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Novacyt reports FY profit, books provision on DHSC dispute

Published 22/06/2021, 09:11
Updated 22/06/2021, 09:14
©  Reuters

© Reuters

By Samuel Indyk

Investing.com – Shares in Anglo-French company Novacyt (LON:NCYT) were trading higher on Tuesday after announcing it had achieved a profitable FY 2020 amid a surge in demand for Covid tests.

The diagnostics company said it developed and launched 10 new products to support laboratories and clinicians testing for Covid-19 which helped provide a 20x revenue increase from £11.5mln in 2019 to £277.2mln in 2020.

The company’s operating profit increased to £167.4mln compared to a loss of £1.6mln in 2019.

Following a strong year of cash generation, the group ended the financial year debt free after all debt of £7.1mln was repaid during H1 2020.

“2020 was a year of transformation for Novacyt as we responded to the worldwide spread of COVID-19,” Novacyt CEO Graham Mullis said. “As a result of supporting an urgent global demand for PCR testing, the future of Novacyt has been secured, having repaid all long-term debt, significantly strengthened the balance sheet, and delivered on a number of strategic objectives to support future growth.”

DHSC dispute

Due to a dispute with the UK’s Department of Health and Social Care, Novacyt has taken a product warranty provision of GBP 19.8mln. The dispute relates to Q4 2020 revenue totalling £129.1mln in respect of a specific product supplied to the NHS.

If a resolution of the claim is materially different from the company’s determination of replacing the product, Novacyt warned that the financial statements with regard to revenue and the provision for product warranty could be “significantly impacted”.

Outlook

The AIM-listed company said they expect to see full year sales of approximately £100mln, excluding sales to the DHSC which are in dispute.

“As the COVID-19 testing market has continued to evolve in 2021, we have continued to strengthen our core capabilities and apply our bioinformatics and design expertise to expand our product offering,” Mullis added.

“We therefore expect to see Novacyt continue to play a major role in COVID-19 testing and, specifically, we expect to see strong revenue growth in private testing as markets and international travel re-opens.”

At 09:10BST, shares in Novacyt were trading higher by 4.9% at 375.00 pence per share.

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