Audited Final Results

RNS Number : 8391T

Yourgene Health PLC

27 July 2022

 

Yourgene Health plc

("Yourgene", the "Company" or the "Group")

Audited Final Results

Manchester, UK - 27 July 2022: Yourgene (AIM: YGEN), the international molecular diagnostics group, announces its final results for the financial year ended 31 March 2022 ("FY22"), and provides an unaudited update on trading for the first quarter of the current financial year ("Q1 FY23").

The Group's performance in FY22 reflects the significant revenue growth delivered from COVID-related products and services, as well as a return to growth in the Company's core business. The strong financial performance has allowed Yourgene to invest further in creating a broader platform or products and services to serve a wider, global customer base, focussed on accelerating growth across Genomic Services, NIPT, Ranger® Technology and PCR testing.

Financial highlights

●	Record revenues of £37.6m (FY21: £18.3m), up 105% and ahead of previously upgraded expectations
	- Genomic Services up 238% to £21.6m, dominated by COVID-19 testing
	- Genomic Technologies up 34% to £16.0m including +9% year-on-year growth in non-COVID sales
●	Gross profit up 88% to 21.4m (FY21: £11.4m)
●	Adjusted EBITDA* of £3.4m (FY21: loss of £2.0m)
●	Reported pre-tax loss of £3.2m (FY21: loss of £12m)
●	Reported loss after tax of £1.9m, following £1.3m tax credit (FY21: £12.2m)
●	EPS loss of 0.3p (FY21: 1.8p loss)
●	£1.3m cash generated from operating activities (FY21: £3.8m used), despite a net working capital outflow of £1.7m (FY21: £0.9m outflow)
●	£3.5m of cash used in investing activities (FY21: £7.4m) - reflecting investment in growth strategy
●	£5.0m term loan secured in January 2022 from Silicon Valley Bank to support growth strategy
●	Cash improved to £8.4m (31 March 2021: £7.0m)

* Adjusted EBITDA is the operating profit/(loss) before interest, tax, depreciation, amortisation, share-based payments and acquisition-related expenses shown separately disclosed on the face of the Income Statement

Operational highlights

●	National Microbiology Framework awards for COVID-19 PCR testing and variant sequencing services
●	DPYD screening contract for NHS Wales and DPYD screening recommended in Spain
●	Opening of new Yourgene Health Canada facilities to support future growth of Ranger® Technology
●	US strategic partnership for NIPT with Ambry Genetics and expanded market access to oncology portfolio for Yourgene Genomic Services
● ● ● ●	Secured two supply contracts with US diagnostic majors for Ranger® Technology (announced in March and June 2021 respectively) are now validated and using the technology in routine clinical testing) Launch of IONA® Care - our NIPT service with expanded clinical menu including sex chromosome aneuploidies Expansion of geographical reach with indirect distribution channels strengthened in Middle East, Africa and Eastern Europe and commercial teams strengthened in APAC, Americas and EMEA New customers for IONA® Nx NIPT Workflow with strong installed base in the USA, Mexico and Singapore

Post period end developments

●	Strategic partnership with Ambry Genetics extended to oncology services portfolio offering in Europe
●	Launch of Yourgene's Accelerator Phase for its Microdeletions Plugin, which expands on the clinical menu and capabilities of IONA® Nx NIPT Workflow offering
●	Yourgene Genomic Services receive ISO 15189:2012 accreditation for UK laboratory
●	Ranger® technology offering expanded with launch of LightBench® Detect - clinical platform for liquid biopsy applications including NIPT with the use of EDTA blood collection tubes
●	Business restructuring is now complete, the Group's platform has been reshaped to deliver growth within the core portfolio across Yourgene's operating footprint
●	Q1 FY23 trading returns to pre-pandemic growth rates (20% year-on-year) for non-COVID revenue streams

Lyn Rees, Chief Executive Officer of Yourgene, commented: "We are greatly encouraged by the performance of the business over the last 12 months. We have delivered record revenues as a result of high demand for our COVID-related products and services, and we have been able to invest the resultant proceeds towards enhancing the growth drivers for our core markets opportunities. Yourgene has progressed significantly over the last few years, and we remain focused on our long-term growth strategy despite some of the challenges faced over the last two years.

"Looking forward we are now established as a growing force in genomic testing with a team of nearly 200 staff with a strong and increasing presence in key overseas geographies including North America, Europe and Asia. We have diverse revenue streams built on proprietary technologies and growth opportunities across cell-free DNA applications such as NIPT, oncology, reproductive health and infectious disease. Our core business is now back to being a stable platform from which to deliver growth, building on the progress in the first quarter.  Yourgene has a unique opportunity to benefit from the more significant growth rates available from the expanded range of market segments in which we operate."

Q&A with CEO, Lyn Rees:

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and the Directors of the Company are responsible for the release of this announcement.

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About Yourgene Health

Yourgene Health is an international molecular diagnostics group which develops integrated genomic technologies and services enabling precision medicine. The group works in partnership with global leaders in DNA technology to advance diagnostic science. 

Yourgene primarily develops, manufactures, and commercialises simple and accurate molecular diagnostic solutions, for reproductive health, precision medicine and now infectious diseases. The Group's flagship products include non-invasive prenatal tests (NIPT) for Down's Syndrome and other genetic disorders, Cystic Fibrosis screening tests, invasive rapid aneuploidy tests, and a recent extension into the oncology space with DPYD genotyping.

The Yourgene Genomic Services team works with healthcare professionals, researchers and pharmaceutical organisations to support and accelerate scientific advances in genomic medicine. The division's specialist services guide decisions about abnormalities, hereditary risk and treatment in addition to providing novel insights in research and discovery. Accredited clinical services are provided in Oncology and Reproductive Health within the UK and worldwide. The team of scientific experts offer consultative services to help guide partners in selecting the right technology and approach for their applications.

In August 2020, Yourgene acquired Coastal Genomics , Inc., a sample preparation technology company based in Vancouver, Canada, enabling the Company to extend its offering and IP portfolio in the DNA sample preparation sector. The acquisition increased Yourgene's geographical penetration into the US and Canada, supplementing existing coverage in the UK, Europe, MEA and Asia.

Yourgene Health is headquartered in Manchester, UK with offices in Taipei, Singapore, the US and Canada, and is listed on the London Stock Exchange's AIM market under the ticker "YGEN". For more information visit www.yourgene-health.com and follow us on twitter @Yourgene_Health.

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

Chairman's statement

The foundations for growth are stronger than ever.

Yourgene has come on a considerable journey over the last six years since I became Chairman. Despite current market conditions the business has weathered the pandemic and delivered its best ever results. More importantly it has used the income generated from COVID testing to strengthen the growth drivers for the business in the future. At the same time, we have continued to build a strong Board and appropriate governance as we build a business of scale.

At the IPO in 2014 we were a UK focused pre-revenue business with a headcount of 10, and a single product due to launch into the NIPT space. Today we have established ourselves as a growing force in genomic testing and technologies: we are a team of approximately 200 staff with more direct presence in key overseas geographies than ever before. On behalf of the Board, I would like to thank the management team and all Yourgene colleagues for their considerable efforts and outstanding contribution to the national pandemic response.

During the year Nick Mustoe left the Board after eight years and Mary Tavener joined the Board as a Non-executive Director. I would like to take this opportunity to thank Nick for all of his time and support during his tenure with Yourgene and to welcome Mary to the Board for the next phase of the Group's journey.

As announced in April 2022 I will be stepping back from my role as Non-executive Chairman of Yourgene to return to being a Non-executive Director and Dr John Brown CBE will assume the role as Non-executive Chairman, which I totally support. John has over 20 years capital markets experience in the healthcare and life sciences sector and has significant relevant Board experience. I look forward to working with John and the rest of the Board as we strive to leverage these strong foundations and deliver the shareholder returns we all desire. 

Adam Reynolds

Non-executive Chairman

27 July 2022

Chief Executive's report

We have achieved record results through agility and resilience

Over the last 12 months Yourgene has been both agile and resilient in equal measure. We have achieved record revenues as a result of high demand for our COVID-related products and services, and we have also seen a return to growth in many of our core markets as the year progressed. This success has provided us with additional funds to invest across our Genomic Services and Genomic Technologies businesses, both of which offer strong growth potential. We are very excited about the broader service offering that we now have, as well as the growth opportunities available from our Genomic Services business, the NIPT markets in the Americas, and in particular the disruptive potential of our Ranger® Technology.

First and foremost, I must offer a huge thanks to all our staff for their hard work over the last 12 months. The application of our skill-base to meet the demands and challenges of the COVID-19 pandemic, and to now redeploy those skills into other growth areas, has been remarkable. Last year's success is a testimony to the commitment of the whole team and there is no doubt that they have helped ensure that Yourgene is in a much better position now than we were going into the pandemic.

We enter the new financial year with a strong platform to meet the needs of a wider customer-base via an adaptable mixture of technologies and services, with the aim of delivering improved profitable growth from our core business in FY23 and beyond.

Full year trading overview

Revenues for FY22 were £37.6m, up 105% on the previous year, with the vast majority of this revenue derived from UK focused COVID PCR testing and variant sequencing services, as well as sales of our own Clarigene® COVID-19 PCR assay. Going forward we expect to see these geographical splits normalise and in particular a greater contribution from sales in North America, a key growth area for Yourgene.

Revenue by Geographical Market	2022 £m	% of Group	2021 £m	% of Group	Growth/ decrease
UK	26.5	71%	5.5	30%	387%
Europe	5.5	14%	5.5	30%	0%
International	5.6	15%	7.4	40%	-24%
Group	37.6	100%	18.3	100%	105%

Genomic Services

Our Genomic Services business delivers clinical and research testing services to consistently high standards, incorporating our longstanding NIPT testing services, our oncology and CRO (contract research organisations) testing services, as well as high-throughput COVID testing services. We have an established international laboratory network with upgraded facilities in the UK (Manchester) and Taiwan (Taipei). 

Genomic Services revenue mix	2022 £m	% of Group	2021 £m	% of Group	Growth/ decrease
COVID-19 services	18.7	50%	1.7	10%	+981%
NIPT services	1.6	4%	1.9	10%	-12%
Other services	1.3	3%	2.8	15%	-55%
Genomic Services	21.6	57%	6.4	35%	+238%

COVID-19 Testing Services

The significant growth in Genomic Services revenues to £21.6m can be attributed to a very strong performance from the team in delivering the highest-quality COVID PCR testing and variant sequencing for the Department of Health and Social Care and non-Government customers. Whilst private COVID-19 testing continues these are at more modest levels and we continue to repurpose our testing capacity in this area.

One of the many examples of how we are now stronger as a business coming out of the pandemic is the recognition of the high quality of performance and competence that our Genomic Services provide. Following assessments by the UK accreditation service, our Manchester labs received ISO 15189:2012 accreditation for its COVID-19 testing and sequencing services, one of the few independent UK labs to have attained this globally recognised ISO standard. It is also a testament to our team that our labs also passed the rigorous assessments required to support the Government's COVID-19 testing programme and provide genetic sequencing services to the UK Health Security Agency.

Our expertise in preparing for successful contract tenders was also developed further during the pandemic as was evidenced by Yourgene's inclusion in the Public Health England National Microbiology Framework Agreement and then subsequent awards granted under it. We have a number of submissions for tenders in place currently where we believe we are well-placed to compete, and we will update shareholders on those that are successful.

Non-Invasive Prenatal Testing (NIPT) services

NIPT and research testing services stabilised in H2 after a challenging first half of the financial year. Whilst the pandemic had a negative effect on birth rates globally, trading at the end of the financial year indicates an encouraging recovery in NIPT services towards previous pre-pandemic growth rates.

Expansion into oncology testing services

We also continue to expand our range of genomic testing services, and in April 2022 we announced an extension of our strategic partnership with Ambry Genetics, part of REALM IDx, Inc (previously Konica Minolta Precision Medicine), which adds a range of leading oncology products to our services offering.

Genomic Technologies

Our Genomic Technologies business encompasses a wide range of instruments, reagents, consumables and software including screening and diagnostic products in the areas of NIPT, Cystic Fibrosis, chemotoxicity (DPYD) and COVID-19 as well as our Ranger® Technology, used in DNA applications such as liquid biopsy including; NIPT, infectious diseases and oncology. Our Ranger® Technology offers clinical and research laboratories with an automated DNA target enrichment solution to enrich and purify DNA samples with a low overall level of target present which improves the performance of DNA test. This provides a clear economic benefit to labs when incorporated into sample preparation.

Genomic Technologies revenues were up 34% to £16.0m (FY21: £11.8m).

Genomic Technologies revenue mix	2022 £m	% of Group	2021 £ 000	% of Group	Growth/ decrease
NIPT	5.4	15%	5.9	32%	-9%
COVID-19 related assays	4.5	12%	1.4	8%	+216%
Reproductive health	3.9	10%	3.6	20%	+7%
Precision Medicine (Ranger®, DPYD and other)	2.2	6%	1.0	5%	+135%
Genomic Technologies	16.0	43%	11.9	65%	+34%

NIPT

Whilst we have grown our portfolio considerably into areas beyond NIPT we remain very excited about the growth opportunity this market offers. We saw a recovery in the second half of the year to double digit growth, recording 11% growth year-on-year compared to H2 2021, and a 19% improvement against H1 2022 sales.

Our UK and European NIPT customer base is now firmly established on our IONA® Nx NIPT workflow using Illumina's next generation sequencing technology, and we have added new partners across the region.  Internationally, the launch of IONA® NX and its component technologies opened up many new markets to us and we are building a strong installed base for IONA® NX in the USA, Mexico and Singapore.  This installed base is starting to build clinical volumes and offers significant growth potential in the coming years.

We remain active in R&D to ensure we continue to offer class leading products to the NIPT market. Post-period end we announced the launch of the accelerator phase for clinical menu expansion for our IONA® Nx NIPT Workflow offering, the Microdeletions Plugin. The expansion offers customers the ability to detect chromosomal microdeletions, an abnormality that occurs when a piece of a chromosome is missing, with a number of microdeletion patterns being associated with a number of clinically categorised syndromes. Yourgene is one of a small group of NIPT providers to include microdeletions in the NIPT workflow and we are pleased to be working alongside leading genomics partners in Asia and Europe.

Looking forward, we are confident that we can exploit commercially the significant opportunity that Yourgene has to influence and disrupt the NIPT market in the Americas by leveraging our Ranger® technology for size selection into established competitor NIPT workflows. The Ranger® Technology is already integrated as a key element in the IONA® Nx NIPT workflow, but the technology can be integrated into other NIPT workflows, and immediately offers laboratories a clear value proposition with unrivalled fetal fraction enrichment, thus improving the success rates of testing and reducing the number of false positives. It also offers potential customers clear economic benefits by simplifying the sample preparation process, allowing considerably lower cost sample tubes to be used and potentially halving the number of sample tubes required. Given that the Ranger® Technology can be used with existing NIPT workflows it allows the Yourgene sales team to begin dialogue with potential customers at any time during the sales cycle, not only when longer term service contracts are approaching renewal. Over time we expect to gain entry to subsequent tender processes via the adoption of the Ranger® Technology into NIPT workflows currently using competing sample testing or reporting workflows.

Across the NIPT landscape in the Americas we have already demonstrated that our technology offering is attractive to all of the various market segments: from the high volume 'Mega Labs', to large private screening labs, as well as to smaller regional reference labs. The fact that we have attracted a key strategic partner such as Ambry Genetics, a leading US laboratory services provider, reinforces the credibility our Ranger® Technology has in the NIPT market.

COVID-19 related assays

Clarigene® COVID-19 PCR assay reported revenues of £4.5m (FY21: £1.4m). Sales are continuing into the new financial year through private testing channels, although ongoing sales are expected to reduce in line with a global reduction in mandatory COVID testing requirements.

Reproductive Health

The reproductive health PCR portfolio of tests such as Cystic Fibrosis, male factor infertility, QST*R rapid aneuploidy analysis and pregnancy loss test has seen a 7% year on year growth. This growth has been with our CE-IVD kits through our existing direct sales and distributor network for predominantly UK, European, Canada and Australian markets. We are now making research use only (RUO) versions that we can take to non IVD regulated markets.

Ranger® technology, DPYD and other technologies

Revenues in this category more than doubled year-on-year and now represent 15% of core Group revenues (i.e.

non-COVID-related revenues) and we continue to invest in developing additional complementary precision medicine products.

We are very pleased with the growth being delivered by our DPYD chemotoxicity genotyping test, which is being used increasingly across Europe to determine which cancer patients (those with a specific genetic deficiency) will be subject to severe, or sometimes lethal, side effects after being treated with a widely used chemotherapy drug, 5-Fluorouracil ("5-FU"). DPYD test revenues increased to £1.2m for the financial year (FY21: £0.7m) reflecting the wider adoption of this screening test, which is now recommended in Wales, England, Germany, Spain and Belgium.

Ranger® Technology is applicable beyond NIPT and this disruptive technology can be applied to all types of DNA testing where automated size selection can bring considerable benefits to labs by enriching the DNA interest in a sample with considerable precision and speed. We have the unique opportunity to take advantage of multiple market segments, addressing needs in areas that use liquid biopsy (such as NIPT, oncology and infectious disease) as well as the gene synthesis and RNA size selection markets.  We have a significant pipeline of opportunities for Ranger® Technology which are at various stages of feasibility and validation.

Operational improvements and right sizing

With a return to focusing on growth acceleration in our core activities, we have ensured the business has an appropriate resource allocation moving forward. As COVID-testing activities have receded we have reduced our variable cost base in that domain and have started to consolidate our UK activities through a programme of co-location and shared support services between both segments of the business. We believe that, once complete, these actions will reduce the Group's annual operating cost base to a more appropriate post-COVID level. At the same time, we are also undertaking a strategic review of our Taiwan business unit which was badly hit by the pandemic with key CRO customer business continuing to fluctuate while the region remains subject to ongoing travel restrictions. The restructuring process is largely complete at the date of this Annual Report and the UK facilities consolidation is very well advanced.

Strengthening global routes to market

During the year we have invested in developing our commercial team to ensure we are best placed to deliver on the growth opportunities we have ahead of us. This has meant that we have strengthened our team in key regions, in particular across the Americas, Asia and Europe. Yourgene now has more teams in local settings and in closer dialogue with our customers and potential customers on the ground. I am delighted to be taking the opportunity to meet these teams over the next few months and to support them to deliver our next stage of commercial growth.

During the pandemic, we also benefitted from a fast-tracked experience curve whereby our Genomic Services team were tested under exceptional circumstances, in terms of delivering to accelerated timelines and unprecedented testing volumes. I am very proud of the team as they have adapted and developed during challenging times whilst ensuring that we continue to operate to the highest quality standards.  Our best-of-breed approach to solving customer challenges remains a key differentiator.

As part of our continued investment in growth and the wider drive for operational improvement we opened our new Yourgene Health Canada facilities in Vancouver in January 2022. The new facility, approximately four times larger than our previous facility, will support the scale up of manufacturing for our Ranger® Technology platforms, reagents and consumables.

Outlook

As we realign our business to focus on post-pandemic growth drivers the strategic pillars for this growth are unchanged: product penetration, geographic expansion, new products and targeted synergistic M&A.

Within Genomic Services we expect to see recovery in NIPT and research services as we also broaden our portfolio to provide whole exome and whole genome sequencing services. We continue to repurpose our testing capacity towards non-COVID testing and our extension of our partnership with Ambry Genetics provides us with an oncology testing range that broadens the Genomic Service offering considerably.

For Genomic Technologies we expect to maintain the momentum that is building in the adoption of the IONA® Nx NIPT solution and we will continue to enhance this technology with new innovations to complement the recently launched Microdeletions Plugin. We also believe that the commercial adoption of our Ranger® Technology provides an exciting opportunity for the business, whether as part of our IONA® Nx NIPT Workflow offering or as an enabler for third-party NIPT workflows. It also has the potential to be a hugely disruptive technology bringing the advantage of Ranger® size selection to adjacent markets of liquid biopsy, RNA and gene synthesis. We believe the offering we have has a number of unique-selling points that will support continued market adoption across all market segments, from the largest "Mega-labs" to smaller regional testing facilities.  We also anticipate further growth in our DPYD chemotoxicity test as screening becomes adopted more widely and we continue to invest in developing further complementary content.

Overall, I believe we have a stable business platform and a number of exciting routes to deliver future growth across the core business, along with a unique opportunity to benefit from the significant growth that is expected from the segments of the molecular diagnostic market in which we operate.

Lyn Rees

Chief Executive Officer

27 July 2022

FINANCIAL REVIEW

Strengthened financial position despite pandemic turbulence

Income Statement

In the reporting period revenues more than doubled to £37.6 million (2021: £18.3 million) as Covid-related products and services delivered significant revenues and core markets started to return to pre-pandemic growth levels.  Our Genomic Services operating segment delivered revenue growth of 240% whilst our product-focused segment, Genomic Technologies, delivered 33% growth. Gross profits grew by 88% to £21.4m (2021: £11.4m) with gross margins decreasing slightly to 57% (2021: 62%) due to the mix bias towards lower margin COVID testing services in a highly competitive market.

Administrative expenses increased to £18.0m (2021: £13.5m).  A more detailed breakdown of key administrative expenses is shown in note 6 and includes expenditure on projects which are expected to generate significant financial improvements which the pandemic deferred into future reporting periods, such as expanding Genomic Services capabilities for post-Covid opportunities, continued investment in the Group's North American commercial presence and the acquired Coastal Genomics business (now renamed Yourgene Health Canada). Long-term projects standardising cloud-based business systems and transitioning to the IONA® Nx NIPT workflow continued and made significant progress during the reporting period.

	2022				2021
	Genomic Technologies £ m	Genomic Services £ m	Central £ m	Total £ m	Genomic Technologies £ m	Genomic Services £ m	Central £ m	Total £ m
Revenues	16.0	21.6	-	37.6	11.9	6.4	-	18.3
Cost of sales	(6.6)	(9.6)	-	(16.2)	(4.7)	(2.2)	-	(6.9)
Gross profit	9.4	12.0	-	21.4	7.2	4.2	-	11.4
Other operating income	-	-	-	-	-	-	-	-
Segmental expenses	(5.6)	(6.6)	-	(12.2)	(5.3)	(3.4)	-	(8.7)
Central overheads	-	-	(5.8)	(5.8)	-	-	(4.7)	(4.7)
Adjusted EBITDA *	3.8	5.4	(5.8)	3.4	1.9	0.8	(4.7)	(2.0)
Depreciation and amortisation	-	-	(4.6)	(4.6)	-	-	(3.2)	(3.2)
Goodwill impairment	-	-	(1.0)	(1.0)	-	-	(4.8)	(4.8)
Share-based payments expense	-	-	(0.3)	(0.3)	-	-	(1.0)	(1.0)
Costs associated with subsidiary acquisition	-	-	-	-	-	-	(0.3)	(0.3)
Acquisition integration expense	-	-	-	-	-	-	(0.4)	(0.4)
Operating profit/(loss)	3.8	5.4	(11.7)	(2.5)	1.9	0.8	(14.4)	(11.7)

* Adjusted EBITDA is measured as the operating loss before depreciation, amortisation, and separately disclosed items.

The Group's two operating segments both delivered positive adjusted EBITDA contributions after segment-specific expenses. Genomic Services contributed £5.6m (2021: £0.8m) with COVID testing services in the UK offsetting pandemic-related weakness in our Taiwan laboratory services. Genomic Technologies contributed £3.6m (2021: £1.9m) with sales of Clarigene® COVID-19 PCR test augmenting a return to growth in core product lines. Overall adjusted EBITDA after deducting central expenses was a profit of £3.4m (2021: £2.0m loss). The increase in central expenses reflects the expansion of the Group through previous acquisitions and the Group's decisions to continue investing in its future growth drivers despite the pandemic headwinds in its core markets.

Separately Disclosed Items

Significant items within administrative expenses are shown separately in the Consolidated Statement of Comprehensive Income, with further details in note 6. These include non-cash accounting charges for share-based payments of £312k (2021: £952k) which reflect lower awards in recent years as the Company has moved towards a Share Incentive Plan for general staff participation.  Acquisition related expenses were £nil (2021: £674k) reflecting the Group's focus on organic growth and driving the benefits from acquisitions made in earlier reporting periods.

Within separately disclosed items is a £1,045k (2021: £4,789k) impairment of goodwill and other intangibles relating to the Genomic Services Taiwan cash-generating unit. These intangibles arose from the 2017 acquisition of Yourgene Health Taiwan (Yourgene Bioscience at the time of acquisition). The markets in which Genomic Services Taiwan operates were particularly badly hit by the COVID-19 pandemic and these restrictions have continued throughout the reporting period.  The Group has announced a strategic review of this operation and this impairment writes down to nil the value of the acquired intangibles.

Operating Loss

The business growth in the reporting period has resulted in a significantly reduced operating loss of £2.5m (2021: £11.7m loss).

Finance Income/(Expenses)

During the period the Group incurred net finance expenses of £0.7m (2021: £0.3m) which reflects the additional term loan secured with Silicon Valley Bank as well as increased lease liability interest charges arising from new leases on the Group's upgraded facilities in Taiwan, Vancouver and Manchester.

Taxation and Foreign Exchange

The resulting loss on ordinary activities after taxation of £1.9m (2021: £12.2m) reflects a £1.3m tax credit (2021: £0.2m charge) which is described in note 12 and is primarily the recognition of a deferred tax asset.  This tax asset arises from previously unrecognised historic losses based on the Group's expectation of profitability in its UK operations over the next 5 years. There are still significant historic tax losses in the UK which have not yet been recognised and which will help offset taxes arising on any additional future profits.

Total Comprehensive Loss

After accounting for exchange differences arising on consolidation the Group recorded a much-reduced total comprehensive loss of £1.8m (2021: £12.2m).

Earnings per Share

Earnings per share were a loss of 0.3 pence (2021: 1.8 pence loss).

Statement of Financial Position

At the reporting date the Group had total assets of £64.1m (2021: £49.1m). Intangible assets reduced to £12.9m (2021: £14.8m) as a result of the impairment of the Taiwanese assets and ongoing amortisation of previously acquired or capitalised intangible assets.  Goodwill reduced to £8.9m (2021: £9.2m) due to the Genomic Services Taiwan impairment. Property, plant and equipment increased to £4.8m (2021: £4.1m) with capital expenditure on new laboratory facilities in the UK and expansion of the Group's facility in Vancouver. Right of use assets increased to £13.5m (2021: £4.2m) due to the relocation to a new long-term leased facility in Vancouver. In the UK the Group is in the process of relocating from multiple sites to a single facility leading to some temporary duplication of property leases until the relocation completes by March 2023.  The recognised deferred tax asset increased slightly to £2.3m (2021: £1.1m) in light of improved business forecasts for the Group's UK operations which have significant unrecognised historic tax losses available.

Total current assets increased to £21.7m (2021: £15.7m) with inventories increased significantly (to £6.0m from £2.9m) for extra resilience in response to global supply chain challenges experienced during the pandemic, and also to support planned business growth.  Trade and other receivables also increased (to £7.0m from £5.3m) reflecting a strong second half of the reporting period. There was also an increase in cash and cash equivalents to £8.4m (2021: £7.0m).

Total equity and liabilities increased to £64.1m (2021: £49.1m) with the principal increases being due to the new property lease liabilities in Vancouver and Manchester (IFRS16 lease liabilities up to £13.9m from £4.6m) and also a £5m term loan facility entered into in January 2022 with Silicon Valley Bank.  This funding was secured to support growth for the Group.  After an initial 3-month interest free period the loan is repayable over the remainder of a 3-year term (see note 21 for more details).

Statement of Cash Flows

The Group had an opening cash position of £7.0m (2021: £2.8m) and a net cash increase of £1.4m during the year (2021: £4.2m increase). Cash and cash equivalents at the end of the period were £8.4m (2021: £7.0m). During the period the Group's improved performance generated £1.3m (2021: used £3.8m) of cash in operating activities despite a net working capital outflow of £1.7m (2021: £0.9m outflow). Cash used in investing activities was £3.5m (2021: £7.4m) reflecting capital expenditure in the year on service capacity, new facilities in Vancouver plus capitalisation of internally generated intangible assets.

Financing activities generated a surplus of £3.6m (2020: £15.5m surplus) primarily due to the Silicon Valley Bank term loan entered into in January 2022 (see note 21). 

As with all businesses at this stage of development and with high growth ambitions, the Board assesses carefully the Group's ability to operate as a going concern and has detailed plans for revenue growth, margin improvement and cash flow control, which are intended to achieve positive cash flows in the near future. More detail on these plans can be found in the notes to the accounts.

Dividends

No dividend is recommended (2021: £nil) in order to invest in the Group's growth strategy, which is designed to enhance value over the longer term.

Capital Management

The Board's objective is to maintain a balance sheet that is both efficient for delivering long-term shareholder value and also safeguards the Group's financial position in light of variable economic cycles and the principal risks and uncertainties outlined elsewhere in the Annual Report. The COVID pandemic presented significant challenges during the reporting period but the provision of COVID-related services also provided some risk mitigation against consequential instability in our core markets. As the COVID pandemic recedes the Group is restructuring itself to better reflect its underlying business model and to capitalise on the significant growth opportunities available in its core markets. As at 31 March 2022 the Group had net cash of £3.2m (2021: £6.8m) which is stated after borrowings of £5.2m (2021: £0.2m) but before lease liabilities arising under IFRS16 (with their offsetting Right of Use assets). Business growth in the Group's Genomic Services and Genomic Technologies segments are expected to enable the Group to operate as a going concern for the foreseeable future.

Post-balance Sheet Events

After the end of the reporting period the Group has undertaken a restructuring of its operations, primarily in the UK and Taiwan, to better reflect its post-COVID model and to direct resources at its primary growth drivers of NIPT, Ranger® technology, Genomic Services and DPYD assets.

Barry Hextall

Chief Financial Officer

27 July 2022

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2022

		2022		2021
	Notes	£ 000	£ 000	£ 000	£ 000
Revenue			37,562		18,288
Cost of sales			(16,197)		(6,912)
Gross profit			21,365		11,376
Other operating income			7		60
Administrative expenses	6		(17,967)		(13,483)
Adjusted EBITDA			3,405		(2,047)
Depreciation and amortisation	6	(4,588)		(3,247)
Impairment of goodwill	5	(1,045)		(4,789)
Share-based payments expense	5	(312)		(952)
Costs associated with acquisitions and integration	5	-		(674)
Total depreciation, amortisation and separately disclosed items	5		(5,945)		(9,662)
Operating loss	6		(2,540)		(11,709)
Financing income	10		5		2
Financing expenses	11		(656)		(302)
Loss on ordinary activities before taxation			(3,191)		(12,009)
Tax credit/(charge) on loss on ordinary activities	12		1,275		(175)
Loss for the year			(1,916)		(12,184)
Other comprehensive expense: to be subsequently reclassified to profit or loss
Exchange translation differences			68		(57)
Loss and total comprehensive loss for the year			(1,848)		(12,241)
Earnings per share (pence)	13
Basic: Loss			(0.3p)		(1.8p)
Diluted: Loss			(0.3p)		(1.7p)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2022

		2022	2021
	Notes	£ 000	£ 000
Assets
Non-current assets
Goodwill	14	8,881	9,181
Intangible assets	14	12,932	14,750
Property, plant and equipment	15	4,752	4,109
Right-of-use assets	16	13,475	4,209
Deferred tax assets	23	2,282	1,145
Total non-current assets		42,322	33,394
Current assets
Inventories	17	5,987	2,897
Trade and other receivables	19	6,982	5,333
Tax asset	23	343	507
Cash and cash equivalents		8,429	6,995
Total current assets		21,741	15,732
Total assets		64,063	49,127
Equity and liabilities attributable to equity holders of the Company
Equity
Called up share capital	28	32,672	32,668
Share premium account	28	67,786	67,260
Merger relief reserve	28	12,994	12,970
Reverse acquisition reserve	28	(39,947)	(39,947)
Foreign exchange translation reserve	28	2	(66)
Other reserves	28	5,833	4,914
Retained losses	28	(46,595)	(44,876)
Total equity		32,745	32,923
Current liabilities
Trade and other payables	20	8,403	5,239
Lease liabilities	16	1,250	587
Current tax liabilities		405	543
Borrowings	21	2,193	119
Other liabilities and provisions	22	-	2,283
Total current liabilities		12,251	8,771
Non-current liabilities
Borrowings	21	3,027	77
Deferred tax liability	23	2,060	2,173
Lease liabilities	16	12,641	4,057
Other long-term liabilities and provisions	22	1,339	1,128
Total non-current liabilities		19,067	7,435
Total equity and liabilities		64,063	49,127

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2022

	Notes	Share capital £ 000	Share premium account £ 000	Merger relief  reserve £ 000	Other  reserves £ 000	Reverse acquisition reserve £ 000	Foreign exchange reserve £ 000	Retained losses   000	Total £ 000
Balance at 1 April 2020		32,561	51,180	12,938	3,069	(39,947)	(8)	(33,495)	26,298
Year ended 31 March 2021:
Loss for the year		-	-	-	-	-	-	(12,184)	(12,184)
Other comprehensive loss		-	-	-	-	-	(58)	-	(58)
Total comprehensive loss for the year		-	-	-	-	-	( 58 )	(12,184)	(12,24 2 )
Issue of share capital	28	106	17,149	-	-	-	-	-	17,255
Share issue expenses		-	(1,069)	-	-	-	-	-	(1,06 9 )
Issue of share capital on acquisition		-	-	33	-	-	-	-	33
Issue of exchange share on acquisition		-	-	-	1,845	-	-	-	1,845
Share-based payments: share option schemes	29	-	-	-	-	-	-	802	802
Balance at 31 March 2021		32,66 7	67,260	12,97 1	4,914	(39,947)	(66)	(44,87 7 )	32,923
Balance at 1 April 2021		32,66 7	67,260	12,97 1	4,914	(39,947)	(66)	(44,87 7 )	32,923
Year ended 31 March 2022:
Loss for the year		-	-	-	-	-	-	(1,916)	(1,916)
Other comprehensive gain		-	-	-	-	-	68	-	68
Total comprehensive loss for the year		-	-	-	-	-	68	(1,916)	(1,848)
Issue of share capital	28	4	526	24	919	-	-	-	1,472
Share-based payments: share option schemes	29	-	-	-	-	-	-	198	198
Balance at 31 March 2022		32,672	67,786	12,994	5,833	(39,947)	2	(46,595)	32,745

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2022

	2022		2021
	£ 000	£ 000	£ 000	£ 000
Cash flows from operating activities
Loss for the year before tax		(3,190)		(12,009)
Adjustments for:
Finance costs		656		302
Finance income		(5)		(2)
Depreciation and impairment of property, plant and equipment		1,755		1,023
Depreciation and impairment of right-of-use asset		959		699
Loss on disposal of property, plant and equipment		1		-
Loss on revaluation of right-of-use asset		25		-
Amortisation of intangible non-current assets		1,874		1,526
Impairment of goodwill and intangible non-current assets		1,044		4,789
Impairment on financial assets (IFRS 9)		13		(39)
Non-cash foreign exchange movements		(421)		(204)
Share-based payment and warrant expense		198		802
Release of provisions		-		(85)
Tax received		144		296
Movements in working capital:
(Increase) in inventories		(3,089)		(1,528)
(Increase)/Decrease in trade and other receivables		(1,661)		646
Increase in trade and other payables		3,165		44
(Increase) in tax asset		(158)		(78)
Cash used by operations		1,309		(3,820)
Investing activities
Purchase of subsidiaries	(832)		(3,637)
Cash acquired on purchase of subsidiaries	-		32
Purchase of property, plant and equipment	(2,334)		(3,004)
Capitalisation of intangible assets	(324)		(838)
Finance income	5		2
Net cash used in investing activities		(3,484)		(7,445)
Financing activities
Net proceeds from issue of shares	55		16,186
Proceeds from borrowings	5,286		160
Loan arrangement fee	(159)		-
Repayment of borrowings	(289)		(321)
Decrease or repayment of lease liability obligations	(935)		(319)
Finance expense	(349)		(211)
Net cash generated from financing activities		3,609		15,496
Net increase in cash and cash equivalents		1,434		4,231
Cash and cash equivalents at beginning of period		6,995		2,764
Cash and cash equivalents at end of period		8,429		6,995

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 March 2022

Notes to the financial statements are taken directly from the Annual Report and Accounts, and Note numbering refers to that document, which is now available to view in full here: https://www.yourgene-health.com/investors/key-documents/financial-reports

1.  Accounting Policies

Basis of Preparation

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined by section 434 and 435 of the Companies Acct 2006.  The financial information for the year ended 31 March 2022 has been extracted from the Group's financial statements upon which the auditor's opinion is unmodified and does not include any statement under section 498(2) or (498(3) of the Companies Act 2006.

The financial information has been prepared in accordance with International Financial Reporting Standards (IFRS), adopted for use in the United Kingdom and including IFRIC interpretations issued by the International Accounting Standards Board (IASB) and the Companies Act (2006).

The consolidated financial information has been prepared on the basis of accounting policies set out in the Group's Annual Report and Accounts for 2022 and selectively included in this announcement.

Company information

Yourgene Health PLC is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is Citylabs 1.0, Nelson Street, Manchester M13 9NQ.

The principal activity of Yourgene Health PLC and its subsidiaries is that of a molecular diagnostics business for research into, and the development and commercialisation of gene analysis techniques for prenatal screening and other clinical applications in the early detection, monitoring and treatment of disease.

The financial statements are presented in British Pounds Sterling, the currency of the primary economic environment in which the Company's headquarters is operated.

1.  Going concern

In their assessment of the Group's ability to continue as a going concern, the Directors have looked at the business prospects for the business as it adjusts to a post-pandemic operating model.  These forecasts are largely based on recurring organic growth drivers including the cash profiles of various prior year asset acquisitions and business combinations.

The COVID pandemic suppressed organic growth somewhat and the forecasts reflect a transition period during which these longer-term growth drivers regain momentum as the pandemic recedes.  The Group anticipates a return to organic growth of the non-Covid business streams including the 2020 acquisition of Coastal Genomics (now renamed Yourgene Health Canada) which has secured some strategic customers but remains an early-stage cash-consuming business.  The acquired company's Ranger® technology has multiple competitive advantages in NIPT testing, oncology, liquid biopsy more generally and adjacent markets such as gene synthesis.  The more speculative applications for this technology are not factored into business forecasts at this stage and the technology is still highly regarded and is expected to act as a catalyst for the Group's accelerating penetration of the US diagnostics market, the largest in the world. For the enlarged Group the Directors have assessed the market dynamics in which it operates, the historic and anticipated rate of growth of gross profits, decisions available to them for management of the cost base of the Group and the potential for future fundraising.

The Group operates a strategic planning process which has historically delivered strong progress on its ambitious multi-year business plan and which has proven resilient and agile, including in the face of the COVID pandemic which continued to significantly impact the reporting period but which is noticeably receding, at least in the Company's home and Western hemisphere markets.  There are early signs that Eastern hemisphere markets are also starting to reopen to non-Covid diagnostics activity.

As described in the Strategic Report, the Group has been leveraging Covid-generated funds inflows to invest in more recurring cashflow drivers. The August 2020 fundraise enabled the acquisition of Coastal Genomics Inc and has also continued to facilitate the significant expansion of the Group's UK laboratory testing services activities, the underlying business systems and the Group's laboratory in Taiwan, all of which are designed to drive cash-generative growth in the years to come. These investments, coupled with the pandemic headwinds which affected the Group's traditional customers and inhibited the penetration into new target markets such as the USA and Japan, have meant that the Group continues to use cash in its trading and that break-even trading performance has not yet been reached. The Group's forecasts include assumptions of further growth in revenue, which are key in achieving positive cash flows. The Directors have also assessed the Group's cost structure as part of the strategic planning process and believe that an ongoing scalability programme, coupled with a significant cost base restructure to adjust to the expected absence of Covid-related revenues, will enable costs growth to be contained below gross profit increases.

There remains an ongoing commitment to keep costs and working capital under control so that increasing gross profits can drive positive cash flows. Detailed sensitivity analysis has been performed to assess the potential impact on the Group's liquidity caused by any continuing delays in revenue growth up to -10% against expected levels along with potential mitigating actions which can be taken to safeguard the Group's cash position if revenues are in a range of -10% to -20% against expected levels. These include working capital controls and reductions in discretionary spending.

If events transpire differently to this assessment, for example if revenues fail to grow at the anticipated pace, there could be lower cash headroom. To mitigate this scenario the existence of significant share options and warrants could potentially generate additional funds within the forecast horizon. The Group also has a successful track record in raising funds from capital markets and has new debt facilities which could potentially be restructured or expanded. Taking all the above into account the Directors believe there is sufficient cash available or accessible to avoid a cash shortfall.

The Directors have concluded that considering the circumstances described above and mitigation strategies in place, the Directors have a reasonable expectation that the Group and Company will have adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis in preparing the Annual Report and Accounts.

Revenue

Revenue from the sale of goods, equipment and related services is recognised in accordance with IFRS 15 'Revenue from Contracts with Customers' in the Statement of Comprehensive Income when the deemed Contractual Performance Obligations have been completed, which is determined to be at the point of despatch of the product or service unless there are specific provisions in the relevant contract. Revenue from the provision of testing and reporting services is recognised upon delivery of the report to the customer. Invoices are typically raised upon delivery of the products or reporting services, unless there is a different contractual requirement, for payment according to credit terms which are usually 30-75 days from date of invoice. For some contracts advance invoices are raised and payments received. These are held on the Statement of Financial Position as 'payments received on account' (see note 20) and are only recognised as revenue once the performance obligations have been deemed satisfied as described above.

Grant income and income for research projects is recognised when all conditions for receiving the grant or research income have been satisfied.

Adjusted EBITDA

Earnings before interest, tax, depreciation and amortisation (EBITDA) is a recognised measure for shareholders and investor analysts when comparing the performance of different companies in their investment portfolios.  The Company reports on this measure after excluding certain separately disclosed items which are shown on the face of the Statement of Comprehensive Income and in Note 5, and recognises these exclusions by using the term Adjusted EBITDA.

Separately disclosed items

Separately disclosed items are those significant items, within Administrative expense which in management's judgement should be highlighted on the face of the Statement of Comprehensive Income by virtue of their size or incidence to enable a full understanding of the Group's financial performance.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use, dismantling and restoration costs. Depreciation is provided on all items of property, plant and equipment to write off the carrying value of items over their expected useful lives. Depreciation is applied at the following rates:

Leasehold land and buildings	20% straight line
Plant and equipment	20-25% straight line
Computer software and hardware	25%-33% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset and is recognised in the Statement of Comprehensive Income.

Leases and right-of-use assets (IFRS 16)

Right-of-use assets and lease liabilities are valued on a present value basis of the lease payments over the lease term. The right-of-use asset is depreciated over the term or remaining term of the lease.

Where there is potential for future increases in lease payments, amounts are not included in the lease liability until they are implemented. The leases are reviewed annually and where the lease liability is increased the lease liability is reassessed and adjusted against the right-of-use asset. When a lease is terminated, or a term amended, the lease liability and right-of-use asset are recalculated and adjusted accordingly.

Lease payments are divided between principal and interest expense. The interest expense is charged to finance expense in the statement of comprehensive income.

The Group has also elected not to reassess whether a contract is or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date, the Group relied on its assessment made in applying IAS 17 and IFRIC 4, 'Determining whether an Arrangement contains a Lease'.

Accounting for acquisitions

The Group assesses the acquisition of shares in a company under IFRS 3 'Business Combinations', to make an initial determination as to whether the acquisition meets the test for the definition "a business". This is defined as: "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities." For acquisitions that meet the test, the accounting treatment will follow IFRS 3 protocols to arrive at fair values. Where the test for a business is not met, then the assets of the acquired company will be accounted for as acquired tangible or intangible assets as described in these policies.

Where the acquisition includes future contingent consideration, this is accrued based on management's judgement of the contingent consideration it considers likely to be paid. Where the actual consideration paid varies to this amount then the difference is written off through General administrative expense in the Statement of Comprehensive Income.

Goodwill

Goodwill represents the excess of the cost of acquisition over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not amortised but is tested annually for impairment, or earlier if there is an indication of impairment. Goodwill impairments are not reversed even if a subsequent fair value assessment would ordinarily give rise to an upward revaluation.

Acquired intangible assets

Intangible assets acquired directly or as part of business combinations are capitalised at fair value at the date of acquisition. Following the initial recognition, the carrying amount of an intangible is its cost less accumulated amortisation and any accumulated impairment losses. Amortisation is charged on the basis of the estimated useful life on a straight-line basis and the expense is taken to the Statement of Comprehensive Income where it is recognised within Depreciation & Amortisation.

The Group has recognised customer relationships as separately acquired intangible assets. The useful economic life attributed to each intangible asset is determined at the time of the acquisition and ranges from 4 to 10 years as described in note 14.

Impairment reviews are undertaken annually and whenever the Directors consider that there has been a potential indication of impairment.

Impairment of tangible and intangible assets

At each reporting end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. Where the recoverable amount is determined by reference to fair value less costs to sell, the recoverable value is assessed by analysing publicly listed peer group revenue multiples, deemed a relevant basis for the sector in which Yourgene operates.  An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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 balance sheet 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 goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is not probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered, or to the extent that there are deferred tax liabilities recognised that would not fall due as a result of previously unrecognised deferred tax assets. Where deferred tax assets not recognised in prior periods begin to meet the criteria for recognition, their value is assessed based on a discounted view of five-year profit forecasts for the relevant taxable entity or Group 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. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Leases

Leases are classified under IFRS 16 'Leases' as lease liabilities with corresponding right-of-use assets in most circumstances except for leases of low value or a lease term of less than 12 months, in which circumstances the lease payments are expensed as incurred.

Research and development tax credits

The Group undertakes research and development activities in the UK which potentially attract a tax credit. Where such activities give rise to a tax credit, amounts receivable are recorded in the Statement of Financial Position as a tax asset and the associated credit is recorded within administrative expenses. The research and development tax credit is recognised in the financial statements in the same year in which the research and development expenditure occurred. This treatment is in line with the recognition of government grants to which the UK research and development tax credits scheme approximates.

Critical judgements

Accounting for acquisitions of a business and intangible assets

In the prior reporting period the Group acquired Ex5 Genomics Ltd (July 2020; now renamed Yourgene Genomic Services Ltd), and Coastal Genomics Inc (August 2020; now renamed Yourgene Health Canada Inc). In the prior period the acquisition of Coastal Genomics Inc was deemed to meet the IFRS 3 criteria for a business combination as it was a full standalone trading business. Also in the prior period, the acquisition of Ex5 Genomics Ltd was deemed to be the acquisition of assets in the form of plant and equipment and customer relationships, as there were no significant trading activities.

The acquisition of Coastal Genomics also contained provisions for earn-out payments to the vendors, based on achieving certain sales performance and concluding contracts with strategic partners post acquisition. Those targets were based on business forecasts and deemed sufficiently probable to be met such that they are recorded as provisions rather than contingent liabilities.

Note 14 Intangibles and note 18 Subsidiaries provide further information on these acquisitions.

Accounting for the capitalisation of development costs

The Group has now been in operation for several years and has resolved some significant technical challenges in bringing its products to market. In certain circumstances this leads to reduced technical risk during the product development cycle. The Group has also started to decouple some previously integrated components of its products, for example its software applications. Development costs are capitalised where it is judged that a development project has met the IAS 38 criteria as described in the accounting policy for internally generated intangible assets above. The triggers for capitalisation are assessed by reference to the completion of specific design review stages as defined by the Group's product development methodology.

Accounting for share-based payments

The Group's rapid growth in revenues and gross profits resulted in a significant swing to an adjusted EBITDA profit in the reporting period. This was largely due to commercial revenues generated through COVID-19 related products and services.  The pandemic in the UK is now receding and the UK Government has significantly reduced testing levels.  Whilst the Group expects to see a reduction in revenues and margins as a result of this, there has been significant investment in the Group's non-Covid revenue generation capabilities.  The Directors assessment is that these enhanced revenue generation capabilities will return the Group quickly to historic sustained growth in earnings per share, the key basis on which share based payments are measured. This performance trajectory is forecast to continue which increases the likelihood that share options will become exercisable in the future. As a result the assumptions for share-based payments remain likely to meet the relevant performance conditions.

Accounting for deferred tax

The Group has generated significant historic losses during its development stage, which have largely not been recognised as a deferred tax asset due to lack of visibility of future profitability within a 5 year time horizon. As the Group now moves towards profitability, such visibility is becoming more likely in the near term. The Group has therefore started to recognise some of these losses where it deems it has a prudent basis on which to do so, including where there are deferred tax liabilities arising on acquisition that can be offset against historic tax losses.

Key sources of estimation uncertainty

Impairment of goodwill and customer relationship intangible assets

The Group's management undertakes impairment reviews of its cash generating units (CGUs) annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable. In respect of impairment reviews, the key assumptions are as follows:

Growth rates

The value in use of the intangible assets is calculated from cash flow projections for the relevant business activities based on the latest financial projections covering the anticipated useful economic life of the intangible assets.

Discount rates

The pre-tax discount rate used to calculate value is determined in relation to the relevant business activities and their geographic location, using external benchmarks where possible to arrive at a relevant weighted average cost of capital.

Cash flow assumptions

The key assumptions for the value-in-use calculations are those regarding discount rates, growth rates and expected cash flows. Changes in revenues and expenditures are based on past experience and expectations of future growth.

As a result of this exercise, £472k of Goodwill and £572k of Customer relationships were impaired as described in note 14 where the relevant growth and discount rates are detailed.

4. Segment Reporting

In the opinion of the Directors, the Group has two business segments; Genomic Technologies and Genomic Services which are monitored by the Group's chief operating decision maker (CODM). Strategic decisions are made on the basis of unadjusted operating results. The Genomic Technologies segment represents the in vitro diagnostic products, software and instrumentation manufactured by the Group and distributed globally through the Group's direct and indirect sales channels. These technologies are often integrated with each other and require the support of the same internal and external resources. The Genomic Services segment operates testing laboratories in Taiwan and the UK and provides services to clinicians, third party clinical service providers and contract research organisations. These services require similar technical, commercial and managerial competences in the two host countries, and sometimes consume the output from the Genomic Technologies segment, but also from third party suppliers where appropriate. Genomic Technologies and Genomic Services are subject to different regulatory requirements, registrations and assessment bodies.

The Group also has three geographic regions, defined as UK, Europe and International.

Revenue

Revenue analysed by geographical market:

	2022 £ 000	2021 £ 000
UK	26,503	5,440
Europe	5,436	5,462
International	5,630	7,386
	37,569	18,288

Revenue analysed by business segment:

	2022 £ 000	2021 £ 000
Genomic Services
NIPT services	1,609	1,833
COVID-19 services	18,714	1,730
Other services	1,259	2,820
	21,582	6,382

	2022 £ 000	2021 £ 000
Genomic Technologies
NIPT	5,385	5,925
Reproductive health	3,841	3,603
COVID-19-related	4,537	1,437
Ranger, DPYD and other technologies	2,217	942
	15,980	11,906
	37,562	18,288

During the reporting period two customers represented more than 10% of Group revenues (2021: none). These customers generated revenue of £7,803k and £4,218k respectively, both within the Genomic Services business segment and arose due to increased activity in COVID-19 testing.

Non-current assets

The Group's non-current assets are located in the following geographic regions:

	2022 £ 000	2021 £ 000
UK	25,409	15,812
Europe	3,550	4,206
International	13,364	13,377
	42,322	33,394

Operating profit/(loss) by segment

	2022				2021
	Genomic Technologies £ 000	Genomic Services £ 000	Central £ 000	Total £ 000	Genomic Technologies £ 000	Genomic Services £ 000	Central £ 000	Total £ 000
Revenues	15,980	21,582	-	37,562	11,906	6,382	-	18,288
Cost of sales	(6,557)	(9,640)	-	(16,197)	(4,690)	(2,223)	-	(6,912)
Gross profit	9,423	11,942	-	21,365	7,216	4,160	-	11,376
Other operating income	7	-	-	7	-	-	60	60
Segmental expenses	(5,657)	(6,540)	-	(12,197)	(5,339)	(3,400)	-	(8,738)
Central overheads	-	-	(5,770)	(5,770)	-	-	(4,745)	(4,745)
Adjusted EBITDA	3,773	5,402	(5,770)	3,405	1,877	760	(4,685)	(2,047)
Depreciation and amortisation	-	-	(4,588)	(4,588)	-	-	(3,247)	(3,247)
Goodwill impairment	-	-	(1,045)	(1,045)	-	-	(4,789)	(4,789)
Share-based payments expense	-	-	(312)	(312)	-	-	(952)	(952)
Costs associated with acquisitions and integration	-	-	-	-	-	-	(286)	(286)
Acquisition integration expense	-	-	-	-	-	-	(388)	(388)
Operating profit/(loss)	3,773	5,402	(11,715)	(2,540)	1,877	760	(14,346)	(11,709)

Central costs are those costs which are not directly attributable to either of the Group's trading business segments.

5. Separately Disclosed Items

	2022 £ 000	2021 £ 000
Impairment of goodwill and intangibles	(1,045)	(4,789)
Share-based payments expense	(312)	(952)
Costs associated with acquisitions and integration	-	(674)
	(1,317)	(6,415)

Impairment of goodwill and intangibles relates to the residual unimpaired value of goodwill and customer relationships that arose on the acquisition of Yourgene Bioscience in March 2017 (now Yourgene Health Taiwan) and have been attributed to the Genomic Services Asia CGU.  The COVID-19 pandemic has created significant headwinds for this CGU and a review was announced in April to determine the appropriate strategic direction for this business unit.  See note 34 for further details. 

Share-based payment expense comprises £198k (2021: £802k) relating to the longstanding share option schemes and £114k (2021: £150k) relating to the new share incentive plan, both as detailed in note 29. The Share-based payment expense relating to the option schemes is provided for in accordance with IFRS 2 'Share-based payment' following the issue of share options to employees under the Company's share option schemes, as set out in note 29.

Costs associated with the acquisition of subsidiaries represents costs incurred during the acquisition of Ex5 Genomics in July 2020, and Coastal Genomics Inc in August 2020.

Acquisition integration expense relates to the expense incurred integrating Delta Diagnostics UK Ltd (acquired April 2019, now integrated into Yourgene Health UK Ltd), AGX-DPNI SAS (acquired March 2020, now Yourgene Health France SAS), EX5 Genomics Ltd (acquired May 2020, now Yourgene Genomic Services Ltd) and Coastal Genomics Inc (acquired August 2020, now Yourgene Health Canada Inc) into the Group.

6. Operating Loss

	2022 £ 000	2021 £ 000
Operating loss for the year is stated after charging the following within Administrative Expenses:
UK Genomic Service laboratory expenses	3,157	1,181
Research and Development expenditure net of capitalisations, grants and tax credits	1,845	1,777
Yourgene Health Canada operating expenses (formerly Coastal Genomics Inc)	1,675	495
US market entry expenses	1,068	316
Depreciation of property, plant and equipment	1,755	1,023
Depreciation of right-of-use assets	959	699
Amortisation of intangible assets	1,874	1,526

8. Employees

The average monthly number of persons (including Directors) employed globally by the Group during the year was:

	2022 Number	2021 Number
Directors	10	9
Administrative	182	117
Research and development	61	54
	253	180

Their aggregate remuneration comprised:

	2022 £ 000	2021 £ 000
Wages and salaries	10,588	6,950
Social security cost	1,054	684
Pension cost	374	322
Share-based payments: share incentive plan (note 29)	114	150
Share-based payments: share option schemes (note 29)	198	802
	12,328	8,908

10. Finance Income

	2022 £ 000	2021 £ 000
Interest income:
Bank deposits	5	1
Loans and receivables	-	1
Total finance income	5	2

11. Finance Expense

	2022 £ 000	2021 £ 000
Interest on loans and borrowings	214	101
IFRS 16 Interest	283	201
Loan arrangement fee	159	0
Total finance expense	656	302

Interest on loans and borrowings increased during the reporting period due to the parent company entering into a term loan agreement with Silicon Valley Bank as described in Note 21.

The Group is required to estimate the income tax in each of the jurisdictions in which it operates. This requires an estimation of the current tax liability together with an assessment of the temporary differences which arise as a consequence of different accounting and tax treatments. These temporary differences result in deferred tax assets or liabilities which are included within the Statement of Financial Position. Deferred tax assets and liabilities are measured using substantially enacted tax rates expected to apply when the temporary differences reverse. Management judgement is required to determine the total provision for income tax. Amounts accrued are based on management's interpretation of country-specific tax law and the likelihood of settlement.

Factors that may affect future tax charges

The Group has estimated trading losses of £9,798k (2021: £14,545k), excess management fees of £20,075k (2021: £16,696k), non-trade loan relationship deficits of £1,320k (2021: £1,320k) and capital losses of £1,934k (2021: £1,934k).  In recognising a UK deferred tax asset of £1,831k in the reporting period the company is utilising UK trading losses of £7,623k out of £33,128k of its cumulative UK losses.

The tax losses have resulted in a potential deferred tax asset of approximately £8,282k (2021: £6,554k), which has been partially recognised based on conservative estimates of future taxable profits in line with Group policy.  Further recognition in future reporting periods is subject to the extent that future taxable profits will be sufficient to utilise the losses, in accordance with current and expected future UK tax rates which are due to increase to 25% from 1 April 2023.

13. Earnings/Loss Per Share

Basic

Basic loss per share was 0.3 pence (2021: loss of 1.8 pence) by dividing the loss for the period of £1,916k (2021: loss £12,184k) by the weighted average number of ordinary shares in issue during the period 724,248,137 (2021: 685,643,605).

Diluted

Diluted loss per share was 0.3 pence (2021: loss of 1.7 pence) after diluting the basic earnings per share to take into account share options, exchangeable shares and warrants. The calculation includes the weighted average number of ordinary shares that would have been issued on the conversion of all the dilutive share options, exchangeable shares and warrants into ordinary shares. The adjusted weighted average number of shares used to calculate diluted earnings per share is 739,276,004 (2021: 726,355,871). 69,314,463 options and warrants (2021: 28,159,443) have been excluded from this calculation as the effect would be anti-dilutive.

After the reporting period end:

A further 1,130,000 new performance-based share options were issued in April 2022 which would have no material impact on the above calculations.

14. Intangible Assets

	Goodwill £ 000	Customer relationships £ 000	Product IP £ 000	Trademarks & brand names £ 000	Software development cost £ 000	Product development cost £ 000	Total £ 000
Cost
At 1 April 2020	10,806	8,444	2,052	-	256	440	21,998
Additions	-	390	47	-	147	643	1,227
Business combinations	3,098	1,454	3,355	24	-	-	7,931
Exchange differences	66	(57)	72	-	-	-	81
At 31 March 2021	13,970	10,231	5,526	24	403	1,083	31,237
Additions	-	-	-	-	-	324	324
Exchange differences	173	82	280	1	-	-	536
At 31 March 2022	14,143	10,313	5,806	25	403	1,407	32,097
Amortisation and impairment
At 1 April 2020	-	812	188	-	-	-	1,000
Charge for the year	-	974	420	3	42	86	1,525
Impairment	4,789	-	-	-	-	-	4,789
Exchange differences	-	(10)	2	-	-	-	(8)
At 31 March 2021	4,789	1,776	610	3	42	86	7,30 7
Charge for the year	-	1,027	535	5	118	189	1,874
Impairment	472	573	-	-	-	-	1,045
Exchange differences	-	12	47	-	-	-	59
At 31 March 2022	5,261	3,388	1,192	8	160	275	10,285
Carrying amount
At 31 March 2022	8,881	6,925	4,614	17	243	1,132	21,813
At 31 March 2021	9,181	8,455	4,916	21	361	997	23,931

Certain intangible assets arose as part of the business combinations of Yourgene Health Taiwan (March 2017), Delta Diagnostics UK Ltd (April 2019) and Coastal Genomics Inc (August 2020; now renamed Yourgene Health Canada Inc), and also the asset purchases of Yourgene Health France SAS (March 2020, formerly AGX-DPNI SAS) and Ex5 Genomics Ltd (July 2020; now renamed Yourgene Genomic Services Ltd). The following intangible assets are amortised over a useful economic life defined upon acquisition:

	Useful economic life	Remaining useful life
Customer relationships	10 years	6-10 years
Product IP	10 years	8-10 years
Trademarks & brand names	5 years	4-5 years
Software development cost	4 years	3-4 years
Product development cost	5 years	3-5 years

Goodwill is allocated to the Group's cash-generating units (CGUs) identified as the Group's operating segments with Genomic Technologies as a single CGU and Genomic Services as two CGUs, representing the distinct local markets of Europe and Asia. Genomic Services Europe has no goodwill assigned to it. Genomic Services Asia goodwill is a revenue-based allocation of the goodwill associated with the acquisition of Yourgene Health Taiwan (March 2017). Genomic Technologies goodwill represents a revenue-based allocation of the goodwill arising on the acquisition of Yourgene Bioscience (Taiwan) in March 2017, since renamed Yourgene Health Taiwan; plus all the goodwill arising on the acquisitions of Delta Diagnostics Ltd (April 2019) and Coastal Genomics Inc (August 2020; now renamed Yourgene Health Canada Inc).

Goodwill attribution by cash generating unit	2022 £ 000	2021 £ 000
Genomic Technologies	8,882	8,709
Genomic Services Asia	-	472
	8,882	9,181

Intangible assets other than goodwill are subject to an annual test to determine if indicators of impairment are present.  Where indicators are present, an impairment test is performed to determine the recoverable amount.  Goodwill is tested for impairment annually. Impairment tests ascertain if the value in use is greater than the carrying value in the financial statements. The intangible assets arising from the acquisitions above are tested over a five-year forecast period plus a terminal value to represent their remaining useful economic life as deemed appropriate for the diagnostics sector in which the Group operates which tends to see lifecycles for intangible assets which are longer than 5 years. A cash flow model for each CGU is used based on historical performance, in which future expectations of growth are forecast based on internal budgets for 24 months, and then on growth rates judged to be relevant to the respective CGUs. Growth rates for Genomic Technologies range from 28% down to 2% over the forecast period, reflecting maturation in certain key markets and anticipated continued pricing pressure on NIPT solutions.  Genomic Services Asia growth rates range from 30% down to 10% reflecting an anticipated bounce back after the pandemic reduced business levels in that CGU. Genomic Services Europe revenues are expected to reduce by 56% after the COVID pandemic recedes, with CGU revenues then growing at 30% in FY24 due to the introduction of new revenue streams and then 5% per annum thereafter as growth becomes more organic. Growth rates for all CGUs reduce to 2% per annum for the terminal value estimation. Pre-tax discount rates were set at 10%, being the representative cost of capital. These assumptions are reviewed and benchmarked to ensure they remain appropriate.

The impairment assessments for Genomic Technologies and for Genomic Services Europe showed assessed values that exceeded the carrying values with significant headroom in excess of £45m for each of these CGUs. For Genomic Technologies a revenue growth reduction of 13 percentage points in each year, which almost eliminates the assumed growth in the latter part of the forecast period, resulted in an impairment of that CGU.  For Genomic Services Europe a revenue growth reduction of 21 percentage points in each year, which gives rise to revenue declines of 16% in the latter part of the forecast period, resulted in an impairment of that CGU.  For both Genomic Technologies and Genomic Services Europe a discount rate sensitivity of 24% did not give rise to an impairment.

For Genomic Services Asia, using the assumptions described above, the recoverable amount of the Genomic Services Asia CGU is deemed to give rise to an impairment charge of £1,045k (2021: £4,789k) with £472k recognised against previously unimpaired goodwill and £572k recognised against an intangible asset relating to acquired customer relationships. The impairment charge within the Genomic Services Asia CGU arose as a result of the continued impact of the COVID-19 pandemic which reduced health tourism in the CGU's core South East and East Asian markets and the redirection of resources by a large customer from their Yourgene-supported research programme.  Sensitivity analysis with respect to this impairment has been performed.  Increasing the average growth rate by 5 percentage points in each year would reduce the impairment charge by £902k.  The Genomic Services Asia impairment assessment is based on the realisable value for that CGU, calculated based on revenue multiples for similar companies, which is higher than the forecast discounted cashflows.  Therefore, sensitivities to reduce forecast revenue or to increase the discount rate will not give rise to any further impairment.

15. Property, Plant and Equipment

	Leasehold land and buildings £ 000	Plant and equipment £ 000	Computer software £ 000	Total £ 000
Cost
At 1 April 2020	738	5,545	126	6,409
Additions	480	2,682	2	3,164
Business combinations	-	80	5	85
Foreign currency adjustments	(10)	(131)	(1)	(142)
At 31 March 2021	1,208	8,176	13 2	9,515
Additions	989	1,280	65	2,334
Disposals	(150)	(32)	-	(182)
Foreign currency adjustments	37	84	2	123
At 31 March 2022	2,084	9,508	198	11,790
Accumulated depreciation and impairment
At 1 April 2020	586	3,811	42	4,439
Charge for the year	61	934	29	1,024
Foreign currency adjustments	(4)	(51)	(1)	(56)
At 31 March 2021	643	4,694	70	5,406
Charge for the year	149	1,576	30	1,755
Disposals	(150)	(32)	-	(182)
Foreign currency adjustments	5	50	1	57
At 31 March 2022	647	6,288	101	7,036
Carrying amount
At 31 March 2022	1,437	3,218	97	4,753
At 31 March 2021	565	3,482	62	4,109

Business combination refers to assets acquired in the acquisition of Coastal Genomics Inc (now renamed Yourgene Health Canada Inc) in August 2020, see note 18.

16. Leases

Lease liabilities

The Group has a number of leases for property in the UK, Taiwan, Singapore and Canada. The incremental borrowing rate applied to the lease liabilities is based on comparable loan interest rates in the relevant jurisdiction where the lease is operable. 

	Property £ 000	Motor vehicles £ 000	Equipment £ 000	Total £ 000
At 1 April 2020	3,051	-	-	3,051
Additions	1,690	83	143	1,916
Business combinations	64	-	-	64
Lease payments	(417)	(29)	(74)	(520)
Interest expense	193	3	4	200
Foreign currency adjustments	(69)	-	-	(68)
At 31 March 2021	4,51 2	57	73	4,643
Additions	10,066	-	90	10,156
Lease payments	(1,030)	(25)	(90)	(1,145)
Interest expense	274	3	7	284
Terminations and amendments	(74)	-	-	(74)
Foreign currency adjustments	27	-	-	27
At 31 March 2022	13,776	35	80	13,891
			2022 £ 000	2021 £ 000
Current			1,250	587
Non-current			12,641	4,056
At 31 March			13,891	4,643

Right-of-use assets

There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

	Property £ 000	Equipment £ 000	Motor vehicles £ 000	Total £ 000
Cost
At 1 April 2020	3,248	-	-	3,248
Additions	1,690	142	83	1,915
Business combinations	64	-	-	64
Terminations and amendments	(44)	-	-	(44)
Foreign currency adjustments	(74)	-	-	(74)
At 31 March 2021	4,884	142	83	5,1 09
Additions	10,081	90	-	10,171
Terminations and amendments	(159)	-	-	(159)
Foreign currency adjustments	108	-	-	108
At 31 March 2022	14,914	232	83	15,230
Accumulated depreciation and impairment
At 1 April 2020	252	-	-	252
Charge for the year	653	24	23	700
Eliminated on termination and amendment	(44)	-	-	(44)
Foreign currency adjustments	(6)	-	-	(6)
At 31 March 2021	853	24	23	900
Charge for the year	871	63	24	958
Eliminated on termination and amendment	(134)	-	-	(134)
Foreign currency adjustments	29	-	-	29
At 31 March 2022	1,619	87	47	1,754
Carrying amount
At 31 March 2022	13,294	145	36	13,475
At 31 March 2021	4,030	11 8	60	4,2 10

Changes to property leases

New leases have been entered into during the reporting period for new long-term facilities in Vancouver and the UK (Manchester).  In Vancouver the new lease replaced a short-term lease on a facility acquired with Coastal Genomics Inc (now Yourgene Health Canada Inc).  In the UK the Group is in the process of exiting multiple existing facilities with varying lease commitments and relocating to a single facility in the same vicinity with significant expansion potential.  At the reporting date the new facility lease had been entered into and the existing facility leases were also still in place creating a degree of duplication which will reverse when all legacy facilities have been exited.

Operating lease commitments

In addition to the property leases disclosed above under IFRS 16 the Group has a small number of low-value asset operating leases.

	2022 £ 000	2021 £ 000
Minimum lease payments expensed in the Income Statement under operating leases	51	60

At the reporting period date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	2022 £ 000	2021 £ 000
Within one year	50	25
Between one and five years	4	9
In over five years	-	-
	54	34

19. Trade and Other Receivables

	2022		2021
	000	£ 000	£ 000	£ 000
Trade receivables	5,447		4,523
Provision for doubtful trade receivables	(924)		(459)
Loss allowance due to expected credit losses under IFRS 9	(76)		(63)
Net trade receivables		4,447		4,001
Other receivables	561		598
Provision for doubtful other receivables	(269)		(269)
VAT recoverable	852		148
Other loans and receivables at amortised cost	-		-
Net other loans and receivables at amortised cost		1,144		477
Prepayments		1,391		855
		6,982		5,333

20. Trade and Other Payables

	2022 £ 000	2021 £ 000
Trade payables	4,325	3,125
Payments received on account	516	373
Accruals	1,576	1,209
Social security, taxation and pensions	569	384
VAT payable	1,391	135
Other payables	26	13
	8,403	5,239

The book value of trade and other payables approximates to the fair values. See note 26 for maturity analysis.

21. Borrowings

	2022 £ 000	2021 £ 000
Unsecured borrowings at amortised cost
Bank loans	5,220	196
	5,220	196

Analysis of borrowings

Borrowings are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

	2022 £ 000	2021 £ 000
Current liabilities	2,193	119
Non-current liabilities	3,027	77
	5,220	196

The continuing borrowings as at 31 March 2022 are:

In January 2022 the Group entered into a £5m 3-year term loan facility with Silicon Valley Bank secured against the Group's intangible and tangible assets in the UK, USA and Canada.  The facility provides access to non-dilutive funding to enable the Group to capitalise on future accretive growth opportunities including potential licensing and M&A activity, allowing for faster deal execution and lower transaction costs.

The Facility is repayable over three years with an interest-only period until April 2022 after which interest is payable at a commercially competitive rate of 4.65% above Bank of England base rates. Covenants are based on a target trailing quarterly revenue basis compared to internal forecasts and were met within the reporting period. The loan is secured against UK IP and fixed assets and a first priority line over IP in the USA and Canada and represents the only material bank debt and third party security borne by Yourgene.

In addition Yourgene Health (Taiwan) Co. Ltd has an asset finance facility which is repayable in equal instalments until September 2023 at an fixed interest rate of 0.66%.  At the reporting date the balance on this facility was £80k (2021: £128k).

Borrowings incurred by Delta Diagnostics (UK) Ltd were fully paid off by October 2021.  The covenants attached to these borrowings were all met and the associated security charge has been cancelled. 

22. Provisions for Liabilities

	2022 £ 000	2021 £ 000
Acquisition - additional consideration	1,339	3,411

Analysis of provisions

Provisions are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

	2022 £ 000	2021 £ 000
Current liabilities	-	2,283
Non-current liabilities	1,339	1,128
	1,339	3,411

23. Deferred Taxation and Current Taxation Assets and Liabilities

The deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period are shown below.

The deferred tax assets and deferred tax liabilities are not offset and are both deemed non-current.

	£ 000
Deferred tax liability at 1 April 2020	1,153
Deferred tax movements
Acquired in business combination	1,226
Credit to profit or loss	(232)
Foreign exchange revaluation	26
Deferred tax liability at 31 March 2021	2,173
Deferred tax movements
Credit to profit or loss	(172)
Foreign exchange revaluation	59
Deferred tax liability at 31 March 2022	2,060

	£
Deferred tax asset at 1 April 2020	1,181
Deferred tax movements
Charge to profit or loss	(23)
Foreign exchange revaluation	(11)
Deferred tax asset at 31 March 2021	1,145
Deferred tax movements
Credit to profit or loss	1,112
Foreign exchange revaluation	25
Deferred tax asset at 31 March 2022	2,282

Tax assets are sums arising from enhanced R&D reliefs available in the UK and tax prepayments in Germany. UK R&D tax credits are allocated between current and non-current according to the Company's view on when the benefits will arise.

31. Analysis of Changes in Net Cash/(Debt)

	01-Apr-21 £ 000	Cash flow £ 000	Acquisitions and disposals £ 000	Exchange movements £ 000	Accrued interest charges £ 000	31-Mar-22 £ 000
Cash and bank balances	6,995	1,434	-	-	-	8,429
Bank loans - see note 21	(196)	289	(5,286)	(5)	(22)	(5,220)
Net cash/(debt)	6,799	1,723	(5,286)	(5)	(22)	3,209

34. Events After the Reporting Date

The Company issued 1,130,000 EPS-based share options to non-UK staff and some UK-based managers, and the purchase by Lyn Rees, Chief Executive Officer, of 1,000,000 ordinary shares in the Company.  Mr Rees' interest in the Company increased to 0.3% of the issued share capital as a result.

In April 2022 a strategic review was announced into the Group's Taiwanese operations in light of ongoing COVID-19 restrictions in the region and the resulting impairments to intangible assets (see note 14).

Also in April 2022 the Group announced it was undertaking a realignment of its global cost base to adapt to the post-pandemic commercial landscape.

 

END

 

 

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