TIDMNCYT
RNS Number : 9312B
Novacyt S.A.
26 September 2018
NOVACYT HALF YEAR 2018 RESULTS
Molecular product revenues up 18% to EUR3m
Gross margin increases to 64%
Paris, France and Camberley, UK - 26 September 2018 - Novacyt
(ALTERNEXT: ALNOV; AIM: NCYT), an international specialist in
clinical diagnostic products, today announces unaudited financial
results for the six months ended 30 June 2018.
Unaudited revenues were broadly flat at EUR7.0m following a
strong performance by the Primerdesign and Lab21 Products
divisions, offset by lower sales from NOVAprep(R) . Group gross
margin increased to 64% (61% H1 2017) and the EBITDA loss was
EUR0.5m. Excluding NOVAprep(R) , the Group achieved EBITDA
breakeven.
Financial highlights
-- Consolidated unaudited Group revenue of EUR7.0m, marginal increase compared to H1 2017
o Primerdesign revenue increased 15% (18% CER) to EUR3m
o Lab21 revenue increased 3% (6% CER) to EUR3.4m
o NOVAprep(R) revenue of EUR0.6m versus EUR1.1m in H1 2017
-- Group revenue increased 1% at CER compared with H1 2017 as a
result of a previously announced decision to re-optimise the
NOVAprep(R) product, exacerbated by supply issues
-- Excluding the impact of NOVAprep(R) , Group revenue increased 8% (11% at CER)
-- Gross profit increased from EUR4.3m to EUR4.5m representing a
three-percentage point increase from 61% to 64%
-- EBITDA loss of EUR0.5m in H1 2018 was broadly similar to the
same period in 2017 as a result of higher gross profit offset by
NOVAprep(R) losses
-- Excluding the impact of NOVAprep(R) EBITDA was at break-even for the first half
-- Novacyt had EUR2.1m in cash and cash equivalents at the end of 30 June 2018
EUR'000 Consol Consol Consol
H1 18 H1 17 H1 16
Revenue 7,044 7,029 4,950
Gross profit 4,492 4,258 2,605
Gross margin % 64% 61% 53%
EBITDA (493) (469) (1,611)
Operating loss before exceptional
items (1,217) (999) (1,815)
------------------------------------ ----------------- -------------
Net result (1,844) (1,713) (3,525)
Earnings per share (fully
diluted and undiluted) -EUR0.08 -EUR0.09 -EUR0.37
Operational highlights
-- Completed the acquisition of Omega Diagnostics ID business on
28th June 2018, a profitable and cash generative infectious disease
business unit
-- Following further investment in commercial infrastructure,
Primerdesign revenue increased 15% (18% at CER) to EUR3.0m compared
with H1 2017 which is being directly driven from the investment in
the core research use only (RUO) business
-- Group gross margin improved again during the period to 64%
through a combination of higher than expected margin in
Primerdesign and Lab21 offset by the disappointing performance of
NOVAprep(R)
-- As a result of the previously announced product optimisation
process and unexpected supply chain issues, NOVAprep(R) sales fell
greater than anticipated by 44% to EUR0.6m compared with H1 2017
(-44% versus H2 2017) and the Board announced a strategic review of
how to maximize future value of the NOVAprep(R) business unit
Post period end
-- Integration of the infectious disease business unit from
Omega Diagnostics is progressing well. Technical transfer of
production to Novacyt is underway alongside product re-registration
and the initiation of direct commercial activities. Early
indications suggest stronger than expected profitability, which
could be delivered as early as H2 2018
-- On 2nd August the Board announced it would undertake a
strategic review of NOVAprep(R) operations. The board is making
good progress and expects to provide an update later in the
year
-- Signed B2B partnership with Applied Microarrays, Inc. (AMI)
and Primerdesign to facilitate the design and optimisation of
customised microarray assays for the US market
Graham Mullis, Group CEO of Novacyt, commented:
"The first half of 2018 has seen strong progress being made
across the Group in terms of sales growth, the development of new
clinical products and the accretive acquisition of the Omega
Diagnostics ID business. This underpins our continued focus and
delivery against our three core strategic objectives.
"The strategic review of NOVAprep(R) is ongoing and I expect to
update the market once it has been concluded.
"We remain committed to becoming EBITDA profitable in 2018."
Corporate review
In the first half of 2018, Novacyt made further progress in
shaping and defining the business to deliver long-term sustainable
growth. At the heart of the strategy is a resolute commitment to
the three pillars of growth based on organic expansion, a
commitment to investment in R&D and a judicious approach to
acquisitions.
Revenues of EUR7.0m were flat on 2017 as a result of the effects
of the previously announced NOVAprep(R) product re-optimisation and
supply chain issue being offset by strong growth in Primerdesign
and solid growth at Lab21. Group revenues, excluding NOVAprep(R) ,
advanced 8% (11% at constant exchange rates CER). Organic growth
was driven by business to business contract wins at Primerdesign,
new tenders in Lab21 and the launch of several newly developed
clinical products.
The Board continues to progress its strategic review of options
for the NOVAprep(R) business, which was announced on 2nd August,
including a sale of the NOVAprep(R) business. In the event of a
successful sale, Novacyt would benefit from a significant reduction
in ongoing losses due to the investment still needed to optimize
the NOVAprep(R) business and the remaining core business would be
expected to become immediately EBITDA profitable and move towards
becoming cash flow generative.
The integration of Omega Diagnostics infectious disease
business, acquired on 28(th) June 2018, is progressing well and
going according to plan. The Group has started to capture the
identified cost and growth synergies and the additional
profitability from this acquisition could exceed expectations
during the second half of this year.
Molecular products
18% underlying sales growth in Primerdesign reflects strong
growth in the core Life Science Research and Food Testing markets
and a step up in business to business activities. We have continued
to invest in sales and marketing, increasing our catalogue of tests
and we continue to make good progress in the development of
clinical IVD products.
Primerdesign is increasingly recognised as a leading clinical
assay development partner. During the period, the Company secured
contracts with ten development customers compared to only three
customers in 2017. The collaboration signed with GenePoC in March
to develop a triplex molecular diagnostic assay to identify
influenza A, influenza B and respiratory syncytial virus A and B
(RSV A and B) for deployment on GenePOC's revogene(TM) instrument
is a typical example of such contracts. The initial work is
expected to complete in the second half and follow-on work is under
discussion.
The Company continues to grow sales of the q16 PCR instrument
and has invested heavily in stock expected to sell during the next
twelve months. The number of units now sold has risen from 230 in
2017 to 339 and this is expanding the pull-through in genesig(R)
kit sales which is delivering a continued increase in
Primerdesign's gross margin. The Company continues to invest in the
development of the next generation PCR instrument - the q24 - which
is faster, higher throughput and offers higher multiplexing
capabilities. The launch of this instrument is planned for H2
2019.
The launch of the next two CE-IVD accredited clinical assays are
expected to launch by the end of the year. The assays EBV and BKV
are used in the management of immunosuppressed patients and in the
monitoring of patients post organ-transplantation. The molecular
market for these two assays in Europe is estimated at EUR20m.
Primerdesign continues to invest in business development and
commercial infrastructure and has increased its direct sales force
in Norther Europe from two to six people dedicated to specific
territories within the region. Additional sales people are being
added into other international markets where we also expect to see
significant growth opportunities. The investment in B2B commercial
infrastructure is building a strong pipeline of potential new
partners and we expect sales to continue to grow from this
investment.
Protein products
Lab21 revenue of EUR3.4m demonstrated reported growth of 3% and
6% CER over H1 2017. There is also a strong start to the second
half of 2018, with a new high level of tenders of EUR1.2m being
secured. During 2017, we completed the development and launch of 10
new products, all of which are now contributing to growth in 2018.
In addition, we launched PathFlow(TM) Mononucleosis, a qualitative
lateral flow immunoassay for the detection of infectious
mononucleosis (IM) and the first in a series of infectious disease
tests. PathFlow(TM) Mononucleosis provides a rapid and effective
differential diagnosis to patients with IM over streptococcal
pharyngitis and will help to address the global issue of antibiotic
resistance.
On 28 June Novacyt, through its Lab21 Products division, agreed
terms of an asset purchase agreement with Omega Diagnostics to
acquire the infectious disease business unit for up to GBP2.175
million subject to performance, comprising:
(i) GBP1.8m upon completion,
(ii) GBP175,000 paid after twelve months upon completion of technology transfer and,
(iii) GBP200,000 paid upon the successful accreditation of the
Axminster, UK production facility to certain standards.
The unaudited sales of the ID business were GBP2.49 million and
EBITDA GBP310,000 for the year ending 31 March 2018. Integration is
progressing well with technical transfer of production to Novacyt
underway alongside product re-registration and initiation of direct
commercial activities. Novacyt continues to anticipate similar
sales in the first twelve months of ownership and to capture
material cost synergies from leveraging existing commercial and
manufacturing infrastructure within Novacyt and expect
profitability in the second half to be greater than expected.
NOVAprep(R)
During the period NOVAprep(R) revenue was EUR0.6m versus EUR1.1m
in H1 2017 reflecting the previously announced product optimisation
actions and the impact of an unexpected supply chain delay. The
supply chain issue has now been resolved and sales are recovering
during the second half. The strategic review announced in August to
consider the optimal way to maximise value for the technology
continues and the Company will provide an update in due course.
Following the balance sheet date NOVAprep(R) has also launched its
first non-gynaecological CE Marked product which is expected to be
an important addition to the NOVAprep(R) product already used in
cervical cancer screening and HPV testing.
Financial review
Revenue
Revenue remained broadly unchanged at EUR7.0m and increased by
1% at CER (taking into account a 2% fall in the value of the Pound
against the Euro) compared with the same period last year. This
underlying increase was achieved due to growth in Primerdesign (18%
CER) and Lab21 (6% CER) which was mostly offset by the greater than
expected reduction in NOVAprep(R) revenue of 44% from EUR1.1m to
EUR0.6m in the first half of this year. At a Group level, sales
have grown compared to the first half of 2017 in Africa, the
Americas and the Middle East, with year-on-year reductions in
Europe and Asia-Pacific caused by weaker NOVAprep(R) sales. Both
Europe and Asia-Pacific achieved growth excluding NOVAprep(R) .
Gross margin
Gross margin has shown continued positive momentum, increasing
from EUR4.3m (61%) in the first half of last year to EUR4.5m (64%)
in 2018. This year-on-year improvement is due to a combination of
higher margins in the Lab21 and Primerdesign businesses and the
impact of Primerdesign increasing its share of Group revenue from
37% to 43% whilst delivering an extremely high margin of 85%. This
improvement in gross margin continues a trend of annual
improvements each year since 2014 when it was 44%.
The Lab21 Products business has seen a 3% year-on-year gross
margin improvement predominantly driven by a sales mix change in
selling a greater proportion of higher margin products. The
NOVAprep(R) gross margin has improved 5% year-on-year, driven a
larger proportion of consumables compared to H1 2017. Lower
manufacturing costs have also helped to increase gross margins due
to economies of scale as sales volumes increase.
EBITDA
EBITDA is broadly unchanged compared with the same period last
year. In the first half of 2018, the Group has continued to invest
in further growth, which has been rewarded with 18% underlying
growth in Primerdesign, 6% growth in Lab21 Products and a
three-percentage point increase in gross margin. However, the
reduction in NOVAprep(R) revenue has temporarily halted the
profitability progress.
Higher commercial costs reflect increased staff levels to
support the growth plans of the business. Facilities costs have
increased year-on-year following the move of the Microgen business
to the new group headquarters in Camberley. Due to the dual stock
market listing (AIM & Euronext Growth) professional fees have
increased year on year, due to the increased regulatory
requirements. Until this period, EBITDA had consistently improved
each half year from a consolidated loss of EUR1.6m in H2 2015 to a
EUR0.3m loss in the second half of 2017 driven by strong sales
growth and gross margin improvements.
Operating loss before exceptional items
Group operating loss before exceptional items increased by 22%
to EUR1.2m compared with H1 2017. With only a small movement in
EBITDA, the movement is due to additional depreciation/amortisation
costs of EUR0.1m and LTIP charges of EUR0.1m as the scheme was put
in place in November 2017.
Net loss
The net loss increased by EUR0.1m to EUR1.8m between H1 2017 and
H1 2018 due to the increase in depreciation and amortisation costs
and LTIP charges described above as well as increases in
exceptional charges of EUR0.1m related to restructuring staff
costs, offset by reduced financial expenses of EUR0.2m due to
reduced interest charges on the outstanding loans.
Balance Sheet
EUR'000 Jun-18 Dec-17 EUR'000 Jun-18 Dec-17
Goodwill 18,212 16,466 Share capital and premium 60,739 60,792
Other non-current
assets 6,463 6,650 Other reserves (2,567) (2,568)
Retained earnings (35,154) (33,310)
Total non-current
assets 24,676 23,116 Total equity 23,018 24,914
Inventories 3,113 1,942 Borrowings (> 1 yr) 3,199 1,115
Provisions and long-term
Other current assets 4,826 4,621 liabilities 332 212
Cash and cash equivalents 2,134 4,345 Total non-current liabilities 3,531 1,327
Total current assets 10,072 10,908
Borrowings (< 1 yr) 3,099 2,778
Trade and other payables 3,390 3,692
Provisions and short-term
liabilities 1,709 1,313
Total current liabilities 8,199 7,783
TOTAL ASSETS 34,748 34,024 TOTAL EQUITY AND LIABILITIES 34,748 34,024
The Group held EUR2.1m of cash on the balance sheet at 30 June
2018 compared to EUR4.3m at 31 December 2017. The reduction in cash
was due to the EBITDA loss of EUR0.5m, exceptional charges of
EUR0.3m and working capital usage of EUR0.9m - primarily driven by
a EUR0.5m increase stock mainly due to the business holding larger
quantities of Primerdesign q16 instruments to support planned sales
in H2. The EUR4.0m of cash derived from the bond issued in May was
offset by the EUR2.1m upfront cost of acquiring the Omega ID
business in June and debt repayments of EUR1.8m. Net debt increased
to EUR4.2m at the end of June 2018 from net cash of EUR0.5m in
December 2017 following the issue of a new EUR4.0m bond facility in
May.
Goodwill increased by EUR1.7m following the acquisition of the
Omega ID business for up to EUR2.5m - including EUR0.4m of deferred
consideration for two milestones related to transitioning
operations to the Novacyt Group - less the cost of inventories and
fixed assets recognised upon acquisition. Due to the transaction
completing very close to the reporting date, purchase price
allocation will be reported at the end of the financial year. As at
June 2018, the balance sheet includes within current assets EUR662k
of inventories and EUR47k of fixed assets related to the
acquisition.
Inventories have increased EUR1.2m since the end of last year,
which includes EUR0.7m of stock acquired from Omega Diagnostics and
EUR0.4m higher stock of instruments to fulfil orders in the second
half of the year driven by a strong order book.
Trade receivables have increased since the year end by EUR0.2m
to EUR4.0m. Payments from the large Chinese debtor reported at the
year-end have recommenced under an agreed schedule, which we expect
will clear a significant portion of the debt by the year end and
enable us to build a strong relationship with the customer in order
to help the Group maximise opportunities in the Chinese market.
Borrowings have increased by EUR2.4m to EUR6.3m since the
previous year end due to the EUR4.0m bond facility (EUR3.96m net of
fees) issued in May offset by debt repayments of EUR1.54m during
the period.
Current trading and outlook
Novacyt remains committed to successfully delivering on its
three pillars of growth strategy which is driving growth in the
core businesses and delivering operational efficiency.
The Board remains confident in the outlook for the core business
and expects to achieve EBITDA profitability in 2018 driven by:
-- Primerdesign - continued double-digit growth in the core
business and conversion of the significant business-to-business
pipeline opportunity
-- Lab21 - the expected completion of major tender opportunities
-- Integration of the Omega ID business and delivery of better than expected profitability
-- Successful outcome of the NOVAprep(R) strategic review to
reduce or eliminate the underlying NOVAprep(R) losses
Upcoming events
Full year 2018 revenue result: 24th January 2019
- 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 SpÄng
+44 (0) 20 3705 9330
FTI Consulting (International)
Brett Pollard / Victoria Foster Mitchell
+44 (0)20 3727 1000
brett.pollard@fticonsulting.com /
victoria.fostermitchell@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 group with a growing portfolio of cancer and infectious
disease products and services. Through its proprietary technology
platform, NOVAprep(R), and molecular platform, genesig(R), Novacyt
is able to provide an extensive range of oncology and infectious
disease diagnostic products across an extensive international
distributor network. The Group has diversified sales from
diagnostic reagents used in oncology, microbiology, haematology and
serology markets, and its global customers and partners include
major corporates.
For more information please refer to the website:
www.novacyt.com
Consolidated income statement as at 30 June 2018
(Unaudited) (Unaudited) (Audited)
Six month Six month Year ended
ended 30 ended 30 31 December
Amounts in '000 EUR Notes June 2018 June 2017 2017
4,
Revenue 5 7,044 7,029 14,954
Cost of sales -2,552 -2,771 -6,030
=================================== ============ ============ =============
Gross profit 4,492 4,258 8,923
Sales, marketing and distribution
expenses -1,756 -1,615 -3,249
Research and development
expenses -287 -397 -819
General and administrative
expenses -3,751 -3,389 -7,114
Governmental subsidies 85 144 368
Operating loss before exceptional
items -1,217 -998 -1,890
Costs related to acquisitions - - -
Other operating income 6 177 7 16
Other operating expenses 6 -469 -144 -2,197
Operating loss after exceptional
items -1,510 -1,135 -4,071
=================================== ============ ============ =============
Financial income 7 32 301 466
Financial expense 7 -367 -878 -1,839
Loss before tax -1,844 -1,712 -5,444
=================================== ============ ============ =============
Tax (expense) / income - - 3
Loss after tax attributable
to owners of the company -1,844 -1,712 -5,442
=================================== ============ ============ =============
Loss per share (EUR) 8 -0.08 -0.09 -0.24
Diluted loss per share
(EUR) 8 -0.08 -0.09 -0.24
All results derive from continuing operations.
Consolidated statement of comprehensive income as at 30 June
2018
(Unaudited) (Unaudited) (Audited)
Six month Six month Year ended
ended 30 ended 30 31 December
Amounts in '000 EUR Notes June 2018 June 2017 2017
Loss after tax -1,844 -1,712 -5,442
========================================== ============ ============ =============
Items that will not
be reclassified subsequently
to profit or loss:
Actuarial differences
IAS19R - - 2
============ ============ =============
Items that may be reclassified
subsequently to profit
or loss:
Translation reserves -3 -7 8
============ ============ =============
Total comprehensive
loss -1,847 -1,719 -5,432
========================================== ============ ============ =============
Comprehensive loss
attributable to:
Owners of the company
(*) -1,847 -1,719 -5,432
(*) There are no non-controlling interests.
Statement of financial position as at 30 June 2018
(Unaudited) (Audited)
Six month Year ended
ended 30 31 December
Amounts in '000 EUR Notes June 2018 2017
Goodwill 9 18,212 16,466
Other intangible assets 4,656 4,840
Property, plant and equipment 1,561 1,573
Non-current financial assets 247 238
Other long-term assets - -
======================================= ============ =============
Non-current assets 24,676 23,116
Inventories and work in progress 10 3,113 1,942
Trade and other receivables 4,018 3,804
Tax receivables 337 271
Prepayments 449 537
Short-term investments 22 10
Cash & cash equivalents 2,134 4,345
======================================= ============ =============
Current assets 10,072 10,908
Total assets 34,748 34,024
======================================= ============ =============
Bank overdrafts and current portion
of long-term borrowings 11 3,099 2,778
Contingent consideration (current
portion) 12 1,552 1,126
Short-term provisions 78 50
Trade and other liabilities 3,390 3,692
Tax liabilities - -
Other current liabilities 79 137
======================================= ============ =============
Total current liabilities 8,199 7,783
Net current (liabilities) / assets 1,874 3,125
======================================= ============ =============
Borrowings and convertible bond
notes 11 3,199 1,115
Contingent consideration (non-current 12
portion) - -
Retirement benefit obligations 14 14
Long-term provisions 146 158
Deferred tax liabilities 41 41
Other long term liabilities 13 132 -
======================================= ============ =============
Total non-current liabilities 3,531 1,327
Total liabilities 11,730 9,111
======================================= ============ =============
Net assets 23,018 24,914
======================================= ============ =============
Statement of financial position as at 30 June 2018
(Unaudited) (Audited)
Six month Year ended
ended 30 31 December
Amounts in '000 EUR Notes June 2018 2017
Share capital 2,511 2,511
Share premium account 58,228 58,281
Own shares -171 -176
Other reserves -2,818 -2,815
Equity reserve 422 422
Retained losses -35,153 -33,309
================================================ ============ =============
Total equity - owners of the company 23,018 24,914
Total equity 23,018 24,914
================================================ ============ =============
Statement of changes in equity as at 30 June 2018
Amounts in
'000
EUR Other group reserves
--------------------------------------------------
Acquisition Other
of the comprehensive
shares income
Share Share Own Equity of Primer Translation on retirement Retained Total
Notes capital premium shares reserves design reserve benefits Total loss equity
======== ======== ======= ========= ============ ============ ============== ====== ========== =======
Balance at 1 January 1 47 - - 2 - 27 17
2017 161 120 165 345 - 2 948 135 - 13 826 867 768
======================== ======== ======== ======= ========= ============ ============ ============== ====== ========== =======
Actuarial gains
on retirement benefits - - - - - - 2 2 - 2
Translation differences - - - - - 8 - 8 - 8
- 5 - 5
Loss for the period - - - - - - - - 442 442
Total comprehensive
income / (loss) - 5 - 5
for the period - - - - - 8 2 10 442 432
Issue of share 1 10
capital 218 9 685 - - - - - - - 903
Own shares
acquired/sold -
in the period - - 11 - - - - - - - 11
Other changes 132 1 476 - 77 - - - - - 1 685
Balance at 31 December 2 58 - - 2 - 33 24
2017 511 281 176 422 - 2 948 143 - 11 816 310 914
======================== ======== ======== ======= ========= ============ ============ ============== ====== ========== =======
Actuarial - - - - - - - - - -
gains
on retirement
benefits
Translation differences - - - - - - 3 - - 3 - - 3
- 1 - 1
Loss for the period - - - - - - - - 844 844
Total comprehensive
income / (loss) - 1 - 1
for the period - - - - - - 3 - - 3 844 847
Issue of share
capital - - 53 - - - - - - - - 53
Own shares
acquired/sold
in the period - - 5 - - - - - - 5
Other changes - - - - - - - - - -
Balance at 30 June 2 58 - - 2 - 35 23
2018 511 228 171 422 - 2 948 140 - 11 819 154 018
======================== ======== ======== ======= ========= ============ ============ ============== ====== ========== =======
Statement of cash flows as at 30 June 2018
Amounts in '000 EUR Notes (Unaudited) (Unaudited) (Audited)
Six month Six month Year ended
ended 30 ended 30 31 December
June 2018 June 2017 2017
Net cash used in operating activities 15 -1,882 -2,122 -4,646
======================================== ============ ============ =============
Investing activities
Proceeds on disposal of property, - 1 -
plant and equipment
Purchases of intangible assets -201 -60 -64
Purchases of property, plant and
equipment -171 -226 -914
Purchases of trading investments -9 - -101
Acquisition of subsidiary / activity
net of cash acquired -2,032 -68 -1,747
Other investing activities -12 -99 -
Net cash generated from investing
activities -2,426 -453 -2,826
======================================== ============ ============ =============
Repayments of borrowings -1,540 -1,000 -3,296
Proceeds on issue of borrowings
and bond notes 3,958 1,370 2,722
Proceeds on issue of shares -53 2,822 11,080
Disposal (purchase) of own shares
- Net 5 -15 -11
Paid interest expenses -281 -863 -1,506
Net cash generated from financing
activities 2,089 2,314 8,989
Net increase/(decrease) in cash
and cash equivalents -2,219 -261 1,517
======================================== ============ ============ =============
Cash and cash equivalents at beginning
of year / period 4,345 2,856 2,856
Effect of foreign exchange rate
changes 8 -18 -27
Cash and cash equivalents at end
of year / period 2,134 2,577 4,345
======================================== ============ ============ =============
Notes to the interim financial statements for the six month
period to 30 june 2018
1. General Information and basis of preparation
Novacyt S.A is incorporated in France and its principal
activities are specialising in cancer and infectious disease
diagnostics and services. Its registered office is located at 13
Avenue Morane Saulnier, 78140 VĂ©lizy 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 2017 and which form the basis of the
2018 financial statements except for a number of new and amended
standards which have become effective since the beginning of the
previous financial year. 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 2017 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 2018 and 30 June
2017 is unaudited and the twelve months to 31 December 2017 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
IAS 17, 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 the 28th June 2018
and Primerdesign (see note 18 of the 2017 Statutory Accounts for
further details), the carrying amounts and useful lives of
intangible assets (see note 19 of the 2017 Statutory Accounts for
further details), deferred taxes (see note 22 of the 2017 Statutory
Accounts for further details), trade receivables (see note 24 of
the 2017 Statutory Accounts for further details) and provisions for
risks and other provisions related to the operating activities (see
note 29 of the 2017 Statutory Accounts for further details).
Due to the acquisition of the Infectious Diseases business from
Omega Diagnostics Ltd occurring at the end of June 2018, the
required purchase price allocation ("PPA") adjustments and
pro-forma P&L will be booked and shown in the year end
financials due to the lack of time to complete the exercise between
the acquisition date and publication of the half year results. As a
result the Goodwill balance is a provisional number and as part of
the PPA process we expect to create a number of intangible assets
(such as customer relationships) reducing the Goodwill balance.
The accounting policies set out below have been applied
consistently to all periods presented in the financial
information.
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.
In making this assessment the Directors have considered the
following elements :
- a positive cash balance at 30 June 2018 of EUR2,134,000;
- the repayment of the current bond borrowings according to the agreed repayment schedules;
- the working capital requirements of the business based on the latest cash flow forecasts;
- In the event that the Group doesn't meet its cash flow
forecasts for any reason, the Board believes that the Group has a
number of options available to it to maintain sufficient headroom
in the business."
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 12-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 Patents
Patents on the balance sheet were acquired or created
internally.
These patents have been recognised in accordance with the
following rules:
- Research phase: recognition of expenses in operating expenses; and
- Development phase: recognition in assets insofar as the
patents are identifiable assets controlled by the Company and from
which future economic benefits will arise.
Each patent has been recognised in accordance with its value,
corresponding to the costs incurred during the development phase or
the acquisition price.
The event generating amortisation is the start of use, i.e. the
filing date of the patent. Patents are amortised on a straight-line
basis over 20 years.
o Customer relationships
In accordance with IFRS 3, the Company's acquisition of
Primerdesign 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 by the Company was also
"allocated" in part to the Primerdesign trademark. 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:
Patents: Straight-line basis - 20
years
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
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 are 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.
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 in the historical financial information.
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 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 months Year ended
ended 30 31 December
Amounts in '000 EUR June 2018 2017
Goodwill Lab21 19,042 19,042
Impairment of goodwill -9,786 -9,786
============================= ============ ==============
Net value 9,256 9,256
============================= ============ ==============
Goodwill Primerdesign 7,210 7,210
Impairment of goodwill - -
============================ ============ ==============
Net value 7,210 7,210
============================= ============ ==============
Goodwill Omega Infectious 1,747 -
Diseases Business
Impairment of goodwill - -
============================ ============ ==============
Net value 1,747 7,210
============================= ============ ==============
Total Goodwill 18,212 16,466
============================= ============ ==============
On the 28th June 2018 Lab21 Healthcare Ltd part of the
Diagnostics Segment - acquired via an asset purchase agreement the
Infectious Disease business from Omega Diagnostics Ltd, for an
initial consideration of EUR2,032,000 (GBP1,800,000), up to
EUR2,456,000 (GBP2,175,000) in total, subject to the achievement of
certain milestones. Due to the acquisition completing at the end of
June no purchase price allocation adjustments have been made and
thus the amount of the goodwill indicated above is therefore a
provisional amount and will be adjusted for in the consolidated
accounts at December 2018.
4. Revenue
The table below shows revenue from ordinary operations:
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended 30 ended 30 31 December
Amounts in '000 EUR June 2018 June 2017 2017
Manufactured goods 6,155 5,862 12,520
Services 549 502 1,021
Traded goods 146 510 1,045
Other 193 155 368
Total Revenue 7,044 7,029 14,954
======================= ============ ============ =============
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 Cytology
This segment corresponds to the sale of machines (automated
equipment, accessories and spare parts to distributors and
partners, or directly to laboratories or hospitals) and consumables
(mainly bottles and storage systems) in the field of cytology.
o 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 now includes
the financial results of the Omega Infectious Diseases businesses
following its acquisition in late June.
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.
The Chief Operating Decision Maker is the Chief Executive
Officer.
Breakdown of revenue by operating segment and geographic
area
o At 30 June 2018
Amounts in '000 Molecular
EUR Cytology Diagnostics products Total
Geographical
area
Africa - 198 121 319
Europe 431 1,568 1,536 3,536
Asia-Pacific 158 706 444 1,307
America 1 529 825 1,356
Middle East 27 402 98 526
Revenue 617 3,403 3,024 7,044
================== ========== ============= =========== =======
o At 30 June 2017
Amounts in '000 Molecular
EUR Cytology Diagnostics products Total
Geographical
area
Africa - 138 172 310
Europe 711 1,688 1,345 3,744
Asia-Pacific 346 754 383 1,483
America - 364 657 1,021
Middle East 44 357 70 471
Revenue 1,101 3,300 2,628 7,029
================== ========== ============= =========== =======
o At 31 December 2017
Amounts in '000 Molecular
EUR Cytology Diagnostics products Total
Geographical
area
Africa - 299 363 662
Europe 1,205 3,347 2,531 7,083
Asia-Pacific 761 1,608 1,656 4,025
America - 661 1,192 1,854
Middle East 239 739 352 1,330
Revenue 2,204 6,655 6,095 14,954
================== ========== ============= =========== ========
6. Other operating income and expenses
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended 30 ended 30 31 December
Amounts in '000 EUR June 2018 June 2017 2017
Reversal of accrual for litigation 177 - -
with employees
Other operating income - 7 16
Other operating income 177 7 16
=========================================== ============ ============ =============
Litigation with employees -211 - -171
Litigation with a supplier -28 - -
Restructuring expenses -123 - -78
Due diligence potential new acquisition -68 - -
IPO preparation -22 -65 -1,631
Relocation expenses - - -176
Other expenses -17 -79 -141
Other operating expenses -469 -144 -2,197
=========================================== ============ ============ =============
The restructuring expenses of EUR123,000 in the 6 months period
ended 30 June 2018 and EUR78,000 in the year ended 31 December 2017
relate to indemnities to employees in relation to restructuring
taken place during this period.
The IPO preparation expenses of EUR22,000 in the period ended 30
June 2018 and EUR1,631,000 in the period ended 31 December 2017
relate to the fees incurred in preparation for the company's AIM
listing in 2017.
7. Financial income and expense
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended 30 ended 30 31 December
Amounts in '000 EUR June 2018 June 2017 2017
Exchange gains - 109 287
Change in fair value of
options - 182 140
Reversals of financial - - -
provisions
Other financial income 32 9 39
Financial income 32 301 466
============================ ======================== ======================= ========================
Interest on loans - 294 - 534 - 1,202
Exchange losses - 40 - 157 - 251
Contingent consideration - - 140 - 386
Other financial expense - 32 - 48 -
Financial expense - 367 - 878 - 1,839
============================ ======================== ======================= ========================
Financial Income:
Exchange gains in the period ended 30 June 2017 and 31 December
2017 resulted from recurring operations and, mostly, from
variations in euros on the contingent consideration liability
denominated in sterling between the Primerdesign acquisition date
and the reporting date.
Primerdesign warrants were first accounted for in June 2016 and
therefore posted at the original EUR445,000 valuation. The June
2017 balance relates to the revaluation of Primerdesign warrants
from EUR266,000 to EUR84,000. The December 2017 balance relates to
the revaluation of Primerdesign warrants from EUR266,000 to
EUR126,000. Because the share value has not materially varied
between 1 January and 30 June 2018, no revaluation was completed at
June 2018.
Financial Expense:
Exchange Losses
At December 2017, an exchange loss of EUR196,000 is recorded
following the revaluation of the debt in favour of Novacyt in the
books of Lab21.
Contingent consideration
The contingent consideration in 2017 relates to the discounting
of the contingent consideration liability in favour of Primerdesign
shareholders.
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) (Audited)
Six month Six months Year ended
ended 30 ended 30 31 December
Amounts in 000' EUR June 2018 June 2017 2017
Net loss attributable to owners
of the company - 1,844 - 1,712 - 5,442
Impact of dilutive instruments - - -
Net loss attributable to owners
of the company - 1,844 - 1,712 - 5,442
================================== ========================== ========================== ==========================
Weighted average number of
shares 23,075,634 18,249,175 23,075,634
Impact of dilutive instruments - - -
Weighted average number of
diluted
shares 23,075,634 18,249,175 23,075,634
================================== ========================== ========================== ==========================
Earnings per share (in euros) - 0.08 - 0.09 - 0.24
================================== ========================== ========================== ==========================
Diluted earnings per share (in
euros) - 0.08 - 0.09 - 0.24
================================== ========================== ========================== ==========================
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 2017 26,252
Recognised on acquisition of a subsidiary -
At 31 December 2017 26,252
Recognised on acquisition of the Omega Infectious
Diseases business 1,747
======
At 30 June 2018 27,999
Accumulated impairment losses
At 31 December 2016 9,786
Exchange differences -
Impairment losses for the period -
Eliminated on disposal of a subsidiary -
======
At 31 December 2017 9,786
Exchange differences -
Impairment losses for the period -
Eliminated on disposal of a subsidiary -
------
At 30 June 2018 9,786
Carrying value at 31 December 2017 16,466
Carrying value at 30 June 2018 18,212
======
Because the acquisition of the Omega Infectious Diseases
business was completed shortly before the closing of the June
accounts, it was not possible to complete the analysis required for
allocating the purchase price between the assets (tangible and
intangible) acquired through the transaction.
The amount of the Goodwill indicated above is therefore a
provisional amount and will be adjusted for in the consolidated
accounts at December 2018.
10. Inventories and work in progress
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended 30 ended 30 31 December
Amounts in '000 EUR June 2018 June 2017 2017
Raw materials 1,255 1,030 931
Work in progress 312 159 135
Finished goods 1,187 432 562
Traded goods 362 189 316
Stock provisions -2 - -2
Total 3,113 1,810 1,942
===================== ========================= =========================== =========================
The cost of inventories recognised as an expense includes
EUR2,000 (Dec. 2017: EUR2,000) in respect of write-downs of
inventory to net realisable value.
As part of the Omega Infectious Diseases business acquisition
approximately EUR662,000 of stock was acquired, based on the value
in Omega's balance sheet, and is included in the June 2018 balance.
Both the Primerdesign and the NOVAprep business have increased
their product stock levels since the end of the year to meet the
expected demand in the second half of the year.
11. Borrowings
The following tables show borrowings and financial liabilities
carried at amortised cost.
o Maturities as of 30 June 2018
Amount due Amount due Total
for settlement for settlement
within 12 after 12 months
Amounts in '000 EUR months
Bond notes 3,009 3,145 6,155
Bank borrowings 67 53 120
Accrued interest on borrowings 23 - 23
Total financial liabilities 3,099 3,199 6,298
================================== ================ ================= ======
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
=============================== =============== ================ =====
As of 30 June 2018, 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 an 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 interest rate of 7.9
% for a term of 3 years;
- A convertible bond subscribed by Vatel in the amount of
EUR4,000,000 issued on 30 June 2018, with an interest rate of 7.4 %
for a term of 3 years
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) (Unaudited) (Audited)
Six months Six months Year ended
ended 30 ended 30 31 December
Amounts in 000' EUR June 2018 June 2017 2017
Contingent consideration (non-current
portion) - 1,664 -
Contingent consideration (current
portion) 1,552 1,000 1,126
1,552 2,664 1,126
-------------------------------------- ----------- ----------- ------------
The movement in the liability between the 31 December 2017 and
30 June 2018 is due to the acquisition of the Omega Infectious
Diseases business acquisition. The payment of the contingent
liability is expected to occur within twelve months.
13. Other long term liabilities
The long-term management incentive plan launched in November
2017 was transferred from a long term provision account to a
long-term liability account and now stands at EUR132,000. Its
balance at 31 December 2017 was EUR18,000 which sat as a long term
provision.
14. Acquisition of subsidiaries
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, antistreptolysin and systemic lupus erythematosus.
Under IFRS rules, this acquisition is considered as an activity.
It includes various assets, such as equipment, stock, trademarks
and patents. It also includes 2 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 EUR2,456,000 (GBP2,175,000) broken down
as follows:
Cash disbursed EUR2,032k
Deferred consideration for successfully supporting and handling
over manufacturing EUR198k
----------
Deferred consideration for successfully achieving a Category
3 facility accreditation EUR226k
----------
Total purchase price EUR2,456k
----------
The assets acquired and the liabilities assumed are as
follows:
Net property, plant and equipment and intangible assets EUR47k
Inventories EUR662k
----------
Fair value of assets acquired and liabilities assumed EUR709k
----------
Goodwill EUR1,747k
----------
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.
As mentioned previously the amount of goodwill is a provisional
amount and will be adjusted for in the consolidated accounts at
December 2018.
15. Notes to the cash flow statement
(Unaudited) (Unaudited) (Audited)
Six month Six month Year ended
ended 30 ended 30 31 December
Amounts in '000 EUR June 2018 June 2017 2017
Loss for the year / period -1,844 -1,712 -5,442
Adjustments for:
Depreciation, amortisation and
impairment loss 625 561 1,265
Unwinding of discount on contingent
consideration - 140 386
(Increase) / decrease of fair
value - -182 -140
Gains / (losses) on disposal of
fixed assets - 11
======================================== ============ ============ =============
Operating cash flows before movements
of working capital -1,219 -1,193 -3,920
(Increase) / decrease in inventories -513 -236 -377
(Increase) / decrease in receivables -121 -1,174 -1,805
Increase / (decrease) in payables -259 127 425
Cash used in operations -2,112 -2,477 -5,678
======================================== ============ ============ =============
Changes in debt issues expenses - -14 -19
Income taxes paid -65 -191 -148
Finance costs 295 560 1,199
Net cash used in operating activities -1,882 -2,122 -4,646
======================================== ============ ============ =============
16. Impact of Brexit on the Group's activity
Companies operating in the "Diagnostics" and "Molecular testing"
sectors are established in the United Kingdom. It is difficult to
anticipate the impact of Brexit on trade relations and regulatory
constraints. The tax consequences depend on the outcome of
negotiations between Europe and the United Kingdom, to date are
undetermined. Management is seeking to identify market, operational
and legal risks and to take the appropriate adaptation measures as
required.
17. Subsequent events
No significant events have taken place since the reporting
date.
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 FKPDPDBKBQCB
(END) Dow Jones Newswires
September 26, 2018 02:01 ET (06:01 GMT)
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