TIDMNCYT
RNS Number : 7086N
Novacyt S.A.
26 September 2019
Novacyt S.A.
("Novacyt", the "Company" or the "Group")
HALF YEAR RESULTS
Double-digit revenue growth
EBITDA profit
Paris, France and Camberley, UK - 26 September 2019 - Novacyt
(ALTERNEXT: ALNOV; AIM: NCYT), an international specialist in
clinical diagnostics, today announces unaudited results for the six
months ended 30 June 2019.
Financial highlights
-- Consolidated unaudited Group revenue of EUR7.2m, an increase
of 12% (11% CER) compared to the restated revenues for H1 2018 of
EUR6.4m
o Primerdesign revenue increased 8% (7% CER) to EUR3.3m
o Lab21 revenue increased 17% (16% CER) to EUR4.0m as a result
of the incremental revenue from the Omega ID acquisition in June
2018
-- Group gross margin remained strong at 63%, a reduction of 2%
from H1 2018, due to the anticipated dilutive gross margin effect
of the Omega ID revenue streams. On a like-for-like pro forma basis
(excluding Omega ID) gross margin increased by 3% year on year to
68%
-- Primerdesign gross margin improved year-on-year by 2% to 87%,
demonstrating the significant current and potential future value of
this business unit to the Group
-- Group EBITDA profititability of EUR0.2m in H1 2019 versus a EUR0.1m loss in H1 2018
-- Operating loss reduced by EUR0.1m to EUR0.7m despite
incremental Omega ID amortisation of EUR0.1m
-- Omega ID contributed a strong EBITDA profit of 19% in H1 2019
and synergies have been identified to further improve gross margin
and EBITDA profitability
-- Novacyt held EUR0.6m in cash and cash equivalents at the end of 30 June 2019
-- Working capital constraints in second and third quarters will
result in consolidated revenue and EBITDA below market expectations
for the full year but ahead of the EBITDA for the prior year.
NOVAprep(R) revenues are excluded, reflecting the strategic
decision to sell the division, as announced on 11 December 2018.
Group revenue includes the Clinical Lab (EUR0.3m) for the first
half of the year, which was subsequently sold on 18 July 2019.
EUR'000 H1 2019 H1 2018
Consol Consol
Revenue 7,223 6,427
Gross profit 4,580 4,191
Gross margin % 63% 65%
EBITDA 153 (100)
Recurring operating (loss)/profit (598) (569)
Operating loss (664) (836)
-------------------------------------- -------------------- -----------------
Loss after tax (1,208) (1,172)
Loss from discontinued operations (786) (673)
-----------------
Loss after tax atrributable to
the owners (1,994) (1,844)
-------------------------------------- -------------------- -----------------
Operational highlights
-- The working capital restrictions have significantly impacted
the Group, especially the Lab21 Products business during the second
quarter. Despite this, the Group has continued to grow sales and
EBITDA profitability, underscoring the potential profitability of
the Group as it continues to scale
-- Primerdesign revenues increased by 8% to EUR3.3m compared to
H1 2018 as a result of growth of 22% in B2B sales and 10% in
International Markets. Sales in the Middle East and US markets were
the fastest growing regions for molecular products at 114% and 33%,
respectively, compared to H1 2018
-- Integration of Omega ID is progressing well, and a decision
to close and consolidate the Axminster facility, acquired with the
Omega ID assets, was implemented during the first quarter, which
has further reduced costs and increased the profitability of this
business
-- The molecular R&D pipeline of CE-Mark assays focused in
transplant diagnostics continues to make good progress, and two new
CE-Mark products - EBV and BKV - were launched in the third quarter
of 2019 as planned
Post period end
-- Sale of the Clinical Lab to Cambridge Pathology BV completed
on 18 July 2019 for a total consideration of GBP400,000. The sale
will enable Novacyt to focus more closely on the expansion and
value of its core products businesses, Primerdesign and Lab21
Products. A second deferred payment of GBP100k was received in
September as expected
-- The Company continues to look for a buyer(s) of its
NOVAprep(R) business unit but is also taking steps to close the
remaining business by the end of 2019 in the event a sale has not
completed. All customers, suppliers and employees have been
informed of the decision, and the Company will work sensitively and
diligently to support all those who will be impacted by this
decision. Due to significantly reduced costs, the liquidation of
certain assets and an increase in consumables sales orders, the
negative cash flow impact on the business unit will be greatly
reduced with the potential for it to generate cash for the Group
during the second half of 2019
Graham Mullis, Group CEO of Novacyt, commented:
"We have continued to experience increasing demand for our
products throughout 2019, which led to 12% growth in sales in H1.
However, this growth has been somewhat moderated by working capital
constraints, which we continue to make good progress on resolving.
As a result, this shortfall will impact our full year revenue and
profit performance as we continue to work through our forward order
book. With sufficient working capital, we will continue to build on
the robust operational performance of our Primerdesign and Lab21
Products business units, which delivered record sales growth in a
number of territories in H1.
"We successfully completed the sale of the Clinical Lab, which
allows us to further streamline and focus our operations. This will
save the the Group EUR0.1m due to the elimination of overheads
associated with the operating site. The decision to dispose of, or
close, the NOVAprep(R) business unit by year end also removes the
uncertainty of the sale process.
"We understand shareholders have been disappointed with the
share price performance and dilution since the convertible bond
facility was executed in April 2019. We continue to assess various
financing options for the Company and will update the market in due
course.
"Novacyt's solid foundation lies in its strengths in vitro
diagnostic product design, development, commercialisation and
contract manufacturing. I look forward to building on the base as
we work hard to restore shareholder confidence and deliver value
through a profitable, high growth diagnostics company."
Corporate review
In the first half of 2019, Novacyt made further progress in
shaping and defining the business to deliver long-term sustainable
profitable growth. This has been achieved through the progress it
is making in restructuring the business to focus on its core,
profitable reagents manufacturing businesses. These achievements
will reinforce the Company's strategy and commitment to the three
pillars of growth based on organic sales expansion, investment in
R&D and a judicious approach to acquisitions. Novacyt expects
it can further reduce the manufacturing cost base across the Group
to grow the Group's gross margins and increase overall
profitability.
Molecular products
Primerdesign revenues increased by 8% to EUR3.3m compared to H1
2018 as a result of a 22% growth in B2B sales and continued growth
of 10% in international markets. Direct sales in the UK were down
by 6% due to the short-term impact of reorganising the sales
management structure with sales growth anticipated to resume
towards the end of the year. Sales in the Middle East and US
markets were the fastest growing regions for molecular products at
114% and 33% compared to H1 2018.
Primerdesign is increasingly recognised as a leading clinical
assay development partner. As of the end of H1 2019, Primerdesign
has engaged with over 15 customers throughout the past 18 months,
fulfilling their specific development requirements. During the
first half of 2019, the Company expanded its assay development
contract with Immunexpress for the first US Food and Drug
Administration (FDA) cleared host response test for suspected
sepsis patients to further support the development of rapid
diagnostic assays for the detection of sepsis.
In May 2019, Primerdesign also launched its next-generation
genesig(R) q32 qPCR molecular testing instrument, to complement the
established genesig(R) q16, launched in 2014. Further operational
enhancements to both the q16 and q32 instrument platforms are
planned in 2020 to provide gold standard PCR cycle times of 30
minutes.
Primerdesign's extensive catalogue of over 550 genesig(R)
Real-Time PCR kits can be run on the q32 instrument, including
human, food pathogens and food speciation testing. As all
genesig(R) kits have an identical running protocol, the q16 and q32
instruments are easy to use for customers of all expertise and
experience levels and provide results that can be easily compared
across the instruments and across different sites or collaborating
groups.
During the first half of 2019, Primerdesign successfully
launched its CE Mark EBV and BKV assays used to help
transplantation and immunosuppressed patients. Both tests provide
quantitative detection of viral DNA extracted from blood plasma,
whole blood and urine. They have initially been validated for the
Roche LightCycler(R) 480 II Instrument and the same assays will be
available to run on additional instruments, the ABI 7500 and
Bio-Rad CFX, later this year. The complementary and important
CE-Mark CMV assay development is progressing well and will launch
early next year.
Protein products
Lab21 revenue of EUR4.0m demonstrated growth of 17% (16% CER) in
the first half of 2019 compared to H1 2018 driven by the Omega ID
acquisition which completed in June 2018. The second quarter of
2019 saw sales restricted by a lack of working capital, which
mainly impacted the Lab21 business unit. Despite this, the new
sales team increased UK sales of Microgen branded products by 29%
compared to the first half of 2018. The order book remains strong
for the second half of the year and continued growth is expected
depending on how quickly the supply chain can be fully
restored.
The Omega ID asset acquisition continues to be EBITDA accretive
to the Group, and a number of additional cost savings and synergies
have been identified to drive this profitability further. These
include (i) the closure of the acquired Axminster site which was
consolidated within the Group during Q2 2019 saving overheads of
EUR150k per annum, (ii) consolidating duplicated products to
minimise manufacturing costs and (iii) the saving of Omega
Diagnostics overhead charges under the Transitional Services
Agreement in early 2020.
During the second half of 2019, the Lab21 business unit aims to
launch twelve new CE-Mark clinical products which will add to the
PathFlow(R) and PathChek(R) product ranges. An immediate launch of
six new products in the PathFlow(TM) range will take place this
month which will extend the range of tests for the rapid diagnosis
of several key pathogens associated with Infectious Disease in
humans. These include tests for Clostridium difficile, Helicobacter
pylori, Influenza A+B, Norovirus, Rotavirus, Adenovirus and RSV
from a range of patient sample types. The products in combination
represent some of the most important tests required in a modern
hospital laboratory setting, addressing the need for fast and
accurate diagnosis of key pathogens to prevent mortality. Quicker
and more effective diagnosis also enables clinicans to combat the
increasing issues of antimicrobial resistance associated with these
pathogens.
The expansion of the PathFlow(TM) range of products serves to
highlight Novacyt's long term commitment to facilitate clinical
improvements to patient outcomes as a result of earlier diagnosis.
Novacyt will look to increase the number of PathFlow(TM) tests with
further expansion of the product range during the final quarter of
this year.
Financial review
Revenue
Unaudited revenues for the first half of 2019 were EUR7.2m
compared to the restated revenues for 2018 of EUR6.4m, with the
addition of Omega ID revenue and solid growth from Primerdesign in
the Middle East and US markets. Continuing Group revenue, excluding
NOVAprep(R) , increased by 12% (11% CER). The order book is strong
for the second half of the year and continued growth is expected
depending on how quickly the supply chain can be fully
restored.
Gross margin
Gross profit has shown continued positive momentum, increasing
from EUR4.2m (65%) in the first half of last year to EUR4.6m (63%)
in 2019. This margin reflects the lower gross margin associated
with the Omega ID revenue streams. On a pro forma basis, gross
margin increased 3% to 68% year on year. Primerdesign's gross
margin improved year on year by 2% to 87% as a result of lower
manufacturing costs due to economies of scale as sales volumes
increase. The gross margin of the Group in 2014 was 44% compared to
63% in H1 2019, an increase of 19 percentage points.
The Lab21 Products business unit has seen a 6% year-on-year
gross margin decrease to 45% impacted by the dilutive gross margin
effect of the Omega ID acquisition. On a pro forma basis, the gross
margin of the business unit would have been largely unchanged at
50% compared to 51% in H1 2018.
EBITDA
The Group has continued its EBITDA profitability trend with an
EBITDA profit of EUR0.2m in the first half of 2019, which saw the
underlying Primerdesign EBITDA margin increase to over 40% before
Group management charges. With Primerdesign delivering
approximately 45% of Group revenue at 87% gross margin, its
continued success contributes substantially to the Group's positive
EBITDA. The effect of increasing Primerdesign revenues as a
percentage of overall Group revenues will continue to enhance the
overall profitability of the Group.
The Omega ID acquisition has been immediately EBITDA accretive
to the business and during the first half the EBITDA margin of this
business was 19%. This strong level of profitability is expected to
increase as the business becomes fully integrated within the
Group.
A focus on cost control across the Group in H1 2019, in addition
to the adoption of IFRS 16, has helped drive EBITDA from a loss of
EUR0.1m in H1 2018 to a profit of EUR0.2m in H1 2019 at a time when
sales were impacted by a lack of working capital. Additional
planned cost saving initiatives, particularly in manufacturing, can
deliver further profit improvements during the second half and into
2020.
Operating loss
Group operating loss narrowed by over 20% to a loss of EUR0.7m
compared with the H1 2018 loss of EUR0.8m. The EUR0.3m improvement
in EBITDA and a reduction in exceptional charges of EUR0.2m year on
year have been offset with additional depreciation/amortisation
costs of EUR0.3m resulting from the Omega ID acquisition (EUR0.1m)
and impact of IFRS 16 (EUR0.1m).
Net loss
The net loss increased by EUR0.2m to EUR2.0m between H1 2018 and
H1 2019 due to a EUR0.1m increase in amortisation costs associated
with the Omega ID acquisition, a EUR0.1m increase in the loss in
discontinued operations driven by the NOVAprep business
performance, and additional financial expenses of EUR0.2m due to
additional borrowing taken on in late Q2 2018, offset by the
EUR0.3m EBITDA improvement.
Balance Sheet
EUR'000 Jun-19 Dec-18 EUR'000 Jun-19 Dec-18
Goodwill 15,913 16,134 Share capital and premium 60,580 60,582
Other non-current assets 8,645 6,369 Retained earnings (42,095) (40,444)
Total non-current assets 24,558 22,503 Total equity 18,485 20,138
Inventories 2,356 2,347 Borrowings (> 1 yr) 3,830 2,259
Other provisions and long-term
Other current assets 4,351 4,237 liabilities 231 222
Cash and cash equivalents 598 1,132 Total non-current liabilities 4,061 2,481
Total current assets 7,305 7,716
Borrowings (< 1 yr) 4,862 3,115
Trade and other payables 4,972 4,647
Other provisions and short-term
liabilities 1,421 2,047
Total current liabilities 11,255 9,809
Assets of discountinued Liabilities of discontinued
operations 2,260 2,294 operations 322 85
TOTAL ASSETS 34,122 32,513 TOTAL EQUITY AND LIABILITIES 34,122 32,513
-------------------------- ------- -------------------------------- ---------
The Group held EUR0.6m of cash on the balance sheet at 30 June
2019 compared to EUR1.1m at 31 December 2018. The reduction in cash
is, in part, due to the repayments of EUR0.3m made against the
outstanding deferred considerations that commenced in H1 2019 and a
net working capital outflow of EUR0.6m. The EUR2.0m of cash derived
from the bond issued in April was used for debt servicing and
working capital to reduce the Group creditor position.
Other non-current assets have increased by EUR2.3m, primarily
driven by the impact of adopting IFRS 16 which has put a long-term
asset of EUR2.6m to the balance sheet comprised mainly of site
related costs, offset by depreciation.
Trade receivables have decreased since the year end by EUR0.3m
to EUR3.6m primarily due to the recovery of some older receivables.
Prepayments have increased since 31 December 2018 by EUR0.4m driven
by EUR0.2m of upfront payments for stock that were not received in
H1, and EUR0.2m due to the timing of rent and business rates
(property taxes) invoices received without a change in the
underlying cost.
Net debt increased to EUR8.1m at the end of June 2019 from
EUR4.2m in December 2018 following i) the draw down of EUR2.0m of
convertible bonds from the EUR5m facility signed in April 2019, ii)
the impact of adopting IFRS 16 which has added a EUR2.6m liability
to the balance sheet, iii) a EUR0.5m reduction in cash offset by,
and iv) debt repayments of EUR1.3m including EUR0.3m of
interest.
The Contingent consideration balance has reduced to EUR1.1m as
at June 2019 from EUR1.6m in December 2018, driven by repayments of
EUR0.3m made during 2019 and by the cancellation of an earn out
milestone worth EUR0.2m.
Current trading and outlook
Novacyt remains committed to successfully delivering on its
three pillars of growth strategy which will continue to deliver
increased profitability. A key factor to this success will be the
Company's ability to secure financing that will facilitate a
restructuring of the debt to put the Company in a much stronger
financial position.
The outlook for the Primerdesign and Lab21 businesses remains
strong entering the final quarter of the year. Both business units
have significant sales pipelines and aim to grow sales above the
levels of H1 2019. However, with working capital restrictions, the
second and third quarters have been impacted. A consequent
reduction in the rate of sales growth is expected for the full
year. Novacyt therefore forecasts single digit full year
consolidated sales growth and an EBITDA below market expectations
but ahead of the EBITDA profitability for the prior year.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
- End -
Contacts
Novacyt SA
Graham Mullis, Chief Executive Officer
Anthony Dyer, Chief Financial Officer
+44 (0)1223 395472
SP Angel Corporate Finance LLP (Nominated Adviser and
Broker)
Matthew Johnson / Jamie Spotswood (Corporate Finance)
Vadim Alexandre / Rob Rees (Corporate Broking)
+44 (0)20 3470 0470
FTI Consulting (International)
Brett Pollard / Victoria Foster Mitchell
+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 an 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
Consolidated income statement as at 30 June 2019
(Unaudited) (Unaudited)
Six month Six month
ended 30 June ended 30 June
Amounts in '000 EUR Notes 2019 2018
Revenue 4,5 7 223 6 427
Cost of sales -2 643 -2 236
========================================================= =============== ===============
Gross profit 4 580 4 191
Sales, marketing and distribution expenses -1 317 -1 217
Research and development expenses -229 -189
General and administrative expenses -3 639 -3 387
Governmental subsidies 7 35
Operating loss before exceptional items -598 -569
Other operating income 6 57 177
Other operating expenses 6 -123 -444
Operating loss after exceptional items -664 -836
========================================================= =============== ===============
Financial income 7 36 32
Financial expense 7 -579 -368
Loss before tax -1 208 -1 172
========================================================= =============== ===============
Tax (expense) / income 0 0
Loss after tax -1 208 -1 172
========================================================= =============== ===============
Loss from discontinued operations -786 -673
Loss after tax attributable to owners of the company -1 994 -1 844
========================================================= =============== ===============
Loss per share (EUR) 8 -0,05 -0,08
Diluted loss per share (EUR) 8 -0,05 -0,08
Loss per share from the continuing operations (EUR) -0,03 -0,05
Diluted loss per share from the continuing operations (EUR) -0,03 -0,05
Loss per share from the discontinued operations (EUR) -0,02 -0,03
Diluted loss per share from the discontinued operations (EUR) -0,02 -0,03
The consolidated income statement is presented to reflect the
impacts of the application of IFRS 5 relative to discontinued
operations, by restating the NOVAprep(R) activity on a single line
"Loss from discontinued operations".
Consolidated statement of comprehensive income as at 30 June
2019
(Unaudited) (Unaudited)
Six month Six month
ended 30 June ended 30 June
Amounts in '000 EUR Notes 2019 2018
Loss after tax -1 994 -1 844
============================================================================== =============== ===============
Items that will not be reclassified subsequently to profit or loss:
Actuarial differences IAS19R - -
=============== ===============
Items that may be reclassified subsequently to profit or loss:
Translation reserves - 2 -3
=============== ===============
Total comprehensive loss -1 996 -1 847
============================================================================== =============== ===============
Comprehensive loss attributable to:
Owners of the company (*) -1 996 -1 847
(*) There are no non-controlling interests.
Statement of financial position as at 30 June 2019
(Unaudited)
Six month (Audited)
ended 30 Year ended
June 31 December
Amounts in '000 EUR Notes 2019 2018
Goodwill 9 15 913 16 134
Other intangible assets 4 664 4 944
Property, plant and equipment 3 752 1 191
Non-current financial assets 228 234
======================================== ============ =============
Non-current assets 24 558 22 503
Inventories and work in progress 10 2 356 2 347
Trade and other receivables 3 573 3 900
Tax receivables 135 94
Prepayments 632 233
Short-term investments 10 10
Cash & cash equivalents 13 598 1 132
======================================== ============ =============
Current assets 7 305 7 716
Assets of discontinued operations 2 260 2 294
Total assets 34 122 32 513
======================================== ============ =============
Bank overdrafts and current portion
of long-term borrowings 11 4 862 3 115
Contingent consideration (current
portion) 12 1 138 1 569
Short-term provisions 73 100
Trade and other liabilities 4 972 4 647
Other current liabilities 209 379
======================================== ============ =============
Total current liabilities 11 255 9 809
Liabilities of discontinued operations 322 85
Net current (liabilities) / assets -3 628 -2 008
======================================== ============ =============
Borrowings and convertible bond
notes 11 3 830 2 259
Long-term provisions 176 168
Deferred tax liabilities 55 54
======================================== ============ =============
Total non-current liabilities 4 061 2 481
Total liabilities 15 638 12 375
======================================== ============ =============
Net assets 18 485 20 138
======================================== ============ =============
Statement of financial position as at 30 June 2019
(Unaudited)
Six month (Audited)
ended 30 Year ended
June 31 December
Amounts in '000 EUR Notes 2019 2018
Share capital 2 710 2 511
Share premium account 58 050 58 249
Own shares -180 -178
Other reserves -2 821 -2 819
Equity reserve 650 422
Retained losses -39 924 -38 047
=============================================== ============ =============
Total equity - owners of the company 18 485 20 138
Total equity 18 485 20 138
=============================================== ============ =============
Statement of changes in equity as at 30 June 2019
Amounts in
'000 EUR Other group reserves
------------------------------------------------
Acquis.
of the OCI
shares on
Share Share Own Equity of Translation retirement Retained Total
capital premium shares reserves Primerdesign reserve benefits Total loss equity
======== ======== ======= ========= ============= ============ =========== ====== ========== =======
Balance at
1 January 2 58 - 2 - 33 24
2018 511 281 - 176 422 - 2 948 143 - 11 816 310 914
=============== ======== ======== ======= ========= ============= ============ =========== ====== ========== =======
Actuarial - - - - - - - - - -
gains
on retirement
benefits
Translation
differences - - - - - - 4 - - 4 - - 4
Loss for the - 4 - 4
period - - - - - - - - 738 738
Total
comprehensive
income /
(loss)
for the - 4 - 4
period - - - - - - 4 - - 4 738 742
Own shares
acquired
/sold in the
period - - - 2 - - - - - - - 2
Other changes - - 32 - - - - - - - - 32
Balance at
31 December 2 58 - 2 - 38 20
2018 511 249 - 178 422 - 2 948 139 - 11 820 047 138
=============== ======== ======== ======= ========= ============= ============ =========== ====== ========== =======
Application
of IFRS 16 - - - - - - - - 117 117
Balance
adjusted
at 31
December 2 58 - 2 - 37 20
2018 511 249 - 178 422 - 2 948 139 - 11 820 930 255
=============== ======== ======== ======= ========= ============= ============ =========== ====== ========== =======
Actuarial - - - - - - - - - -
gains
on retirement
benefits
Translation
differences - - - - - - 2 - - 2 - - 2
Loss for the - 1 - 1
period - - - - - - - - 994 994
Total
comprehensive
income /
(loss)
for the - 1 - 1
period - - - - - - 2 - - 2 994 996
Issue of share
capital - - 137 - - - - - - - - 137
Own shares
acquired
/sold in the
period - - - 2 - - - - - - - 2
Other changes 199 - 62 - 228 - - - - - 365
Balance at 2 58 - 2 - 39 18
30 June 2019 710 050 - 180 650 - 2 948 137 - 11 822 924 485
=============== ======== ======== ======= ========= ============= ============ =========== ====== ========== =======
Statement of cash flows as at 30 June 2019
(Unaudited) (Unaudited)
Six month Six month
Amounts in '000 EUR ended 30 June ended 30 June
2019 2018
Net cash used in operating activities -577 -1 882
======================================= ============== ==============
Investing activities
Acquisition of subsidiary net of
cash acquired -278 -2 032
Purchases of patents and trademarks -158 -201
Purchases of property, plant and
equipment -200 -171
Other investment activities 6 -22
Net cash generated from investing
activities -630 -2 426
======================================= ============== ==============
Investing cash flows from discontinued
activities -25 -77
Investing cash flows from continuing
operations -606 -2 349
Repayments of borrowings -993 -1 540
Proceeds on issue of borrowings
and bond notes 2 036 3 958
Proceeds on issue of shares -69 -53
Disposal (purchase) of own shares
- Net -2 5
Paid interest expenses -290 -281
Net cash generated from financing
activities 682 2 089
======================================= ============== ==============
Financing cash flows from discontinued - -
activities
Financing cash flows from continuing
operations 682 2 089
Net increase/(decrease) in cash
and cash equivalents -525 -2 219
======================================= ============== ==============
Cash and cash equivalents at beginning
of year / period 1 132 4 345
Effect of foreign exchange rate
changes -9 8
Cash and cash equivalents at end
of year / period 598 2 134
======================================= ============== ==============
Notes to the interim financial statements
for the six month period to 30 june 2019
1. General Information and basis of preparation
The Novacyt Group is an 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 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 blue chip companies. Its registered office
is located at 13 Avenue Morane Saulnier, 78140 Vélizy
Villacoublay.
The financial information contained in this report comprises the
consolidated financial statements of the Company and its
subsidiaries (hereinafter referred to collectively as "the Group").
They are prepared and presented in '000s of euros.
The financial information includes all companies under exclusive
control. The Company does not exercise joint control or have
significant influence over other companies. Subsidiaries are
consolidated from the date on which the Group obtains effective
control. It has been prepared in accordance with the recognition
and measurement requirements of International Financial Reporting
Standards as adopted for use in the EU (IFRSs). The accounting
policies applied by the Group in this financial information are the
same as those applied by the Group in its financial statements for
the year ended 31(st) December 2018 and which form the basis of the
2019 financial statements except for a number of new and amended
standards which have become effective since the beginning this
financial year, the key one being IFRS 16. These new and amended
standards are not expected to materially affect the Group.
This condensed consolidated interim financial information does
not constitute full statutory accounts. Statutory accounts for the
year ended 31(st) December 2018 were approved by the Board of
Directors and have been delivered to the Registrar of Companies.
The auditor's report on those accounts was unqualified. The
financial information for the half years 30 June 2019 and 30 June
2018 is unaudited and the twelve months to 31 December 2018 is
audited.
2. Summary of accounting policies applied by the Group
The financial information has been prepared on the historical
cost basis except in respect of those financial instruments that
have been measured at fair value. Historical cost is generally
based on the fair value of the consideration given in exchange for
the goods and services.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a
liability, the Group takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in the financial information is determined on such a
basis, except for leasing transactions that are within the scope of
IFRS 16, and measurements that have some similarities to fair value
but are not fair value, such as net realisable value in IAS 2 or
value in use in IAS 36.
The areas where assumptions and estimates are material in
relation to the financial information are the measurement of
goodwill resulting from the Company's acquisition of the Infectious
Diseases business from Omega Diagnostics Ltd on 28 June 2018 (see
note 37 of the 2018 Statutory Accounts for further details), the
carrying amounts and useful lives of intangible assets (see note 19
of the 2018 Statutory Accounts for further details), deferred taxes
(see note 22 of the 2018 Statutory Accounts for further details),
trade receivables (see note 24 of the 2018 Statutory Accounts for
further details) and provisions for risks and other provisions
related to the operating activities (see note 29 of the 2018
Statutory Accounts for further details).
The accounting policies set out below have been applied
consistently to all periods presented in the financial information,
except for the adoption of IFRS 16 which is only applied from 2019
onwards.
Going concern
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company has adequate
resources to continue operating for the foreseeable future. Thus
they adopt the going concern basis of accounting in preparing the
financial statements.
In making this assessment the Directors have considered the
following elements:
- a positive cash balance at 30 June 2019 of EUR598,000;
- the working capital requirements of the business
- the repayment of the current bond borrowings according to the agreed repayment schedules
- earn out payments in respect of previous acquisitions
- current status of negotiations for further financing
-- Further bond issuances beyond the initial EUR2,000,000 drawn
down upon signing of the Negma facility are dependent on
shareholder approval to issue new equity. The Company cannot
guarantee that shareholders will approve the issue of new equity
and so it cannot rely upon the remaining EUR3,000,000 which is
available from the convertible bond facility. Therefore, the Group
is considering additional financing options to support its working
capital requirements.
-- The Company is evaluating options for new debt financing
facilities that may provide sufficient working capital for the
foreseeable future along with the opportunity to restructure its
balance sheet.
-- Additional capital receipts from the disposal of the NOVAprep
business or through the liquidation of assets 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 or the non-closure of the new bond
facilities.
Failure to achieve shareholder approval to issue new equity in
order to meet the conditions within the convertible bond facility
or failure to agree any alternative debt facilities could place a
material uncertainty on the Company's ability to trade as a going
concern.
Business combinations and measurement of goodwill
o Business combinations
Business combinations are accounted for using the purchase
method (see IFRS 3R).
Each time it takes over a company or group of companies
constituting a business, the Group identifies and measures the
assets acquired and liabilities assumed, most of which are carried
at fair value. The difference between the fair value of the
consideration transferred, including the recognised amount of any
non-controlling interest in the acquiree and the net amount
recognised in respect of the identifiable assets acquired and
liabilities assumed measured at fair value, is recognised as
goodwill.
Pursuant to IFRS 3R, the Group applies the following
principles:
- transaction costs are recognised immediately as operating expenses when incurred;
- any purchase price adjustment of an asset or a liability
assumed is estimated at fair value at the acquisition date, and the
initial assessment may only subsequently be adjusted against
goodwill in the event of new information related to facts and
circumstances existing at the acquisition date if this assessment
occurs within the twelve month allocation period after the
acquisition date. Any adjustment of the financial liability
recognised in respect of an additional price subsequent to the
intervening period or not meeting these criteria is recognised in
the Group's comprehensive income;
- any negative goodwill arising on acquisition is immediately recognised as income; and
- for step acquisitions, the achievement of control triggers the
re-measurement at fair value of the interest previously held by the
Group in profit or loss; loss of control results in the
re-measurement of the possible residual interest at fair value in
the same way.
For companies acquired during the year, only the results for the
period following the acquisition date are included in the
consolidated income statement.
o Measurement of goodwill
Goodwill is broken down by cash-generating unit (CGU) or group
of CGUs, depending on the level at which goodwill is monitored for
management purposes. In accordance with IAS 36, none of the CGUs or
groups of CGUs defined by the Group are greater in size than an
operating segment.
o Impairment testing
Goodwill is not amortised, but is subject to impairment testing
when there is an indication of loss of value, and at least once a
year at the reporting date.
Such testing consists of comparing the carrying amount of an
asset to its recoverable amount. The recoverable amount of an
asset, a CGU or a group of CGUs is the greater of its fair value
less costs to sell and its value in use. Fair value less costs to
sell is the amount obtainable from the sale of an asset, a CGU or a
group of CGUs in an arm's length transaction between well-informed,
willing parties, less the costs of disposal. Value in use is the
present value of future cash flows expected to arise from an asset,
a CGU or a group of CGUs.
It is not always necessary to determine both the fair value of
an asset less costs to sell and its value in use. If either of
these amounts exceeds the carrying amount of the asset, the asset
is not impaired and it is not necessary to estimate the other
amount.
Intangible fixed assets
o Customer relationships
In accordance with IFRS 3, the Company's acquisition of
Primerdesign and the Asset Purchase of the Omega ID business
resulted in the recognition of the value of the acquired customer
base on the balance sheet. The value of this asset was determined
by discounting the additional margin generated by customers after
remuneration of the contributing assets.
Customer relationships will be amortised on a straight-line
basis over nine years.
o Trademark
The acquisition price of Primerdesign and Omega ID by the
Company was also "allocated" in part to the Primerdesign trademark
and Omega trademarks. The value of this asset was determined by
discounting the cash flows that could be generated by licensing the
trademark, estimated as a percentage of revenue derived from
information available on comparable assets.
The trademark will also be amortised on a straight-line basis
over nine years.
o Other intangible assets
Intangible assets include licences recognised at cost and
amortised over useful lives of between 7 and 20 years.
Intangible assets under construction
Pursuant to IAS 38, the Group capitalises development costs
(external costs and personnel expenses), provided that they meet
the following criteria:
- the Group has the intention, as well as the financial and
technical capacity, to complete the development project;
- the asset will generate future economic benefits; and
- the cost of the intangible asset can be measured reliably.
Assets under construction are not amortised until the
development programme has been completed and the asset brought into
use. Other research and development expenses not meeting the
criteria set out above are expensed directly.
Property, plant and equipment
Items of property, plant and equipment are recognised at their
acquisition cost (purchase price plus incidental expenses and
acquisition costs).
Depreciation and amortisation
Property, plant and equipment and intangible assets are
depreciated or amortised on a straight-line basis, with major
components identified separately where appropriate, based on the
following estimated useful lives:
- Leasehold improvements: Straight-line basis - 2 to 15
years
- Trademark: Straight-line basis - 9 years
- Customers: Straight-line basis - 9 years
- Industrial machinery and equipment: Straight-line basis - 3 to 6
years
- General fittings, improvements: Straight-line basis - 3 to 5
years
- Transport equipment: Straight-line basis - 5 years
- Office equipment: Straight-line basis - 3 years
- Computer equipment: Straight-line basis - 2 to 3
years
Any leased buildings, equipment or other leases that fall under
the scope of IFRS 16 as at the effective date of 1 January 2019 and
have been capitalised as a right of use asset will be depreciated
on a straight-line basis over the term of the lease as required
under IFRS 16.
The depreciation or amortisation of fixed assets begins when
they are ready for use and ceases at their disposal, scrapping or
reclassification as assets held for sale in accordance with IFRS
5.
Given the nature of its assets, the Group does not recognise
residual value on the items of property, plant and equipment it
uses.
Depreciation and amortisation methods and useful lives are
reviewed at each reporting date and revised prospectively if
necessary.
Asset impairment
Depreciable and non-depreciable assets are subject to impairment
testing when indications of loss of value are identified. In
assessing whether there is any indication that an asset may be
impaired, the Company considers the following external and internal
indicators:
External indicators:
- drop in the market value of the asset (to a greater extent
than would be expected solely from the passage of time or the
normal use of the asset);
- significant changes with an adverse effect on the entity,
either having taken place during the period or expected to occur in
the near future, in the technical, economic or legal environment in
which the Company operates or in which the asset is used; and
- increases in market interest rates or other market rates of
return during the year when it is likely that such increases will
significantly reduce the market value and/or value in use of the
asset.
Internal indicators:
- existence of indication of obsolescence or physical damage of
an asset unforeseen in the depreciation or amortisation
schedule;
- significant changes in the way the asset is used;
- weaker-than-expected performance by the asset; and
- significant reduction in the level of cash flow generated by the asset.
If there is an indication of impairment, the recoverable amount
of the asset is compared with its carrying amount. The recoverable
amount is the greater of fair value less costs to sell and value in
use. Value in use is the present value of future cash flows
expected to flow from an asset over its estimated useful life.
The recoverable amount of assets that do not generate
independent cash flows is determined by that of the cash-generating
unit (CGU) to which it belongs, a CGU being the smallest
homogeneous group of identifiable assets generating cash flows that
are largely independent of other assets or groups of assets.
The carrying amount of an asset is its gross value less, for
depreciable fixed assets, accumulated depreciation and impairment
losses.
In the event of loss of value, an impairment charge is
recognised in profit or loss. Impairment is reversed in the event
of a change in the estimate of the recoverable value or if
indications of loss of value disappear. Impairment is recognised
under "Depreciation, amortisation and provisions for impairment of
property, plant and equipment and intangible assets" in the income
statement.
Intangible assets not subject to amortisation are tested for
impairment at least once a year.
Inventories
Inventories are carried at the lesser of their acquisition cost
and their recoverable amount. The acquisition cost of inventories
includes materials and supplies, and, where applicable, personnel
expenses incurred in transforming inventories into their current
state. It is calculated using the weighted average cost method. The
recoverable amount represents the estimated selling price less any
marketing, sales and distribution expenses.
The gross value of goods and supplies includes the purchase
price and incidental expenses.
A provision for impairment, equal to the difference between the
gross value determined in accordance with the above terms and the
current market price or the realisable value less any proportional
selling costs, is recognised when the gross value is greater than
the other stated item.
Trade receivables
Trade receivables are recognised upon transfer of ownership,
which generally corresponds to delivery for sales of goods and the
rendering of the service for services.
Receivables are recorded at their fair value, which corresponds
most often to their nominal value. Receivables may be impaired by
means of a provision, to take into account any difficulties in
recovering the outstanding amounts. Provisions for impairment are
determined by comparing the acquisition cost and the likely
realisable value, which is defined as the present value of the
estimated recoverable amounts.
Trade receivables have not been discounted, because the effect
of doing so would be immaterial.
Cash and cash equivalents
Cash equivalents are held in order to meet short-term cash
commitments rather than for investment or other purposes. For an
investment to qualify as a cash equivalent, it must be readily
convertible into a known amount of cash and be subject to an
insignificant risk of change in value. Cash and cash equivalents
comprise cash funds, current bank accounts and marketable
securities (cash Undertakings for Collective Investment in
Transferable Securities "UCITS", negotiable debt securities, etc.)
that can be liquidated or sold within a very short time (generally
less three months at the acquisition date) and which have a
negligible risk of change in value. All such items are measured at
fair value, with any adjustments recognised in profit or loss.
Long Term Incentive Plan
Novacyt granted certain employees 'phantom' shares under a long
term management incentive plan adopted on 1 November 2017. The
exercise price is set at the share price on the grant date and the
options will be settled in cash. The options will fully vest on the
third anniversary of the grant date. The payment expenses are
calculated under IFRS 2 "Share-based payments". The accounting
charge is spread across the vesting period to reflect the services
received and a liability recognized on the balance sheet.
Loss per share
The Group reports basic and diluted losses per common share.
Basic losses per share is calculated by dividing the profit
attributable to common shareholders of the Company by the weighted
average number of common shares outstanding during the period.
Diluted losses per share is determined by adjusting the profit
attributable to common shareholders by the weighted average number
of common shares outstanding, taking into account the effects of
all potential dilutive common shares, including options. These
options are taken into account for the calculation of the loss per
share only if their exercise price is higher than the market
price
Exceptional items
Exceptional items are those costs or incomes that in the view of
the Board of Directors, require separate disclosure by virtue of
their size or incidence, and are charged/credited in arriving at
operating profit/loss.
Discontinued operations and assets held for sale
Discontinued operations and assets held for sale are restated in
accordance with IFRS 5.
On the 11(th) December 2018, Novacyt announced its intention to
sell the NOVAprep business and thus is presenting its financial
results in accordance with the IFRS 5 accounting rule on
discontinued operations. As a result, all revenues and charges
generated by this activity are presented on a single line, below
the net result.
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.
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 was made in the 2018
accounts and continues to be for H1 2019 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.). On 18 of July 2019
the Clinical Lab business was sold.
3. 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.
Key sources of estimation uncertainty
The Group has a number of key sources of estimation uncertainty
as listed below. Of these items only the measurement of goodwill,
the measurement of useful lives of intangible assets, measurement
of fair value of assets and liabilities in business combinations,
recognition of deferred taxes and the value trade and other
receivables are considered likely to give material adjustment.
Others are areas of estimates deemed not material.
-- 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:
(Unaudited) (Audited)
Six month Year ended
ended 30 June 31 December
Amounts in '000 EUR 2019 2018
Goodwill Lab21 17 709 17 709
Impairment of goodwill - 9 101 - 9 101
========================== =========================== ======================
Net value 8 608 8 608
========================== =========================== ======================
Goodwill Primerdesign 7 210 7 210
Impairment of goodwill - -
========================= =========================== ======================
Net value 7 210 7 210
========================== =========================== ======================
Goodwill Omega 95 316
Impairment of goodwill - -
========================= =========================== ======================
Net value 95 316
========================== =========================== ======================
Total Goodwill 15 913 16 134
========================== =========================== ======================
The goodwill associated with the Omega Acquisition has reduced
by EUR221,000 as a result of the cancellation of an earn-out
milestone, resulting in a reduction to the purchase price and an
adjustment being made to goodwill as the event has occurred within
the twelve month allowable period.
4. Revenue
The table below shows revenue from ordinary operations:
(Unaudited) (Unaudited)
Six month Six month
ended 30 June ended 30 June
Amounts in '000 EUR 2019 2018
Manufactured goods 6 676 5 598
Services 306 549
Traded goods 58 85
Other 183 195
Total Revenue 7 223 6 427
====================== ======================== ========================
A portion of the Group's revenue is generated in foreign
currencies (particularly in sterling). The group has not hedged
against the associated currency risk.
The breakdown of revenue by operating segment and geographic
area is presented in note 5.
5. 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
Following the announcement of the sale proceedings for NOVAprep,
this segment now 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 carries on diagnostic activities in laboratories,
and the manufacture 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 primarily intended for laboratory use and rely on
"polymerase chain reaction" technology.
The Chief Operating Decision Maker is the Chief Executive
Officer.
Breakdown of revenue by operating segment and geographic
area
At 30 June 2019
Amounts in '000 Corporate Molecular
EUR & Diagnostics products Total
Geographical
area
Africa 358 161 518
Europe 1 555 1 352 2 906
Asia-Pacific 1 097 496 1 594
America 409 980 1 390
Middle East 551 264 815
Revenue 3 970 3 253 7 223
================= ================ =========== =======
At 30 June 2018
Amounts in '000 Corporate Molecular
EUR & Diagnostics products Total
Geographical
area
Africa 198 121 319
Europe 1,568 1,536 3,104
Asia-Pacific 706 444 1,150
America 529 825 1,354
Middle East 402 98 500
Revenue 3,403 3,024 6,427
================= ================ =========== =======
6. Other operating income and expenses
(Unaudited) (Unaudited)
Six months Six months
ended 30 ended 30
Amounts in '000 EUR June 2019 June 2018
Reversal of accrual for litigation
with employees 57 177
Other operating income - -
Other operating income 57 177
========================================== ============ ============
Provision for litigation with employees - 3 - 211
Restructuring expenses - 31 - 123
Business sale expenses - 21 -
Acquisition related expenses - - 68
IPO preparation - - 22
Other expenses - 68 - 20
Other operating expenses - 123 - 444
========================================== ============ ============
Exceptional charges have come down over the periods in question,
with there being no material items to mention as at June 2019.
Prior period costs were driven predominantly by one-time events
such as acquisition costs or business sale costs.
7. Financial income and expense
(Unaudited) (Unaudited)
Six month Six month
ended 30 ended 30
June June
Amounts in '000 EUR 2019 2018
Exchange gains 36 -
Change in fair value of - -
options
Other financial income - 32
Financial income 36 32
========================== =========================== ===========================
Interest on loans - 430 - 294
Exchange losses - 53 - 40
Other financial expense - 96 - 34
Financial expense - 579 - 368
========================== =========================== ===========================
Financial Expense:
Interest on Loans:
This primarily relates to the outstanding Kreos and Vatel bonds,
but includes an additional interest stream in relation to the Negma
convertible bond taken out in April 2019, which generated an
interest charge of EUR83,000 during the period to June 2019.
8. 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.
(Unaudited) (Unaudited)
Six month Six month
ended 30 June ended 30
2019 June
Amounts in 000' EUR 2018
Net loss attributable to owners
of the company - 1 994 - 1 844
Impact of dilutive instruments - -
Net loss attributable to owners
of the company - 1 994 - 1 844
===================================== ================== ==================
Weighted average number of shares 37 664 418 23 075 634
Impact of dilutive instruments - -
Weighted average number of diluted
shares 37 664 418 23 075 634
===================================== ================== ==================
Earnings per share (in euros) - 0.05 - 0.08
===================================== ================== ==================
Diluted earnings per share (in
euros) - 0.05 - 0.08
===================================== ================== ==================
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.
9. Goodwill
Goodwill is the difference recognised, upon consolidation of a
company, between the fair value of the purchase price of its shares
and the net assets acquired and liabilities assumed, measured in
accordance with IFRS 3.
EUR
Cost
At 1 January 2018 26,252
Recognised on acquisition of the Omega Infectious
Diseases business 316
Transferred to assets of discontinued operations - 1,333
=======
At 31 December 2018 25,235
Adjustment to the goodwill of the Omega
Infectious Diseases business -221
At 30 June 2019 25,014
Accumulated impairment losses
At 1 January 2018 9,786
Exchange differences -
Impairment losses for the period -
Eliminated on disposal of a subsidiary -
Transferred to assets of discontinued operations -685
=======
At 31 December 2018 9,101
Exchange differences -
Impairment losses for the period -
Eliminated on disposal of a subsidiary -
-------
At 30 June 2019 9,101
Carrying value at 31 December 2018 16,134
Carrying value at 30 June 2019 15,913
=======
Further details can be found in the 2018 Statutory Accounts in
note 18.
The goodwill associated with the Omega Acquisition has reduced
by EUR221,000 as a result of the cancellation of an earn-out
milestone, resulting in a reduction to the purchase price and an
adjustment being made to Goodwill as the event has occurred within
the twelve month allowable period.
10. Inventories and work in progress
(Unaudited)
Six month (Audited)
ended 30 Year ended
June 31 December
Amounts in '000 EUR 2019 2018
Raw materials 1 093 1 168
Work in progress 704 593
Finished goods 707 763
Stock provisions - 148 - 177
Total 2 356 2 347
===================== ============= ==============
The underlying inventory value has not materially changed since
December 2018.
11. Borrowings
The following tables show borrowings and financial liabilities
carried at amortised cost.
o Maturities as of 30 June 2019
Amount due for settlement within Amount due for settlement after Total
Amounts in '000 EUR 12 months 12 months
Bond notes 4 331 1 429 5 760
Bank borrowings 120 1 121
IFRS16 Liabilities 206 2 401 2 607
Accrued interest on borrowings 205 - 205
Total financial liabilities 4 862 3 831 8 693
================================= ================================== ================================== ===========
o Maturities as of 31 December 2018
Amount due for settlement within Amount due for settlement after 12 Total
Amounts in '000 EUR 12 months months
Bond notes 2 976 2 239 5 216
Bank borrowings 67 20 87
Accrued interest on borrowings 72 - 72
Total financial liabilities 3 116 2 259 5 375
================================= =================================== =================================== =========
As of 30 June 2019, the Group's financing primarily
comprised:
- A bond subscribed by Kreos Capital IV Ltd in the amount of
EUR3,500,000 on 15 July 2015, with an interest rate of 12.5 % for a
term of 3 years;
- A bond subscribed by Kreos Capital V Ltd in the amount of
EUR3,000,000 issued on 12 May 2016, with a nominal interest rate of
12.5 % for a term of 3 years;
- A convertible bond subscribed by Vatel in the amount of
EUR1,500,000 issued on 31 March 2017, with an effective interest
rate of 12.7% for a term of 3 years.
- A convertible bond subscribed by Vatel in the amount of
EUR4,000,000 on 29 May 2018, with an effective interest rate of
8.5% for a term of 3 years.
- In April 2019, the Group secured a new flexible bond financing
arrangement with a maximum drawdown of EUR5,000,000 through a
private placement subscribed by the Negma / Park Partner private
equity fund. The funds are released in tranches of EUR500,000,
corresponding to one issuance right giving rise to the subscription
of bonds convertible into shares with warrants (OCABSA). By
exception, the first tranche amounted to EUR2,000,000 and the group
exercised this first issuance right as of 18 April 2019. As of 30
June 2019, 170 resulting OCABSA were converted into shares.
As a result of adopting IFRS 16 from the 1st January 2019, there
is a EUR2,607,000 liability created (and a similar value fixed
asset) primarily relating to building leases.
12. Contingent consideration
The contingent consideration relates to the acquisition of the
Primerdesign shares in May 2016 and the acquisition of the
Infectious Diseases business from Omega Diagnostics Ltd Company in
June 2018.
(Unaudited) (Audited)
Six months Year ended
ended 30 31 December
Amounts in 000' EUR June 2019 2018
Contingent consideration (current
portion) 1,138 1,569
Total 1,138 1,569
---------------------------------- ----------- ------------
The movement in the liability between the 31 December 2018 and
30 June 2019 is due to repayments of the earn outs and the removal
of one earn-out milestone that will no longer be achieved. The
payment of the remaining contingent liability is expected to occur
within twelve months.
13. Notes to the cash flow statement
(Unaudited) (Unaudited)
Six month Six month
Amounts in '000 EUR ended 30 June ended 30 June
2019 2018
Loss for the year / period -1 994 -1 844
Loss from the discontinued activities -786 -673
Loss the from the continuing operations -1 208 -1 171
Adjustments for:
Depreciation, amortisation and impairment
loss 863 625
Unwinding of discount on contingent - -
consideration
(Increase) / decrease of fair value - -
Gains / (losses) on disposal of
fixed assets 6 -
================================================= ============== ==============
Operating cash flows before movements of working
capital -1 125 -1 219
(Increase) / decrease in inventories 105 -513
(Increase) / decrease in receivables -224 -121
Increase / (decrease) in payables 281 -259
Cash used in operations -964 -2 112
================================================= ============== ==============
Changes in debt issues expenses - -
Income taxes paid -41 -65
Finance costs 428 295
Net cash used in operating activities -577 -1 882
================================================= ============== ==============
Operating cash flows from the discontinued
activities -633 -881
Operating cash flows from the continuing
operations 56 -1 001
14. Impact of THE UK'S DEPARTURE FROM THE EUROPEAN UNION on Group activity
Companies operating in the "Diagnostics" and "Molecular testing"
sectors are established in the United Kingdom. It is difficult to
anticipate the impact of the UK's departure from the European Union
on trade relations and regulatory constraints. The tax consequences
depend on the outcome of negotiations between Europe and the United
Kingdom, and to date are undetermined.
Management continues to identify market, operational and legal
risks and to take the appropriate mitigation measures as
required.
15. Subsequent events
On 18 July 2019, Novacyt completed the sale of its non-core
Cambridge clinical laboratory businesses to Cambridge Pathology BV
for a total consideration of GBP400,000
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
IR EAANSALENEAF
(END) Dow Jones Newswires
September 26, 2019 02:02 ET (06:02 GMT)
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