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MarketScreener Homepage  >  Equities  >  Euronext Growth Paris  >  Novacyt    ALNOV   FR0010397232

NOVACYT

(ALNOV)
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Novacyt : Interim Accounts June 2020

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09/17/2020 | 09:30am EDT

NOVACYT GROUP

INTERIM ACCOUNTS 2020

Page 1 of 28

Consolidated income statement as at 30 June 2020

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

Notes

2020

2019

Continuing Operations

Revenue

Cost of sales

Gross profit

Sales, marketing and distribution expenses Research and development expenses General and administrative expenses Governmental subsidies

Operating profit/loss before exceptional items

Other operating income

Other operating expenses

Operating profit/loss after exceptional items

Financial income

Financial expense

Profit/loss before tax

Tax (expense)/income

Profit/loss after tax from continuing operations

4, 5

72,374

7,223

6

- 12,109

- 2,643

60,265

4,580

- 1,966

- 1,317

- 593

- 229

- 9,035

- 3,639

-

7

48,672

- 598

7

5

57

7

- 353

- 123

48,324

-664

8

87

36

8

- 2,292

- 579

46,120

- 1,208

9

- 5,924

-

40,195

- 1,208

Loss from discontinued operations

-

- 786

Profit/loss after tax attributable to owners of the

40,195

- 1,994

company

Profit/loss per share (€)

10

0.61

-0.05

Profit/diluted loss per share (€)

10

0.61

-0.05

Profit/loss per share from the continuing operations (€)

0.61

-0.03

Profit/diluted loss per share from the continuing operations (€)

0.61

-0.03

Loss per share from the discontinued operations (€)

0.00

-0.02

Diluted loss per share from the discontinued operations (€)

0.00

-0.02

The June 2019 consolidated income statement is presented to reflect the impacts of the application of IFRS 5 relative to discontinued operations, by stating the NOVAprep activity on a single line "Loss from discontinued operations".

Page 2 of 28

Consolidated statement of comprehensive income as at 30 June 2020

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

Notes

2020

2019

Profit/loss after tax

40,195

- 1,994

Items that may be reclassified subsequently to profit

or loss:

Translation reserves

- 1,959

- 2

Total comprehensive profit/loss

38,236

- 1,996

Comprehensive profit/loss attributable to:

Owners of the company (*)

38,236

- 1,996

(*) There are no non-controlling interests.

Page 3 of 28

Statement of financial position as at 30 June 2020

(Unaudited)

(Audited)

Six month

Year ended

30 June

31 December

Amounts in '000 €

Notes

2020

2019

Goodwill

15,911

15,918

Other intangible assets

3,514

4,313

Property, plant and equipment

3,221

3,478

Non-current financial assets

112

240

Other long-term assets

377

214

Non-current assets

23,136

24,163

Inventories and work in progress

11

15,558

2,439

Trade and other receivables

12

28,470

2,168

Tax receivables

-

4

Prepayments

1,081

406

Short-term investments

10

10

Cash & cash equivalents

13

19,720

1,805

Current assets

64,839

6,832

Assets classified as held for sale

-

70

Total assets

87,975

31,065

Bank overdrafts and current portion of long-term

14

-

2,189

borrowings

Lease liabilities - short-term

225

268

Provisions - short-term

15

4,237

50

Trade and other liabilities

16

16,296

4,591

Tax liabilities

5,650

-

Other current liabilities

469

591

Total current liabilities

26,877

7,689

Net current assets / (liabilities)

37,962

-857

Borrowings and convertible bond notes

14

-

6,137

Lease liabilities - long-term

2,043

2,356

Provisions - long-term

15

215

240

Deferred tax liabilities

78

49

Total non-current liabilities

2,336

8,782

Total liabilities

29,213

16,471

Net assets

58,762

14,594

Page 4 of 28

Statement of financial position as at 30 June 2020

(Unaudited)

(Audited)

Six month

Year ended

30 June

31 December

Amounts in '000 €

Notes

2020

2019

Share capital

17

4,708

3,873

Share premium account

62,151

58,012

Own shares

- 138

- 174

Other reserves

- 5,265

- 3,306

Equity reserve

1,323

401

Retained losses

- 4,017

- 44,212

Total equity - owners of the company

58,762

14,594

Total equity

58,762

14,594

Page 5 of 28

Statement of changes in equity as at 30 June 2020

Amounts in '000 €

Other group reserves

Other

Acquisition

comprehensive

of the shares

income on

Share

Share

Own

Equity

of

Translation

retirement

Retained

Total

capital premium shares reserves Primerdesign

reserve

benefits

Total

loss

equity

Balance at 1 January 2019

2,511

58,249

- 178

422

- 2,948

139

- 11

- 2,820

- 38,046

20,138

Translation differences

-

-

-

-

-

- 486

-

- 486

-

- 486

Loss for the period

-

-

-

-

-

-

-

-

- 6,558

- 6,558

Total comprehensive loss for

-

-

-

-

-

- 486

-

- 486

- 6,558

- 7,044

the period

Issue of share capital

-

- 180

-

-

-

-

-

-

-

- 180

Own shares acquired/sold in

-

-

4

-

-

-

-

-

-

4

the period

Other changes

1,362

-57

-

-21

-

-

-

-

392

1,676

Balance at 31 December 2019

3,873

58,012

- 174

401

- 2,948

- 347

- 11

- 3,306

- 44,212

14,594

Translation differences

-

-

-

-

-

- 1,959

-

- 1,959

-

- 1,959

Profit for the period

-

-

-

-

-

-

-

-

40,195

40,195

Total comprehensive income

-

-

-

-

-

- 1,959

-

- 1,959

40,195

38 236

/ (loss) for the period

Issue of share capital

835

4,139

-

-

-

-

-

-

-

4,974

Own shares acquired/sold in

-

-

36

-

-

-

-

-

-

36

the period

Other changes

-

-

-

922

-

-

-

-

-

922

Balance at 30 June 2020

4,708

62,151

- 138

1,323

- 2,948

- 2,306

-11

-5,265

-4,017

58,762

Page 6 of 28

Statement of cash flows as at 30 June 2020

Amounts in '000 €

Notes

Net cash from operating activities

18

Investing activities

Proceeds on disposal of property, plant and equipment Purchases of patents and trademarks

Purchases of property, plant and equipment

Purchases of trading investments

Acquisition / sale of subsidiaries net of cash

Net cash generated from investing activities

Investing cash flows from discontinued activities

Investing cash flows from continuing operations

Repayments of borrowings and other financial liabilities 14 Proceeds on issue of borrowings and bond notes Proceeds on issue of shares

Disposal (purchase) of own shares - Net

Variation of other short-term financing facilities

Paid interest expenses

Net cash generated from financing activities

Financing cash flows from discontinued activities

Financing cash flows from continuing operations

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Effect of foreign exchange rate changes

Cash and cash equivalents at end of period

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

2020

2019

24,603

- 577

3

-

- 43

- 158

- 268

- 200

78

6

7

- 278

- 223

- 630

-

- 25

- 223

- 605

- 5,991

- 993

-

2,036

2,908

- 69

36

- 2

- 775

-

- 1,808

- 290

- 5,630

682

-

-

- 5,630

682

18,750

- 525

1,805

1,132

- 835

- 9

19,720

598

Page 7 of 28

NOTES TO THE INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTH PERIOD TO 30 JUNE 2020

1. GENERAL INFORMATION AND BASIS OF PREPARATION

The Novacyt Group is an international diagnostics business generating an increasing portfolio of invitro 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 microbiology, haematology and serology markets as do its global partners, which include major corporates. 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).

This condensed consolidated interim financial information does not constitute full statutory accounts. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the twelve months ended 31 December 2019. Statutory accounts for the year ended 31 December 2019 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 2020 and 30 June 2019 is unaudited and the twelve months to 31 December 2019 is audited.

Page 8 of 28

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the

members of the Group are eliminated on consolidation. The Company's scope of consolidation included the

following companies:

At 30 June 2020

and 31 December 2019

At 30 June 2019

Companies

Interest

Control

Consolidation

Interest

Control

Consolidation

percentage

percentage

method

percentage

percentage

method

Biotec Laboratories Ltd

100.00 %

100.00 %

FC

100.00 %

100.00 %

FC

Lab21 Healthcare Ltd

100.00 %

100.00 %

FC

100.00 %

100.00 %

FC

Lab21 Ltd

0.00 %

0.00 %

-

100.00 %

100.00 %

FC

Microgen Bioproducts Ltd

100.00 %

100.00 %

FC

100.00 %

100.00 %

FC

Novacyt SA

100.00 %

100.00 %

FC

100.00 %

100.00 %

FC

Novacyt Asia Ltd

100.00 %

100.00 %

FC

100.00 %

100.00 %

FC

Novacyt China Ltd

100.00 %

100.00 %

FC

100.00 %

100.00 %

FC

Novacyt UK Holdings Ltd

100.00 %

100.00 %

FC

0.00 %

0.00 %

-

Primerdesign Ltd

100.00 %

100.00 %

FC

100.00 %

100.00 %

FC

Page 9 of 28

2. SUMMARY OF ACCOUNTING POLICIES APPLIED BY THE GROUP

The financial statements have been prepared in accordance with International Financials Reporting Standards (IFRSs). The financial statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Goup financial statements comply with Article 4 of the EU IAS Regulation.

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 (see Note 16 of the 2019 Statutory Accounts for further details), the carrying amounts and useful lives of intangible assets (see Note 17 of the 2019 Statutory Accounts for further details), deferred taxes (see Note 21 of the 2019 Statutory Accounts for further details), trade receivables (see Note 23 of the 2019 Statutory Accounts for further details) and provisions for risks and other provisions related to the operating activities (see Note 28 of the 2019 Statutory Accounts for further details).

The accounting policies set out below have been applied consistently to all periods presented in the financial information.

The accounting policies applied by the Group in these condensed consolidated interim financial statements are substantially the same as those applied by the Group in its financial statements for the year ended 31 December 2019 and which form the basis of the 2020 financial statements. The methodology for selecting assumptions underpinning the fair value calculations has not changed since 31 December 2019.

Going concern

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

In making this assessment the Directors have considered the following elements:

  • the working capital requirements of the business;
  • a positive cash balance at 30 June 2020 of €19,720,000;
  • the payment of the LTIP that commenced in November 2017 to be paid in November 2020;

Page 10 of 28

  • increased operating cash inflows generated by the COVID-19 pandemic.

Leases - After adoption of IFRS 16

IFRS 16 Leases was issued in January 2016 and is effective for an entity's financial statements for annual reporting periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 introduces significant changes to lessee accounting: it removes the distinction between operating and finance leases under IAS 17 and requires a lessee to recognise a right-of-use asset and a lease liability at lease commencement for all leases, except for short-term leases and leases of low value assets.

  • The right-of-use asset is initially measured at cost and subsequently measured at cost less accumulated depreciation and impairment losses, adjusted for any remeasurement of the lease liability
  • The lease liability is initially measured at the present value of the future lease payments discounted using the discount rate implicit in the lease (or if that rate cannot be readily determined, the lessee's incremental borrowing rate). Subsequently, the lease liability is adjusted for interest and lease payments, as well as the impact of lease modifications, amongst others.

IFRS 16's transition provisions permit lessees to use either a full retrospective or a modified retrospective approach for leases existing at the date of initial application of the standard, with options to use certain transition reliefs.

The Group has elected to apply the standard using the modified retrospective approach from 1 January 2019, utilising certain of the practical expedients provided within the standard. The Group recognised right-of-use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of the future lease payments, with the right-of-use asset adjusted by the amount of any prepaid or accrued lease payments.

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

The Group has an established credit policy under which the credit status of each new customer is reviewed before credit is advanced, including external credit evaluations where possible. Credit limits are

Page 11 of 28

established for all significant or high-risk customers, which represent the maximum amount permitted to be outstanding without requiring additional approval from the appropriate level of senior management. Outstanding debts are continually monitored by each division. Credit limits are reviewed on a regular basis, and at least annually. Customers that fail to meet the group's benchmark creditworthiness may only transact with the group on a prepayment basis.

Trade receivables are recorded initially at fair value and subsequently measured at amortised cost. This generally results in their recognition at nominal value less an allowance for any doubtful debts. Trade receivables in foreign currency are transacted in their local currency and subsequently revalued at the end of each reporting period, with any foreign exchange differences being recognised in as an income/expense.

The allowance for doubtful debts is recognised based on management's expectation of losses without regard to whether an impairment trigger happened or not (an "expected credit loss" model). Through implementation of IFRS 9, the Group concluded that no real historical default rate could be determined due a low level of historical write offs across the business. The Group therefore recognises an allowance for doubtful debts on the basis of invoice ageing. Once an invoice is overdue from its due date, based on agreed upon credit terms by more than 90 days, that this invoice is then more likely to default than those invoices operating within 90 days of their due date. As such, these invoices will be provided for in full as part of an expected credit loss model.

Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there may be no reasonable expectation of recovery may include the failure of the debtor to engage in a payment plan, and failure to make contractual payments within 365 days past due.

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 with original maturities of three months or less) 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.

Trade payables

Trade payables are obligations to provide cash or other financial assets. They are recognised in the balance sheet when the Group becomes a party to a transaction generating liabilities of this nature. Trade and other payables are recognised in the balance sheet at fair value on initial recognition, except if settlement is to occur more than 12 months after recognition. In such cases, they are measured using the amortised cost method. The use of the effective interest rate method will result in the recognition of a financial expense in the income statement. Trade and other payables are eliminated from the balance sheet when the corresponding obligation is extinguished.

Trade payables have not been discounted, because the effect of doing so would be immaterial.

Page 12 of 28

Provisions

  • Long Term Incentive Plan

Novacyt granted to certain employees 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 recognised on the statement of financial position.

Taxation

The income tax expense represents the sum of the tax currently payable and deferred tax.

  • Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of external tax professionals supported by the Group and previous experience in respect of such activities.

  • Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Page 13 of 28

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Profit/loss per share

The Group reports basic and diluted profit/loss per common share. Basic profit/loss 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 profit/loss 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 profit/loss per share only if their exercise price is higher than the market price and if they have a dilutive effect on the result per share.

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 on the face of the consolidated income statement.

Loss from discontinued operations

On the 11th December 2018, Novacyt announced its intention to sell the NOVAprep business and thus presents 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. This business was disposed of on the 24th December 2019.

Page 14 of 28

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. Of these items only the measurement of goodwill, the measurement of useful lives of intangible assets, the measurement of fair value of assets and liabilities in business combinations, the recognition of deferred taxes, the value of trade and other receivables and the provisions for risks and other provisions related to the operating activities are considered likely to give material adjustment. Other areas of estimates are deemed not material.

Taxation provisions:

The Group's current tax provision of €5,924,000 relates to management's assessment of the amount of tax payable on open tax positions where the liabilities remain to be agreed with HMRC. Uncertain tax items included in the provision of €5,924,000 relate principally to the interpretation of tax legislation regarding arrangements entered into by the Group in the UK. Due to the uncertainty associated with such tax items, there is a possibility that, on conclusion of open tax matters at a future date, the final outcome may differ significantly.

Whilst a range of outcomes is reasonably possible, the extent of the reasonably possible range is from additional liabilities of up to €3,683,000 to a reduction in liabilities of up to €1,052,000.

Page 15 of 28

4. REVENUE

The table below shows revenue from ordinary operations:

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

2020

2019

Manufactured goods

72,210

6,676

Services

-

306

Traded goods

58

26

Other

138

183

Total Revenue

72,374

7,223

The majority of the Group's revenue is generated in British Pounds. 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:

  1. Corporate and Cytology

Previously, this segment represented the NOVAprep and French Group central costs. Following the disposal of NOVAprep in December 2019, this segment now shows the French Group central costs, the results of Novacyt UK Holdings Limited and the results of NOVAprep are shown in a single line - Discontinued Operations.

Page 16 of 28

  1. Lab21 Products (formerly Corporate and Diagnostics)

This segment represents Lab21 Products which is a developer, manufacturer and distributor of a large range of protein-based infectious disease IVD products with both Microgen Bioproducts Ltd and Lab21 Healthcare Ltd now based in Camberley, UK.

  1. Primerdesign (formerly Molecular Products)

This segment represents the activities of Primerdesign, which is a designer, manufacturer and marketer of molecular 'real time' qPCR testing devices and reagents in the areas of infectious diseases based in Southampton, UK.

The Chief Operating Decision Maker is the Chief Executive Officer.

  1. Reliance on major customers

Primerdesign's revenue includes approximately €21,000,000 (2019: € nil) from sales to the Group's largest customer. One other customer contributed 10% or more to the Group's revenue in 2020.

Breakdown of revenue by operating segment and geographic area

  1. At 30 June 2020

Amounts in '000 €

Lab21 Products

Primerdesign

Total

Geographical area

Africa

64

2,014

2,078

Europe

943

58,040

58,983

Asia-Pacific

518

2,764

3,282

America

195

3,685

3,880

Middle East

70

4,081

4,151

Revenue

1,790

70,584

72,374

  1. At 30 June 2019

Amounts in '000 €

Lab21 Products

Primerdesign

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

Page 17 of 28

6. COST OF SALES

The table below shows the cost of sales:

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

2020

2019

Cost of inventories recognised as an expense

4,811

1,592

Change in stock provision

145

152

Manufacturing sub-contracting costs

6,011

-

Non-stock items and supplies

130

17

Freight costs

122

39

Direct labour

859

815

Other

31

28

Total Cost of sales

12,109

2,643

Cost of inventories recognised as an expense, has increased significantly due to higher sales in H1 2020. In order to respond to market demands in 2020 some elements of manufacturing were outsourced resulting in €6,011,000 of sub-contractor costs.

7. OTHER OPERATING INCOME AND EXPENSES

The table below shows other operating income and expenses:

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

2020

2019

Other income

5

57

Other operating income

5

57

Litigation with employees

-

-3

Restructuring expenses

-126

-31

Business sale expenses

-

-21

Brand impairment - Omega

-200

-

Other expenses

-27

-68

Other operating expenses

-353

-123

Page 18 of 28

The restructuring expenses in 2020 relate to site closure costs for the Bridport facility, following the transfer of manufacturing of the Lab21 Healthcare portfolio of products to our Camberley facility.

No further products will be sold under any brands/trademarks acquired as part of the Omega Infectious Diseases acquisition in 2018, and as a result the remaining intangible asset has been fully written down in 2020.

8. FINANCIAL INCOME AND EXPENSE

The table below shows financial income and expense:

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

2020

2019

Exchange gains

33

36

Actualisation of the long term sale receivables

54

-

Financial income

87

36

Interest on loans

-1,744

-430

Negma phantom warrant settlement

-404

-

Exchange losses

-115

-53

Other financial expense

-29

-96

Financial expense

-2,292

-579

Financial Expense:

Interest on loans

The interest charge is mainly related to the Vatel and Harbert European Growth Capital bond notes. The June 2020 figure has increased substantially due to the full repayment of the €5,000,000 Harbert European Growth Capital bond and its associated interest charges.

Negma phantom warrant settlement

In November 2019 Novacyt SA granted Negma 1,300,000 phantom warrants, i.e. warrants that do not give access to the share capital of the Company, in exchange for the cancellation of 1,300,000 warrants giving access to the share capital of Novacyt SA. The phantom warrants guaranteed to pay Negma the profit

from the difference between the €0.20 exercise price and the share price on the day before the exercise

date. This instrument was recognised as a derivative financial liability at December 2019 for a value of €90,000. Negma exercised the phantom warrants in February 2020, which resulted in a payment to Negma of €494,000. The charge at June 2020 is the difference between these two amounts.

Page 19 of 28

9. INCOME TAX

The standard rate of corporation tax applied to reported profit is 28 percent, which is the tax rate applicable to Novacyt SA in France. It has not changed compared to June 2019.

Taxation for other jurisdictions (mainly the UK) is calculated at the rates prevailing in the respective jurisdictions.

The charge for the period can be reconciled to the profit before tax as follows:

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

2020

2019

Profit before tax on continuing operations

46,120

-1,208

Tax at the French corporation tax rate (28 %)

12,914

-338

Tax effect of non-deductible expenses and non-taxable income

101

-86

Tax effect of utilisation of tax losses not previously recognised

-244

-

Change in unrecognised deferred tax assets

1,610

534

Research tax expenditure enhancement

-90

-63

Patent box relief

-3,683

-

Effect of different tax rates of subisidiaries operating in other jurisdictions

-4,689

9

Other effects

5

-56

Tax expense for the period

5,924

-

Matters affecting the tax charge

For the first time, the Group has been able to benefit from the UK Patent Box regime, which is a special low corporate tax rate used by several countries to incentivise research and development by taxing patent revenues differently from other commercial revenues. Subject to a number of adjustments, the effective rate of tax on profits derived from the sale of products subject to patents is close to 10% rather than the normal UK tax rate of 19%. The Patent Box rate is normally claimed once a patent has been granted, but it is likely that the Group's products will fall within a specific exemption allowing the reduced rate to be claimed immediately. Due to the uncertainty over the details of the full calculation, for current reporting purposes a reduced corporation tax rate of 12% on profits from patented products has been assumed.

10.PROFIT/LOSS PER SHARE

Profit/loss per share is calculated based on the weighted average number of shares outstanding during the period. Diluted profit/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. At June 2020, there are no longer any outstanding dilutive instruments.

Page 20 of 28

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in 000' €

2020

2019

Net loss attributable to owners of the company

40,195

- 1,994

Impact of dilutive instruments

-

-

Net loss attributable to owners of the company

40,195

- 1,994

Weighted average number of shares

65,721,150

37,664,418

Impact of dilutive instruments

-

-

Weighted average number of diluted shares

65,721,150

37,664,418

Earnings per share (€)

0.61

- 0.05

Diluted earnings per share (€)

0.61

- 0.05

Page 21 of 28

The table below presents the movements of the stock options during the first 6 months of 2020. They were not taken into account in the calculation of diluted earnings because they were anti-dilutive for the period ending on 30 June 2019, and were all exercised or elapsed at June 2020.

Beneficiary

Kreos

Primerdesign

Yorkville

Negma

Harbert

Total

12 May

25 April

5

Grant date

12 May 2016

31 July 2015 to 18 July 2017

November

2016

2019

2019

Number of

353,536

1,000,000

1,501,427

2,979,544

6,017,192

warrants

Exercise price

€1.45

€1.16

From €5.511 to €0.946

€0.20

€0.0698

Exercise

1 November

25 April

5

deadline

12 May 2021

3 years after issuance

November

2022

2024

2026

Derivative

Derivative

Derivative

Accounting

Equity

financial

Equity

financial

financial

liability

liability

liability

Number of

warrants on

353,536

1,000,000

853,216

1,679,544

6,017,192

9,903,488

1 January

2020

Warrants

exercised in

-353,536

-1,000,000

-528,541

-1,679,544

-6,017,192

-9,578,813

2020

Number of

additional

353,536

1,000,000

528,541

1,679,544

6,017,192

9,578,813

shares

Share capital

€512,627

€1,160,000

€500,000

€335,909

€420,000

€2,928,536

increase

Warrants

cancelled in

-

-

-324,675

-

-

-324,675

2020

Warrants

outstanding

-

-

-

-

-

-

on 30 June

2020

Page 22 of 28

11.INVENTORIES AND WORK IN PROGRESS

The table below shows inventories and work in progress:

(Unaudited)

(Audited)

Six month

Year ended

30 June

31 December

Amounts in '000 €

2020

2019

Finished goods

9,084

780

Raw materials

5,133

1,399

Work in progress

1,480

282

Traded goods

69

82

Stock provisions

-208

-104

Total

15,558

2,439

Increased inventory levels are supporting the Group's revenue growth, with significant finished goods being held in stock ready for immediate dispatch to support the worldwide COVID-19 pandemic, as demand remains high for the Primerdesign test kits.

The lead time for obtaining some raw materials was significant, as such bulk orders have been placed to ensure there are no supply chain issues, contributing to the higher raw materials balance in 2020.

12.TRADE AND OTHER RECEIVABLES

The table below shows trade and other receivables:

(Unaudited)

(Audited)

Six month

Year ended

30 June

31 December

Amounts in '000 €

2020

2019

Trade and other receivables

28,401

2,014

Estimated credit loss provision

-552

-464

Accrued income

18

17

Tax receivables (excluding income tax)

428

392

Receivables on sale of businesses

176

178

Other receivables

-

30

Total Trade and other receivables

28,470

2,168

Page 23 of 28

Trade receivables balances are due within one year. Once an invoice is overdue from its due date by more than 90 days, this invoice is deemed more likely to default and as such, these invoices have been provided for in full as part of an expected credit loss model.

13.CASH AND CASH EQUIVALENTS

The table below shows cash and cash equivalents:

(Unaudited)

(Audited)

Six month

Year ended

30 June

31 December

Amounts in '000 €

2020

2019

Available cash

19,708

1,793

Money market deposits

12

12

Cash and cash equivalents

19,720

1,805

14. BORROWINGS

The following tables show borrowings and financial liabilities carried at amortised cost.

  1. Maturities as of 30 June 2020

Amount due for

Amount due for

settlement within

settlement after 12

Total

Amounts in '000 €

12 months

months

Bond notes

-

-

-

Accrued interest on borrowings

-

-

-

Short term financing facilities

-

-

-

Total financial liabilities

-

-

-

  1. Maturities as of 31 December 2019

Amount due for

Amount due for

settlement within

settlement after 12

Total

Amounts in '000 €

12 months

months

Bond notes

1,306

6,137

7,443

Accrued interest on borrowings

39

-

39

Short term financing facilities

844

-

844

Total financial liabilities

2,189

6,137

8,326

Page 24 of 28

At 30 June 2020, the Group is debt free having repaid the €5,000,000 bond subscribed by Harbert European Growth Capital and converted the Vatel €4,000,000 bond into equity.

The short-term financing facility remains in place but no funds have been drawn down as at 30 June 2020.

15.PROVISIONS

The table below shows the nature of and change in provisions for risks and charges for the period from 1 January 2020 to 30 June 2020:

At

Change in

At

1 January

exchange

30 June

Amounts in '000 €

2020

Increase

Reduction

Reclass

rates

2020

F00 -

Provisions for restoration of

226

3

-

-

-14

215

premises

Long term management

14

-

-

-14

-

-

incentive plan

Long-term provisions

240

3

-

-14

-14

215

Long term management

-

4,173

-

14

-

4,187

incentive plan

Provision for litigation

50

-

-

-

-

50

Short-term provision

50

4,173

-

14

-

4,237

Page 25 of 28

The table below shows the nature of and change in provisions for risks and charges for the period from 1 January 2019 to 31 December 2019:

At

Change in

At

1 January

Adoption

exchange

31 December

Amounts in '000 €

2019

Increase

Reduction

of IFRS 16

rates

2019

F00 -

Provisions for restoration of

147

7

- 25

87

10

226

premises

Long term management

20

-

- 6

-

-

14

incentive plan

Long-term provisions

167

7

- 31

87

10

240

Provision for litigation

100

-

- 50

-

-

50

Short-term provision

100

-

- 50

-

-

50

As a result of the share price increasing significantly since December 2019, the provision for the long-term incentive plan for management has increase substantially to €4,187,000 as at 30 June 2020.

16.TRADE AND OTHER LIABILITIES

(Unaudited)

(Audited)

Six month

Year ended

30 June

31 December

Amounts in '000 €

2020

2019

Trade payables

3,572

2,091

Accrued invoices

7,577

858

Social security liabilities

485

473

Tax liabilities

4,654

142

Other liabilities

8

37

Options classified as liabilities

-

990

Total Trade and other liabilities

16,296

4,591

The options classified as liabilities at 31 December 2019 include the warrants and phantom warrants granted to Harbert European Growth Capital, Negma and the former shareholders of Primerdesign, that were exercised, in the first half of 2020.

Page 26 of 28

Trade payables and accrued invoices have increased significantly in line with increased revenue.

The €4,654,000 tax liability predominantly relates to Value Added Tax (VAT) payable to HMRC in the UK.

17.SHARE CAPITAL

Amount of

Number of

share

Unit value

shares

Amounts in '000 €

capital

per share

issued

At 1 January 2019

2,511

0.07

37,664,341

Capital increase by conversion of OCABSA

1,362

0.07

20,430,413

At 31 December 2019

3,873

0.07

58,094,754

Capital increase following the exercise of warrants

639

0.07

9,578,813

Capital increase by conversion of debt

197

0.07

2,952,681

At 30 June 2020

4,708

0.07

70,626,248

As of 31 December 2019, the Company's share capital of €3,872,983.59 was divided into 58,094,754 shares with a par value of 1/15th of a Euro each.

As of 30 June 2020, the Company's share capital of €4,708,416.55 was divided into 70,626,248 shares with a par value of 1/15th of a Euro each.

The Company's share capital consists of one class of share. All outstanding shares have been subscribed, called and paid.

Page 27 of 28

18.NOTES TO THE CASH FLOW STATEMENT

(Unaudited)

(Unaudited)

Six month

Six month

30 June

30 June

Amounts in '000 €

2020

2019

Profit / Loss for the year / period

40,195

-1,994

Profit / Loss from the discontinued activities

-

-786

Profit / Loss from the continuing operations

40,195

-1,208

Adjustments for:

Depreciation, amortisation and impairment loss

897

863

Management long-term incentive plan

4,173

-

Undiscounting of the long-term sales receivable (NOVAprep & Lab21 Ltd)

-54

-

(Increase) / decrease of fair value

-90

-

Gains / (losses) on disposal of assets

166

6

Operating cash flows before movements of working capital

45,287

-1,125

(Increase) / decrease in inventories

-13,766

105

(Increase) / decrease in receivables

-28,338

-224

Increase / (decrease) in payables

13,253

281

Cash from operations

16,436

-964

Income taxes paid/(received)

5,928

-41

Finance costs

2,238

428

Net cash from operating activities

24,603

-577

Operating cash flows from the discontinued activities

-

-633

Operating cash flows from the continuing operations

24,603

56

19. IMPACT OF THE UK'S DEPARTURE FROM THE EUROPEAN UNION ON GROUP ACTIVITY

It is difficult to anticipate the impact of Brexit as trade negotiations continue and the final trade agreements and regulatory landscape is unknown. The tax consequences depend on the outcome of negotiations between Europe and the United Kingdom, and to date are undetermined.

Management is continually monitoring the situation and continues to identify market, operational and legal risks and to take the appropriate mitigation measures as deemed necessary.

20.SUBSEQUENT EVENTS

There are no subsequent events to report.

Page 28 of 28

Disclaimer

Novacyt SA published this content on 17 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 September 2020 12:29:02 UTC


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Sales 2020 288 M 341 M 341 M
Net income 2020 180 M 214 M 214 M
Net Debt 2020 79,5 M 94,3 M 94,3 M
P/E ratio 2020 5,16x
Yield 2020 -
Capitalization 931 M 1 102 M 1 104 M
EV / Sales 2020 3,51x
EV / Sales 2021 4,30x
Nbr of Employees 110
Free-Float 99,5%
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Number of Analysts 2
Average target price 14,14 €
Last Close Price 13,18 €
Spread / Highest target 11,0%
Spread / Average Target 7,28%
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Graham David Mullis Chief Executive Officer & Executive Director
James Christopher Wakefield Chairman
Lisa Henriet Director-Group Operations
Anthony Dyer CFO, Secretary & Executive Director
Jean-Pierre Crinelli Non-Executive Director
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