjusted selling, general and administrative expenses:
|
|
2023
£000
|
2022
£000
|
|
Selling, general and administrative expenses
|
155,248
|
153,103
|
|
Adjusting Items:
|
|
|
|
Share-based payment expense on
Founder Long Term Incentive Plan (LTIP)
|
(20,886)
|
(53,182)
|
|
Employer's social security taxes on
Founder LTIP and pre‑IPO share awards
|
285
|
11,743
|
|
Adjusted selling, general and administrative
expenses
|
134,647
|
111,664
|
The following table presents the
Group's EBITDA and Adjusted EBITDA, together with a reconciliation
to loss for the year:
|
|
2023
£000
|
2022
£000
|
|
Loss for the year
|
(154,507)
|
(91,025)
|
|
Tax expense
|
4,739
|
7,614
|
|
Finance income
|
(18,853)
|
(5,941)
|
|
Interest expense
|
1
|
221
|
|
Interest on lease
|
2,205
|
1,407
|
|
Depreciation and
amortisation
|
41,627
|
31,871
|
|
EBITDA
|
(124,788)
|
(55,853)
|
|
Share-based payments (Founder
LTIP)
|
20,886
|
53,182
|
|
Employer's social security credit
on Founder LTIP and pre‑IPO share‑based awards
|
(888)
|
(21,634)
|
|
Gain on sale of property
|
-
|
(18,620)
|
|
Settlement of COVID-19 testing
contract
|
-
|
(37,896)
|
|
(Write-back)/impairment of
investment in associate
|
(144)
|
2,193
|
|
Adjusted EBITDA
|
(104,934)
|
(78,628)
|
The following table presents cash,
cash equivalents and other liquid investments:
|
|
2023
£000
|
2022
£000
|
|
Cash and cash
equivalents
|
220,536
|
356,778
|
|
Treasury deposits
|
-
|
101,274
|
|
Investment bonds
|
256,534
|
100,898
|
|
Less: fair value movements on
investment bonds
|
(4,960)
|
(936)
|
|
Cash, cash equivalents and other liquid
investments
|
472,110
|
558,014
|