Final Results

Abingdon Health PLC

17 October 2023

 

Abingdon Health plc

("Abingdon Health" or "the Company")

Final Results

York, U.K.  17 October 2023: Abingdon Health plc (AIM: ABDX), a leading international lateral flow contract research (CRO) and contract development and manufacturing organisation (CDMO), announces its final results for the year ended 30 June 2023.

Operational highlights (including post-period end)

·    Strong commercial traction and growth from a diverse range of customers across all aspects of Abingdon's fully integrated CDMO solution, including contract development, technical transfer, manufacturing, and regulatory, quality assurance and commercial support, establishing the platform for further growth.

·    Continuing to work with multiple current and new customers across different contract service projects with projects moving through the cycle from development to technical transfer and manufacture.

·    Encouraging growth in the Company's product offering, including the Abingdon Simply Test™ range, with 12 self-branded products now available and further own brand and third-party product launches expected.

·    Salistick™, the first ever saliva pregnancy test, launched in 400 Superdrug stores and online, via Amazon and on the Abingdon Simply Test website in June 2023, followed by its roll-out in 298 Tesco stores and Tesco online in August 2023.

·    Break up of concert party, established at IPO, which prevented shareholders who were holding approximately 35% of the issued share capital in Abingdon being able to buy additional shares who are now able to do so.

Financial highlights

·    Revenue of £4.0m (2022: £2.8m), with H2 2023 revenue of £2.9m being over 2.5x that of H1 2023 (H1 2023: £1.1m) reflecting increasing commercial momentum over the year.

·    YoY revenue growth of 126% in FY23 when excluding COVID-19-related sales from both years.

·    Adjusted^* EBITDA loss of £2.9m (2022: £10.0m loss).

·    Gross margin of 51% (2022: minus 116% or 3% when adjusted for £3.7m stock provisions in FY2022).

·    Cash burn has reduced significantly in H2 2023 compared with H1 2023 due to the combined impact of revenue growth and the operational restructuring undertaken in H1 that reduced overhead costs.

·    Cash as at 30 June 2023: £3.2m (2022: £2.4m), in-line with the Board's expectations.

·    Net cash inflow from operating activities of £0.8m (2022: outflow £7.7m).

·    No additional funding requirement expected.

Chris Yates, Chief Executive Officer of Abingdon Health, said: "With our transition away from COVID-19 activities and focus as a fully integrated lateral flow CRO/CDMO, the Company has made strong progress, with a significant increase in our non-COVID-19 revenues and an increase in our opportunity pipeline.

"I believe that Abingdon is well positioned to meet the growing lateral flow market, through both our CRO/CDMO offering, and through our complementary direct sales and distribution platform. We remain highly focused on continuing to grow our revenues and reducing our cash-burn in FY24 and beyond."  

Enquiries

Abingdon Health plc		www.abingdonhealth.com/investors/
Chris Yates, Chief Executive Officer		Via Walbrook PR
Melanie Ross, Chief Financial Officer
Chris Hand, Non-Executive Chairman
Singer Capital Markets (Sole Broker and Nominated Adviser)		Tel: [phone]
Peter Steel, Alex Bond (Corporate Finance)
Tom Salvesen (Corporate Broking)
Walbrook PR Limited	Tel: [phone] or [e-mail]
Paul McManus / Phillip Marriage Alice Woodings	Mob: [phone] [phone]

About Abingdon Health plc

Abingdon Health is a leading lateral flow contract development and manufacturing organisation ("CDMO") offering its services to an international customer base across industry sectors that include clinical, animal health, plant health, and environmental testing. Abingdon Health has the internal capabilities to take projects from initial concept through to routine and large-scale manufacturing; from "idea to commercial success."

The Company's CDMO division offers product development, regulatory support, technology transfer and manufacturing services for customers looking to develop new assays or transfer existing laboratory-based assays to a lateral flow format. Abingdon Health aims to support the increase in need for rapid results across many industries and locations and produces lateral flow tests in areas such as infectious disease, clinical testing including companion diagnostics, animal health and environmental testing. Faster access to results allows for rapid decision making, targeted intervention and can support better outcomes. 

Abingdon Health's Abingdon Simply Test^® range of self-tests is an ecommerce platform that offers a range of self-tests to empowers consumers to manage their own health and wellbeing. The Abingdon Simply Test® ecommerce site offers consumers a range of information to support them in making informed decisions on the tests available. In addition, the site provides Abingdon's contract services customers with a potential route to market for self-tests. The Abingdon Simply Test^® range is also sold through international distributors and through other channels in the UK and Ireland such as pharmacy chains.

Founded in 2008, Abingdon Health is headquartered in York, England.

For more information visit: www.abingdonhealth.com

Chairman & CEO Joint Statement

We are pleased to report a significant improvement in the trading performance of Abingdon Health over the financial year ended 30 June 2023. The refocusing of the business away from COVID-19 activities, which was undertaken from the summer of 2022 onwards, has started to yield growth in customer projects and revenues. We believe there is significant opportunity within the lateral flow market and expect to see continued strong revenue growth in 2024 and beyond.

We are now seeing growth in the market across a broad range of other (non-COVID-19) applications. Our integrated Contract Research Organisation ("CRO") and Contract Development and Manufacturing Organisation ("CDMO") model is resonating well with a diverse customer base across clinical (both self-testing and point of care), pharmaceutical, animal health, food, plant pathogen and environmental testing. This growth is being driven in part by reduced barriers to adoption for lateral flow technology ("LFT") due to the widespread awareness of LFT seen during the COVID-19 pandemic. We remain confident that Abingdon Health's expertise in the lateral flow industry and our in-house development and manufacturing platform, will continue to lead to sustainable revenue growth in coming years. Our key objective remains that of moving the Company to a positive cashflow position and we are making solid progress towards achieving this objective. 

During the financial year we successfully resolved the remaining COVID-19 legal challenges faced, and restructured the business to enable it to focus on non-COVID-19 CRO/CDMO business activities. In July 2022 we received payment of £6.3m from the Department of Health & Social Care ("DHSC"). This was in settlement of the outstanding payments and invoices payable by DHSC for lateral flow tests and component stock for contracts entered into during the COVID-19 pandemic. In October 2022 a judicial review at the High Court of Justice dismissed in their entirety all the claims relating to the three contracts the DHSC had entered into with Abingdon Health for COVID-19 antibody testing. Successfully resolving these issues has allowed the management team to focus fully on executing its strategy and driving commercial performance. From a standing start in the summer of 2022, with most activities in the prior year being COVID-19 related, we have seen a significant increase in our non-COVID-19 commercial activities and opportunity pipeline.

We strongly believe that we are at the start of a paradigm shift in the use and application of rapid testing across a wide range of applications and that Abingdon Health is well positioned to support customers in bringing new, innovative products to market across a range of sectors. We are proud to be working with some of the leading innovators in our sector and our focus remains on expanding our customer base and driving products through development, manufacturing and to commercial success.

Our strategy

Our mission at Abingdon Health is to improve life by making rapid results accessible to all. We achieve this by supporting our customers, as an integrated lateral flow CRO & CDMO, in developing and manufacturing lateral flow tests across a range of sectors including human health, such as infectious disease testing, animal health, plant pathogen and environmental testing.

Our technology focus continues to be based on lateral flow. The lateral flow market is large and growing with recent market estimates forecast that the lateral flow market will increase by 150 percent between 2022 and 2032 to reach a market size of $11.7bn by 2032 (Source: Fact.MR⁽¹⁾). Whilst reduced barriers to adoption of lateral flow technology are a key driver, there are other factors at play. For example, there is a drive towards decentralisation of testing, both in the clinical market with a focus on personalised healthcare and the empowerment of patients to manage their own health, and in the animal health market where testing is being transitioned from the laboratory to the farm and the field. Lateral flow technology is simple and cost-effective, it is well-understood by users and seen as a valid alternative to laboratory testing in many cases. Due to these strengths, we are seeing growth across clinical (both point of care and self-testing), animal health, food testing, plant pathogen and environmental testing.

Abingdon Health's focus within the lateral flow market is two-fold:

Lateral flow CRO/CDMO

Firstly, we remain committed to becoming a leading lateral flow CRO/CDMO. The CRO and CDMO business model, well-established in the pharmaceutical industry, has direct application to the medical diagnostics market, and Abingdon Health's CRO/CDMO team have the capability to take a project from "idea to commercial success". Our contract services include R&D, optimisation and scale-up, technical transfer and manufacturing as well as added-value services such as reagent development, regulatory and clinical trial support, and packaging design and packaging service provision. The ability to offer this range of outsourced options to our customer base is resonating well. We are focused on driving greater awareness of the capabilities of, and innovation in, lateral flow technology through a regular cadence of blogs and articles and we also attend third party workshops and conferences to promote the use of lateral flow technology and share knowledge. We intend to continue to expand our contract service provision, through both investment in the development of new service lines and through acquisition of complementary businesses.

Self-testing lateral flow sales & distribution

Secondly, we are building a route to market initially, within Europe, for lateral flow self-tests. We believe that COVID-19 has been a catalyst for the expansion of self-testing across a range of other clinical areas. Our route to market will be a combination of both direct sales, via Amazon or through our website www.abingdonsimplytest.com, and through retail and distribution agreements. It is our intention to be a provider of choice to both our CDMO customers and to other parties who are looking for one partner to cascade their lateral flow tests across Europe. We have established our own self-test lateral flow brand, Abingdon Simply Test™ which currently includes 12 self-test products which we intend to expand to provide an increasingly comprehensive product portfolio to meet the needs of retailers and distributors.

Again, we will focus on organically developing our distribution platform but there may be the opportunity to accelerate this strategy through acquisition. We very much see our lateral flow sales & distribution platform as complementary to our CRO/CDMO business.  It is intended to provide support to a number of our CDMO customers who are developing self-tests, with a ready-made route-to-market to drive early commercial adoption. The first such example was the launch in June 2023 of Salistick™, the first ever saliva pregnancy test in the UK, on behalf of our CDMO customer Salignostics Limited. We were pleased to launch this online at Amazon, on our own website, www.abingdonsimplytest.com and in 400 Superdrug stores and online at Superdrug.com; with the addition of Tesco post-year end instore and online.

Performance in the year

We are pleased with the strong commercial progress made in FY23 following the decision to refocus the business in summer 2022. The Company's revenues increased to £4.0m, 43% higher than FY22 (£2.8m) and excluding COVID-19 revenues, FY23 revenues were 126% higher, underlining the strong transition to a sustainable CRO/CDMO business model. Revenue for H2 FY23, was £2.9m which was more than 2.5x that of H1 FY23 (£1.1m), with the increase coming from several new projects commencing from late H1 2023.

Our CRO/CDMO business grew 52% year-on-year and excluding COVID-19, CRO/CDMO revenues grew 155% year-on-year. This strong revenue traction was from a diverse range of customers across all aspects of our fully integrated CRO/CDMO solution, including contract development, technical transfer, manufacturing, regulatory, quality assurance and commercial support. This growth augurs well for future financial years as our model is based on bringing customers through the development process and into manufacturing and hopefully keeping these customers as manufacturing customers for the long-term. Therefore, the growth in customers we have seen during FY23 will create a platform for revenue growth in our CRO/CDMO business for FY24 and beyond.

We were also pleased to see our Product business revenues grow strongly during FY23 with 17% year-on-year growth when excluding COVID-19 and retired products from each year. FY23 was the first year of trading of our newly established Abingdon Simply Test™ brand and we were pleased with the progress made in growing the product range as well as establishing a number of new retail customers and distributors. Again, in FY24 we will build on this progress with continued expansion of our product range and sales and distribution platform to generate further Product sales growth.

Current Activity and Pipeline

We are continuing to see good momentum across both our CRO/CDMO and Product divisions in the current financial year. 

Within the CRO/CDMO division, we continue to grow our contract development customer base and have signed a number of new Development contracts and Technical Transfer contracts in the current financial year to date (since July 2023). We have also seen a number of our existing contracted projects transition from development into technical transfer and from technical transfer into manufacturing. One such example is Loop Diagnostics ("LoopDx"), where we have worked closely with the LoopDx team for over 12 months to support the development of an early diagnostic test for sepsis. This product is targeting a significant unmet need and we are working closely with the LoopDx team to transfer the product into manufacturing, and will support them as they work through their clinical trials and commercial roll-out.

In addition to our new and existing customer base our commercial pipeline remains robust, and we continue to see good opportunities to expand our CRO/CDMO customer base for the foreseeable future. Based on this forecast growth in our CRO/CDMO customer base we are continuing to grow our development team to support this expansion in activity. 

The Product division has had an encouraging start to FY24, and we were pleased to announce in August 2023 that the Salistick™ product was launched in 298 of Tesco's larger stores and also online at Tesco.com. We now have two of the UK's leading retailers stocking the product and we continue to work on expanding the sales and distribution network for Salistick™ and our Abingdon Simply Test™ range both in the UK and into the EU. We will launch a rebranded Abingdon Simply Test™ range at the Pharmacy Show, a national event for community and primary care pharmacy professionals, in October 2023.

Concert Party

Post-year end, on 30 August 2023, we announced the break-up of a concert party established at IPO which effectively prevented shareholders who were holding approximately 35% of the issued share capital in Abingdon from being able to buy additional shares. Now that this 'IPO concert party' has been divided into three smaller concert parties, the holders within each separate concert party may now buy additional shares.

Team

During the financial year we reduced our average staff numbers from 130 to 82, which was a reflection of the full year impact of the redundancies in FY22. As at 31 August 2023 there were 82 employees within Abingdon Health. Due to the number of opportunities in the Contract Development pipeline, the number of heads in this area will increase by a small number in the coming months as projects become active. This will enable the Company to deliver more projects in this area.

We would like to thank all of the Abingdon Health team for their efforts in the last year, which resulted in significant revenue growth for the Business.

Governance and People

Mary Tavener is the senior-independent non-executive director, having been appointed in November 2020 prior to listing on AIM. Abingdon Health's other non-executive director is Dr Chris Hand who is a co-founder of Abingdon Health and non-executive chairman, and who retains a significant shareholding in the Company as noted in the Directors' Report.

Our Audit Committee and Remuneration Committee currently comprises Mary Tavener (Chair) with Chris Hand (non-executive chairman). The executive directors Chris Yates and Melanie Ross are invited to attend as required from time-to-time. The Board has concluded that at this time the Group does not currently require a Nominations Committee but will review this assessment on a regular basis including discussing the matter with its Nominated Advisor.

The Board remains focused on ensuring its own effectiveness and that of the governance processes throughout the Group, and that these governance structures remain fit for purpose as the Group develops and grows over time. Mary Tavener is Abingdon Health's only independent non-executive director and, as such, the Board's current composition does not comply with the requirements for a minimum of two independent non-executive directors under the QCA Corporate Governance Code, being the corporate governance code that the Company has chosen to apply.

The Board continues to believe, however, that its current composition is appropriate for the current size of the business and will continue to review its structure periodically as the needs of the business change.

Outlook & Funding

The Board believes it has no current requirement for additional funding. Cash at the end of the financial year was £3.2m. We believe we have sufficient cash resources to fund progress beyond 12 months from the signing date of the accounts, with our priority continuing to be moving the Company to a positive cashflow position.

Our strategic focus is on growing our CRO/CDMO business and expanding the reach of our Abingdon Simply Test™ product range. We will continue to focus on growing our CRO/CDMO customer base and support our customers in bringing their innovative products to market. As part of this strategy we will continue to expand our CRO/CDMO service offering to provide a comprehensive package of solutions that allow us to bring on customers' products through the journey "from idea to commercial success". We will also continue to grow our European distribution platform for self-tests both through increasing the number of retailer and distribution agreements in place and secondly through broadening the self-test product range including those developed in partnership with our CRO/CDMO customers.

Our key financial priorities are to grow our revenues and reduce our cash-burn through continued close cost management. To this end we will continue to focus our team's activities on CRO/CDMO business and near-term revenues with own-product development being given less priority until we are closer to break-even.

As a CRO/CDMO focused on lateral flow technology with a well-established track record of bringing products from "idea to market" we believe we are well-placed to support a broad range of customers across the clinical (point of care & self-test), pharmaceutical, animal health, food, plant pathogen and environmental testing markets. We believe our full-service contract service proposition strongly resonates with customers and we look forward to continuing to support our customers in bringing their innovative tests to market.

We would like to thank all our employees for their hard work, dedication and commitment during the past year as we returned to growth. We are confident that our contract services customer base and our current growing pipeline means we are well positioned to grow our business and deliver shareholder value going forward. We would like to thank shareholders for their support.

⁽¹⁾       Lateral Flow Assays Market Size to Surpass US$ 11.7 Billion (globenewswire.com)

Operating and Financial Review

Revenue and Margins

The Business delivered strong revenue growth in the period, growing 43% to £4.0m (2022: £2.8m), and increased by 126% when stripping out COVID-19 revenue from both fiscal years. 

Revenue by Geographical Market

Geographical Market	2023 £m	% *	2022 £m	%*	(Decrease)/Growth
UK	1.3	32%	1.4	50%	(8)%
USA/Canada	0.8	21%	0.2	6%	373%
Europe	1.7	41%	1.0	38%	55%
ROW	0.2	5%	0.2	6%	33%
Total	4.0	100%	2.8	100%	43%

* note - percentages are calculated on exact totals and not the rounded amounts shown above

Revenue by Operating Segment

Operating Segment	2023 £m	%*	2022 £m	%*	(Decrease)/ Growth
Products	0.4	10%	0.4	16%	(10)%
Contract Manufacturing	1.1	26%	1.1	40%	(6)%
Contract Development	2.3	57%	1.3	44%	85%
Regulatory	0.3	7%	0.0	0%	-
Total	4.0	100%	2.8	100%	43%

*note - percentages are calculated on exact totals and not the rounded amounts shown above

Contract Manufacturing (manufacture of products for third parties) fell 6% over the period. However, when adjusting for COVID-19 related sales, Contract Manufacturing grew 6%.

Product sales (own products) fell by 10% in the relevant period. When excluding COVID-19 sales and Seralite (discontinued products) sales increased 17%.  Sales of products available through the Abingdon Simply Test™ website grew in line with expectations.

Contract Development (R&D activity based on a fee for service and manufacturing of validation batches) increased 85% year-on-year, and 445% when excluding COVID-19 sales which made up over 65% of revenue in the previous fiscal year.

Regulatory Affairs, charged as a fee-for-service model, is a new revenue stream that launched in 2022, and offers wrap around services that range from acting as UK representative for our contract manufacturing customers, to full regulatory support during design, development, and submission for regulatory approval. It encompasses ongoing regulatory support once the products are in the market or any combination of the above services. This service offering enhances the CRO/CDMO model to current and future customers.

Gross margin in the financial year was 51% (2022: minus 116% including underlying stock provision).  Gross margin for FY23 is also significantly higher than the underlying gross margin for FY22 which, when adjusted for the £3.7m in stock provisions, was 3%. This increase is in part due to the restructuring activities in the previous year, as well as the strong growth in Contract Development revenue streams.

Adjusted EBITDA

Abingdon Health uses adjusted EBITDA as a measure, as this excludes items which can distort comparability as well as being the measure of profit that most accurately reflects the cash generating activities of the Company. The reconciliation of these adjustments is as follows:

	Year Ended 30 June 2023 £'000	Year Ended 30 June 2022 £'000
Adjusted EBITDA	(2,893)	(9,997)
Share based payment expense	(28)	(231)
Impairment charges	(86)	(7,192)
Gain on Lease Modification	390
Non-recurring legal and professional fees	(33)	(688)
Non-recurring employee costs	(162)	(198)
Other Exceptional Costs	(88)
DHSC related costs		(1,585)
Net Finance income/(costs)	17	(65)
Statutory EBITDA	(2,883)	(19,956)
Amortisation	(29)	(121)
Depreciation	(644)	(1,516)
Loss before Tax	(3,556)	(21,593)

Adjusted EBITDA loss in the period was £2.9m (2022: loss £10.0m), a significant decrease on the prior year driven by both increases in the revenue and cost reductions year on year.

Headcount in the Group was an average of 82 (2022: 130).  Staff costs overall reduced to £4.0m (2022: £5.3m) reflecting the full year impact of the reduction in heads implemented during the previous year, and the savings associated with further leavers early in H1.  Exceptional costs of £0.2m were incurred in the year in relation to these leavers.  Headcount at the end of the year was 82.

Professional costs in the year were £0.4m (2022: £1.5m). Excluding the non-recurring and DHSC related costs in the previous year, FY22 costs were £0.6m, illustrating the underlying improvement of £0.2m results from a reduction in external consultancy and professional advisory services. 

Premises costs were £0.6m in the year (2022: £1.0m), with underlying costs being £0.9m when adjusted for the one off £0.3m gain (in exceptionals) due to a release of the Right of Use asset resulting from releasing the contractual lease obligations on space at the Company's York site during the year as laboratories and manufacturing premises were rearranged to improve efficiency. This, as well as the continued mothballing of the Doncaster site, saw a reduction in rent and other associated costs by £0.2m.  This saving was partially offset by an increase in the utility costs of the business of £0.1m.

Marketing and Travel costs increased to £0.2m (2022: £0.1m) as travel bans were lifted and the Company was able to attend more exhibitions and visit more customers in person.  Increased spend was also incurred on website costs as we launched the Abingdon Simply Test™ own label product range. 

Cash Resources

Net cash inflow from operating activities was £0.9m (2022: outflow £7.7m). A reduction in payables, stock and the unwinding of the DHSC contract stock and payable amounts following the satisfactory conclusion of the dispute with DHSC were the main drivers of the improvement. 

The net proceeds from financing activities were from a drawdown against an existing Innovate UK product development loan arrangement.

Altogether this represented a net cash increase of £0.8m when compared to the prior year, and a closing cash position of £3.2m (2022: £2.4m).

Financing

In July 2022 the Company received £6.3m cash in full settlement from the DHSC of the disputed amounts.

Key Performance Indicators ("KPIs")

The Company considers various factors when determining the KPI measures and these evolve as the business changes to meet differing market demands to ensure continued success.  In this financial year the KPI measures focused on revenue growth, reduction in (adjusted) EBITDA loss and reduction in the cash burn of the business. These metrics are felt to be the most important to ensure that the business achieves cash breakeven and profitability. Other internal measures introduced in the new financial year will focus on contract progression from Development to Manufacturing, as well as the number of tests manufactured per FTE.

Earnings per Share

Earnings per share was a loss of 1.14p in the period and adjusted EPS was a loss of 0.95p in the same period.

					EPS
Basic EPS					(1.14)p
Loss attributable to Shareholders					£(3.56)m
Add: Share Based Payments					£0.03m
Add: Nonrecurring legal fees					£0.03m
Add: Nonrecurring employment costs					£0.16m
Add: Impairment charge					£0.09m
Add: Depreciation and Amortisation					£0.67m
Deduct: Finance Costs					£(0.02)m
Deduct: Lease modification					£(0.39)m
Add: Other exceptional costs					£0.09m
Adjusted Loss attributable to Shareholders					£(2.89)m
Adjusted EPS					(0.95)

Consolidated Statement of Comprehensive Income

For the Year Ended 30 June 2023

	Year ended 30 June 2023	Year ended 30 June 2022
	£'000	£'000
Revenue	4,045	2,835
Cost of sales	(1,970)	(6,427)
Gross profit/(loss)	2,075	(3,592)
Administrative expenses	(5,220)	(6,645)
Other income	252	240
Adjusted EBITDA (before adjusting items)	(2,893)	(9,997)
Amortisation	(29)	(121)
Depreciation	(644)	(1,516)
Impairment charges	(86)	(7,192)
Share based payment expense	(28)	(231)
Non-recurring legal, professional and fundraising fees	(33)	(688)
Non-recurring redundancy costs	(162)	(198)
Lease Modification	390	-
Other exceptional costs	(88)	-
DHSC exceptional costs	-	(1,585)
Operating loss	(3,573)	(21,528)
Finance income	89	4
Finance costs	(72)	(69)
Loss before taxation	(3,556)	(21,593)
Taxation credit	105	331
Loss for the financial period	(3,451)	(21,262)
Other comprehensive income for the year net of tax	-	-
Total comprehensive loss for the year	(3,451)	(21,262)
Attributable to: Equity holders of the parent	(3,451)	(21,262)

Basic losses per share (pence)	(1.14)	(7.29)
Diluted losses per share (pence)	(1.14)	(7.29)

Consolidated Statement of Financial Position

As at 30 June 2023

	30 June 2023	30 June 2022
	£'000	£'000
Non-current assets
Goodwill	-	-
Other intangible assets	90	36
Property, plant, and equipment	1,209	1,777
	1,299	1,813
Current assets
Inventories	329	534
Trade and other receivables	1,147	7,844
Income tax receivable	50	183
Cash and cash equivalents	3,236	2,397
	4,762	10,958
Total assets	6,061	12,771
Current liabilities Trade and other payables	2,033	5,059
Borrowings	-	115
Obligations under leases	87	150
	2,120	5,324
Non-current liabilities
Borrowings	708	435
Obligations under leases	224	580
	932	1,015
Total liabilities	3,052	6,339
Net assets	3,009	6,432
Equity
Attributable to the owners of the parent:
Share capital	76	76
Share premium	30,309	30,309
Share based payment reserve	80	153
Accumulated deficit	(27,456)	(24,106)
Total equity	3,009	6,432

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2023

	Share Capital	Share premium	Share based payment reserve	Accumulated deficit	Total equity attributable to owners of the parent
	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2021	69	24,180	44	(2,966)	21,327
Year ended 30 June 2022:
Profit and loss	-	-	-	(21,262)	(21,262)
Total comprehensive loss for the year	-	-	-	(21,262)	(21,262)
Other movements:
Share option expense	-	-	231	-	231
Share options exercised	-	-	(10)	10	-
Share options cancelled	-	-	(112)	112	-
Issue of shares	7	6,493			6,500
Cost of issue of shares	-	(364)	-	-	(364)
Balance at 30 June 2022	76	30,309	153	(24,106)	6,432
Year ended 30 June 2023:
Profit and loss	-	-	-	(3,451)	(3,009)
Total comprehensive loss for the year	-	-	-	(3,451)	(3,009)
Other movements:
Share option expense	-	-	28	-	28
Share options exercised	-	-	(4)	4	-
Share options cancelled	-	-	(97)	97	-
Balance at 30 June 2023	76	30,309	80	(27,456)	3,009

Consolidated Statement of Cash Flows

For the Year Ended 30 June 2023

	30 June 2023	30 June 2022
	£'000	£'000
Cash flows from operating activities:
Loss for the year	(3,451)	(21,262)
Adjustments for:
Other income	(252)	(240)
Net finance (income)/costs	(17)	65
Tax charge/(credit)	(105)	(331)
Amortisation and impairment of intangible assets	29	1,270
Share based payments	28	231
Depreciation and impairment of property, plant and equipment	730	7,559
Loss on disposal of property, plant and equipment	-	240
Impairment of inventories (including DHSC)	-	9,676
Changes in working capital:
Decrease/(increase) in inventories	205	(2,322)
Decrease in trade and other receivables	6,647	2,134
(Decrease) in trade and other payables	(3,180)	(5,170)
Cash generated from/(used in) operations	634	(8,150)
Interest paid (including leases)	(48)	(58)
Income taxes received	325	323
Insurance claim proceeds	2	146
Net cash inflow / (outflow) from operating activities	913	(7,739)
Interest received	89	4
Purchase of intangible assets	(82)	(78)
Purchase of property, plant and equipment	(75)	(682)
Proceeds on disposal of property, plant and equipment	1	-
Net cash used in investing activities	(68)	(756)

Consolidated Statement of Cash Flows

For the Year Ended 30 June 2022

	30 June 2023	30 June 2022
	£'000	£'000
Financing activities
Proceeds from issue of own shares (net of costs *)	-	6,136
Cash withheld for SAYE scheme	(1)	(7)
Proceeds from new bank loans and borrowings	250	167
Payment of loans	(115)	(125)
Payment of lease obligations	(141)	(144)
Payment on settlement of accrued lease obligations	-	(112)
Net cash (used in)/generated from financing	(7)	5,915
Net increase/(decrease) in cash and cash equivalents	839	(2,580)
Cash and cash equivalents at beginning of the year	2,397	4,977
Cash and cash equivalents at end of the year	3,236	2,397
Recognised in the Statement of Financial Position as:
Cash at bank and in hand	3,236	2,397
Overdrafts	-	-
	3,236	2,397

* Net of costs of £nil (2022 - £364,000) set against the share premium account only.

Notes to the Financial Statements

For the Year Ended 30 June 2023

Company information

Abingdon Health PLC ("the Company") is a public limited company domiciled and incorporated in England and Wales. The Company is quoted on the London Stock Exchange's Alternative Investment Market ("AIM"). The registered office is York Biotech Campus, Sand Hutton, York, YO41 1LZ. The consolidated financial information (or "financial statements") incorporates the financial information of the Company and entities (its subsidiaries) controlled by the Company (collectively comprising the "Group").

The principal activity of the Group is to develop, manufacture and distribute diagnostic devices and provide consultancy services to businesses in the diagnostics sector.

Basis of preparation

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined by section 434 of the Companies Act 2006.

The financial information for the year ended 30 June 2023 and the year ended 30 June 2022 does not constitute the Company's statutory accounts for those years. Statutory accounts for the year ended 30 June 2022 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 June 2023 were approved by the Board on 16 October 2023 and will be delivered to the Registrar of Companies in due course.  The statutory accounts for the period ended 30 June 2023 will be posted to shareholders at least 21 days before the Annual General Meeting and made available on the Group's website.

The Group's statutory financial statements for the year ended 30 June 2023, from which the financial information presented in this announcement has been extracted, were prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The financial statements have been prepared on the historical cost basis with the exception of certain items which are measured at fair value as disclosed in the principal accounting policies set out in the Group's Annual Report. These policies have been consistently applied to all years presented.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from these estimates.

The auditor's reports on the accounts for 30 June 2023 and 30 June 2022 were unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. 

Judgements and key sources of estimation uncertainty

The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements:

Right of use asset recognition                                       

Management have assessed each lease liability for recognition under IFRS 16 and recognised a right of use asset where appropriate.

One lease includes a material component of service charge by comparison to the headline rental payments, where this service charge partially covers shared areas and facilities which would normally form part of a rental price. The Directors have applied judgement in splitting this service charge into rent-like components of £24,000 per annum (which qualify for capitalisation as a right of use asset), utility fees of £104,000 per annum, and ongoing shared costs of £72,000 per annum (which the latter two do not qualify for capitalisation as a right of use asset, nor recognition as a lease liability). The lease runs for a 7-year term and the total value of rent-like components capitalised (prior to amortisation) is £161,000.

Revenue recognition

In line with IFRS 15 management are required to determine appropriate revenue recognition points for all revenue streams. Where multiple contracts are entered into with a single counterparty any instalment payments are not considered to be a key indicator of the satisfaction of a performance obligation, although linked contracts with a counterparty are considered in conjunction when identifying the appropriate point for revenue recognition.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:

Valuation and impairment of cash generating units (including goodwill)

Goodwill is tested annually for impairment as part of a cash generating unit ("CGU"). The test considers future cash flow projections of each CGU on a group basis, as the group as a whole is considered to be a single CGU. In the current year, two tests have been performed, a discounted cash flow model and a value-in-use model, which have both approximated to the same value.

Where the discounted cash flows are less than the carrying value of the CGU, an impairment charge is recognised for the difference.

Share based payments

The determination of the fair values of EMI and SAYE options has been made by reference to the Black-Scholes model.

Going concern

Since the end of the last financial year, the monies were received from the DHSC, and outstanding liabilities in relation to the DHSC were all settled.  To reduce the cashburn of the group, the management team undertook a restructuring of the group to reduce headcount and operational infrastructure in line with the anticipated revenue generating activities.  As part of this exercise the group focused its commercial activities in its CRO/CDMO model and specifically moved away from COVID-19 projects towards a broader lateral flow contract proposition.  The impact of this restructuring has been a significant increase in the number of contract service customers combined with a reduced operational cost base which has led to a reduction in the groups cashburn. As discussed in the Strategic Report, this model is continuing to progress well and the group has sufficient visibility of commercial opportunities to give confidence in the pipeline revenue and the base model in the financial forecasts. 

The Directors have prepared cash flow forecasts under a number of scenarios, that being the budget, sensitised to increase costs in areas such as headcount and additional inflationary pressure, and also other plausible downside scenarios including little to no growth in revenues for the next fiscal year. 

These forecasts cover a period of at least 12 months from the expected date of approval of the financial statements and the Business continues to evaluate financial forecasts on a regular basis.

The models are underpinned by a high percentage of forecast revenues up to December 2024 being based on committed milestone-based contracts.  The focus of the group remains on expanding its fee for service CRO/CDMO model and any increase in headcount and/or operational footprint will be on the basis of an increase in the number of secured contracts, revenue and cash inflows. At 30 June 2023 the bank balance was £3.2m.  Cash burn on a monthly basis continues to reduce. The Board is satisfied that based on the above and the current forecasts, there is sufficient headroom and concluded that it is appropriate to prepare the Annual Report and Accounts on a going concern basis. 

Non-recurring income and costs

The Group seeks to highlight certain items as exceptional operating income or costs. These are considered to be exceptional in size, frequency and/or nature rather than indicative of the underlying day to day trading of the Group. These may include items such as acquisition costs, restructuring costs, obsolescence costs, employee exit and transition costs, legal costs, profits or losses on the disposal of subsidiaries, and loan impairments. All of these items are charged or credited before calculating operating profit or loss.

The Directors apply judgement in assessing the particular items, which by virtue of their size and nature are disclosed separately in the Statement of Comprehensive Income and the notes to the financial statements as non-recurring income and costs. The Directors believe that the separate disclosure of these items is relevant to understanding the Group's financial performance.

Guarantees, commitments and contingent liabilities

At 30 June 2023, the Group and Company had no contingent liabilities (2022 - none). The borrowings disclosed in note 20, were secured over the assets of the Group including the Company.

At 30 June 2023 the Group had contracted for capital commitments of approximately £nil (2022 - £nil). These amounts have not been reflected in the financial statements.

1. Revenue

The Group applies IFRS 15 'Revenue from contracts with customers'. Under IFRS 15, the Group applies the 5-step method to identify contracts with its customers, determine performance obligations arising under those contracts, set an expected transaction price, allocate that price to the performance obligations, and then recognises revenues as and when those obligations are satisfied.

Segmental analysis of revenue

	2023	2022
	£'000	£'000
Product sales	418	465
Contract manufacturing	1,059	1,124
Contract development	2,301	1,246
Regulatory	268	-
Total revenue from contracts with customers	4,045	2,835

Revenue analysed by geographical market        

	2023	2022
	£'000	£'000
United Kingdom	1,307	1,417
Europe (excluding Belgium)	1,179	334
Belgium	479	738
USA & Canada	861	182
Rest of the World	219	164
	4,045	2,835

All revenue received in the current and comparative years has been recognised at a point in time in accordance with the Group's revenue recognition policy.

2. Taxation

	2023	2022
	£'000	£'000
Current tax
UK Corporation tax on profits for the current year	46	-
Adjustments in respect of prior years	(151)	(331)
Total current tax	(105)	(331)
Deferred tax
Origination and reversal of temporary differences	-	-
Impact of change in tax rates	-	-
Total deferred tax	-	-
Total tax charge/(credit)	(105)	(331)

The charge for the year can be reconciled to the profit per the Consolidated Statement of Comprehensive Income as follows:

	2023	2022 As A
	£'000	£'000
(Loss) before taxation	(3,608)	(21,593)
Expected tax (credit)/charge based on a corporation tax rate of              20.5% (2022 - 19%)	(740)	(4,103)
Tax effect of expenses that are not deductible in determining taxable profit	(55)	717
Depreciation on assets not qualifying for tax allowances	-	316
Change in unrecognised deferred tax asset	851	3,072
Timing differences between depreciation and capital allowances	(5)	-
Share based payments	6	44
Prior year adjustment	(151)	(331)
Research and development	(20)	-
Tax movement on provisions	(5)	-
Other differences	14	(46)
Total tax charge/(credit)	(105)	(331)

The UK corporation tax rate was 19% until 1 April 2023 when it increased to 25%, giving a hybrid tax rate of 20.5% for the year.

Deferred tax balances at the reporting date are measured at 25%, which is the effective rate in place (2021: 25%; 2020: 19%).

4. Dividends

No dividends were paid in the current or prior year.

5. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

	2023	2022
Earnings used in calculation (£'000)	(3,451)	(21,262)
Weighted average number of ordinary shares	304,033,363	291,622,638
Basic EPS (pence/share)	(1.14)	(7.29)
Weighted average number of dilutable shares	305,820,420	291,622,638
Diluted EPS (pence/share)	(1.14)	(7.29)

The diluted EPS is the same as the Basic EPS as there is a loss for each of the periods concerned.

In each period there were share options outstanding. As at 30 June 2023, options which are out of the money are excluded from the calculation of the weighted average number of dilutable shares.

The Directors use adjusted earnings before certain non-recurring costs ("Adjusted Earnings") as a measure of ongoing performance and profitability. These non-recurring costs are presented as separate items on the face of the Consolidated Income Statement.

The calculated Adjusted Earnings for the current and comparative periods are as follows:

	2023	2022
	£'000	£'000
Loss before taxation attributable to equity owners of the Parent	(3,556)	(21,593)
Share-based payment costs	28	231
Impairment charges	86	7,192
Non-recurring legal fees	33	688
Non-recurring employee redundancy costs	162	198
Exceptional costs relating to settlement of DHSC contract	-	1,585
Depreciation and amortisation	672	1,637
Net finance (income) / cost	(17)	65
Lease modification	(390)	-
Other exceptional costs	88	-
Adjusted Earnings	(2,894)	(9,997)
Basic and diluted Adjusted Earnings per share (pence/share)	(0.95)	(3.43)

The calculation of Adjusted Earnings is consistent with the presentation of Adjusted Earnings before Interest, Tax, Depreciation, and Amortisation, as presented on the face of the Statement of Comprehensive Income. This adjusted element also removes non-recurring items, as explained further in note 5. The Directors have presented this Alternative Performance Measure ("APM") because they feel it most suitably represents the underlying performance and cash generation of the business, and allows comparability between the current and comparative period in light of the rapid changes in the business (most notably its admission to AIM and associated costs), and will allow an ongoing trend analysis of this performance based on current plans for the business. Tax is excluded from this APM because the Group has significant tax losses and so the tax charge is not representative of the cash generated.

6. Share capital and reserves

	2023	2022
Ordinary share capital
Authorised	Number	Number
Ordinary shares of 0.025p each	121,716,822	121,711,614
Deferred shares of 0.025p each	182,316,812	182,316,812
	304,033,634	304,028,426
Allotted and fully paid	Number	Number
Ordinary shares of 0.025p each	121,716,822	121,711,614
Deferred shares of 0.025p each	182,316,812	182,316,812
	304,033,634	304,028,426
	£'000	£'000
Ordinary shares of 0.025p each	31	31
Deferred shares of 0.025p each	45	45
	76	76

On 19 July 2022 there was an exercise of options over 5,208 Ordinary shares of 0.025 pence each.

Reconciliation of movements during the year:

	Number
At 1 July 2022	304,028,426
Exercise of share options	5,208
At 30 June 2023	304,033,634

Reserves of the Company represent the following:

·    Share capital - Shares in the Company held by shareholders at a proportional level with equal voting rights per share.

·    Share premium - Excess over share capital of any investments.

·    Retained earnings - This comprises the accumulated trading results of the Group.

·    Share-based payment reserve - This reserve comprises the fair value of options share rights recognised as an expense. Upon exercise of options or performance share rights, any proceeds received are credited to share capital.

7. Share options

Group & Company	Number of share options		Weighted average exercise price
	30 June 2023	30 June 2022	30 June 2023	30 June 2022
	Number	Number	£	£
Outstanding at 1 July 2022	219,781	729,467	0.3997	0.5071
Granted	4,119,285	-	0.07	-
Forfeited	(86,648)	(497,186)	0.4642	0.5755
Exercised	(5,208)	(12,500)	0.0025	0.0003
Outstanding at 30 June 2023	4,247,210	219,781	0.0773	0.3997
Exercisable at 30 June 2023	70,836	115,632	0.0025	0.0025

5,208 options were exercised during the year.

The options outstanding at 30 June 2023 had an exercise price ranging from £0.00025 to £0.70 and a remaining contractual life of up to 2 years and 6 months. The options exist at 30 June 2023 across the following share option schemes:

	Number of shares	Exercise price per share (£)	Fair value of scheme	Vesting period
EMI scheme granted in April 2021	70,836	0.00025	54,880	1 year
SAYE scheme granted in March 2021	57,089	0.70	33,573	3 years
LTIP scheme granted in December 2022	4,119,285	0.07	107,542	3 years
	4,247,210		195,995

The fair value of the scheme is being expensed over the vesting period. All share options expire 10 years after the date of issue.

	Group		Company
	30 June 2023 £'000	30 June 2022 £'000	30 June 2023 £'000	30 June 2022 £'000
Expenses recognised in the year Arising from equity settled share-based payment transactions	28	231	19	87

 

END