TIDMNCYT
RNS Number : 4745X
Novacyt S.A.
30 April 2019
NOVACYT FULL YEAR 2018 RESULTS
Paris, France and Camberley, UK - 30 April 2019 - Novacyt
(EURONEXT GROWTH: ALNOV; AIM: NCYT), an international specialist in
clinical diagnostics, today announces its audited financial results
for the year ended 31 December 2018 and restated financial results
for the year ended 31 December 2017 following the impact of the
discontinuing operations of NOVAprep(R).
In 2018, Novacyt delivered material financial and operational
progress as it focused on integrating the Omega Infectious Diseases
business unit ("Omega ID") acquired in June 2018 and undertook a
strategic review resulting in the decision to sell the NOVAprep(R)
business unit. Novacyt took the decision to focus on its core and
more profitable reagent diagnostic product development
manufacturing units of Primerdesign and Lab21. This core continuing
business of Novacyt delivered sales growth of 9% at CER, improved
gross margin 63% (FY17: 62%) and adjusted EBITDA profitability for
both FY2017 and FY2018, with the NOVAprep(R) business unit
eliminated from the operating results for continuing operations,
under the provisions of IFRS 5.
Financial and recent highlights
-- Decision taken during the year to exit the NOVAprep(R)
business unit to allow the Group to focus on diagnostic reagent
product development, commercialisation, contract design and
manufacturing
-- Delivered full year adjusted EBITDA for FY18 of EUR0.6
million with adjusted EBITDA of EUR0.9 million in 2017(1) ,
demonstrating the underlying financial strength of the continuing
operations of Novacyt
o The reduction in adjusted EBITDA reflects investment in
commercial and manufacturing capacity, including two new
manufacturing facilities, as well as the additional costs of being
dual listed on Euronext and AIM markets
-- Group consolidated revenue increased by 8% (9% at CER) to
EUR13.7m (GBP12.1m) compared with EUR12.7m (GBP11.2m) in 2017
o Sales momentum continued in H2 2018, up 7% year-on-year to
EUR7.3m and up 13% on H1 2018
o Excluding the acquisition of Omega ID, pro forma growth for
the year was 1% CER
-- Group gross margin increased to 63% in 2018 from 62% in 2017
driven by product mix, sales volumes and cost of sales improvements
within Primerdesign
o Primerdesign's gross margin grew 3% year-on-year to 84%
-- Following the successful acquisition in late June 2018 of
Omega ID, Novacyt has almost tripled Omega ID's adjusted EBITDA
margin to 28%
-- Novacyt ended the year with EUR1.1m (GBP1.0m) in cash
Note: 1) All references to 2017 results within this release are
to the restated position under IFRS 5, unless otherwise stated
EUR'000 2018 2017 2016
Consol Consol* Consol
Revenue 13,721 12,749 11,076
Gross profit 8,604 7,909 6,080
Gross margin % 63% 62% 55%
Adjusted EBITDA ** 579 902 (2,295)
Recurring operating (loss)/profit
*** (425) 62 (3,074)
Operating loss (1,385) (2,119) (4,461)
Loss after tax (2,112) (3,491) (5,710)
Loss from discontinued operations (2,626) (1,951) -
Loss after tax attributable to
the owners (4,738) (5,442) (5,710)
---------
* 2017 Consolidated results have been restated as per IFRS 5
rules, with the discontinuing operations results now below the
operating result
** Adjusted EBITDA is the recurring operating result adjusted
for amortisation, depreciation and long-term employee incentive
plan (LTIP)
*** Recurring operating result is stated before EUR1.0m of
exceptional charges as follows:
-- Acquisition & Business sale related expenses of EUR0.5m charged to the income statement
-- Other non-recurring costs totalling EUR0.3m, including IPO
listing costs & French legal costs
-- Group employee restructuring costs of EUR0.2m
The loss after tax attributable to the owners is stated after
the loss attributable to the discontinuing operations of
NOVAprep(R). While NOVAprep(R) is being held for sale, it is
expected to remain loss making, but materially reduced compared to
2018 due to careful management of operational costs with a view to
keeping cash outflows to a minimum.
Divisional revenues
-- Primerdesign sales increased to EUR6.2m (GBP5.5m), up 2% (3% CER) in 2018
o Revenue growth in the core molecular business was strong at
over EUR0.5m (GBP0.5m) or 11%, which was offset by reduced business
to business ("B2B") sales as a result of a large one-off sale to
China in late 2017 of over $1m (GBP0.9m)
-- Lab21 revenues were EUR7.5m (GBP6.6m), up 14% on 2017 at CER,
mainly reflecting the acquisition of Omega ID which accounted for
13% of the 14% year-on-year growth. Lab21 has EUR1.0m of confirmed
tender orders received at the end of 2018 which will now be
completed in 2019.
-- On 2 August 2018 the Board announced that it had placed the
NOVAprep(R) business under a strategic review. Subsequently, on 11
December 2018 the Board announced the decision to sell the
NOVAprep(R) business unit due the material investment required in
this early stage business at odds with the other more mature
businesses within the Group. The planned divestment for the
NOVAprep(R) business unit continues to make progress and a further
update is expected later in the quarter or as soon as a binding
position has been established with a buyer
-- As part of the strategic review of Novacyt it was also
decided to sell the Clinical Lab business based in Cambridge as it
is now considered non-core. Solid progress is being made in the
sale of this business and management expect to update the market by
the end of Q2 2019
Operational highlights
-- Primerdesign completed a substantial q16 molecular instrument
order, expanding the Group's clinical diagnostic reach in the
fast-growing Chinese market
-- New molecular CE Mark genesig(R) BKV Kit and genesig(R) EBV
Kit assays were developed expanding the Group's clinical diagnostic
menu
-- Exclusive supply agreement signed by Primerdesign with
US-based full-service diagnostic laboratory Genesis Diagnostics
worth a minimum $3.0m over five years
-- Recently completed the rapid development of an African Swine
Flu assay to help address the current swine flu food supply-chain
limitations in China, Vietnam and certain European countries
Post Balance Sheet Funding Event
On the 23 April 2019, the Company entered into a Convertible
Bond Financing, for up to EUR5.0 million (net of expenses) (the
"Agreement") with Park Partners GP and Negma Group LTD (together
the "Investment Managers"). Under the terms of the Agreement, the
Company will be able to access capital in seven tranches which
oblige the Investment Managers to immediately subscribe for an
initial tranche of EUR2.0 million, followed by six further
tranches, each of an aggregate nominal value of EUR500,000,
drawable at the Company's option subject to certain terms and
conditions. The Company has immediately exercised its right to the
initial tranche of funding giving rise to the subscription of
EUR2.0 million of convertible bonds with warrants by the Investment
Managers. The remaining EUR3.0 million of convertible bonds can be
issued by the Company over the next 36 months following the signing
of the Agreement.
The EUR5.0m convertible bond financing facility with the
immediate draw down of EUR2.0m was a factor in preparing the
audited financial statements on a going concern basis, while
emphasising that certain conditions attached to the draw down of
further tranches could place uncertainty on this principal as
discussed later in this release.
Current Trading and Outlook
The first quarter of 2019 has started well operationally, with
sales meeting management expectations and continuing strong
double-digit growth from 2018.
However, sales are expected to temporarily slow during Q2 due to
the availability of stock, which has been directly impacted by lack
of working capital prior to execution of the Agreement and
associated capital draw down. Nonetheless, the outlook for the full
year continues to be very encouraging, with the full impact of the
acquisition of Omega ID and the visibility from the current sales
pipeline also looking strong. Overall, the Company's financial
performance is meeting management expectations.
Following completion of the Convertible Bond Financing, the
Company has cash and cash equivalents of approximately EUR2.4
million as at 29 April 2019, being the latest practicable date
ahead of this announcement.
Graham Mullis, Group CEO of Novacyt, commented:
"The Group made good operational progress over the course of
2018, continuing its growth trajectory and R&D development.
During this period we took the difficult decision to exit the
NOVAprep(R) business unit as we believe greater long-term value for
our shareholders can be realised by focusing our resources on
reagent development and manufacturing.
We remain committed to our three strategic growth pillars with
the delivery of strong organic sales growth from Primerdesign and
Lab21 and the recent launch of our CE-Mark approved molecular
products, the genesig(R) BKV Kit and genesig(R) EBV Kit.
"We have begun to see the full benefit from the acquisition of
the Infectious Disease Business from Omega Diagnostics Plc., which,
has contributed to EBITDA profitability in the first six months of
ownership and further significant synergies in respect of sales
channels, overheads and direct costs are anticipated.
"The Group, on a continued operations basis, is now EBITDA
profitable and we aim to build on the operational progress made in
2018 to continue to deliver double-digit revenue growth from this
base, further increase margins with the medium target to become
self-sustainable on a free cash-flow basis and look at the
potential for further acquisitions.
"On 23 April 2019 we announced the completion of an up to
EUR5.0m financing facility which will enable management to drive
the business forward knowing there is sufficient working capital to
support growth. The business has started well operationally in 2019
and, with the new financing now in place, management can fully
focus on the business which we expect to see the benefit of in the
second half of the year."
The information included in this announcement is extracted from
the Annual Report. Defined terms used in the announcement refer to
terms as defined in the Annual Report unless the context otherwise
requires. This announcement should be read in conjunction with, and
is not a substitute for, the full Annual Report. The information
contained within this announcement is deemed to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014. Upon the publication of this announcement, this
inside information is now considered to be in the public domain
- End -
Contacts
Novacyt SA
Graham Mullis, Chief Executive Officer
Anthony Dyer, Chief Financial Officer
+44 (0)1223 395472
Stifel Nicolaus Europe Limited (Nominated Advisor and Joint
Broker)
Jonathan Senior / Fred Walsh / Ben Maddison
+44 (0)20 7610 7600
WG Partners (Joint Broker)
Nigel Birks / Chris Lee / Claes Spång
+44 (0)203 705 9330
FTI Consulting (International)
Brett Pollard / Victoria Foster Mitchell / Mary Whittow
+44 (0)20 3727 1000
brett.pollard@fticonsulting.com/victoria.fostermitchell@fticonsulting.com/
Mary.whittow@fticonsulting.com
FTI Consulting (France)
Arnaud de Cheffontaines / Astrid Villette
+33 (0)147 03 69 47 / +33 (0)147 03 69 51
arnaud.decheffontaines@fticonsulting.com /
astrid.villette@fticonsulting.com
About Novacyt Group
The Novacyt Group is a rapidly growing, international
diagnostics business generating an increasing portfolio of in vitro
and molecular diagnostic tests. Its core strengths lie in
diagnostics product development, commercialisation, contract design
and manufacturing. The Company's lead business units comprise of
Primerdesign and Lab21 Products, supplying an extensive range of
high quality assays and reagents worldwide. The Group directly
serves oncology, microbiology, haematology and serology markets as
do its global partners, which include major corporates.
For more information please refer to the website:
www.novacyt.com
CHIEF EXECUTIVE OFFICER'S REVIEW
Overview
Novacyt has achieved the major milestone of adjusted EBITDA
profitability within its continuing operations for both FY2018 and
the restated results of FY2017, following its announced intention
to divest the non-core NOVAprep(R) business unit. This reinforces
the financial strength of its core, continuing reagent
manufacturing businesses: Primerdesign (molecular diagnostics) and
Lab21 Products (protein diagnostics). In the current challenging
financial markets, we believe this places Novacyt into a strong
competitive position as an adjusted EBITDA profitable, technology
focused, high growth diagnostics company.
During 2018, Novacyt commenced a strategic review to explore
ways to maximise the future value of certain non-core assets within
the Group. A decision was reached to sell the NOVAprep(R) and Lab21
Clinical Lab businesses: processes which remain ongoing. The
continuing businesses within the Group are, therefore, focused on
the development, manufacture, sales and distribution of diagnostic
reagents used in infectious disease markets. The decision to move
away from large instrumentation means Novacyt can capitalise on its
core expertise in reagents and continue to drive stronger, premium
margins.
The Group has been reorganised internally from a divisional to a
centralised structure, enabling us to align the organisation to
create greater integration and synergies across each of the core
business units during 2019 and beyond, to further enhance financial
performance. I would like to extend my thanks and appreciation to
colleagues involved in these changes who have shown continued
commitment and support for the Novacyt business with some
outstanding leadership from the executive management team.
Novacyt remains committed to its growth strategy based on the
three strategic pillars of organic growth, acquisitive growth and
growth from new product development.
Organic Growth
The core reagent products are based on molecular and protein
diagnostic technologies and the Group's extensive product menu
generates sales from clinical testing, food testing and animal
testing diagnostics. The Group will continue to invest in
commercial infrastructure for its clinical and food sales channels
and will look for a strategic partner in the animal testing
market.
The molecular products business provides the Group's most
significant growth opportunity which continues to develop following
the successful acquisition of Primerdesign. In 2018, molecular
sales increased to EUR6.2m (GBP5.5m), up 3% (CER) year-on-year,
with revenue growth in the core international business strong at
over EUR0.5m (GBP0.5m) or 11%. Total molecular sales growth in 2017
was positively impacted by a large one-off sale to China in excess
of $1m (GBP0.9m). Excluding this one off sale in 2017 would have
resulted in a year-on-year growth of over 20% for the Primerdesign
business in 2018. In 2019, further investment is planned to expand
the Group's direct sales channel.
Lab21 revenues in the year were EUR7.5m (GBP6.6m), an increase
of 14% on 2017 at CER, with growth being driven by the acquisition
of Omega ID.
Acquisitive Growth
The Company has always been clear that significant opportunities
exist in the diagnostics market to acquire new high growth products
and accelerate financial performance with attractive and accretive
M&A. The Company has been able to demonstrate this during the
past five years through the acquisitions of Lab21, Primerdesign and
Omega ID as it has significantly increased sales from EUR1.2m to
EUR13.7m and turned losses into EBITDA profitability. With
attractive buying multiples and the Group's demonstrated ability to
integrate assets successfully, acquisitions are expected to
continue be significantly accretive to sales growth, gross margins
and earnings.
In May 2018, the Company successfully raised EUR4.0 million
through bonds to fund the acquisition of the profitable Omega ID
business which helped the Group accelerate its EBITDA profitability
during the second half of 2018 and give the Group greater access to
certain key markets to help create operational synergies. During
the first six months of integrating the business assets, Novacyt
was able to generate an EBITDA margin of 28% from this acquisition,
which has almost tripled its underlying EBITDA margin due to
manufacturing and overhead cost savings. This level of performance
is expected to continue into 2019 where the full year benefit of
the acquisition will be seen.
While the financial markets remain uncertain, Novacyt has no
current immediate plans for further acquisitions but will continue
to monitor and assess opportunities that have the potential to
benefit the Group.
R&D
During 2018, a number of significant B2B opportunities were
secured and new products and further CE-IVD marked molecular
diagnostic kits were launched. This reflects the Group's commitment
to our core strengths of in-vitro diagnostics product development,
commercialisation and contract manufacturing as we focus on our
molecular and protein reagent manufacturing business units
Primerdesign and Lab21 Products.
A key target is to expand our clinical molecular menu following
the launch in 2018 of two new molecular CE Mark assays (BKV and
EBV), with three additional complementary molecular assays for
immunosuppressed patients set to be launched in 2019.
During the year, significant operational development of the qPCR
instrument, the q16 was made, allowing Novacyt to reduce test cycle
times further from 120 minutes to for some assays down to 45
minutes which the Company believes is class-leading. Further
developments are planned in 2019 with the launch of the
next-generation and larger qPCR instrument: the q32. In addition,
Primerdesign has just launched the newly developed African Swine
Flu assay where significant demand is currently experienced in
China, Vietnam and some Eastern European countries, again showing
how responsive its development capabilities are to market
demands.
Graham Mullis
Chief Executive Officer
Novacyt S.A.
FINANCIAL REVIEW
Overview
During the year, Novacyt continued to grow revenue and gross
margin and the steps we took to refocus the business helped us
deliver EBITDA profitability. It has also been an important year in
which the Group has completed its first full year as a dual-listed
AIM and Euronext Growth Paris company. We have set ourselves an
objective of continuing to drive high sales growth, improve the
gross margin whilst balancing ongoing investment with sustained
EBITDA profitability goals and ultimately deliver free cash flow
generation.
Following the issuance of a bond to finance the acquisition of
the Infectious Disease business of Omega Diagnostics, which has
increased Group borrowings, Novacyt has continued to reduce the
level of indebtedness of the Company through debt repayments of
EUR3.2m during the year including EUR0.6m of interest.
On 23 April 2019, Novacyt entered into the convertible bond
Agreement with an immediate investment of EUR2.0 million. The
initial EUR2.0 million of funding, will be used primarily for
general working capital purposes and support the planned growth of
the business in the short and medium term. The full facility
funding, if drawn down would also be used to further service
outstanding debt and earn out obligations. Ultimately, the
Directors believe that the full facility funding would support
Novacyt in becoming cash flow self-sufficient in the longer
term.
Financial performance
Revenue growth of 8% (9% CER) compared to 2017 was underpinned
by improvements in the two continuing operating divisions:
-- Primerdesign FY18: EUR6.2m (GBP5.5m), FY17: EUR6.1m (GBP5.3m), +3% at CER
-- Lab21 Group FY18: EUR7.5m (GBP6.6m), FY17: EUR6.7m (GBP5.8m), +14% at CER
Primerdesign sales growth was driven by a strong core business
delivering over 11% or EUR0.5m of growth, offset by reduced B2B
revenues as a result of a large one-off sale in late 2017 for over
$1m. Removing this one-off sale in 2017 would have resulted in a
year-on-year growth of over 20% for the Primerdesign business.
During 2018 Primerdesign signed a multi-year exclusive B2B supply
agreement worth a minimum in excess of $3m over five years with a
US customer with material revenue streams expected to commence in
2019. As sales have increased, the impact of high margin genesig(R)
testing reagent kits have ensured the divisional gross margin
remains above 80% and have increased by three percentage points to
84%.
Lab21 sales grew by 14% (CER) for the full year, primarily due
to the accretive effect of the Omega ID business, which drove 13%
of the 14% year-on-year growth. Revenue growth was achieved while
maintaining the divisional gross margin, which at 45%, is good for
a mature products business.
Group operating costs have increased year-on-year to support the
continued growth of the business following a profitable 2017
adjusted EBITDA position for the continuing operations of the
Group. A number of new staff have been hired across different
functions in 2018 to ensure the business is structured to build on
historical growth.
The Group's underlying adjusted EBITDA remains positive in 2018
at EUR0.6m, EUR0.3m lower than the restated 2017 position, due
primarily to the EUR0.3m of additional costs associated with being
dual listed on AIM and Euronext from November 2017. Improvements to
EBITDA from the acquisition of Omega ID were broadly offset by
increased investment in commercial and manufacturing capacity. The
decision to dispose of the NOVAprep(R) business has a significant
impact on the financial results of the Group for 2018 and on an
ongoing basis.
The recurring operating result has decreased to a loss of
EUR0.4m during 2018 from a profit of EUR0.1m in 2017. The reduction
is due to two main factors: i) the EUR0.3m reduction in EBITDA as
explained above, and ii) an annual increase in amortisation and
depreciation of EUR0.2m following the Omega ID business and asset
purchase, primarily customer relationships and brands. Total
depreciation charges of EUR317k (2017: EUR248k) and amortisation
charges of EUR685k (2017: EUR574k) are higher than in 2017 due to
the impact of the Omega ID acquisition and the full year effect of
significant capital expenditure investment in the second half of
2017.
The operating loss in 2018 was reduced to EUR1.4m from EUR2.1m
in 2017 and is stated after non-recurring charges amounting to
EUR1.0m. The 2018 charges comprise EUR0.5m of acquisition and
business sale related expenses, EUR0.2m of Group restructuring
costs and EUR0.3m of other non-recurring charges, including delayed
IPO listing costs and French employee litigation costs. Significant
listing costs in 2017 were not repeated in 2018, helping drive the
improved EBIT in 2018.
The total net loss was EUR4.7m in 2018, reduced from EUR5.4m in
2017, and is stated after EUR0.7m of gross borrowing costs (2017:
EUR1.2m), other financial expenses and tax of EUR0.05m (2017:
EUR0.2m) and the loss from discontinued operations of EUR2.6m (2017
EUR2.0m). The discontinued operations loss represents the
financials of the NOVAprep(R) business that is available for sale
and is accounted for under IFRS 5 - non-current assets held for
sale and discontinued operations. Other financial expenses in 2017
comprised items such as exchange gains and losses, change in fair
value of the Primerdesign warrants and the Primerdesign contingent
consideration.
The loss per share significantly improved during 2018 to
-EUR0.13 (2017: -EUR0.24) due to increased revenue and reduced net
loss.
Financial position
Goodwill has reduced to EUR16.1m in 2018 from EUR16.5m in the
previous year. This reflects a EUR316k increase in the year as a
result of the residual goodwill attributed to the Omega ID
acquisition following the Purchase Price Allocation process and
fair valuing of the assets, and a EUR648k reduction in Goodwill as
a result of allocating a portion of the overall Lab21 Goodwill to
the Cambridge Clinical Labs (asset held for sale) as part of the
accounting requirements of IFRS 5.
Trade and other receivables have increased slightly in the year
by EUR0.1m (3%) to EUR3.9m in line with revenue growth.
Inventory has increased by EUR0.4m (21%) year-on-year.
predominantly following the acquisition of the Omega ID business
resulting in an additional circa EUR0.5m of stock compared with
2017. Additionally, the underlying inventory holding for the group
has increased by EUR0.4m to meet the greater sales demand of the
growing business. Partially offsetting these increases, EUR0.5m of
inventory has been transferred to the assets of discontinued
operations.
The assets of discontinued operations consist of:
-- Clinical Lab goodwill of EUR648k - representing the portion
of Lab21 Goodwill that has been allocated to the Clinical lab
(approximately 7%),
-- EUR825k of other intangibles in relation to NOVAprep(R) patents,
-- EUR281k of tangible fixed assets in relation to NOVAprep(R)
comprising instrument development, moulds and instrument equipment,
and
-- EUR459k of inventories and WIP in relation to NOVAprep(R),
instrument stock (EUR256k) and vials (EUR154k).
Borrowings have increased from EUR3.9m to EUR5.4m during the
year due to issuing a new three year EUR4.0m bond, offset by
capital repayments of EUR2.6m against outstanding borrowings. Total
borrowings in 2018 include two main items: Kreos bonds totalling
EUR1.1m (two bonds originally valued at EUR3.5m and EUR3.0m
amortising monthly) and Vatel convertible bonds totalling EUR4.2m
(two bonds originally valued at EUR1.5m and EUR4.0m, amortising
monthly until March 2020 and May 2021 respectively.
The final Primerdesign earn out milestone of GBP1.0m (disclosed
under Contingent Considerations in the financial statements) will
be paid over the next 12 months. The increase of EUR0.4m in
contingent consideration compared to 2017 is caused by the two earn
out milestones associated with the Omega ID acquisition.
Cash reduced by EUR3.2m to EUR1.1m during 2018. Net cash used in
operating activities decreased from EUR4.6m to EUR1.2m due to one
off 2017 costs relating to the IPO of EUR1.8m not repeating in
2018, a large aged debtor receipt of EUR0.4 in 2018 received from a
single customer and improved terms with suppliers.
Net cash outflow from investing activities reduced slightly to
EUR2.7m in 2018 from EUR2.8m in 2017. This movement was caused by a
EUR1.7m earn out payment made in relation to the Primerdesign
acquisition, offset by the EUR2m cash consideration paid for the
Omega ID assets offset by a EUR0.4m reduction in capital
expenditure due significant investment in 2017 on leasehold
improvements as part of the move to new upgraded headquarters in
Camberley.
Novacyt raised EUR4.0m in 2018 through the issuance of
convertible bonds. There were no equity capital increases in 2018
and as a result year-on-year cash inflows from financing activities
have reduced between 2017 and 2018 by EUR8.2m as Novacyt moves
towards being cash self-sustaining. The significant reduction in
2018 is largely explained by the equity financing of EUR9.7m before
expenses (EUR7.9m net of expenses) upon the Group's successful
listing on AIM and the issuance of EUR2.7m in convertible bonds
(net of fees), both of which took place in 2017.
Repayments of capital and interest for all borrowings have
decreased in 2018 by EUR1.6m to EUR3.2m, consisting of repayments
on Kreos bonds totalling EUR1.9m, Vatel repayments totalling
EUR1.2m and other small loan repayments of EUR0.1m.
Audited financial statements will be released on 30 April
2019.
Anthony Dyer
Chief Financial Officer
Novacyt S.A.
Consolidated statement of comprehensive income
Figures in EUR'000 Year ended Year ended
31 December 31 December
Notes 2018 2017 *
Revenue 3 13,721 12,749
Cost of sales -5,116 -4,840
Gross profit 8,604 7,909
Sales, marketing and distribution
expenses -2,454 -1,974
Research and development expenses -406 -626
General and administrative expenses -6,119 -5,492
Government subsidies -51 245
Operating loss/profit before exceptional
items -425 62
Costs related to acquisitions 4,5 -201 -
Other operating income 5 - 16
Other operating expenses 5 -759 -2,197
Operating loss after exceptional
items -1,385 -2,119
Financial income 6 225 466
Financial expense 6 -919 -1,839
Loss before tax -2,080 -3,492
Tax income/(expense) -32 2
Loss after tax -2,112 -3,491
------------------------------------------ ------- ------------ -------------------------
Loss from discontinued operations 13 -2,626 -1,951
Loss after tax attributable to owners
of the company -4,738 -5,442
--------------------------------------------------- ------------ -------------------------
Loss per share (EUR) 7 -0.13 -0.24
Diluted loss per share (EUR) 7 -0.13 -0.24
Loss per share from the continuing
operations (EUR) 7 -0.06 -0.15
Diluted loss per share from the
continuing operations (EUR) 7 -0.06 -0.15
Loss per share from the discontinued
operations (EUR) 7 -0.07 0.09
Diluted loss per share from the
discontinued operations (EUR) 7 -0.07 -0.09
* 2017 financials are restated as per IFRS 5 - Non-current
Assets held for sale and discontinued operations.
Statement of financial position
Figures in EUR'000 Year ended Year ended
31 December 31 December
Notes 2018 2017
Goodwill 2.4 16,134 16,466
Other intangible assets 4,944 4,840
Property, plant and equipment 1,191 1,573
Non-current financial assets 234 238
------------------------------------------- ------- ------------ ------------
Non-current assets 22,503 23,116
Inventories and work-in-progress 2,347 1,942
Trade and other receivables 3,900 3,804
Tax receivables 94 271
Prepayments 233 537
Short-term investments 10 10
Cash & Cash equivalents 1,132 4,345
------------------------------------------- ------- ------------ ------------
Current assets 7,716 10,908
Assets of discontinued operations 13 2,294 -
Total assets 32,513 34,024
------------------------------------------- ------- ------------ ------------
Bank overdrafts and current portion of long-term
borrowings 9 3,115 2,778
Contingent consideration (current
portion) 10 1,569 1,126
Short-term provisions 100 50
Trade and other liabilities 4,647 3,692
Other current liabilities 379 137
------------------------------------------- ------- ------------ ------------
Total current liabilities 9,809 7,783
Liabilites of discontinued operations 13 85 -
Net current assets/(liabilities) -2,008 3,125
------------------------------------------- ------- ------------ ------------
Borrowings and convertible bond
notes 9 2,259 1,115
Retirement benefit obligations - 14
Long-term provisions 168 158
Deferred tax liabilities 54 41
------------------------------------------- ------- ------------ ------------
Total non-current liabilities 2,481 1,327
Total liabilities 12,375 9,111
------------------------------------------- ------- ------------ ------------
Net assets 20,138 24,914
------------------------------------------- ------- ------------ ------------
Share capital 11a 2,511 2,511
Share premium account 11b 58,249 58,281
Own shares -178 -176
Other reserves 11c -2,819 -2,815
Equity reserve 11d 422 422
Retained losses 11e -38,047 -33,309
Total equity 20,138 24,914
------------------------------------------- ------- ------------ ------------
Statement of changes in equity
Other group reserves
======= ======= ====== ------------ ---------------------------------- ======== ======
Acquisition Other
of the comprehensive
shares income on
Figures in Share Share Own Equity of Translation retirement Retained Total
EUR '000 Notes capital premium shares reserves Primerdesign reserve benefits Total loss equity
======= ======= ======= ====== ======== ============ =========== ============= ====== ======== ======
Balance at
1 January
2017 1,161 47,120 -165 345 -2,948 135 -12 -2,825 -27,867 17,768
============== ======= ======= ======= ====== ======== ============ =========== ============= ====== ======== ======
Actuarial
gains
on retirement
benefits - - - - - - 2 2 - 2
Translation
differences - - - - - 8 - 8 - 8
Loss for the
period 11e - - - - - - - - -5,442 -5,442
Total
comprehensive
income /
(loss)
for the
period - - - - 8 2 10 -5,442 -5,432
Issue of share 11a,
capital 11b 1,218 9,685 - - - - - - - 10,903
Own shares
acquired/sold
in the period - - -11 - - - - - - -11
Other changes 132 1,476 - 77 - - - - - 1,685
Balance at
31 December
2017 2,511 58,281 -176 422 -2,948 143 -11 -2,815 -33,309 24,914
============== ======= ======= ======= ====== ======== ============ =========== ============= ====== ======== ======
Actuarial
gains
on retirement
benefits - - - - - - - - - -
Translation
differences - - - - - - 4 - -4 - -4
Loss for the
period 11e - - - - - - - - -4,738 -4,738
Total
comprehensive
income /
(loss)
for the
period - - - - - - 4 - -4 -4,738 -4,738
Issue of share
capital 11a,11b - - - - - - - - - -
Own shares
acquired/sold
in the period - - -2 - - - - - - -2
Other changes - -32 - - - - - - - -32
Balance at
31 December
2018 2,511 58,249 -178 422 -2,948 139 -11 -2,819 -38,047 20,138
============== ======= ======= ======= ====== ======== ============ =========== ============= ====== ======== ======
Statement of cash flows
Figures in EUR'000 Year ended Year ended
31 December 31 December
Notes 2018 2017
Net cash used in operating activities -1,246 -4,646
Investing activities
Purchases of patents and trademarks -307 -64
Purchases of property, plant and
equipment -377 -914
Purchases of trading investments 3 -101
Acquisition of subsidiary net of
cash acquired 12 -2,034 -1,747
----------------------------------------- ---------- ------------ ------------
Net cash used in investing activities -2,716 -2,826
----------------------------------------- ---------- ------------ ------------
Investing cash flows from discontinued
activities -130 -97
Investing cash flows from continuing
operations -2,586 -2,729
Repayment of borrowings -2,561 -3,296
Proceeds on issue of borrowings and
bond notes 3,960 2,722
Proceeds on issue of shares 11a,11b - 11,080
Purchase of own shares -2 -11
Paid interest expenses -632 -1,506
----------------------------------------- ---------- ------------ ------------
Net cash generated from financing
activities 765 8,989
----------------------------------------- ---------- ------------ ------------
Financing cash flows from discontinued
activities - -3
Financing cash flows from continuing
operations 765 8,992
Net increase/decrease in cash and
cash equivalents -3,197 1,517
----------------------------------------- ---------- ------------ ------------
Cash and cash equivalents at beginning
of year 4,345 2,856
Effect of foreign exchange rate changes -16 -27
Cash and cash equivalents at end
of year 1,132 4,345
----------------------------------------- ---------- ------------ ------------
Anthony Dyer
Chief Financial Officer
Novacyt S.A.
Notes
1. Corporate Information
Novacyt S.A is incorporated in France and its principal
activities are specialising in cancer and infectious disease
diagnostics. Its registered office is located at 13 Avenue Morane
Saulnier, 78140 Vélizy Villacoublay.
2. Basis of announcement
2.1 Basis of Preparation
The consolidated financial statements for the fiscal year ended
December 31, 2018 were prepared in accordance with the
international accounting standards and interpretations (IAS / IFRS)
adopted by the European Union and applicable on December 31, 2018.
They are prepared and presented in '000s of Euros.
2.2 Key accounting policies
- IFRS 5: Non-current Assets Held for Sale and Discontinued Operations
Discontinued operations and assets held for sale are restated in
accordance with IFRS 5.
A discontinued operation is a component of an entity that has
been disposed of or is classified as held for sale, and:
-- Represents a separate major line of business or geographical area of operations,
-- Is part of a plan to dispose of, or
-- Is a subsidiary acquired solely with a view to resale.
As per IFRS 5 we have presented discontinued operations as
follows:
In the statement of profit and loss and other comprehensive
income: a single amount comprising the total of:
- The post-tax profit or loss of the discontinued operation,
- The post-tax gain or loss recognised on the measurement to
fair value less costs to sell, and
- The post-tax gain or loss recognised on the disposal of assets
or the disposal group making up the discontinued operation.
The analysis of the single amount is presented in the note.
This restatement, which concerns only the NOVAprep activity, is
made for both years to ensure comparability.
In the statement of cash flows: the net cash flow attributable
to the operating, investing and financing activities of
discontinued operations have been disclosed separately.
In the statement of financial position: the assets and
liabilities of a disposal group have been presented separately from
other assets. The same applies for liabilities of a disposal group
classified as held for sale.
This restatement is made in the accounts 2018 to reflect the
intention to dispose of the NOVAprep activity (held by Novacyt
S.A.) and of the Clinical Lab business (held by Lab21 Ltd.).
- Standards, interpretations and amendments to standards with
mandatory application for periods beginning on or after 1 January
2018
- IFRS 15: "Revenues from contracts with customers". This
standard came into effect on 1(st) January 2018. Its application
had no impact on the way revenues are recognized by the companies
of the group.
2.3 Going concern
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Thus they adopt the going concern basis of accounting in
preparing the financial statements.
The going concern model covers the period up to and including
April 2020. In making this assessment the Directors have considered
the following elements:
- the working capital requirements of the business;
- a positive cash balance at 31 December 2018 of EUR1,132,000;
- the repayment of the current bond borrowings according to the agreed repayment schedules;
- earn out payments in respect of previous acquisitions
- draw down of funds from time to time from the EUR5,000,000
convertible bond facility including the initial EUR2,000,000
received upon completion.
Further bond issuances beyond the initial EUR2,000,000 upon
signing are dependent on certain conditions, such as a cool down
period, average daily volume and minimum share price prior to each
draw down request. The Company anticipates being able to draw
sufficient funds to support its working capital requirements, but
as they are outside of the Company's direct control, complete
certainty cannot be given and waivers may be used where
necessary.
Additional capital receipts from the disposals of the Clinical
labs and NOVAprep businesses and the potential strategic partnering
of the Primerdesign animal health business have not been factored
into the Group's cash flow forecast. Any such funds received would
help reduce the need and mitigate the risk of further bond
issuances.
Failure to meet the conditions within the convertible bond
facility could place uncertainty on the going concern principle
applied in preparing the financial statements insofar as the
company may in this case not be able to repay its debts and dispose
of its assets in the ordinary course of its business. The going
concern principle applied for the period ended 31 December 2018
could in that case prove inappropriate.
2.4 Critical accounting judgements and key sources of estimate
uncertainty
The preparation of the financial information in accordance with
IFRS requires management to exercise judgement on the application
of accounting policies, and to make estimates and assumptions that
affect the amounts of assets and liabilities, and income and
expenses. The underlying estimates and assumptions, made in
accordance with the going concern principle, are based on past
experience and other factors deemed reasonable in the
circumstances. They serve as the basis for the exercise of
judgement required in determining the carrying amounts of assets
and liabilities that cannot be obtained directly from other
sources. Actual amounts may differ from these estimates. The
underlying estimates and assumptions are reviewed continuously. The
impact of changes in accounting estimates is recognised in the
period of the change if it affects only that period, or in the
period of the change and subsequent periods if such periods are
also affected.
- Measurement of goodwill
Goodwill is tested for impairment on an annual basis. The
recoverable amount of goodwill is determined mainly on the basis of
forecasts of future cash flows.
The total amount of anticipated cash flows reflects management's
best estimate of the future benefits and liabilities expected for
the relevant cash-generating unit (CGU).
The assumptions used and the resulting estimates sometimes cover
very long periods, taking into account the technological,
commercial and contractual constraints associated with each
CGU.
These estimates are mainly subject to assumptions in terms of
volumes, selling prices and related production costs, and the
exchange rates of the currencies in which sales and purchases are
denominated. They are also subject to the discount rate used for
each CGU.
The value of the goodwill is tested whenever there are
indications of impairment and reviewed at each annual closing date
or more frequently should this be justified by internal or external
events.
The carrying amount of goodwill at the balance sheet and related
impairment loss over the periods are shown below:
Year ended Year ended
31 December 31 December
Amounts in '000 EUR 2018 2017
Goodwill Lab21 17,709 19,042
Impairment of goodwill - 9,101 - 9,786
=========================== =========================== ===========================
Net value 8,608 9,256
=========================== =========================== ===========================
Goodwill Primerdesign 7,210 7,210
Impairment of goodwill - -
========================== =========================== ===========================
Net value 7,210 7,210
=========================== =========================== ===========================
Goodwill Omega ID 316 -
Impairment of goodwill - -
========================== =========================== ===========================
Net value 316 -
========================== =========================== ===========================
Total Goodwill 16,134 16,466
=========================== =========================== ===========================
3. Operating Segments
Segment reporting
Pursuant to IFRS 8, an operating segment is a component of an
entity:
- that engages in business activities from which it may earn
revenues and incur expenses (including revenues and expenses
relating to transactions with other components of the same
entity);
- whose operating results are regularly reviewed by the Group's
chief executive and the managers of the various entities to make
decisions regarding the allocation of resources to the segment and
to assess its performance;
- for which discrete financial information is available.
The Group has identified three operating segments, whose
performances and resources are monitored separately:
o Corporate and Cytology
Previously, this segment represented the NOVAprep and French
Group central costs. Following the announcement of the sale
proceedings for NOVAprep, this segment now only shows the French
Group central costs and the results of NOVAprep are shown in a
single line - Discontinued Operations.
o Corporate and Diagnostics
This segment corresponds to diagnostic activities in
laboratories, and the manufacturing and distribution of reagents
and kits for bacterial and blood tests. This is the activity
conducted by Lab21 and its subsidiaries. This segment also includes
UK Group central costs.
o Molecular testing
This segment represents the activities of recently acquired
Primerdesign, which designs, manufactures and distributes test kits
for certain diseases in humans, animals and food products. These
kits are intended for laboratory use and rely on "polymerase chain
reaction" technology.
Reliance on major customers
The Group is not dependent on a particular customer, there are
no customers generating sales accounting for over 10% of
revenue.
Breakdown of revenue by operating segment and geographic
area
o At 31 December 2018
Corporate Corporate Molecular
Amounts in '000 EUR & Cytology & Diagnostics Products Total
Geographical area
Africa 715 285 1,000
Europe 3,304 2,811 6,115
Asia-Pacific 1,738 1,282 3,020
America 795 1,578 2,372
Middle East 951 262 1,213
Revenue 7,502 6,218 13,721
===================================== =============== ========== =======
o At 31 December 2017
Corporate Corporate Molecular
Amounts in '000 EUR & Cytology & Diagnostics Products Total
Geographical area
Africa 299 363 662
Europe 3,347 2,531 5,878
Asia-Pacific 1,608 1,656 3,265
America 661 1,192 1,853
Middle East 739 352 1,091
Revenue 6,655 6,095 12,749
==================================== =============== ========== ======
Breakdown of result by operating segment
o Year ended 31 December 2018
Corporate Corporate Molecular Total
& & Diagnostics Products
Amounts in '000 EUR Cytology
Revenue - 7,503 6,219 13,721
Cost of sales - -4,147 -969 -5,116
Sales and marketing costs - -1,152 -1,302 -2,454
Research and development - -162 -244 -406
General & administrative expenses -959 -2,635 -2,525 -6,119
Governmental subsidies - 75 -125 -51
==================================== =========== =============== =========== =========
Operating profit/(loss) before
exceptional items -959 -519 1,054 -425
Other operating income - - - -
Other operating expenses -526 -337 -97 -960
Operating profit/(loss) -1,486 -856 957 -1,385
==================================== =========== =============== =========== =========
Financial income 290 -144 79 225
Financial expense -736 -180 -4 -919
Profit/(Loss) before tax -1,931 -1,181 1,032 -2,080
==================================== =========== =============== =========== =========
Tax (expense) / credit - - -32 -32
Loss from discontinued activities -2,626 - - -2,626
Profit/(Loss) after tax -4,557 -1,181 1,001 -4,738
==================================== =========== =============== =========== =========
Attributable to owners of
the company -4,557 -1,181 1,001 -4,738
==================================== =========== =============== =========== =========
Attributable to non-controlling - - - -
interests
o Year ended 31 December 2017
Corporate Corporate Molecular Total
& & Diagnostics Products
Amounts in '000 EUR Cytology
Revenue - 6 654 6 095 12 749
Cost of sales - -3 671 -1 170 -4 840
Sales and marketing costs - -1 015 -959 -1 974
Research and development - -113 -513 -626
General & administrative expenses -849 -2 364 -2 279 -5 492
Governmental subsidies - 119 127 245
==================================== ========== ================ =========== =========
Operating profit/(loss) before
exceptional items -849 -391 1 301 62
Other operating income 16 - - 16
Other operating expenses -1 661 -503 -33 -2 197
Operating profit/(loss) -2 494 -894 1 268 -2 119
==================================== ========== ================ =========== =========
Financial income 556 -99 9 466
Financial expense -1 564 -257 -18 -1 839
Profit/(Loss) before tax -3 502 -1 249 1 259 -3 492
==================================== ========== ================ =========== =========
Tax (expense) / credit -2 - 3 2
Loss from discontinued activities -1 951 - - -1 951
Profit/(Loss) after tax -5 455 -1 249 1 262 -5 442
==================================== ========== ================ =========== =========
Attributable to owners of
the company -5 455 -1 249 1 262 -5 442
==================================== ========== ================ =========== =========
The 2017 consolidated income statement is presented to reflect
the impacts of the application of IFRS 5 relative to discontinued
operations, by restating the NOVAprep activity on a single line
"Loss from discontinued operations".
4. Costs related to acquisitions
On 28 June 2018, the UK Company Lab21 Healthcare Ltd completed
an asset purchase agreement for the Infection Diseases business of
the company called Omega Diagnostics Ltd. The acquisition was
accounted for as a business combination under IFRS, accordingly,
the costs related to the acquisition of EUR201,000 was expensed
5. Other operating income and expenses
Year ended Year ended
31 December 31 December
Amounts in '000 EUR 2018 2017
Other operating income - 16
Other operating income - 16
=========================================== ========================= ========================
Provision for litigation with employees - 46 - 171
Restructuring expenses - 183 - 78
Business sale expenses -104 -
Acquisition related expenses - 379 -
IPO preparation - 87 - 1,631
Relocation expenses - - 176
Other expenses - 161 - 141
Other operating expenses - 960 - 2,197
=========================================== ========================= ========================
The restructuring expenses of EUR78,000 in the year ended 31
December 2017 and EUR183,000 in the period ended 31 December 2018
relate to redundancy payments made to employees in relation to
restructuring taken place during this period.
The IPO preparation expenses of EUR1,631,000 in the year ended
31 December 2017 and EUR87,000 in the period ended 31 December 2018
relate to the fees incurred in preparation for the company's AIM
listing in late 2017.
6. Financial income and expense
Year ended Year ended
31 December 31 December
Amounts in '000 EUR 2018 2017
Exchange gains 102 287
Change in fair value of options 122 140
Other financial income - 39
Financial income 225 466
=================================== =========================== ===========================
Interest on loans - 682 - 1,202
Exchange losses - 190 - 251
Contingent consideration - - 386
Other financial expense - 47 -
Financial expense - 919 - 1,839
=================================== =========================== ===========================
Financial Income:
Exchange gains
Exchange gains resulted from recurring operations and from
variations in sterling on the contingent consideration liability
related to the Primerdesign acquisition.
Change in fair value of options
The December 2017 balance relates to the revaluation of the
Primerdesign warrants liability from EUR266,000 to EUR126,000.
The December 2018 balance relates to the revaluation of the
Primerdesign warrants liability from EUR126,000 to EUR5,000.
Financial Expense:
Interest on loans
The interest charge is mainly related to the Kreos and Vatel
bond notes.
Exchange Losses
Exchange losses in 2017 and 2018 were mainly those recorded by
the British company Lab21 Ltd on its operations and relate to the
monthly revaluation of the Novacyt loan in Lab21 Ltd's books.
Contingent consideration:
The contingent consideration in 2017 relates to the discounting
of the contingent consideration liability in favour of Primerdesign
shareholders.
7. Loss per share
Loss per share is calculated based on the weighted average
number of shares outstanding during the period. Diluted loss per
share is calculated based on the weighted average number of shares
outstanding and the number of shares issuable as a result of the
conversion of dilutive financial instruments.
Year ended Year ended
31 December 31 December
Amounts in 000' EUR 2018 2017
Net loss attributable to owners of the company - 4,738 - 5,442
Impact of dilutive instruments - -
Net loss attributable to owners of the company - 4,738 - 5,442
=================================================== ========================== ==========================
Weighted average number of shares 37,664,342 23,075,634
Impact of dilutive instruments - -
Weighted average number of diluted shares 37,664,342 23,075,634
=================================================== ========================== ==========================
Earnings per share (in Euros) - 0.13 - 0.24
=================================================== ========================== ==========================
Diluted earnings per share (in Euros) - 0.13 - 0.24
=================================================== ========================== ==========================
Loss per share from the continuing operations
(in Euros) - 0.06 - 0.15
=================================================== ========================== ==========================
Diluted loss per share from the continuing
operations (in Euros) - 0.06 - 0.15
=================================================== ========================== ==========================
Loss per share from the discontinued operations
(in Euros) - 0.07 - 0.09
=================================================== ========================== ==========================
Diluted Loss per share from the discontinued
operations (in Euros) - 0.07 - 0.09
=================================================== ========================== ==========================
Pursuant to IAS 33, options whose exercise price is higher than
the value of the Company's security were not taken into account in
determining the effect of dilutive instruments.
8. Group companies
The consolidated financial statements of the Group include:
Closing Opening
============== =============== ============== ============== =============== ==============
Companies Interest Control Consolidation Interest Control Consolidation
percentage percentage method percentage percentage method
=============== ============== =============== ============== ============== =============== ==============
Biotec
laboratories
Ltd 100.00 % 100.00 % FC 100.00 % 100.00 % FC
Lab21
Healthcare Ltd 100.00 % 100.00 % FC 100.00 % 100.00 % FC
Lab21 Ltd 100.00 % 100.00 % FC 100.00 % 100.00 % FC
Microgen
Bioproducts
Ltd 100.00 % 100.00 % FC 100.00 % 100.00 % FC
Novacyt SA 100.00 % 100.00 % FC 100.00 % 100.00 % FC
Novacyt Asia 100.00 % 100.00 % FC 100.00 % 100.00 % FC
Novacyt China 100.00 % 100.00 % FC 100.00 % 100.00 % FC
Primerdesign
Ltd 100.00 % 100.00 % FC 100.00 % 100.00 % FC
9. Borrowings
The following tables show borrowings and financial liabilities
carried at amortised cost.
o Maturities as of 31 December 2018
Amount due Amount due Total
for settlement for settlement
within 12 after 12 months
Amounts in '000 EUR months
Bond notes 2,976 2,239 5,216
Bank borrowings 67 20 87
Accrued interest on borrowings 72 - 72
Total financial liabilities 3,115 2,259 5,374
================================== ========================= ========================= =========================
o Maturities as of 31 December 2017
Amount due Amount due Total
for settlement for settlement
within 12 after 12 months
Amounts in '000 EUR months
Bond notes 2,664 1,028 3,692
Bank borrowings 66 87 153
Accrued interest on borrowings 49 - 49
Total financial liabilities 2,778 1,115 3,894
=============================== =============== ================ =====
o Change in borrowings and financial liabilities in 2018
At At
31 December 31 December
Amounts in 000' EUR 2017 Increase Repayment Renegotiation 2018
Bond notes 3,692 4,019 - 2,554 59 5,216
Bank borrowings 153 - - 66 - 87
Accrued interest on
borrowings 49 72 - 49 - 72
Total financial liabilities 3,894 4,091 - 2,669 59 5,374
=============================== ============= ========= ============= ============== =============
o Change in borrowings and financial liabilities in 2017
At
31 December
Amounts in '000 EUR At 31 December 2016 Increase Repayment Conversion 2017
Bond notes 5,620 2,664 - 3,227 -1,365 3,692
Bank borrowings 220 - - 67 - 153
Accrued interest on borrowings 414 49 -414 - 49
Total financial liabilities 6,254 2,713 - 3,708 -1,365 3,894
=============================== =================== ======== ========= ========== ============
10. Contingent Consideration
The contingent consideration related to the acquisition of the
Primerdesign shares and the Asset Purchase Agreement of the
Infectious Diseases business from Omega Diagnostics Ltd.
Year ended Year ended
31 December 31 December
Amounts in '000 EUR 2018 2017
Contingent consideration (current portion) 1,569 1,126
1,569 1,126
============================================== ================ ================
The movement in the liability between the 31 December 2017 and
31 December 2018 is due to the variance of the foreign exchange
rate (contingent liability is denominated in Pounds Sterling), by
the interest accrued on this debt in the amount of GBP40,000, and
by the deferred consideration related to the acquisition of the
Omega infectious diseases business for GBP375,000 comprising:
-- GBP175,000 paid after twelve months upon completion of technology transfer and,
-- GBP200,000 paid upon the successful accreditation of the
Axminster, UK production facility to certain standards (expected to
be achieved inside 12 months of acquisition date)
11. Issued capital and reserves
a. Share capital
As of 1 January 2017, the Company's share capital of
EUR1,161,134 was divided into 17,417,014 shares with a par value of
1/15th of a Euro each.
Amounts in '000 EUR Amount of share capital Unit value per share Number of shares issued
========================================== ======================== ===================== ========================
At 1 January 2017 1,161 0.07 17,417,014
Capital increases 1,218 0.07 18,269,258
Capital increase by conversion of OCABSA 132 0.07 1,978,070
At 31 December 2017 2,511 0.07 37,664,342
At 31 December 2018 2,511 0.07 37,664,342
As of 31 December 2018, the Company's share capital of
EUR2,510,956.06 was divided into 37,664,342 shares with a par value
of 1/15th of a Euro each.
The Company's share capital consists of one class of share. All
outstanding shares have been subscribed, called and paid.
b. Share premium
Amounts in '000 EUR
Balance at 1 January 2017 47,120
Premium arising on issue of equity shares 12,987
Expenses of issue of equity shares - 1,826
Balance at 31 December 2017 58,281
Premium arising on issue of equity shares -
Expenses of issue of equity shares - 32
Balance at 31 December 2018 58,249
c. Other reserves
Amounts in '000 EUR
Balance at 1 January 2017 - 2,826
Translation differences 8
Other variations 3
Balance at 31 December 2017 - 2,815
Translation differences - 4
Other variations -
Balance at 31 December 2018 - 2,819
d. Equity reserve
Amounts in '000 EUR
Balance at 1 January 2017 345
Conversion of the OCABSA Yorkville 77
Balance at 31 December 2017 422
Conversion of the OCABSA Yorkville -
Balance at 31 December 2018 422
e. Retained losses
Amounts in '000 EUR
Balance at 1 January 2017 - 27,867
Net loss for the year - 5,442
Other variations -
Balance at 31 December 2017 - 33,309
Net loss for the year - 4,738
Other variations -
Balance at 31 December 2018 - 38,047
12. Business Combinations
- Acquisition of Omega ID
On 28 June 2018, the UK Company Lab21 Healthcare Ltd completed
an asset purchase agreement for the Infection Diseases business of
the company called Omega Diagnostics Ltd. The Infectious Diseases
business specialises in the manufacture of a range of diagnostic
kits, in particular for syphilis and febrile antigens, as well as a
range of latex serology tests for rheumatoid factor, C-reactive
protein, anti-streptolysin and systemic lupus erythematosus.
It includes various assets, such as equipment, stock, trademarks
and patents. It also includes two employees, whose employment
contracts were transferred to Lab21 Healthcare Ltd via the TUPE
process under which employees in the UK transfer with the activity
on the same employment term.
The purchase price was GBP2,175,000 (EUR2,456,000) broken down
as follows:
Cash disbursed EUR2,032,000
Deferred consideration for successfully supporting
and handling over manufacturing EUR198,000
Deferred consideration for successfully achieving
a Category 3 facility accreditation EUR226,000
Total purchase price EUR2,456,000
The assets acquired and the liabilities assumed are as
follows:
Net property, plant and equipment and intangible assets EUR46,000
Inventories EUR523,000
Customer relationship EUR1,314,000
Trademark EUR251,000
Fair value of assets acquired and liabilities assumed EUR2,134,000
Goodwill EUR322,000
The table above shows how the goodwill figure of EUR322,000 is
arrived at after allocating the purchase price accordingly. The
residual goodwill arising from the acquisition reflects the future
growth expected to be driven by new customers, the value of the
workforce, technical files and know-how.
The value of "customer relationships" was determined by
discounting the additional margin generated by customers after
remuneration of the contributing assets.
The value of the trademark was determined by discounting the
cash flows that could be generated by licensing the Omega
trademark, estimated as a percentage of revenue derived from
information available on comparable assets.
IFRS 3 provides for a period of 12 months from the takeover to
complete the identification and measurement of the fair value of
assets acquired and liabilities assumed. Therefore, until May 2019,
the gross amount of goodwill is subject to adjustment.
Goodwill is a residual component calculated as the difference
between the purchase price for the acquisition of control and the
fair value of the assets acquired and liabilities assumed. It
includes unrecognised assets such as the value of the personnel and
know-how of the acquiree.
The acquisition costs amounted to EUR201,000. They are included
on the statement of comprehensive income in the year ended 31
December 2018 as "Costs related to acquisitions".
Omega contributed EUR1,030,000 to consolidated revenue in the
year ended 31 December 2018 and EUR45,000 to net profit or loss
attributable to owners of the company between its consolidation on
1 July 2018 and 31 December 2018.
If the acquisition of the Omega business were deemed to have
been completed on 1 January 2018, the opening date of the Group's
2018 financial year, consolidated revenue would have amounted to
EUR14,751,000 and net profit or loss attributable to owners of the
company to a loss of EUR4,695,000.
The table below presents the group income statement for the 12
months period ended on 31 December 2018 as if the acquisition of
Omega had been completed on 1st January 2018.
31 December
2018
Amounts in 000' EUR Pro forma
Revenue 2,455
Cost of sales -1,612
====================================== ============
Gross profit 843
Sales and marketing costs -70
General & administrative costs -532
====================================== ============
Recurring operating profit 242
Costs related to acquisitions -
Other operating expenses -131
Operating profit 111
====================================== ============
Financial expenses -1
Loss before tax 110
====================================== ============
Tax expense -
Loss after tax 110
====================================== ============
Total net loss 110
====================================== ============
Attributable to owners of the company 110
====================================== ============
13. Discontinued operations
Novacyt has begun the formal sale process for the NOVAprep
(Cytology businesses) and Cambridge Clinical Labs businesses. The
Clinical Lab business is a non-core service business and does not
fit in with the long-term high margin growth strategy for the
Group. NOVAprep is being sold as it continues to be loss making and
is a drain on working capital while it is non-profit making and as
such the decision was made to dispose of the business in late
2018.
It is expected that NOVAprep and the Clinical Labs will be sold
or disposed of by December 2019 at the latest.
The assets and liabilities available for sale are transferred on
the lines "Assets of the discontinued activities" and "Liabilities
of the discontinued activities". The nature of these assets and
liabilities are presented in the table below:
Amounts in '000 EUR Clinical Lab NOVAprep Total
Goodwill 648 - 648
Other intangible assets - 829 829
Property, plant and equipment 3 281 284
============= ========= ======
Non-current assets 651 1,110 1,761
Inventories and work in progress 24 459 483
Trade and other receivables 49 - 49
Current assets 73 459 532
Total assets held for sale 725 1,569 2,294
================================== ============= ========= ======
Trade and other liabilities 43 18 61
Total current liabilities 43 18 61
Long term provisions 7 17 24
Total non-current liabilities 7 17 24
Total liabilities held for sale 50 35 85
================================== ============= ========= ======
In accordance with the IFRS 5, the net result of the NOVAprep
business was transferred on the line "Loss from the discontinued
activities".
The table below presents the detail of the loss generated by
this business in 2017 and 2018.
Year ended Year ended
31 December 31 December
Amounts in '000 EUR 2018 2017
Revenue 974 2,204
Cost of sales -719 -1,190
============================================== ============= =============
Gross profit 255 1,014
Sales, marketing and distribution expenses -1,169 -1,274
Research and development expenses -189 -194
General and administrative expenses -1,563 -1,622
Governmental subsidies 88 123
Operating loss before exceptional items -2,578 -1,952
Other operating expenses -48 -
Operating loss after exceptional items -2,626 -1,952
============================================== ============= =============
Financial expense - -
Loss before tax -2,626 -1,952
============================================== ============= =============
Tax (expense) / income - 1
Loss after tax from discontinued operations -2,626 -1,951
============================================== ============= =============
14. Subsequent Events
On the 23rd April 2019, Novacyt entered into a Convertible Bonds
with Warrants Funding Programme, for up to EUR5,000,000 (net of
expenses). Under the terms of the Agreement, the Company will be
able to access capital in seven tranches which oblige the
Investment Managers to immediately subscribe for an initial tranche
of EUR2,000,000, followed by six further tranches, each of an
aggregate nominal value of EUR500,000 (together the "Tranches"),
drawable at the Company's option subject to certain terms and
conditions. The Company has immediately exercised its right to the
initial tranche of funding giving rise to the subscription of
EUR2,000,000 of convertible bonds with warrants by the Investment
Managers. The remaining EUR3,000,000 of convertible bonds can be
issued by the Company over the next 36 months following the closing
of the Agreement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKLFLKZFEBBZ
(END) Dow Jones Newswires
April 30, 2019 02:01 ET (06:01 GMT)
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