NOVACYT

Public limited company under French law 13 avenue Morane Saulnier

78140 Vélizy-Villacoublay

'Rapport de Gestion'

Management report on the financial statements for the year ended 31 December 2022

2

NOVACYT

Public limited company under French law (société anonyme) with capital of 4,708,416.54 euros

Registered office: 13 avenue Morane Saulnier - 78140 Velizy-Villacoublay

Versailles Trade and Companies Register 491 062 527

(hereinafter "the Company" or "Novacyt")

MANAGEMENT REPORT ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

To the shareholders,

We hereby present to you the management report on the activities of Novacyt (hereinafter referred to as "the Company") and its subsidiaries during the financial year beginning on 1 January 2022 and ending on 31 December 2022 in accordance with the provisions of the French Commercial Code.

1. REVIEW OF THE ANNUAL AND GROUP CONSOLIDATED ACCOUNTS

The annual accounts and consolidated accounts for the year ended 31 December 2022, which we submit to your approval, have been prepared in accordance with the rules of presentation and valuation methods provided for in the current regulations.

1.1 Annual Social Accounts

  • Operating Income:

For the year ended 31 December 2022:

  • Net turnover amounted to €381,146
  • Total operating revenues amounted to €381,149
  • Operating expenses for the year amounted to €2,327,294
  • The operating result therefore is a loss of -€1,946,144
  • Salaries and wages amounted to €0
  • The amount of social security charges amounted to €0
  • Financial result:
    The financial result for the year 2022 is -€6,339,642
  • Exceptional result:
    The exceptional result for the 2022 financial year is -€34,266
  • Net accounting income:
    The year ended 31 December 2022, therefore, resulted in a net accounting loss of -€8,320,053
  • Total balance sheet:
    At 31 December 2022, the Company's balance sheet total amounted to €18,483,111

3

  • Proposed appropriation of the result:
    We propose you to approve the annual accounts (balance sheet, income statement and schedule) as presented to you and to allocate the net accounting loss for the year amounting to -€8,320,053, as follows:
  • the debtor "Retained Earning" account, for an amount of -€8,320,053

Therefore, the balance of the "Retained Earnings" account, will be debtor for an amount of -€60,363,722

1.2 Annual Group Consolidated Accounts

  • Consolidated Operating Income:

For the year ended 31 December 2022:

  • Net consolidated turnover amounted to £21,040,000
  • Total consolidated operating revenues amounted to £21,040,000
  • Consolidated operating expenses for the year amounted to £44,433,000
  • The consolidated operating result therefore is a loss of -£23,393,000
  • Financial consolidated result:
    Net financial income and expense for the year 2022 is £3,340,000.
  • Net consolidated accounting income:
    The year ended 31 December 2022, therefore, was a consolidated net accounting loss of -£25,730,000.
  • Total consolidated balance sheet:
    At 31 December 2022, the company's consolidated balance sheet assets total amounted to £140,901,000.
  • Approval of consolidated results:

We suggest that you approve the consolidated financial statements (balance sheet, income statement and schedule) as presented to you.

2. ACTIVITY OF THE COMPANY AND ITS SUBSIDIARIES AND BUSINESS TRENDS DURING THE YEAR ENDED 31 DECEMBER 2022

2.1 Overview of Novacyt's activity

Novacyt is an international diagnostics business delivering a broad portfolio of in vitro and molecular diagnostic tests for a wide range of infectious diseases, enabling faster, more accurate, accessible testing to improve healthcare outcomes. The Company provides customers with a seamless sample-to-result workflow using its integrated and scalable instrumentation/solutions. The Company specialises in the design, manufacture, and supply of real-time PCR kits, reagents and a full range of laboratory and qPCR instrumentation for molecular biology research and clinical use. Novacyt offers one of the world's most varied and comprehensive range of qPCR assays, covering human, veterinary, biodefence, environmental, agriculture and food testing.

4

The following companies make up the Novacyt Group:

Biotec Laboratories Ltd

IT-IS International Ltd

Lab21 Healthcare Ltd

Novacyt US Inc

Novacyt Inc

Microgen Bioproducts Ltd

Novacyt SA

Novacyt Asia Ltd

Novacyt China Ltd

Novacyt UK Holdings Ltd

Primer Design Ltd

2.2 Situation and activity / Analysis of business trends

  • Group revenue for FY2022 was £21.0m, in line with guidance, (FY2021: £92.6m), due to the expected decline in COVID-19 related sales
  • Revenue from COVID-19 products in 2022 totalled £14.7m (FY2021: £84.0m)
  • Revenue for the non-COVID-19 portfolio in 2022 totalled £6.3m (FY2021: £8.6m). This decline was predominantly driven by lower instrument sales compared to FY2021 which benefited from COVID-19 demand.
  • Group gross profit totalled £5.7m (27%) in FY2022 (FY2021: £28.2m (30%)). The FY2022 gross profit was reduced as a result of significant stock provisions based on lower forecasted COVID-19 sales in addition to writing-off stock that had not been provided for previously. Excluding the impact of these items, the margin would be in excess of 60%
  • Group EBITDA loss in FY2022 is £13.5m before exceptional items (FY2021: £3.1m profit) as a result of the expected decline in revenue and in line with guidance
  • Discontinued operations loss of £3.5m in FY2022 (FY2021: £3.7m loss)
  • Loss after tax increased to £25.7m in FY2022 (FY2021: £9.7m loss)
  • Cash position at 31 December 2022 was £87.0m (2021: £101.7m) and the Company remains debt free

2.3 Results, progress achieved and difficulties encountered Overview

Novacyt's 2022 performance was impacted by a faster than anticipated decline in COVID-19 related sales, and as such is reporting a loss for the year. During the second half of 2022 the Group made good progress on i) transitioning from its reliance on COVID-19 revenue and ii) right sizing its cost base. During the year the Group carried out a large restructuring exercise to reduce its opex cost base, which saw over 100 employees leave the Group.

Operational highlights

Non-COVID-19 assay development

  • Completed the development of genesig®PLEX, a multiplex gastrointestinal bacterial assay, available as a research-use-only test (RUO)

5

  • Developed and relaunched two single analyte transplant viral assay panels for the Epstein-Barr virus and BK virus for use on open instrument platforms
  • Augmented product portfolio with the addition of over 40 CE marked in vitro diagnostic (IVD) assays, through a third-party distribution agreement with Clonit srl
  • International launch and UK Coronavirus Test Device Approvals (CTDA) approval of genesig® Real-time PCR SARS-CoV-2 genesigTM Winterplex® panel covering RSV, Flu A&B and COVID-19
  • Relaunched RUO portfolio globally and developed Monkeypox and Adenovirus F41 RUO assays to support infectious disease monitoring

COVID-19 assay development

  • Six UK CTDA approvals in the year (including genesigTM Winterplex® multiplex panel), taking the total number of Novacyt products approved by the CTDA to seven, the most of any UK-based company
  • CE marked two lyophilised PROmate® products, enabling deployment of near-patientCOVID-19 diagnostic solution without the need for cold-chain shipping
  • CE marked PathFlow® COVID-19 Rapid Antigen Self-Test received, one of the first saliva-based COVID- 19 assays to be launched in the EEA and providing diagnosis of symptomatic and asymptomatic individuals in approximately 15 minutes

Workflow and instrumentation development

  • Launched and CE marked CO-Prep™ Automated Liquid Handling System Completed validation of a nucleic acid extraction system to enhance post-COVID-19 integrated sample-to-result molecular workflow solution
  • Launched two new lateral flow test (LFT) readers for use in conjunction with a broad range of assays within Novacyt's Pathflow® product portfolio, consisting of 18 non-COVID-19 products across sexually transmitted, gastrointestinal, respiratory and insect-borne infections

Commercialisation

  • Partnered with a global fisheries company to develop solutions for testing infectious salmon anaemia virus and bacterial kidney disease
  • Signed a contract with a leading global non-governmental organisation (NGO) to support the detection of arboviruses, including dengue, Zika and Chikungunya.
  • Partnered with leading healthcare company in India to develop and supply both reagents and instrumentation

2.4 Foreseeable change in the Company's position and future prospects

Strategy highlights

During the period, Novacyt has focused on deploying talent in key geographies and optimising its global distributor network to ensure optimal commercial coverage for its recently relaunched RUO portfolio and its growing clinical offering. Through this work, coverage has been increased across EMEA and the Company has begun conducting distributor training on its full portfolio, including its expanded clinical portfolio and workflow.

  • Commercialised Winterplex® panel with sales to hospitals in both the UK and Europe.
  • Partnered with a global fisheries company in the development of tests and workflow for more efficient management of fish stocks; initial sales have been focused on their North American subsidiary and we are now engaging with other global sites to identify their testing needs.
  • As the APAC region begins to open up post-COVID, we are re-engaging with new and existing distributors across the region with the RUO reagent and instrument products.
  • Signed a contract with a leading global non-governmental organisation (NGO) to support the detection of arboviruses, including dengue, Zika and Chikungunya. This has now been extended to include West Nile fever, hepatitis A & E and haemorrhagic fever, with further orders received. We also anticipate sales of our RSV test to come in the near term and they are currently evaluating our Winterplex® ® product for deployment across Africa.
  • Partnered with a leading healthcare company in India to supply both reagents and instrumentation.

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Novacyt SA published this content on 27 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 April 2023 12:02:11 UTC.