TIDMYGEN
RNS Number : 5115V
Yourgene Health PLC
14 December 2021
Yourgene Health plc
("Yourgene" or the "Company")
Half-year Report
H1 revenues doubled year-on-year
Full year revenues to exceed already upgraded market
expectations
Manchester, UK - 14 December 2021: Yourgene (AIM: YGEN), a
leading integrated technologies and service group enabling the
delivery of genomic medicine , announces its unaudited half-year
report for the six months ended 30 September 2021 ("H1 FY22") .
Unless otherwise stated, comparative data shown is for the
six-month period ended 30 September 2020 ("H1 FY21").
The first half of the financial year saw record performance as
prior investment into clinical service lab capacity started to
deliver a substantial return, with significant growth seen in both
Genomic Technologies and Genomic Services business segments. The
Board is confident that trading for the full year will remain
robust and that full year revenues are therefore likely to exceed
current market expectations, already upgraded previously in
October.
Financial highlights
-- Revenues increased by 113% to GBP17.5m (H1 FY21: GBP8.2m)
with Genomic Services segment up 260% to GBP10.5m and Genomic
Technologies segment up 32% to GBP6.9m
-- Gross profit up 107% to GBP10.2m (H1 FY21: GBP4.9m)
-- General administrative expenses up 55% to GBP8.1m (H1 FY21:
GBP5.2m) including growth-focused expenditures on UK COVID-19
testing, continuation of the NIPT transition to IONA(R) Nx and
expansion of strong US commercial personnel
-- Adjusted EBITDA* of GBP2.1m (H1 FY21: loss of GBP0.3m)
-- Cashflow neutral at operating level (H1 FY21: outflow GBP1.2m)
-- Cash and cash equivalents as at 30 September 2021: GBP4.7m (31 March 2021: GBP7.0m)
Operational highlights
-- IONA(R) Nx moving from transition phase to pipeline expansion
and since year end has been installed as a CE-IVD or technology
transfer in labs in the USA, Mexico, Singapore, Switzerland and
Italy
-- The Illumina-based IONA(R) Nx workflow has experienced
overall good growth but has had to overcome some challenges with
supply chain disruption and extended validation phases due to the
transitions. These issues have now been fully resolved and
confidence in the IONA(R) Nx workflow is stronger than ever.
-- Concerns around COVID's impact on supply chain resulted in
customers carrying additional stock into H1 FY22 normalising for
this affect shows that NIPT is stable through H1 FY22
-- Successful attainment of earn-out milestones for the Coastal
Genomics business acquired in H1 FY21, with $2m equity issued. Over
performance due to contract wins with two US diagnostic majors of
which Labcorp supported digital marketing campaigns with customer
webinar in post-period end
-- Expansion of geographical reach with indirect distribution
channels strengthened in Middle East, Africa and Eastern Europe
-- DPYD chemo-toxicity assay revenues doubled as a result of
strong domestic and international adoption and on track to be a
GBP1m+ pa product
-- COVID-19 testing service scaled significantly in the UK
through a combination of public contracts and direct to consumer
retail channels, generating c. GBP9m revenue, compared to GBP0.4m
in H1 FY21. Public tender contract award in August 2021 for the UK
National Microbiology Framework (COVID-19 testing) which delivered
GBP0.6m revenues in the period, with a further GBP0.6m post period
end. In addition, Clarigene(R) product sales contribute an
additional GBP1.4m in the period (H1 FY21: GBP0.2m)
Post period end:
-- DPYD adoption recommended in November 2021 by experts in
Spain, the fifth such country to recognise the benefits of using a
DPYD genotyping test to help identify cancer patients at risk of
higher toxicity from DPD deficiency
-- Expect to continue provision of COVID-19 testing to all our
existing partners, both public and private until the end of Q4
-- Further contract secured under National Microbiology
Framework for COVID-19 sequencing, details to follow
-- Coastal Genomics, acquired in August 2020, rebranded as
Yourgene Health Canada as part of corporate integration and
embedding the Ranger(R) technology as a core part of the Group's
broadened genomic technologies portfolio
-- Commercial team further enhanced with new appointments in key
regions including LATAM, Singapore and Taiwan
Genomic Services continues to expand the portfolio to include
further tests in reproductive health and DPYD from Genomic
Technologies, strengthening the integration between Technologies
and Services.
Lyn Rees, Chief Executive Officer of Yourgene, commented:
"The strong performance in this first half is a testament to how
we are able to take our core competencies from Genomic Technologies
and Genomic Services offerings and react to market demands. The
first half has seen this result in very substantial growth in
COVID-19 testing where we have quickly mobilised our core lab
services and scaled resources to meet this key need, and we have
the ability to apply these core skills and capacity to other areas
in due course.
"Whilst growth across non-COVID areas of the business is
subdued, we are seeing reassuring signs of a return to growth
across a number of our Genomic Technologies and Genomic Services
portfolios, particularly following growing access for our sales
teams in Europe and North America. We remain confident in the
recovery of non-COVID-19 revenue streams to underpin longer-term
growth prospects.
"It was a great pleasure to again be able to visit the USA and
Canada recently, and I am as optimistic as ever about our prospects
in the North American market. As we fill out our global footprint
into Latin America and refresh our presence in the Middle East and
Asia, we can truly say that Yourgene is now a globally integrated
provider of leading genomic technologies and services."
A presentation on the financial results and business outlook
will be delivered by Lyn Rees, CEO, and Barry Hextall, CFO and via
the Investor Meet Company platform and there will be an opportunity
for investors to submit questions. Investors can sign up to
Investor Meet Company for free and register for the Yourgene Health
meeting via:
https://www.investormeetcompany.com/yourgene-health-plc/register-investor
* Adjusted EBITDA is the operating profit/(loss) before
interest, tax, depreciation, amortisation, and expenses shown
separately disclosed on the face of the Income Statement
This announcement contains inside information for the purposes
of the UK Market Abuse Regulation.
The Directors of the Company take responsibility for this
announcement.
Yourgene Health plc Tel: +44 (0)161 669 8122
Lyn Rees, Chief Executive Officer investors@yourgene-health.com
Barry Hextall, Chief Financial Officer
Joanne Cross, Director of Marketing
Cairn Financial Advisers LLP (NOMAD) Tel: +44 (0)20 7213 0880
Liam Murray / James Caithie / Ludovico
Lazzaretti
Singer Capital Markets (Joint Corporate Tel: +44 (0)20 7496 3000
Broker)
Aubrey Powell / Tom Salvesen / George
Tzimas
Stifel Nicolaus Europe Limited (Joint Tel: +44 (0)20 7710 7600
Corporate Broker)
Nicholas Moore / Matthew Blawat / Ben
Maddison
Walbrook PR Ltd (Media and Investor Tel: +44 (0)20 7933 8780 or yourgene@walbrookpr.com
Relations)
Paul McManus / Lianne Applegarth Mob: 07980 541 893 / 07584 391 303
/ Alice Woodings / 07407 804 654
About Yourgene Health
Yourgene Health is an international molecular diagnostics group
which develops and commercialises integrated genomic technologies
and services enabling genomic medicine in over 60 territories. The
group works in partnership with global leaders in DNA technology to
advance diagnostic science and support precision medicine.
Yourgene primarily develops, manufactures, and commercialises
simple and accurate molecular diagnostic solutions, for
reproductive health, precision medicine and now infectious
diseases. The Group's flagship products include non-invasive
prenatal tests (NIPT) for Down's Syndrome and other genetic
disorders, Cystic Fibrosis screening tests, invasive rapid
aneuploidy tests, and a recent extension into the oncology space
with DPYD genotyping.
Yourgene has a range of innovative DNA sample preparation
platforms, and launched Yourgene Genomic Services in 2020, which
has enabled Yourgene to offer a global laboratory service network
equipped to provide high quality genetic testing and bioinformatics
solutions and serve as a full life-cycle partner for clinical,
research and pharmaceutical organisations to support partners at
the preclinical, clinical, and post-market stages to develop,
manufacture, obtain regulatory approval and commercialise new
products and services. In addition, Yourgene Genomic Services
offers an NIPT and high throughput COVID-19 testing service. These
capabilities [are also being/will begin to be / will be] made
available for Non-COVID health testing.
In August 2020, Yourgene acquired Coastal Genomics , Inc., a
sample preparation technology company based in Vancouver, Canada,
enabling the Company to extend its offering and IP portfolio in the
DNA sample preparation sector. The acquisition increased Yourgene's
geographical penetration into the US and Canada, supplementing
existing coverage in the UK, Europe, MEA and Asia.
Yourgene Health is headquartered in Manchester, UK with offices
in Taipei, Singapore, the US and Canada, and is listed on the
London Stock Exchange's AIM market under the ticker "YGEN". For
more information visit www.yourgene-health.com and follow us on
twitter @Yourgene_Health.
BUSINESS REVIEW
As announced in the October 2021 trading update, the first half
of the financial year has delivered a significant uplift in
revenues to more than double those of the comparative period last
year, with substantial growth in both our Genomic Technologies and
Genomic Services business segments. COVID-19 related products and
services have driven a substantial proportion of this growth and
the funds generated are allowing us to continue to invest in our
broader portfolio of services and products in line with our
longer-term growth strategy, against which we continue to make
progress both in terms of the diversification of our customer offer
and our international footprint.
Strategy
Our strategy remains to build a globally integrated molecular
diagnostics business through the deployment of scientific advances
to enable the delivery of genomic services through Yourgene's own
clinical laboratories in Manchester, UK, Taipei and Taiwan, and the
provision of genomic technologies to laboratory customers across
the world. As shown below, substantial revenue growth has been
driven by sustained UK-based COVID-19 testing as the world attempts
to return to some form of normality. Over time, we expect to
re-deploy the capabilities and capacity acquired from the rapid
scale-up and deployment of COVID-19 related services into genomic
testing in other health areas such as oncology and reproductive
health. This will enable us to capitalise fully on recent
investments and maximise the return from the interplay between our
proprietary technologies and delivered services in the growing
field of molecular diagnostics and other precision medicine
applications.
Unaudited
6 months to Unaudited Audited
Group revenue 30 September 6 months to 12 months to
by territory 2021 30 September 2020 31 Mar 2021
GBP'000 GBP'000 GBP'000
=============== ============== =================== ==============
UK 12,450 1,521 5,440
Europe 2,436 2,877 5,462
International 2,564 3,783 7,386
17,450 8,181 18,288
--------------- -------------- ------------------- --------------
Genomic Services
Launched as Yourgene Genomic Services ("YGS") in September 2020,
the Company has established an international laboratory network
which leverages proprietary and third-party products, automation
and software to process human samples as a full life-cycle partner
for clinical, research and pharmaceutical organisations. YGS now
offers non-invasive prenatal testing ("NIPT"), high throughput
COVID-19 testing services and a range of clinical and research
services to prestigious partner organisations.
COVID-19 testing services in the UK were the major driver of
growth, recording unaudited revenues of GBP9.0m in the first half
(H1 2021: GBP0.4m). Sustained demand has seen testing volumes
steadily increase over the period, with record volumes processed in
September 2021. Whilst travel PCR testing was an early contributor
to growth, market channels have been expanded into non-travel
related testing, particularly through the National Microbiology
Framework with the Department of Health and Social Care plus other
third-party channels.
NIPT services have seen some repositioning towards private
sector clinics as the NHS England national hub strategy has come
into force. Other non-COVID-19 services in the fields of research
and clinical genome testing offered from Yourgene's UK laboratory
also delivered double digit growth and the YGS laboratory in Taiwan
continues to rebound from a challenging FY21.
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
========================== ============== ============== ===========
Genomic Services Revenue
NIPT services 879 969 1,833
Covid-19 services 9,045 392 1,730
Other services 624 1,576 2,819
10,548 2,937 6,382
-------------------------- -------------- -------------- -----------
Genomic Technologies
The Genomic Technologies business stream provides an integrated
portfolio of instruments, reagents, consumables and software, all
aimed at supporting laboratory customers around the world. Flagship
screening and diagnostic products include NIPT, Cystic Fibrosis,
DPYD genotyping and Clarigene(TM) SARS-CoV-2. DNA handling
platforms include the LightBench with Ranger(R) Technology,
acquired as part of Coastal Genomics, for size selection in
cell-free DNA applications such as NIPT, oncology and liquid
biopsy. This capability supports longer sequencing reads and is a
key attraction to customers seeking efficiency and accuracy gains.
The Ranger(R) Technology also provides innovative sample
preparation and removes barriers to and enhances utilisation of
sequencing using Yourgene's Genomic Technologies.
The Company's Clarigene(R) SARS-CoV-2 PCR product to third-party
testing providers contributed revenues of GBP1.4m in the period (H1
FY21: GBP0.2m) after routes to market had been partly established
in the second half of the last financial year.
Non-COVID-19 product and technology sales delivered growth of 9%
to GBP5.5m (H1 FY21: GBP5.0m) with strong growth in the acquired
Ranger(R) technology platform plus a doubling of DPYD revenues,
couple with robust reproductive health PCR revenues more than
offsetting declines in NIPT revenues. These declines were partly
cyclical as a very strong H2 FY22 created an inventory overhang in
countries such as France which then experienced new pandemic waves.
Transitional issues on IONA(R) Nx were also a factor as supply
chain challenges required free of charge reagents and consumed
commercial and aftersales energy which we would have preferred to
have used for installing new workflows. These issues have been
fully diagnosed and the IONA(R) Nx system has a number of
optimisations rolling out in the second half of the financial year
which will give us the high-performance platform to return NIPT to
growth. Indeed, new installations of CE-IVD IONA(R) Nx workflows,
and equivalent technology transfers have been completed in the USA,
Mexico, Singapore, Switzerland and Italy.
Revenues from the differentiated Ranger(R) Technology have
exceeded $1m for the first time in the six-month period, more than
double the equivalent period prior to its acquisition in August
2020 and, before further anticipated inflection points as recently
won new contracts start to go live in the coming months.
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
=============================== ============== ============== ===========
Genomic Technologies Revenue
NIPT 2,570 3,160 5,925
Reproductive health 1,776 1,666 3,602
Covid-19 related 1,413 200 1,437
Ranger and other technologies 1,143 218 942
------------------------------- -------------- -------------- -----------
6,902 5,244 11,906
FINANCIAL REVIEW
The Group's results for the six months to 30 September 2021 are
presented in the financial statements below and show gross profits
having more than doubled to GBP10.2m (H1 FY21: GBP4.9m), on the
back of similar levels of revenue growth.
Gross margins slipped back slightly to 58% (H1 FY21: 60%) due to
increased IONA Nx manufacturing costs arising from a temporary
supplier issue which has since been resolved, and a heavier usage
of third-party consumables in the provision of COVID-19 testing
services to the DHSC.
General administrative expenses increased to GBP8.1m (H1 FY21:
GBP5.2m) with the notes to the accounts providing a breakdown of
some of the more significant items. This breakdown demonstrates
higher operating costs of GBP1.3m incurred in delivering the
revenue uplift from UK-based COVID-19 testing services (H1 FY21:
GBP0.4m) as well as continued investment in future growth drivers
such as a GBP0.3m spend on US market entry (H1 FY21 GBP0.1m),
tail-end spending of GBP0.2m on the Company's flagship NIPT product
transition to the new platform IONA Nx (H1 FY21: GBP0.3m), and
GBP0.1m spent on strengthening business systems (H1 FY21: GBP0.0m).
Debtor provisions of GBP0.3m were primarily a final provision for a
sole debtor as noted in the Company's annual results for FY21,
otherwise receivables are under control at an average of 60 days of
turnover.
Adjusted EBITDA, even after the above increased expenditure
items, was a profit of GBP2.1m (H1 FY21: loss of GBP0.3m). The
Group's operating loss all but reversed to GBP0.2m (H1 FY21: loss
of GBP2.5m) and was at a breakeven position before share-based
payments and residual FY21 acquisition expenses.
Net financing expenses remained low at GBP0.2m (H1 FY21:
GBP0.1m) reflecting the minimal debt position of the Group. The
total comprehensive loss for the period was almost eliminated at
GBP0.1m (H1 FY21: loss of GBP2.5m). Earnings per share were 0.0
pence (H1 FY21: loss of 0.4 pence per share; FY21: loss of 1.8
pence).
In the reporting period, the Group was cash neutral for
operating activities (H1 FY21: GBP1.2m consumed), despite heavy
working capital outflows associated with the rapid increase in
COVID-19 testing services. Investing activities consumed GBP1.9m
(H1 FY21: GBP5.0m) reflecting incremental additions to operational
infrastructure and the crystallisation of earn-outs from the 2020
acquisition of Coastal Genomics Inc. in Canada. Financing
activities technically consumed GBP0.4m on lease repayments under
IFRS 16 (H1 FY21: GBP15.7m net proceeds generated via equity
fundraise).
At the end of the reporting period, the Group had GBP4.7m in
cash and cash equivalents (H1 FY21: GBP12.2m post equity raise).
Borrowings outside IFRS16 lease commitments remain modest and net
cash is GBP4.6m (30 Sept 2019: GBP11.9m). As cash generation and
balance sheet strength improve, and in response to shareholder
feedback at the time of the AGM, the Company is reviewing its
capital structure with a view to accessing manageable debt
facilities where appropriate to fund future growth.
Post period end:
Since the end of September 2021, the Group has maintained H1
revenue run-rates and continued to pursue its non-COVID-19 growth
strategy. The opening up of North American travel has enabled a
recommencement of face-to-face partner visits and closer
collaboration with our Canadian colleagues on their scale-up
journey, both of which are expected to accelerate momentum for the
next financial year. Testing for DPD chemo-toxicity has also been
adopted by the Spanish national healthcare system, which offers the
Group additional traction for its DPYD assay in a market where it
already has established distribution channels.
Outlook
Due to the strong performance in H1 FY22, and despite the
inherent unpredictability of COVID-19 related revenue streams, the
Board is confident that trading for the full year will remain
robust. Having already upgraded guidance in October, the Board
believes that full year revenues are likely to further exceed
current market expectations. However, the exact scale of
out-performance remains difficult to judge at this stage in the
financial year.
For the remainder of the financial year the Company expects to
continue to generate revenues from COVID-19 testing products and
services whilst continuing its strategic focus on building its
non-COVID-19 pipelines for both Genomic Services and Genomic
Technologies segments. A further contract has recently been awarded
to Yourgene under the National Microbiology Framework for COVID-19
sequencing. Outside COVID-19 we have strengthened local commercial
teams across the world and now with travel corridors into Europe
and North America hopefully open for business, we remain confident
in the recovery of non-COVID-19 revenue streams to underpin
longer-term growth prospects.
Lyn Rees, Chief Executive Officer
14 December 2021
Consolidated Statement of Comprehensive
Income
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30-Sep 30-Sep 31-Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Revenue 17,450 8,181 18,288
Cost of sales (7,296) (3,265) (6,912)
Gross profit 10,154 4,916 11,376
Other operating income 41 59 60
Administrative expenses
General administrative expenses (8,096) (5,225) (13,483)
----------------------------------------------------- ---------- ---------- ----------
Adjusted EBITDA 2,099 (250) (2,047)
Depreciation and amortisation (2,095) (1,308) (3,247)
Impairment of goodwill - - (4,789)
Share-based payments expense (118) (453) (952)
Costs associated with the acquisition of
subsidiary - (280) (286)
Acquisition integration expense (17) (219) (388)
Total Depreciation, Amortisation and separately
disclosed items (2,230) (2,260) (9,662)
Operating loss (131) (2,510) (11,709)
Financing income - 1 2
Financing expenses (175) (96) (302)
Profit /(loss) on ordinary activities before
taxation (306) (2,605) (12,009)
Tax credit/(charge) on loss on ordinary
activities 69 47 (175)
Profit/(loss) for the period (237) (2,558) (12,184)
Other comprehensive expense
Exchange translation differences 138 41 (57)
Profit/(loss) and total comprehensive profit/(loss)
for the period (99) (2,517) (12,241)
----------------------------------------------------- ---------- ---------- ----------
Earnings per share pence
Basic: Profit/(loss) 0.0p (0.4p ) (1.8p )
Diluted: Profit/(loss) 0.0p (0.4p ) (1.7p )
Consolidated Statement of Financial Position
Unaudited Unaudited Audited
30-Sep 30-Sep 31-Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Goodwill 9,214 12,987 9,181
Intangible assets 14,083 17,621 14,750
Property, plant and equipment 4,334 3,427 4,109
Right of Use Asset 4,649 3,069 4,209
Tax Asset - 132 -
Deferred tax asset 1,305 1,131 1,145
Total non-current assets 33,585 38,367 33,394
Current assets
Inventories 4,901 1,804 2,897
Trade and other receivables 8,827 5,647 5,333
Tax asset 308 541 507
Cash and cash equivalents 4,674 12,204 6,996
Total current assets 18,710 20,196 15,733
Total assets 52,295 58,563 49,127
----------------------------------------------- ---------- ---------- ---------
Equity and liabilities attributable to equity
holders of the company
Equity
Called up share capital 32,669 32,666 32,668
Share premium account 67,315 67,057 67,260
Merger relief reserve 12,994 14,815 12,970
Reverse acquisition reserve (39,947) (39,947) (39,947)
Foreign exchange translation reserve 72 33 (66)
Other reserves 6,307 3,069 4,914
Retained losses (45,031) (35,600) (44,876)
Total equity 34,379 42,093 32,923
Current liabilities
Trade and other payables 8,592 4,848 5,239
Lease liability 1,175 388 586
Current tax liabilities 495 320 543
Borrowings 42 171 119
Other Liabilities & Provisions - 3,404 2,283
Total current liabilities 10,304 9,131 8,770
Non-current liabilities
Borrowings 81 107 77
Deferred tax liability 2,260 2,849 2,173
Lease Liability 4,043 2,835 4,056
Long term provisions 1,228 1,548 1,128
Total non-current liabilities 7,612 7,339 7,434
Total equity and liabilities 52,295 58,563 49,127
----------------------------------------------- ---------- ---------- ---------
Consolidated Statement of changes in equity
Share Share Merger Other Reverse Foreign Retained Total
capital premium relief reserve acquisition exchange losses
account reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 30
September
2020 (unaudited)
Balance at 1 April 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,298
Loss for the period - - - - - (2,558) (2,558)
Other comprehensive Gain - - - - - 41 41
Total comprehensive loss
for
the period - - - - - 41 (2,558) (2,517)
Transactions with owners
Issue of share capital 104 16,945 17,049
Share issue expenses (1,068) (1,068)
Issue of share capital on
acquisition 1 1,877 1,878
Share-based payments 453 453
Warrants issued - - - - - - - -
Total transactions with
owners 105 15,877 1,877 - - - 453 18,312
Balance at 30 September
2020 32,666 67,057 14,815 3,069 (39,947) 33 (35,600) 42,093
========================== ========= ========= ========= ========= ============= ========== ========= ========
Consolidated Statement of changes in equity
Share Share Merger Other Reverse Foreign Retained Total
capital premium relief reserve acquisition exchange losses
account reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
12 months ended 31 March
2021
(audited)
Balance at 1 April 2020 32,561 51,180 12,938 3,069 (39,947) (8) (33,495) 26,298
Profit for the year - - - - - - (12,183) (12,183)
Other comprehensive loss - - - - - (58) - (58)
Total comprehensive
profit
for the year - - - - - (58) (12,183) (12,241)
Transactions with owners
Issue of share capital 107 17,148 - - - - - 17,255
Share issue expenses - (1,068) - - - - - (1,068)
Issue of share capital
on
acquisition - - 32 - - - - 32
Issue of share options
on
acquisition - - - 1,845 - - - 1,845
Share-based payments - - - - - - 802 802
Warrants issued - - - - - - - -
Total transactions with
owners 107 16,080 32 1,845 - - 802 18,866
Balance at 31 March 2021 32,668 67,260 12,970 4,914 (39,947) (66) (44,876) 32,923
========================= ========= ========= ========= ========= ============= ========== ========= =========
Consolidated Statement of changes in equity
Share Share Merger Other Reverse Foreign Retained Total
capital premium relief reserve acquisition exchange losses
account reserve reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months ended 30
September
2021 (unaudited)
Balance at 1 April 2021 32,668 67,260 12,970 4,914 (39,947) (66) (44,876) 32,923
Loss for the period (237) (237)
Other comprehensive Gain 138 138
Total comprehensive loss
for
the period - - - - - 138 (237) (99)
Transactions with owners
Issue of share capital 1 55 - - - - - 56
Share issue expenses - - - - - - - -
Issue of share capital on
acquisition - - 24 - - - - 24
Issue of share options on
acquisition - - - 1,393 - - - 1,393
Share-based payments - - - - - - 82 82
Warrants issued - - - - - - - -
Total transactions with
owners 1 55 24 1,393 - - 82 1,555
Balance at 30 September
2021 32,669 67,315 12,994 6,307 (39,947) 72 (45,031) 34,379
========================== ========= ========= ========= ========= ============= ========== ========= ========
Consolidation statement of cash
flows
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30-Sep 30-Sep 31-Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit / (loss) for the year before
tax (306) (2,605) (12,009)
Adjustments for:
Finance costs 175 96 302
Finance income - (1) (2)
Depreciation and impairment of property,
plant and equipment 733 414 1,023
Depreciation and impairment of right
of use asset 422 249 698
Amortisation of intangible non-current
assets 940 645 1,526
Impairment of goodwill - - 4,789
Impairment on financial assets (IFRS9) 2 25 (39)
Foreign exchange movements 4 (134) (204)
Share based payment (Options) expense 82 452 802
Decrease in provisions - - (85)
Tax (paid) / received 234 333 296
Movements in working capital:
(Increase)/decrease in inventories (2,004) (435) (1,528)
(Increase)/decrease in trade and
other receivables (3,496) 264 646
Increase/(decrease) in trade and
other payables 3,353 (344) 44
Decrease/(increase) in tax asset (103) (132) (79)
------------------------------------------- ---------- ---------- ----------
Cash generated / (used by) operations 36 (1,173) (3,820)
Investing activities
Purchase of subsidiaries (832) (2,765) (3,637)
Cash acquired on purchase of subsidiaries - 32 32
Purchase of property, plant and
equipment (908) (1,615) (3,004)
Capitalisation of intangible assets (201) (690) (838)
Interest received - 1 2
------------------------------------------- ---------- ---------- ----------
Net cash (used in) investing activities (1,941) (5,037) (7,445)
Financing activities
Net proceeds from issue of shares 56 15,981 16,186
Proceeds from borrowings - 160 160
Repayment of borrowings (78) (247) (321)
(Increase)/decrease in lease liability - - -
Repayment of Lease liability obligations (291) (148) (318)
Interest paid (103) (96) (211)
------------------------------------------- ---------- ---------- ----------
Net cash (used in) / generated from
financing activities (416) 15,650 15,496
------------------------------------------- ---------- ---------- ----------
Net (decrease)/increase in cash
and cash equivalents (2,321) 9,440 4,231
Cash and cash equivalents at beginning
of period 6,995 2,764 2,764
Cash and cash equivalents at end
of period 4,674 12,204 6,995
------------------------------------------- ---------- ---------- ----------
Notes to the interim financial statements
General information
The principal activity of Yourgene Health plc (the "Company")
and its subsidiaries (together, the "Group") is that of a molecular
diagnostics business for the development and commercialisation of
gene analysis techniques for non-invasive prenatal screening,
reproductive health and oncology diagnostics, and the provision of
DNA sequencing services for the early detection, monitoring and
treatment of disease. The Company is incorporated and domiciled in
the United Kingdom. The address of its registered office is
Citylabs 1.0, Nelson Street, Manchester, M13 9NQ. The registered
number is 03971582.
As permitted, this Interim Report has been prepared in
accordance with the AIM rules and not in accordance with IAS 34
"Interim Financial Reporting". The consolidated financial
statements are prepared under the historical cost convention.
This Consolidated Interim Report and the financial information
for the six months ended 30 September 2020 does not constitute full
statutory accounts within the meaning of section 434 of the
Companies Act 2006 and are unaudited. This unaudited Interim Report
was approved by the Board of Directors on 16 December 2020.
The Group's financial statements for the period ended 31 March
2021 have been filed with the Registrar of Companies. The Group
auditor's report on these financial statements was unqualified and
did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
Electronic communications
The Company is not proposing to bulk print and distribute hard
copies of this Interim Report for the six months ended 30 September
2021 unless specifically requested by individual shareholders. The
Board believes that by utilising electronic communication it
delivers savings to the Company in terms of administration,
printing and postage, and environmental benefits through reduced
consumption of paper and inks, as well as speeding up the provision
of information to shareholders.
News updates, Regulatory News and Financial statements can be
viewed and downloaded from the Group's website,
www.yourgene-health.com . Copies can also be requested from; The
Company Secretary, Yourgene Health plc, Citylabs 1.0, Nelson
Street, Manchester, M13 9NQ or by email:
investors@yourgene-health.com .
Accounting policies
Basis of preparation
This financial information has been prepared in accordance with
International Financial Reporting Standards (IFRS), including IFRIC
interpretations issued by the International Accounting Standards
Board (IASB) as adopted by the United Kingdom and in accordance
with the accounting policies which will be adopted in presenting
the Group's Annual Report and Financial Statements for the year
ending 31 March 2022. These are consistent with the accounting
policies used in the Financial Statements for the year ended 31
March 2021.
Going concern
In their assessment of the Group's ability to continue as a
going concern, the Directors have focused on the implications of
the COVID pandemic, underlying organic growth drivers and the cash
profiles of various in-year and prior year asset acquisitions and
business combinations.
The COVID pandemic has suppressed organic growth somewhat and
has also led to the creation of a significant revenue stream of its
own through the provision of COVID testing services in the UK and
sales of the Group's SARS-CoV-2 PCR test in the UK and
internationally. Looking forward as the pandemic hopefully recedes
the Group anticipates a return to organic growth of the existing
business plus the positive long-term benefits of recent
acquisitions, not least that of Coastal Genomics Inc which is an
early-stage cash-consuming business at present but which is a
catalyst for the Group's accelerating penetration of the US
diagnostics market, the largest in the world. For the enlarged
Group the Directors have assessed the market dynamics in which it
operates, the historic and anticipated rate of growth of gross
profits, decisions available to them for management of the cost
base of the Group and the potential for future fundraising.
The Group operates a strategic planning process which has
historically delivered strong progress on its ambitious multi-year
business plan and which has proven resilient and agile in the face
of the COVID pandemic which ran concurrently with the reporting
period.
As described in the 31 March 2021 Annual report, the Group has
been investing heavily in future cashflow drivers as a result of a
successful equity issuance in August 2020. This fundraise enabled
the acquisition of Coastal Genomics Inc and has also facilitated
the significant expansion of the Group's UK laboratory testing
services activities, the underlying business systems and the
Group's laboratory in Taiwan, all of which are designed to drive
cash-generative growth in the years to come. These investments,
coupled with the pandemic headwinds which affected the Group's
traditional customers and inhibited the penetration into new target
markets such as the USA and Japan. Nonetheless, the significant
revenues achieved through COVID-19 testing have allowed the Group
to be cash neutral in its trading operations and only consumed in
investing and financing activities. The Group's forecasts include
assumptions of further growth in revenue, which are key in
achieving positive cash flows. The Directors have also assessed the
Group's cost structure as part of the strategic planning process
and believe that an ongoing scalability programme will enable costs
growth to be contained below gross profit increases.
There remains an ongoing commitment to keep costs and working
capital under control so that increasing gross profits can drive
positive cash flows. Detailed sensitivity analysis has been
performed to assess the potential impact on the Group's liquidity
caused by any continuing delays in revenue growth against expected
levels along with potential mitigating actions which can be taken
to safeguard the Group's cash position. These include working
capital controls and reductions in discretionary spending.
If events transpire differently to this assessment, for example
if revenues fail to grow at the anticipated pace, there could be
lower cash headroom. To mitigate this scenario the existence of
significant share options and warrants are likely to generate
additional funds within the forecast horizon. The Group also has a
successful track record in raising funds from capital markets and
is exploring debt facilities. Taking all the above into account the
Directors believe there is sufficient cash available or accessible
to avoid a cash shortfall.
The Directors have concluded that considering the circumstances
described above and mitigation strategies in place, the Directors
have a reasonable expectation that the Group and Company will have
adequate resources to continue in operational existence for the
foreseeable future. For these reasons, they continue to adopt the
going concern basis in preparing these interim financial
statements.
Revenues
Revenue analysed by geographical
region.
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
================================== ============== ============== ===========
UK 12,450 1,521 5,440
Europe 2,436 2,877 5,462
International 2,564 3,783 7,386
17,450 8,181 18,288
---------------------------------- -------------- -------------- -----------
Revenue analysed by operating segment.
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30 September 30 September 31 Mar
2021 2020 2021
GBP'000 GBP'000 GBP'000
======================================== ============== ============== ===========
Genomic Services
NIPT services 879 969 1,833
Covid-19 services 9,045 392 1,730
Other services 624 1,576 2,819
10,548 2,937 6,382
---------------------------------------- -------------- -------------- -----------
Genomic Technologies
NIPT 2,570 3,160 5,925
Reproductive health 1,776 1,666 3,602
Covid-19 related 1,413 200 1,437
Other technologies 1,143 218 942
---------------------------------------- -------------- -------------- -----------
6,902 5,244 11,906
17,450 8,181 18,288
---------------------------------------- -------------- -------------- -----------
Operating profit / (loss) by segment
Unaudited 6 months to Unaudited 6 months to Audited 12 months to
30 September 2021 30 September 2020 31 Mar 2021
----------------------------------------------- -------------------------------------------- ----------------------------------------------
Genomic Genomic Central Total Genomic Genomic Central Total Genomic Genomic Central Total
Technologies Services Technologies Services Technologies Services
GBP GBP GBP GBP GBP GBP GBP GBP GBP
-------------- ------------- --------- -------- ----------- ------------- --------- -------- -------- ------------- --------- --------- ---------
Revenues 6,902 10,548 - 17,450 5,244 2,937 - 8,181 11,906 6,382 - 18,288
Cost of Sales (3,273) (3,867) - (7,140) (1,816) (1,449) - (3,265) (4,690) (2,222) - (6,912)
--------------- ------------- --------- -------- ----------- ------------- --------- -------- -------- ------------- --------- --------- ---------
Gross Profit 3,629 6,681 - 10,310 3,428 1,488 - 4,916 7,216 4,160 - 11,376
Other
operating
income - - 41 41.00 - - 59 59 - - 60 60
Segmental
expense (1,716) (1,654) - (3,370.00) (1,016) (759) - (1,775) (5,339) (3,400) - (8,739)
Central
overhead - - (4,882) (4,882.00) - - (3,448) (3,448) - - (4,745) (4,745)
--------------- ------------- --------- -------- ----------- ------------- --------- -------- -------- ------------- --------- --------- ---------
Adjusted
EBITDA 1,913 5,027 (4,841) 2,099 2,412 729 (3,389) (248) 1,877 760 (4,685) (2,048)
Depreciation
and
amortisation - - (2,095) (2,095) - (1,309) (1,309) - - (3,247) (3,247)
Goodwill
impairment - - - - - - - - - - (4,788) (4,788)
Share-based
payments
expense - - (118) (118) - - (453) (453) - - (952) (952)
Costs
associated
with
subsidiary
acquisition - - - - - - (280) (280) - - (286) (286)
Acquisition
integration
expense - - (17) (17) - - (220) (220) - - (388) (388)
Operating
Profit /
(Loss) 1,913 5,027 (7,071) (131) 2,412 729 (5,651) (2,510) 1,877 760 (14,346) (11,709)
--------------- ------------- --------- -------- ----------- ------------- --------- -------- -------- ------------- --------- --------- ---------
Operating loss for the period is stated after
charging / (crediting)
Unaudited Unaudited Audited
6 months 6 months 12 months
to to to
30-Sep 30-Sep 31-Mar
2021 2020 2021
GBP000 GBP000 GBP000
Research and development costs excluding
salaries 123 192 406
Research and development tax credit (103) (133) (78)
Debtor provisions, impairment, and
bad debts 299 58 639
Iona NX transition expense 170 281 767
Cloud ERP Services and Implementation
costs 145 - 397
Genomic services UK cost 1,347 439 1,181
US market entry expense 329 64 316
Depreciation of property, plant, and
equipment 733 414 1,023
Depreciation of right of use assets 422 249 698
Amortisation of intangible assets 940 645 1,526
Share-based payments (Options & SIP)
expense 118 453 952
Taxation
Taxes on income in the interim periods are accrued using the
rate of tax that would be applicable to expected total annual
earnings.
The research and development tax credit of GBP103k (30 Sept
2020: GBP133k; 31 March 2021: GBP78k) is shown as a deduction
against general administrative expenses.
Deferred tax liability of GBP2,260k (30 Sept 2020: GBP2,849k; 31
March 2021: GBP2,173k) is recognised in respect of the intangible
fixed assets acquired in business combinations in March 2017, April
2019, and August 2020. The UK rate of Corporation tax to 25%
(effective from 1 April 2023) was substantively enacted on 24 May
2021, as such any timing differences expected to reverse on or
after 1 April 2023 have been recognised at the higher rate of 25%.
This resulted in an increase to the deferred tax liabilities of
GBP196k.
A deferred tax asset of GBP968k (30 Sept 2020: GBP1,064k; 31
March 2021 GBP823k) has been recognised to offset the deferred tax
liability arising on the acquisition of Delta Diagnostics UK Ltd in
April 2019 which should be available to be sheltered by those
losses. Further recognition in future reporting periods is subject
to the extent that future taxable profits will be sufficient to
utilise the losses, in accordance with current and expected future
UK tax rates.
Earnings/Loss per share
Basic
Basic loss per share is calculated by dividing the loss for the
period of GBP237k (30 Sept 2020: loss GBP2,588k; 31 March 2021:
loss GBP12,184k) by the weighted average number of ordinary shares
in issue during the period 723,439,822 (30 Sept 2020: 650,842,212;
31 March 2021: 685,643,605).
Diluted
Diluted earnings per share dilute the basic earnings per share
to take into account share options and warrants. The calculation
includes the weighted average number of ordinary shares that would
have been issued on the conversion of all the dilutive share
options and warrants into ordinary shares. The adjusted weighted
average number of ordinary shares used to calculate diluted
earnings / loss per share is 754,536,235 (30 Sept 2020:
681,646,876; 31 March 2021: 726,355,871).
28,439,443 options and warrants (30 Sept 2019: 26,759,443; 31
March 2021: 28,159,443) have been excluded from this calculation as
the effect would be anti-dilutive.
Acquisitions of Subsidiaries
Acquisition of Coastal Genomics Inc
During the period two further elements of consideration of
US$1.0m each were paid in April and August 2020 for early strategic
customer wins, payable in Yourgene Health Canada Investment Ltd
("YGEN-HCIL") shares, exchangeable for shares in Yourgene Health
Plc, and subject to lock-up periods of 12 months except for
specific circumstances.
Further consideration is payable under the terms of the
acquisition as follows:
-- cash consideration of US$2.0m should Coastal Genomics
generate revenues of at least US$4.0m for the year ended 31 March
2022, which would become payable in April 2022, or rolled over into
the year ended 31 March 2023; and
-- contingent cash consideration of US$4.0m should Coastal
Genomics generate revenues of at least US$8.5m in the financial
year to 31 March 2023, which would become payable in April 2023.
The Group has deemed this a stretch target which was not included
in the fair value assessment at acquisition, which is based on more
cautious cashflows than would trigger this stretch target payment.
This consideration will either be earned or not and there is no
contractual provision for partial payment. As such, this amount is
disclosed as a contingent liability.
Acquisition of Yourgene Health SAS (formerly AGX-DPNI SAS)
In April 2021 the Company paid the final performance payment
(earn-out) of EUR977,500 to the former shareholders of AGX-DPNI
SAS, a French distribution company acquired on 9 March 2020. The
performance payment was based on sales volumes achieved in the
French market. There are no further remaining performance payments
outstanding on the acquisition of AGX-DPNI SAS.
Share capital
During the period the company announced the issue of the
following in consideration for the acquisition of Coastal Genomics
Inc:
-- On 12 April 2021
o 81,899 new ordinary shares
o 4,696,065 new shares in the wholly owned subsidiary Yourgene
Health Canada Investments Ltd. These YGEN-HCIL shares are
exchangeable on a one-for-one basis with the Company's ordinary
shares, subject to certain lock-in provisions over the next one to
six years.
-- On 11 August 2021
o 85,124 new ordinary shares
o 4,880,971 new shares in the wholly owned subsidiary Yourgene
Health Canada Investments Ltd. These YGEN-HCIL shares are
exchangeable on a one-for-one basis with the Company's ordinary
shares, subject to certain lock-in provisions over the next one to
six years.
On 17 June 2021 the Company announced the exercise of the
following options:
-- Options over 150,000 ordinary shares at a price of 10.25 pence, with proceeds of GBP15k
-- Options over 400,000 ordinary shares at a price of 10 pence, with proceeds of GBP40k
Total shares in issue after these transactions is 723,780,306
ordinary shares at the end of the reporting period and at the date
of this report.
In addition, as a result of the issuance of the YGEN-HCIL shares
detailed above there are now a total of 19,826,660 unlisted
YGEN-HCIL shares issued which are exchangeable on a one-for-one
basis for the Company's shares as described above.
As at 30 September 2021 there are 59,459,232 outstanding
options, of which 48,685,893 are exercisable. During the six month
period to 30 September 2021; 550,000 options were exercised,
1,160,000 new options were options issued, and 2,410,000 options
were forfeited.
Contingent liabilities
The Company has two contingent liabilities. The first arose as
part of a February 2019 capital restructure which created a GBP6.5
million liability, payable to Thermo Fisher only in the event of a
sale of the Company or an insolvency event before February 2022.
The second arose upon the August 2020 acquisition of Coastal
Genomics Inc. The consideration for the acquisition of Coastal
Genomics included performance-based earn-out payments, the last of
which is a US$ 4 million payment in the event of the acquired
company achieving stretch target revenues of US$ 8.5 million in
financial year 2022-23. This final payment is not included in the
fair valuation of the acquired company which is based on more
conservative cashflows than would trigger this final earn-out
payment, and it is therefore regarded as a contingent
liability.
Events after the reporting period
For the purposes of the financial statements there have been no
material events after the reporting period end and the business has
continued to trade at run-rates consistent with those it achieved
in the first six months of the financial year.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions security holders and prospective security
holders not to place undue reliance on these forward-looking
statements, which reflect the view of the Company only as of the
date of this announcement. The forward-looking statements made in
this announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
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