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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