29 May 2020 07:00
This announcement contains inside informationfor the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR)
Concepta PLC
("Concepta" or the "Company")
Final Results
Year Ended 31 December 2019
Concepta PLC (AIM: CPT), the innovative UK personalised healthcare company and developer of myLotus®, the UK's most accurate home-use fertility tracking and pregnancy self-testing system, announces final results for the year ended 31 December 2019.
Product Highlights
· myLotus first pregnancies and births announced
· Supply to Boots.com
· Leases and assets for Doncaster manufacturing site assigned to third party in April 2020
· Contract manufacturing agreement signed April 2020
Corporate Highlights
· Appointment of Madeleine Kennedy as Chief Financial Officer & Secretary in October 2019
· Appointment of Penelope McCormick as Chief Executive Officer in November 2019
· Appointment of Lyn Rees as Non-executive Director in November 2019
Financial Overview
• EBITDA loss £2.2m
• Cash at year end £0.62m
• £2.2m (net of issue expenses) share placing secured in April 2019
• £1.7m (net of issue expenses) share placing secured in April 2020
Commenting on Outlook, Penny McCormick, Chief Executive Officer of Concepta plc, said:
"As we roll out our commercial strategy and continually improve our cost base, we are confident of building sustainable growth, and an ability to invest in a portfolio that meets the needs of our customers. Underpinned by our increasing focus on the digital marketing and education effort from mid-2020, we expect to see good commercial traction of myLotus and take advantage of up-coming connected personal diagnostic technology innovation and industry know-how to drive our growth strategy."
The full Group Annual Report and Financial Statements are available here: www.conceptaplc.com
Concepta plc | www.conceptaplc.com |
Penny McCormick, Chief Executive Officer | via Walbrook PR |
Maddy Kennedy, Chief Financial Officer |
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SPARK Advisory Partners Limited (NOMAD) | Tel: +44 (0)20 3368 3550 |
Neil Baldwin |
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Novum Securities (Broker) | Tel: +44 (0)20 7399 9400 |
Colin Rowbury |
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Walbrook PR Ltd (Media & Investor Relations) | Tel: +44 (0)20 7933 8780 or concepta@walbrookpr.com |
Paul McManus | Mob: +44(0)7980 541 893 |
About Concepta PLC (www.conceptaplc.com)
Concepta PLC is an AIM-quoted pioneering UK healthcare company that has developed a proprietary product, myLotus®, targeted at the personalized mobile health market with a primary focus on hormone testing and increasing a woman's chances of naturally getting pregnant and to provide insight to unexplained infertility.
myLotus® is currently the only consumer product which allows both quantitative and qualitative home (self-test) test measurement of a woman's personal luteinizing hormone (LH) during ovulation and human chorionic gonadotropin (hCG) hormone level during pregnancy, facilitating higher conception rates and early diagnosis of fertility issues. The proposition of myLotus® is to empower women to better understand their hormone levels and menstrual cycle and help women conceive naturally by identifying their window of fertility and optimal time for conception.
The Company has received CE-mark certification for myLotus® and has launched its first product in the UK. The Company is preparing plans to roll-out across the core EU countries in 2020.
myLotus® is expected to be beneficial to users who have been unable to conceive after 6 months of trying. This highly motivated target group of women won't typically be offered medical intervention until after 12 months of unsuccessfully trying to conceive, with IVF not usually offered until after two years of trying to conceive. Research indicates couples start to take positive action ahead of this time typically with little medical support to help them do so.
CHAIRMAN'S STATEMENT
Concepta has seen a number of key management changes beginning in Q4 2019 and into Q1 of 2020. Penny McCormick was appointed CEO, Maddy Kennedy CFO and Karen Whiting as CTO. In addition to the executive team, Lyn Rees joined the Board as a Non-Executive Director and I became Non-Executive Chairman.
We now have a Board of highly experienced professionals with exemplary knowledge and skills within the field of fertility, IVD, and global healthcare. These appointments will now allow us to execute and deliver a business that has substantial growth opportunities over the coming years.
The initial focus in the last quarter of 2019 was to rationalise the business, reduce costs at the operational level, restructure and refocus the business commercially in order to achieve success with myLotus. During the short period since our new management team has been in place, they have delivered on all of the above and further advances will be made during the current financial year.
Since the year end, we successfully raised £1.9m gross via a Placing of new shares and disposed of our manufacturing facility in Doncaster for a further £0.3m. We are now well placed to grow our core underlying business and I expect a number of positive opportunities for the business during the current financial year.
A detailed review of the 2019 activities, a description of the product offering and the outlook for 2020 are covered in the CEO report to follow, and in addition, a summary of the financials to year end December 2019 are addressed in the Financial Review.
I would like to thank the Board, the new executive team and employees for their effort and commitment in driving Concepta's progress over the past five months.
We now have a stable platform and opportunities that will allow us to grow the business substantially over the coming months and years.
Adam Reynolds
Non-Executive Chairman
28 May 2020
CHIEF EXECUTIVE'S REVIEW
Building a Sustainable Future
I was delighted to join Concepta in November 2019 and take the reins on the commercialisation of such a strong product offering. The myLotus® Fertility Tracker is high quality and effective product and provides a platform upon which Concepta can build a sustainable and growing business, and I look forward to leading the team on this journey.
Looking ahead, our approach at Concepta is to leverage this core asset to fully engage with women and couples who are trying to conceive, whilst expanding our portfolio of products and education to deliver growth through increased awareness, brand building, territory expansion and range selling. Our strategy will build first and foremost on our score principle: to be a trusted provider to the population of women who are thinking ahead to conception, or who have already been engaged in a process for months, or perhaps years.
Our recent fundraise has demonstrated a commitment from our investors and I look forward to developing a robust growth plan that has the support of our investment community.
Our Mission
Concepta's mission is to help women and couples to start their journey at home, and to make fact-based decisions as early as possible; and to support their decision-making regarding next steps.
In doing so, we will strive for myLotus® to be the go-to brand for trusted ovulation, conception and fertility advice and tracking, and up to date information regarding natural conception and ongoing care.
myLotus® Fertility Tracker
myLotus® is a reliable and accurate fertility tracker that quantitatively tests for levels of Luteinising Hormone ('LH'), to help women identify their optimal time for conception. myLotus® provides a result in 10 minutes, and helps women accurately see their peak LH level, even if it is 'untypically' short, long, low or high. This means that women who fall outside of the 'average' hormone profile can visually identify their own personal optimal time to conceive and can do so using a sophisticated monitor with an algorithm that works to their cycle.
Following its initial UK launch late in 2018, myLotus® has been trialed and used by hundreds of women in the market and has impacted significantly on the lives of many women and couples. myLotus® has led to a number of successful pregnancies, and healthy births from late 2019. Our market reviews are extremely positive and give an indication of the performance credentials of myLotus®.
myLotus® in 2020 will evolve into an increasingly high-quality proposition, as we enhance the positioning and presentation of the product and, significantly, increase reach to target our core market via effective ecommerce and digital marketing channels.
Customer Support
Our customer support is valued, and customer feedback achieved in the market since launch has been positive around our care team and trusted support. Customer service will remain of utmost importance to Concepta and we will always closely interact with our valued customers. We will continue to evolve myLotus® by building materials and technology that have user experience and support at the core and help women to understand that they are not alone is their journey. Our customer onboarding will be key, making the user journey an informative and intuitive experience.
myLotus® Smartphone App
The myLotus® App has achieved over 3000 downloads, which has been driven by women's desire to track their cycle. Our App is under redevelopment for launch in Q4 2020 and will provide a valuable user experience to customers of myLotus®.
Our People
Concepta's leadership team has been strengthened to include a team of women who are highly experienced in consumer health technology and commercialisation. Karen Whiting's appointment in March as Chief Technology Officer brings a highly complementary skillset to that of Maddy Kennedy and I. Additionally, a new, high quality marketing team is forming with specialisms in content, ecommerce and digital, and we have established a tight technical project team to ensure the timely, regulated and quality assured launches of our pipeline.
As Concepta grows, our ethos is to continue to be a compact, focused and agile team, scaling up proportionately in line with revenue growth. Our focus is on building a team of talent with the right experience and energy, an appetite to really make a difference, and an ambitious attitude towards growth.
Building Awareness
Awareness of myLotus® and of the knowledge it can provide around maximising the chances of conception is key to building a sustainable future. We have reduced our core overheads by over 30% since December 2019, and will continue to refine our fixed cost base, so that we can channel funds into commercialisation and portfolio expansion over time.
The impact myLotus® has made to the lives of its existing customers cannot be underestimated, and these mums and mums-to-be will play a major role in our forward plan, influencing others through customer review, influencer and word of mouth programmes. Building upon this contact base is key, as we provide valuable information to the market and direct our funds towards a methodical and incremental awareness drive.
New Products
The appointment of our CTO brings a fresh viewpoint on technology. We have plans to innovate and strengthen our offering to compliment our core technology, and look forward to sharing these short and long-term plans with our shareholders in 2020 and beyond. In addition, we have strengthened our Quality and Regulatory team, ensuring a clear alignment and plans for the transition to the new IVDR, and future regulatory submissions.
Strategic plan
In 2020, as we on-board Concepta's new team, we will commence a focused strategic planning programme. This will allow us to identify the key growth drivers, and carry out targeted commercial feasibility on new territories, portfolios, vertical and horizontal expansion opportunities in the medium and longer term.
Geographical expansion
Geographical expansion will be key to Concepta moving forward and following a small pilot testing programme in Germany in 2019 we will commence a broader rollout in late 2020 and early 2021. The key to a successful roll out will be building upon a proven, UK footprint, which is our primary commercial target for 2020.
As we roll out our commercial strategy and continually improve our cost base, we are confident of building sustainable growth, and an ability to invest in a portfolio that meets the needs of our customers. Underpinned by our increasing focus on the digital marketing and education effort from mid-2020, we expect to see good commercial traction of myLotus and take advantage of up-coming connected personal diagnostic technology innovation and industry know-how to drive our growth strategy.
Penny McCormick
Chief Executive Officer
28 May 2020
FINANCIAL REVIEW
Income statement
During the year 2019 the Group commenced generating revenues in the UK following the receipt of CE Mark certification for myLotus branded products. In the year all revenues were generated from the UK and no revenues were generated from China as operations in this territory have been deferred.
The Group's loss after taxation was £2,150,053 (2018: £2,813,507).
The administration costs, including share-based payments, incurred during the year ended 31 December 2019 of £2,008,416 (2018: £2,305,986) included a bad debt provision of £nil (2018: £107,811).
Other administration costs (excluding share-based payments) of £1,938,695 (2018: £2,213,695) included £228,098 (2018: £558,181) research and development costs (net of capitalised development costs), staff costs and head office costs.
The tax credit of £344,876 represents the research and development tax credit for prior year adjustment of £166,573 and current year of £178,303 (2018: £52,277). Full settlement of the R&D tax credit in relation to 2018 was received on 17 October 2019 (£52,277 and £166,573).
Loss per share
The basic and diluted loss per share was £0.01 (2018: £0.02).
Financial Position
The Group net assets at 31 December 2019 were £2,233,822 (2018: £2,103,851). This comprised total assets of £2,792,128 (2018: £2,655,003) and total liabilities of £558,306 (2018: £551,152).
The total assets included property, plant and equipment, right-of-use assets and intangible assets (capitalised development costs and patent costs) of £1,494,592 (2018: £1,298,384), of which £281,338 (2018: £118,452) represents additional development and patent costs capitalised net of amortisation and equipment spend of £14,197 (2018: £456,789) during the year and cash and cash equivalents of £616,263 (2018: £740,227).
Cashflow
The Group's cash balance at the period end was £616,263 (2018: £740,227).
During the period the net cash outflow from operating activities was £1,865,788 (2018: £2,268,960) and total spend on property, plant and equipment and intangible assets of £374,350 (2018: £626,654), with financing activities generating net proceeds of £2,116,174 (2018: £2,098,082).
Dividends
No dividend is recommended (2018: £nil) due to the early stage of the development of the Group.
Capital management
The Board's objective is to maintain a balance sheet that is both efficient and delivers long term shareholder value. The Group had cash balances of £616,263 at 31 December 2019 and has a 5 year sale and leaseback financing for three parts of its manufacturing equipment. On 17 April 2020 the Company signed a Sales and Purchase Agreement with Abingdon Health to transfer to the business the leases on the same equipment. The Board continues to monitor the balance sheet to ensure it has an adequate capital structure.
Events after the reporting period
Events after the reporting period are described in the notes to the financial statements.
Effects of Covid-19 pandemic
The Board anticipate short-term reductions in revenues in the current year as a result of the Covid-19 pandemic, however, given the early stage commercialisation, income from sales is currently a small contributor, and cost control has a greater impact on the financial position of the Company.
Management have taken decisive action to protect the welfare of employees, whilst continuing to meet the needs of our customers in the UK and overseas. Production activity has been condensed to match visible demand, and appropriate measures taken to reduce operating costs and manage immediate cash flows. We will continue to take all steps possible in these challenging circumstances, and ensure that all support mechanisms available to our company from outside agencies are accessed, in order to preserve value and capability, and ameliorate the impact on the business, its workforce and our customers and partners.
Further commentary on these uncertainties are set out in the section entitled 'Principal risks and uncertainties' in the Operating and Financial review.
The statement of the Directors' responsibilities under s172(1) Companies Act 2006 is separately disclosed in the Governance section.
Madeleine Kennedy
Chief Financial Officer
28 May 2020
FINANCIAL STATEMENTS
The notes to the Financial Statement are an integral part of these financial statements and are available in full in the Group Annual Report and Financial Statements which is available on the Company website: www.conceptaplc.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For The Year Ended 31 December 2019
| 2019 | 2018 |
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Revenue from contracts with customers | 31,970 | 4,838 |
Cost of sales | (492,136) | (540,721) |
Gross loss | (460,166) | (535,883) |
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Other administrative expenses | (1,938,695) | (2,213,695) |
Share-based payments | (69,721) | (92,291) |
Administrative expenses | (2,008,416) | (2,305,986) |
Operating loss | (2,468,582) | (2,841,869) |
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Finance expenses | (26,347) | (23,915) |
Loss before income tax | (2,494,929) | (2,865,784) |
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Tax credit | 344,876 | 52,277 |
Loss for the period | (2,150,053) | (2,813,507) |
Other comprehensive income | - | - |
Total comprehensive loss for the year | (2,150,053) | (2,813,507) |
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Attributable to owners of the parent: | (2,150,053) | (2,813,507) |
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Loss per ordinary share - basic and diluted (£) | (0.01) | (0.02) |
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All activities relate to continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As At 31 December 2019
| 2019 | 2018 |
| £ | £ |
Non-current assets |
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Property, plant and equipment | 259,861 | 789,189 |
Right-of-use assets | 444,198 | - |
Intangible assets | 790,533 | 509,195 |
Total non-current assets | 1,494,592 | 1,298,384 |
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Current assets |
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Inventories | 380,205 | 399,182 |
Trade and other receivables | 122,765 | 164,933 |
Corporation tax receivable | 178,303 | 52,277 |
Cash and cash equivalents | 616,263 | 740,227 |
Total current assets | 1,297,536 | 1,356,619 |
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Total assets | 2,792,128 | 2,655,003 |
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Current liabilities |
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Trade and other payables | 271,523 | 259,681 |
Lease liabilities | 101,036 | - |
Loans and borrowings | - | 64,228 |
Total current liabilities | 372,559 | 323,909 |
Non-current liabilities |
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Lease liabilities | 185,747 | - |
Loans and borrowings | - | 227,243 |
Total non-current liabilities | 185,747 | 227,243 |
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Total liabilities | 558,306 | 551,152 |
Net assets | 2,233,822 | 2,103,851 |
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Share capital | 6,623,667 | 4,704,917 |
Share premium account | 10,739,816 | 10,448,263 |
Share-based payment reserve | 812,899 | 743,178 |
Capital redemption reserve | 1,814,674 | 1,814,674 |
Reverse acquisition reserve | (6,044,192) | (6,044,192) |
Retained earnings | (11,713,042) | (9,562,989) |
Total equity | 2,233,822 | 2,103,851 |
These financial statements were approved and authorised for issue by the board of directors on 28 May 2020 and were signed on its behalf by:
Madeleine Kennedy
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Share capital | Share Premium | Share-based payment reserve | Capital redemption reserve | Reverse acquisition reserve | Retained earnings | Total |
| £ | £ | £ | £ | £ | £ | £ |
Equity as at 31 December 2017 | 3,454,917 | 9,813,131 | 650,887 | 1,814,674 | (6,044,192) | (6,749,482) | 2,939,935 |
Loss for the period | - | - | - | - | - | (2,813,507) | (2,813,507) |
Total comprehensive loss | - | - | - | - | - | (2,813,507) | (2,813,507) |
Issue of shares net of expenses | 1,250,000 | 635,132 | - | - | - | - | 1,885,132 |
Share-based payments | - | - | 92,291 | - | - | - | 92,291 |
Equity as at 31 December 2018 | 4,704,917 | 10,448,263 | 743,178 | 1,814,674 | (6,044,192) | (9,562,989) | 2,103,851 |
Loss for the period | - | - | - | - | - | (2,150,053) | (2,150,053) |
Total comprehensive loss | - | - | - | - | - | (2,150,053) | (2,150,053) |
Issue of shares net of expenses (note 19) | 1,918,750 | 291,553 | - | - | - | - | 2,210,303 |
Share-based payments (note 21) | - | - | 69,721 | - | - | - | 69,721 |
Equity as at 31 December 2019 | 6,623,667 | 10,739,816 | 812,899 | 1,814,674 | (6,044,192) | (11,713,042) | 2,233,822 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Year Ended 31 December 2019
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| 2019 | 2018 |
| £ | £ |
Cash flows from operating activities |
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Loss before taxation | (2,494,929) | (2,865,784) |
Adjustments for: |
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Depreciation and amortization | 267,583 | 192,260 |
Finance expenses | 26,347 | 23,915 |
Share-based payments | 69,721 | 92,291 |
Operating loss before working capital changes | (2,131,278) | (2,557,318) |
Changes in working capital |
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Decrease/(increase) in inventory | 18,975 | (102,634) |
Decrease in trade and other receivables | 42,171 | 513,302 |
Increase/(decrease) in trade and other payables | 11,841 | (203,213) |
Cash used in operations | (2,058,291) | (2,349,863) |
Tax received | 218,850 | 104,818 |
Interest paid on sale & leaseback | (24,766) | (21,415) |
Other interests | (1,581) | (2,500) |
Net cash outflow from operating activities | (1,865,788) | (2,268,960) |
Investing activities |
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Purchase of property, plant and equipment | (14,197) | (457,836) |
Purchase of intangible assets | (360,153) | (169,560) |
Sale of asset | - | 742 |
Net cash flows used in investing activities | (374,350) | (626,654) |
Financing activities |
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Issue of ordinary shares (net of issue expenses) | 2,210,303 | 1,885,132 |
Proceeds from sale and leaseback | - | 381,215 |
Repayment of sale and leaseback | (94,129) | (168,265) |
Net cash flows from financing activities | 2,116,174 | 2,098,082 |
Net change in cash and cash equivalents | (123,964) | (797,532) |
Cash and cash equivalents at the beginning of the period | 740,227 | 1,537,759 |
Cash and cash equivalents at the end of the period | 616,263 | 740,227 |
NOTES TO THE FINANCIAL STATEMENTS
The notes to the Financial Statement are available in full in the Group Annual Report and Financial Statements which is available on the Company website: www.conceptaplc.com
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs), as adopted by the European Union ("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The preparation of financial statements in compliance with adopted IFRSs requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed below.
Earnings per share
| 2019 | 2018 |
Basic and diluted |
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Loss for the period and earnings used in basic & diluted EPS (£) | (2,150,053) | (2,813,507) |
Weighted average number of shares used in basic and diluted EPS | 240,780,008 | 158,321,675 |
Loss per share (£) | (0.01) | (0.02) |
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
Due to the loss in the periods the effect of the share options was considered anti-dilutive and hence no diluted loss per share information has been provided.
Events after the reporting date
On 24 April 2020, the Company raised £1,900,000 (before expenses) through a placing of 112,187,500 and subscription of 112,687,500 new Ordinary Shares at 0.8p per ordinary share and the subscription for £101,000 of Convertible Loan Notes. The Convertible Loan Notes have the following principal terms:
· Maturity Date: 27 April 2023
· Coupon: the interest rate on the Loan is 5%
· Security: the Loan is unsecured
· Repayment: The Company will redeem the full amount of the Loan together with all interest accrued and the Redemption Premium (to the extent not previously converted) on the Maturity Date
· Redemption Premium: a redemption premium of 30% of the aggregate value of the loan
· Conversion Price: the conversion price will be 0.8p or, if lower, the average closing price on AIM of the Ordinary Shares for the five business days preceding the relevant conversion date
On the same day, and as the price at which the Placing Shares and the Subscription Shares were to be issued is below the nominal value of 2.5p per ordinary share, each of the Existing Ordinary Shares of 2.5p was sub-divided into one New Ordinary Share of 0.1p and one Deferred Share of 2.4p. The Deferred Shares will not entitle their holders to receive notice of or to attend or vote at any general meeting of the Company, or to receive any dividend or other distribution. On a return of capital on a winding up or dissolution of the Company, the Deferred Shares will be entitled as a class to receive in aggregate the sum of £1 prior to any return on capital paid in respect of the Ordinary Shares. The holders of Deferred Shares are not entitled to any further right of participation in the assets of the Company. The Company shall have the right to purchase the Deferred Shares in issue at any time for an aggregate sum of £1. As such, the Deferred Shares effectively have no value. Share certificates will not be issued in respect of the Deferred Shares, and they will not be admitted to trading on AIM. The Company intends to buy the Deferred Shares back as soon as reasonably practicable subject to Shareholders' approval.
The primary use of the net proceeds will be to strengthen and develop the digital marketing effort, appointing core marketing personnel and to provide the additional working capital requirements of the Company to refine its manufacturing provision and to target strategic commercial contracts to exploit the myLotus product and technology nationally then internationally.
On 17th April the Company signed a Sales and Purchase Agreement with Abingdon Health to transfer to them its lateral flow test manufacturing site in Doncaster. As part of the asset purchase agreement, Concepta will assign the leases on the facility and machinery, transfer the staff, and will sell residual manufacturing equipment to Abingdon Health for a total cash consideration of approximately £0.3m.
To this end, the Company has signed agreements with Abingdon Health for the continual manufacture and supply myLotus® testing strips.