Novacyt : Rapport annuel et comptes Novacyt pour l'exercice clos en décembre 2020

2020 December 31 ended year the forGroupAccountsytNovaand Report Annual

Headquarters:	Registered Address:
Novacyt Group (UK)	Novacyt Group (France)
Unit 1, Watchmoor Point, Watchmoor	13 Avenue Morane Saulnier 78140
Road, Camberley, Surrey GU15 3AD	Vélizy-Villacoublay, France
T [phone]	Registered Number: 491 062 527
F [phone]
E [e-mail]
www.novacyt.com

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

Accelerating

our strategy for long-term value

Business	Strategic	Our	Financial	Company
Overview	Report	Governance	Statements	Information

Novacyt is a diagnostics group, manufacturing diagnostic and pathogen testing kits based on molecular and protein testing technologies sold into human clinical, life science, food and industrial markets.

Financial highlights
Revenue £'000		Gross Margin £'000
(2019: £11,468)		(2019: £7,340)
£277,204	£211,500
			£277,204				£211,500
£11,169	£12,140	£11,468		£6,929	£7,613	£7,340
17	18	19	20	17	18	19	20
EBITDA £'000		Net Debt £'000
(2019: £174)			(2019: £5,567)
£176,145	£0
				17	18	19	20
			£176,145		£3,825	£5,567
£790	£512	£174		(			0
				)
				£401
17	18	19	20

Read the financial review on pages 26 to 29

Contents

Business Overview
The year that was 2020	02
Group at a Glance	04
Business Model	06
Strategic Report
Chairman's Statement	12
Market Opportunity	14
Our Strategy	18
Q&A with CEO and CFO	20
Chief Executive Officer's report	22
Section 172(1) Statement	25
Financial Review	26
Sustainability	30
Governance
The Board of Directors	38
The Executive team	42
Directors' report	43
An introduction from the Chairman	46
QCA principles	47
Nomination Committee report	57
Directors' Remuneration report	58
Remuneration Committee	59
Audit Committee report	62
Principal Risks and	66
Risk Management
Financial Statements
Statement of Directors'	74
responsibilities in respect of
the annual report and financial
statements

Leading the response to COVID-19

Accelerating our strategy for long-term value

Operational highlights
Acquisition	COVID-19
of IT-IS	response

Statutory auditor's report on the	76
consolidated financial statements
Accounts and notes
Consolidated income statement	78
Consolidated statement of	79

We developed one of the first tests for COVID-19, achieving the CE mark and regulatory approval in February 2020. We created new products for COVID-19 throughout 2020.

Our response to COVID-19 has enabled Novacyt to demonstrate the value of the business foundations that have been developed during the last few years.

We have been able to accelerate our strategy for delivering long-term value to Shareholders. We have identified specific high-value opportunities for growth in the diagnostics market where Novacyt can leverage its innovative position for developing new in vitro diagnostic products. In addition, with new opportunities created by an increased demand for diagnostics and investment in the industry, we expect to further boost revenues and profitability through selective and accretive acquisitions.

Providing a profitable diagnostic instrument development and manufacturing company with a solid reputation in development of mobile and rapid PCR instruments with proven high- quality, performance and reliability.

The Company experienced unprecedented sales demand for its COVID-19 products during 2020, which transformed our financial position, resulting in us significantly exceeding our full year 2020 budget and surpassing any previous performance.

comprehensive income
Statement of financial position	80
Statement of changes in equity	81
Statement of cash flows	82
Notes to the annual accounts	83
Glossary of terms	136
Company Information	IBC

Read more on our COVID-19response on page 3

Read more on accelerating our strategy on pages 18 and 19

Read more on the acquisition	Read more on our response
on page 23	on pages 22 to 24

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

01

The year that was 2020

Business	Strategic	Our	Financial	Company
Overview	Report	Governance	Statements	Information

For many, the year 2020 will always be remembered as the year that everything changed. From the way we greeted one another, to the way we held meetings, it was truly the year of radical transformation for many businesses.

For Novacyt, we too had a transformational year. From a mid- sized company of 110 people to a group of 237 people by the end of 2020. We have the capability to rapidly innovate new solutions and now supply our Gold standard kits to over 130 countries worldwide.

The Novacyt ethos has shone through, with everyone demonstrating a continued drive and positivity to innovate new products rapidly.

As a pioneer in clinical diagnostics, we have a proven history of responding quickly to changing global health needs, which includes providing testing solutions for Zika, Swine flu, and Ebola viruses. Solidifying this position, we were among the first to respond to the COVID-19 pandemic in 2020, providing a rapid and reliable CE-IVD marked SARS-CoV-2 testing kit.

SEPT

SARS-CoV-2 IgG EIA

Product launches

CE-mark approved serology (antibody) 96-well plate ELISA (enzyme-linked immunosorbent assay) test for the detection of IgG antibodies to SARS- CoV-2 derived from plasma and serum samples.

Our contribution to the COVID-19 testing solutions has proven that we can respond quickly to any changing global health needs.

Breakthrough innovations in 2020 by Novacyt Group

AUG

Market need

Our teams in Marketing and R&D aimed to pioneer innovations

JAN/FEB

RUO

Product launches

RUO novel Coronavirus test.

genesig®

Product launches

genesig® real-time PCR (polymerase chain reaction) COVID-19 (CE), the first CE-mark approved test for clinical diagnosis of the 2019 strain of the novel coronavirus.

Market need

In late 2019, researchers in China

MAR	JUL
EUA FROM THE	AWARDED LTA
FDA FOR FIRST	WITH UNICEF
COVID-19 TEST
APR
EUL FROM WHO
FOR FIRST COVID-
19-CE IVD TEST

Winterplex®

Product launches

Winterplex® CE-mark approved PCR respiratory test panel.

Market need

With the anticipation of Winter in the northern hemisphere, Influenza A, B and RSV were expected to add complexity to the COVID-19 pandemic.

Since the onset of the COVID-19 pandemic, patients and population groups have been extensively tested for an antibody response to COVID-19. Although there is much ongoing debate about how the immune system responds to different variants, the impact of vaccinations and even the type of antibody used in the test, our serology tests offer additional information on

a patient profile, supporting ongoing population management.

as a strategic priority. We are committed to delivering high-quality diagnostic products that will make a meaningful difference to our customers and their patients.

Our state-of-the-art innovations and technologies enabled us to be the first company globally to respond to the threat of the global COVID-19 pandemic by developing a CE IVD molecular test for the virus. Fast forward a year: we have developed a suite of solutions for COVID-19 to better manage the pandemic. These innovations enable us to deploy our expertise in other areas of diagnostics, paving the way

identified a new virus that had infected dozens of people in Asia. As the COVID-19 pandemic began to spread beyond China, the need for testing increased exponentially worldwide.

SEPT

NOV

PROmate®

Product launches

PROmate®, a new product to

for us to be a truly global clinical diagnostics company.

JUN

exsig® DIRECT, exsig® and COVID-HT

Product launches

Two new products to support laboratories testing for COVID-19. These were exsig® Direct and exsig® Mag, both RNA extraction kits for use prior to running a PCR test for COVID-19, and COVID-HT, a high- throughput test for COVID-19.

Market need

The number of known Coronavirus cases across the globe grew rapidly, with more than 100,000 new infections a day, causing demand for higher throughput COVID-19 tests. The onset of mass testing globally brought about many challenges. One of the most profound was a sudden shortage of pre-analytical solutions required for sample preparation prior to PCR testing for COVID-19.

genesig® COVID-19 2G

Product launches

CE-mark approved PCR two-gene target test for COVID-19.

Market need

To support the adoption of our products in jurisdictions mandating the approach of utilising PCR testing, Novacyt's first generation product was improved further with the addition of a secondary target to the initial Gold standard product.

improve the workflow efficiency of Novacyt's closer to patient system for COVID-19 testing.

Market need

The global death toll from coronavirus surpassed 800,000 in August. The tally continued to rise as new infections flared across Europe with high numbers of deaths recorded in the United States, India, South Africa and most of Latin America, prompting mass testing programmes to

be operated out of centralised laboratories.

See page 136 for a

glossary of terms

02

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

03

Group at a

Glance

The Novacyt Group is an international specialist diagnostic solutions provider, with a comprehensive product portfolio in advanced molecular and protein detection technologies.

Business	Strategic	Our	Financial	Company
Overview	Report	Governance	Statements	Information

We passionately believe in providing patient-led focus and high-quality innovations, which advance the science behind diagnostics in microbiology, haematology and serology testing.

a specialist in the development and	focused on design, manufacture,
manufacture of molecular diagnostic	validation and supply of Gold standard
instrumentation.	real-time PCR kits, reagents and
	instruments.

a product range of diagnostic	manufacturer and supplier of Plasmatec and
products in the fields of microbiology,	Biotec branded products, plus a range of
serology, haematology, bacteriology	reagents and tests for IVD application and
and virology.	blood grouping.

IT-IS International

Acquired by Novacyt in October 2020, a specialist in the development and manufacture of molecular diagnostic instrumentation, delivers high performing technology for real- time PCR. With comprehensive capabilities ranging from molecular biology to software engineering, IT- IS provides products from bespoke system development to off the shelf real-time PCR machines.

Our capabilities

High quality analysis techniques to both real-time PCR amplification quantification, and PCR melt analysis. Our unique techniques identify PCR features such as dye response, baseline offset and drift, efficiency to yield accurate, reproducible results, and to recognise potential problem samples.

Our products

Agile, portable and high-performingreal-time PCR instruments:

• genesig® q16 and q32: Novacyt's exclusive real-time PCR machines that work with solutions like VersaLab™ to provide rapid closer-to-patients testing.
• MyGo PCR Systems: real-time PCR machines that provide rapid, precise, quantitative PCR and melting point analysis.

Primerdesign

Focused on the design, manufacture, validation, and supply of Gold Standard real-time PCR kits and reagents. Provides the best custom qPCR assay development service in the world. Solidifying this position, we were among the first to respond to the COVID-19 pandemic in 2020, providing a rapid and reliable CE-IVD marked SARS- CoV-2 test kit.

Our capabilities

Bespoke and commercialisation of real-time PCR with an agile team that can deliver to market in the shortest possible time.

Our products

Proud producers of Gold Standard real-time PCR kits with world-class innovations:

• genesig®: for Pathogen detection,food and water testing, veterinary and agricultural testing, and more recently the COVID-19 pandemic.
• PROmate®: total workflow solution that is nearer to patients, inclusive of sample preparation, qPCR amplification, and analysis on the genesig® q16 and q32 instruments, specifically for the detection of SARS-CoV-2.
• SNPsig®: detect SARS-CoV-2 variants of concern under 2 hours, designed to run on central laboratory systems and the genesig® q16 and q32 rapid PCR systems.

Microgen Bioproducts

Clinical product range that supports healthcare providers in improving patient health with a comprehensive food diagnostic range that helps manufacturers ensure consumer safety.

Our capabilities

Expertise in the development, manufacturing, distribution, and marketing of products used by clinical laboratories to detect and diagnose infectious disease, and by food laboratories to detect and identify pathogenic organisms. Our product range comprises a comprehensive list of quality diagnostic solutions in the fields of microbiology, serology, haematology, bacteriology,

and virology.

Our products

Recognised leaders in diagnostics solutions for infectious diseases as well as for food and industrial microbiology:

• PathFlow® Rapid Tests: complete solution for the rapid diagnosis of infectious diseases including for the detection of SARS-CoV-2 antibodies.
• Path-ChekHygiene Tests: detection of a range of bacteria from work surfaces and the processing environment.
• Latex Agglutination Kits: simple one-step identification and confirmation of a range of pathogenic bacteria.

Lab 21 Healthcare

Cost-effective solutions in the production and distribution of reagents and test kits for both IVD and blood grouping application.

Our capabilities

Constantly improving production efficiency in our attempts to offer our end users the most cost- effective solutions with scale-up capabilities. Product improvement and enhancement to meet the needs of developing markets to broaden our geographical market coverage.

Our products

Well known for Plasmatec and Biotec branded products:

• Plasmatec: Core products are in the areas of latex microbiology and serology, blood grouping antisera, syphilis serology, and pregnancy testing.
• Biotec: Comprehensive range of diagnostic reagents, test kits, and blood grouping reagents.

04	Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

05

Business

Model

Key resources

Business	Strategic	Our	Financial	Company
Overview	Report	Governance	Statements	Information

Key activities

Speed to develop products

As one of the first diagnostic companies to have a launched CE-markCOVID-19 tests approved by both the FDA and the WHO under the Emergency Use Listing ("EUL"), Novacyt put itself on the map. This product has now received regulatory approval from 57 countries. As the pandemic has evolved, Novacyt has continued to be at the forefront of new product development, improving workflow with PROmate® for near patient testing and tackling new Variants of Concern ("VOC") with SNPsig®. Our

This was further compounded by the introduction of new products with almost 60% of our revenue coming from products launched after the original COVID genesig® product. Novacyt has managed a network of sub-contractors to access additional capacity, which has accelerated the scale-up, ensuring we can flex capacity upwards and downwards in line with very unpredictable demand patterns.

Rapid commercialisation

Novacyt has used its extensive network of distributors to bring products to market consistently and more quickly

Can-do culture

The DNA of Novacyt is an agile entrepreneurial business where speed to market and indeed speed to patient is paramount. The success of 2020 is testimony to this can-do culture

in action where significant scientific, regulatory and supply chain challenges were conquered. As we scale-up the organisation, we are preserving our core values to ensure we continue

to respond in a rapidly changing environment.

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technology covers a range of PCR, ELISA, lateral flow antibody and antigen tests for near patient, central labs and high throughput settings that can run on many laboratory systems, as well as our own q16 and q32 rapid-PCR systems. Novacyt launched 14 new COVID-19 related products during 2020.

Manufacturing scale-up

Novacyt revenue increased by over 20 times from 2019 to 2020. This increase in revenue did not occur evenly throughout 2020, which meant that manufacturing had to scale-up even more than the revenue increase.

than our competition. We have strengthened the commercial leadership both internationally and in the UK, to drive more direct customer sales and build an installed instrument base. In the first half of 2021, we have seen a shift from Government testing to private testing as parts of the economy reopen, and we have worked closely with several leading private test companies in this space including the launch of our own mobile trailer solution under the VersaLab™ brand.

In Novacyt, innovation is about delivering effective solutions ahead of our competitors. Innovation is where all our attributes of speed to develop products, manufacturing scale-up and rapid commercialisation come together, propelled forward by our can-do culture. Innovation is only successful when all our capabilities combine and complement each other. In a market with unprecedented opportunities developing at pace, Novacyt is in a great position to build a sustainable long-term business.

Evidencing our outcomes

The financial outcomes for 2020	• Sales growth of >20 times; EBITDA
show a highly profitable business that	margin of 64%; cash position of
experienced extraordinary growth	£92 million; debt free
throughout the year. Beneath the	• 14 new products launched;
headline numbers, we focus on specific
over 20 patents filed
metrics for our stakeholders:
• Integration of IT-IS acquisition

• Employee increase from 110 to 237. 11% staff turnover and no reported injuries
• Implementing systems to track customer satisfaction

06

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

Novacyt Group Annual Report and Accounts for the year ended 31 December 2020

07