Abingdon Health plc

("Abingdon Health" or "the Company")

Final Results

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

Operational highlights (including post-period end)

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

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

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

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

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

Financial highlights

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

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

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

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

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

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

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

· No additional funding requirement expected.

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

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

Enquiries

About Abingdon Health plc

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

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

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

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

For more information visit: www.abingdonhealth.com

Chairman & CEO Joint Statement

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

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

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

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

Our strategy

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

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

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

Lateral flow CRO/CDMO

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

Self-testing lateral flow sales & distribution

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

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

Performance in the year

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

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

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

Current Activity and Pipeline

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

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

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

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

Concert Party

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

Team

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

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

Governance and People

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

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

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

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

Outlook & Funding

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

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

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

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

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

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

Operating and Financial Review

Revenue and Margins

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

Revenue by Geographical Market

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

Revenue by Operating Segment

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

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

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

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

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

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

Adjusted EBITDA

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

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

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

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

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

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

Cash Resources

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

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

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

Financing

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

Key Performance Indicators ("KPIs")

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

Earnings per Share

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

Consolidated Statement of Comprehensive Income

For the Year Ended 30 June 2023

Consolidated Statement of Financial Position

As at 30 June 2023

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2023