2023-04-29 10:40:21 ET
Novacyt S.A. (NVYTF)
Q4 2022 Results Conference Call
April 27, 2023 07:00 AM ET
Company Participants
James McCarthy - Acting Chief Executive Officer
Steve Gibson - Group Finance Director
Presentation
Operator
Good afternoon, and welcome to the Novacyt Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. [Operator Instructions] The company may not be in a position to answer every question received in the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. And for the benefit of those joining us from France.
[Foreign Language]
Before I begin, I'd like to let the following poll. And I'd now like to hand you over to James McCarthy, Acting Chief Executive Officer. Good afternoon to you, sir.
James McCarthy
Thank you very much. Good afternoon, everybody. Welcome to the 2022 full year annual results. I would just pause on to the disclaimer. Can we just go back one? And just please pay attention to the disclaimer. We will take that as read, but I think it's an important page for the document, which will be in the public domain.
So my name is James McCarthy. I am Acting Chief Executive for Novacyt, since November last year, I've been prior to that CFO from January 2021. And I'm delighted to be joined today by Steve Gibson, who is the Group Finance Director. So maybe I'll just hand over to Steve to introduce himself before we proceed.
Steve Gibson
Thank you, James, good afternoon, everyone. This is Steve Gibson. I have been with Novacyt for seven years now. I joined just prior to the IPO and prior to that I worked for Hewlett-Packard for about 12 years. Thank you.
James McCarthy
So just in terms of the format, Steve and I will run through some slides today, trying to give you a summary of how the business has been performing. And the key actions looking forward. At the end, we will pause and deal with questions.
I'd like to just maybe do a quick recap of the vision and capabilities of the business and not for any of the long-term holders. They will be familiar with this, but there may also some new voices out there.
The origin of Novacyt, the Primerdesign business was an RUO business that really was incredibly successful for a couple of things, its agility to react to the needs of the market, its speed to market and the quality of the reagent produced. And that was underpinned by bioinformatics capability, which meant that not only could they stop what's happening in the marketplace, is also key to design diagnostics products that was highly successful.
As pandemic hit, the business really shifted from being a core RUO life science business to the clinical business because many of the corporate assets for our clinical products. So that really is the first foray, if you like, interclinical products and the business learnt a lot in terms of product development, commercialization and regulatory exception. The group also acquired the ITIS International business along the way in October 2020. And that brought an instrumentation capability into the company, which the business hadn't had previously.
And we're not really putting all of those capabilities together, to leverage the post-COVID landscape and try to build a leading global chemical diagnostics company.
Go to the next one. So 2022 has been a key year of transition for the business. I mean even though COVID sounds like it is a distant memory to most people now, but for the Novacyt business for Q1 in 2022, we still have pretty substantial sales from COVID products. And pretty much for the first half of 2022, we were developing products for the COVID portfolio. We had six further CTDA approvals during the course of 2022, most in the first half of the year, bringing our total approved portfolio to seven. Which look, it's something we're very proud of, and I think something that shows the underlying capability and ability of the business to build leading products.
But it became clear in Q2 2022, that the COVID sales fell rapidly, and that really triggered the beginning of the transition. And that meant a shift in development terms towards the non-COVID portfolio. So we're pouring our energies into developing the non-COVID menu and also looking at our costs.
And look, as we walk through the year, the first couple of products that come out of that internal development is a gastrointestinal bacterial product, closely followed by a gastro-viral product, which we are working on. They will be the first two internally developed clinical products. And that's supplemented by a deal we did with an Italian company, an Italian molecular company, but we distribute some of their molecular products, which is to give us a broader menu as we start on our journey of commercializing clinical diagnostics.
We also did quite a bit of work on our RUO, I mean the original life science portfolio. The RUO business which has been the founding part of the product design business.
The RUO business softened really during the pandemic. I think it suffered because the market was looking elsewhere. I mean there's a lot of resources developed post-COVID. And -- but also internally, I mean, I think the Novacyt business also de-prioritized RUO or at least the priorities were overtaken by focus on COVID. And we've been rebuilding that towards the back half of 2022.
And that includes refreshing the top products to make sure everything is up to date and working a lot on our supply chain to increase our response. And we clearly, we've made a lot of progress in reestablishing that business.
And finally, we had to address our cost base in 2022 and address it fairly aggressively and that included the disposal of the Microgen and Lab21 businesses plus some significant change in the cost base of the Primerdesign business. And now is entirely necessary, as we face into a different future, we need a different cost base going forward. I think we have now done the heavy lifting and right sized that during the course of the year.
And just maybe lastly in this section to talk about business development, and business development is a catchall for us that covers pretty much all third-party partnerships. And there are some clear evidence where we've been building partnerships. I mean I've talked about currently on the asset side. But we've also built partnerships in developing our workflow, so partnerships to develop extraction systems, partnership to develop liquid handling. I mean you put that together, we now have a workflow that goes from sample extraction through the liquid handling, so sample preparation, and the thermal cyclers, which are in-house to develop -- to deliver sorry, total workflow our clinical customers.
And it is very, very important that we have. And it's a really good demonstration of us working with both parties. And we also called out our work with Eluceda, which is, look, it's not the biggest project, but we worked with Eluceda last year to do a proof of concept for biosensor product. This is obviously a non-PCR diagnostic solution. And I think it's important for us to keep a fairly open mind on alternative systems. And we are now moving forward with that relationship and targeting a couple of products, one in a non-human health, which we hope we can develop within the next six to nine months and have it in the market in 2024.
Look, it's a very exciting product. I mean, the whole biosensor platforms are very, very interesting in terms of the sample to result and the time involved at low cost. So it could be a very exciting application in the right circumstances.
And look, I think M&A, and I'll come back at the end, business development also includes more strategic M&A. And that's not something we've taken our eyes off of. And I think it's clear we have cash. I think we also need the right partner for the business. And I think valuations have been problematic for a lot of the staff for the last year. I think a lot of that has now levelled off. I think the field is levelling. And -- so we were confident we can actually put that capital to work going forward.
So I shall now hand over to Steve to talk through the financials.
Steve Gibson
Thanks, James. Good afternoon, everyone. Hope you are well. It's great to be here today to talk you through the 2022 financial results. If you read the financial statements, please remember that the results of Microgen Bioproducts and Lab21 Healthcare have been reported on a separate line, loss from discontinued operations, and that's in accordance with IFRS 5, and that's for both 2021 and 2022.
If we kick off from a revenue perspective, we reported revenue of £21 million for FY 2022, and that was in line with guidance. There is a decline from the prior year of £92.6 million, and that was driven predominantly by a decline in COVID-related sales.
If we look at revenue from a product mix perspective, around 70% of our revenue, which is over £14.5 million came from COVID sales and around 30% of our revenue came from our non-COVID business. And that's really our RUO business and our instrument business. There was a decline year-on-year and that was driven by lower instrument sales compared to 2021, which benefited from COVID-19 to then.
If we look at revenue as well from a geographic perspective, what we remain is well-balanced in international business. And what you'll see is that the U.K. region generated around 50% of our revenue, which is over £10 million. And that's because we have our largest direct sales force presence on the ground in the U.K.
Other regions, Americas and the Europe, sorry, excluding the U.K., both generates around 20% and then the remaining at 10% to 12% was derived from Asia Pac and Middle East and then Africa.
One point to note is that post-inflation of Lab21, Microgen, Primerdesign, our molecular business now represents around 93% of our overall group revenue. And that's important because it's our most profitable business.
From a gross profit perspective, we reported £5.7 million or 27% compared with £28.2 million or 30% in 2021. Now the 2022 gross margin was impacted by significant levels of obsolete stock as a result of COVID sales declining quicker than we expected, and this study took the gross margins significantly.
Now if we exclude the impact of these one-off items, which totalled approximately £7 million, the underlying gross margin of the business would have been in excess of 60% which is a key metric for us going forward.
As James mentioned it earlier, we're on this journey of rightsizing the cost base of our business. And our OpEx costs filed by over 20% from £25.1 million, down to £19.3 million in 2022. And the main driver for that was the group-wide restructuring program that we undertook and this reduced the headcount of our continuing business from around 240 at the end of December 2021, down to around 137 at the end of December 2022. So a reduction of over 100. Our current headcount is around 120 at the moment.
We also saw further savings in legal and professional, commercial insurance facilities as the business contracted. We did manage those to protect some of the front end of the business, and we continued to invest in R&D. We saw a 9% year-on-year increase in expenditure taking it to over £5 million. And that's important because product development and innovation are critical to the continued success of our business.
From a profitability perspective, we reported an EBITDA loss of £13.5 million versus an EBITDA profit of £3.1 million in 2021. Now the swing from EBITDA profitability to the EBITDA loss was driven by significantly lower sales and therefore a reduction in the gross margin contribution, totalling around £22.5 million, which we managed to partially offset by a £5.8 million reduction in OpEx costs.
So this meant that the group reported a loss after tax from the continuing operations of £22.2 million compared with a loss of £6 million in 2021. Now in addition to the EBITDA loss that I just discussed, we also reported exceptional costs of around £7.7 million, and that was made up of three key items. The largest by far is a £5.2 million goodwill impairment charge associated with the ITIS acquisition. The next largest charge was £1.3 million of restructuring expense, then predominantly covered redundancy payments and then there was £900,000 of costs in relation to the ongoing DHSC contract dispute.
Taxation of £2.1 million is predominantly as a result of the movement in the deferred tax balance. And if we just jump back to the discontinued operations, that's reported on the separate line, loss from discontinued operations and it reported a net loss of £3.5 million for 2022. And now to that £3.5 million, about 50% or £1.8 million disclosure related costs, which are non-cash impacted items. And there's two main drivers in there.
The first one is we recognized the £1 million impairment charge in relation to the company facility lease, and we actually surrendered that lease in January of this year, saving the company over £1 million in cash, have the least plan to term. And the other big item in there is the £0.6 million impairment charge for the remaining property, plant and equipment that we can utilize in the wider business. So overall, this resulted in the group reporting a loss after tax attributed to the owners at £25.7 million.
Go to next slide, please. Moving to the balance sheet. We closed the year of £87 million of cash in the bank, and that was compared to just under £102 million in 2021. And this provides the company with a strong platform for which to execute its future growth strategy. Importantly, we remain debt-free as a business.
Goodwill, as I touched on earlier, has decreased year-on-year, and that was driven by the impairment associated with the ITIS acquisition. From a working capital perspective, excluding cash, that file was just over £2 million down to £16 million at the end of 2022. And that was driven by falling revenues which is the pre-receivables balance.
The actions we took in relation to COVID-19 stock to reduce inventory and the payment of the remaining 2017 to 2020 outer team to reduce trade and other liabilities.
From a capital expenditure perspective, we incurred costs of £0.4 million in 2022, and that's a much better indicator of our future run rate as a business compared to 2021, where we incurred over £4 million of expenditure because we've heavily invested in insourcing manufacture. That was a big run through the 2022 results and more detailed information can be found on our website, where we published today the group results.
And I'll now hand back to James. Thank you.
James McCarthy
Thank you Steve. So Phil, can you just advance in the next slide, thank you. So just a quick reminder of how we think about strategy and how we think of the journey we're on. So we look at four pillars of the strategy, the first is product development. And here, we talk more about reagent development such as about building clinical menu. And the second pillar is instrumentation.
You should also think of probably instrumentation and the outflow because it's not just the hardware, it's the process for sample to results, which involves instrumentation for sure, but also software and connectivity across those different platforms.
Geographic expansion also causes commercial for me. So commercialization is the obvious one, developing these products and finding a customer base for the products. And finally, business development, which, as I think I already mentioned is, for me, all things are third-party partnerships of various sizes all the way through to say more strategic M&A. And we'll just move forward. But I mean I will -- I'd like to just give you some of the highlights under the different pillars, I try not to have too much repetition from the full year highlights. Let me a little bit apologize to that, but I think it's just good to give some context of progress against the pillars and how we think about it.
And when I talk about building the reagent portfolio, I talked about the GI Viral, bacterial which is the in-house developed forms and what we've done with our parties. So we've also launched Winterplex. And so there is still COVID testing going on. It just happens -- generally it tends to happen as controller a broader Winter panel, or Flu A/B, RSV typically is the types of panels. And we're very pleased to get our Winterplex product launched last year, CTDA approval from U.K. sale in October last year. And we've been selling that successfully in the U.K. and Europe, and even though we were a bit late in the season because of the U.K. CTDA coming so late. And that's quite a good example of us commercializing a clinical product.
I think also, we have a unique strength with our RUO heritage. And if we look at clinical development timetables, since May last year, when IVDR came into force. We've gone from a system where you could probably do an IVDD product in maybe six to seven months and IVDR products in something like two years. And that clearly changes the game. I think it's much more difficult for something smaller diagnostics companies to bring products to market.
We're using our RUO experience to build a set initially, RUO products, diagnostic products. But guided by the targets, we came out of the market research we did last year. So we're taking those key clinical areas where we feel we can be competitive and we're developing RUO, typically multiplex diagnostic products in those target areas. And that's something I think you'll see in our update, that's something we can do in fairly short level. So we've set ourselves a challenge of up to probably 10 products during the course of 2023. And that products we should see is RUO multiplex products that we can develop and get in front of some customers and get more experience.
I would love to think that RUO also got down in IVDR route later on. But let's wait and see what that looks like, and we have a bit more market experience with those products. So I think it's important that we can use our RUO credentials to kind of turbocharge that clinical development. And I think that's going to be super important for clinical customers.
And just on instrumentation, I mean, I talked a little bit about the partnerships, a mixture of internal instrumentation now, particularly in some recycling plus the external liquid handling extraction to get a workflow. And look, we're looking to develop our thermal cyclers further, again, on to the team of multiplexing, so upgrading our q32 instruments. So that they can deal with multiplex products -- a more complex multiplex products, which is where the market is going. In fact, I think it's become almost the basic entry level, and we have to have multiplex assets now. So we're gearing up for that.
And I think the fact that we've seen out both water instrument outside instrumentation, and we've seen a liquid handling, or about to see a macro extraction system. Again, this is very important for clinical clients because that's again the minimum they want to have to see a mark solution, which is great.
Next slide, please. So talking about geographic expansion, I mean, particularly commercialization. I mean, commercialization in the post-COVID world, it's a very different from what we experienced before and this is a much tougher job. Not least of all as I have to talk about the lead times and developing products, but also clinical products typically customers need to validate. And so we had the experience of some of that during COVID as well and there's a slightly a lot runway to do that. So that's something we're engaging ahead on. So it's the current part for us where we develop clinical products. We're finding customer platforms that we can work with.
I think I just want talking about RUO. I mean, RUO, we need to also try to make a shift on RUO from more I would say, academic, and that's not only what we sell for more an academic market to a more industrial repeat market -- repeat business market because we all want to have a repeat more predictable sales profile rather than just a series of lots of individual projects going on, which has probably been more of the characterization of already more historically. And we certainly have the capabilities, we believe, to deliver more services.
And just finally on business development. And as I said, to repeat business development for me is how do we supply our cash with our parties. And that, as I said, can be -- I mean, the overarching objective here is we accelerate the strategy. How can we deploy our cash to accelerate strategy? And the examples of building workflow solutions, building interaction solutions, as an example, I was working with a third party, at the business development capacity and accelerating our strategy. And the work we've called out with biosensor. Biosensor work with Eluceda and that's again, trying to look at an opportunity where we could accelerate our strategy that has been a non-PCR area.
Go to the next slide. Maybe just to leave you with a couple of key messages, the three things we have to demonstrate with you as we go through this year; how we accelerate and develop the portfolio. And I think I set out some of the directions we are going there, and we'll come back to you later with a deal and let you know how we are getting on. Now, can we drive commercialization? Can we commercialize the portfolio you have in the emerging portfolio successfully? And can we put our capital to good use in business development. Those are kind of three things that you should measure us on as we go through the year.
And we've also got in there the cost base. I mean we don't want a lose sight of our cost base. I think we've done pretty significant work last year and rightsizing the cost base, but we continue to challenge ourselves to make sure that value for money, and give it all the moving parts of the business.
And I think when you look in Q1 2023, we were posting sales of £0.7 million, of which £0.3 million was still COVID related, which is obviously a fraction of COVID has been historically, but we still see a low level of COVID coming through the door. I think we were disappointed with revenues in Q1. There was some overhang in the instrumentation business.
We've always reported that the instrumentation business is not incorporated but carefully I think for simplicity, but clearly, when you look into that industry, I mean, there was a lot of instrumentation went into the market during COVID, from all of the different sectors. And I think we're having a little bit of a hangover from that. And we hope to work through that so we get to the balance of the year. And generally, we need to drive the rate of COVID -- sorry, RUO and instrument sales and improve that for the rest of the year. Plus, we should see some more clinical sales coming through in the back end of 2023.
And -- so I think with that, let's just take to the next slide, look, I'll just leave you with this picture. I think we're already at this stage to deal with any questions. So if I hand back to Mark, I'm not sure which one of you guys is.
Question-and-Answer Session
Operator
Thanks, James, Steve, yes, of course, and thanks very much for the presentation. [Operator Instructions] Given the significant attendance on today's call, the company will not be able to answer every question but we'll start off the Q&A session with this one here, which reads as follows.
What performance milestones can we expect in the next 12 months?
James McCarthy
Thanks. I think I probably just mentioned this a little bit. I think the three pillars would be product development. Coming back to you specifically with what products are we developing? What stage are they at? [indiscernible] stage? What's the journey to IVDR, it's a very clear metric.
Commercialization will be certain on what sales we're posting. So what actual sales we're posting, but also do we have line of sight contracts as we develop our sales plans towards the back end of the year. M&A progress will be -- yes, I mean, M&A is always a difficult one. Clearly, bigger projects are, by definition, something we don't discuss openly. But this is something we're working on very hard. I'd love to be in position. We've gone accurate from the year and actually demonstrated some moves in that area and hopefully we can.
So I think it will be very clear when we talk to you next, whether we're making progress to have to get this ties and we'd be very transparent about it.
Operator
Perfect. Thanks very much, James.
Can you provide an update on your M&A progress?
James McCarthy
Sorry, just be into that maybe a little bit. But I think, look, I tried to show you the real examples where we patent with outside terms -- for margin in terms of being rather going all over it again in terms of the development of the workflow, et cetera. I mean, I can just assure you, we are looking at more strategic partnerships which could really accelerate the journey of the business, sometimes that can give us a bit of a step change.
That by its nature is hard. And I think we are rightly challenging ourselves to pick the right partner. I know people were seeing starting your cash for a long time, there's probably still a better outcome than spending on the long thing because you kind of get one-go of this. And I think I also mentioned valuation have come back to in the last six to nine months’ valuations are more reasonable. So I think we've got a more level playing field. And again, we're working very hard in that area and hope you'll have more progress to share with you through the course of the year.
Operator
Great, thank you. Thanks very much. Just turning to the next one. Any further cost-cutting measures planned?
Steve Gibson
Yes, so I think fundamentally, as a business, we'll always continue to review the cost base of our business and where it is appropriate, it will take cost out of the business. But if you're asking in terms of will there be another large-scale restructuring program that we saw in 2022? In the immediate near term the answer is no.
Operator
Perfect. Thank you very much for that, Steve. When will you appoint a new CEO? And is it likely to be linked with M&A?
James McCarthy
Yes. Look, I think just to recap for everybody, I'm the acting CEO at the moment. So -- and look, I think that was a decision the Board took, we changed the COO last year. I think the Board wanted to have some time to say, look, there are so many moving past the business, right? We still come out of COVID. I don't need to repeat the kind of extent businesses like this have shifted.
And if the Board felt answer my question to lead this business through that transition until we can demonstrate on the right strategic journey, we can get one on the Board. And that's why I'm an acting CEO. Look, I'm delighted to be in the role. I mean I love the business. I think it's a great potential. So I'm very pleased to be in the seat. But I also appreciate it's an acting role because of the uncertainty around -- has been around the strategy.
Look, there's no plans to change that for now. I mean I'd love to think that if there was a current CEO, I'd be a good candidate for that, and I'd be considered and I'd be very pleased to do the role and that's really given act to the Board. But as far as I'm concerned, I don't wake up every morning and think, "Oh, God, I'm only the acting CEO. It's not something that troubles me. I think the business gets our full attention and that we're very committed to make it a success.
And the second part of the question, is that linked to M&A? I mean I don't think we're that clever. You never know what M&A what happens. But I mean it's just not a consideration. M&A, you always like to think you pick up great talent you can't be tampered like that. And so that's not really a primary consideration.
Operator
Perfect. Thanks very much. How realistic is your five-year revenue target of £100 million?
James McCarthy
Yes. So I think the £100 million is an aspirational plan for the business. This business should be able to get to those levels if it can build a compelling clinical portfolio. I mean when I look at where we are at the moment, how we're trading in Q1, £100 million is a non-way of looking it was also a five-year plan out there. I think it's still an ambition of the company. But I can't lay a roadmap out for you about how we get to £100 million. But I think it's still -- we should have the ambition to be getting to that kind of size of business on that period of time.
Operator
Perfect. Thank you very much. Can you be specific about where you're focusing your R&D efforts?
James McCarthy
Yes, sure. I mean we did an extensive piece of work last year market research, which I think we shared some of portions of that through the various updates. And we're focused on infectious diseases, gastro insect borne, and there are the kind of three major payrolls and also some more transportation. And we are -- I mentioned we're developing RUO multiplex assets. We're developing them in those basins in the main. So we're using that research to guide our development efforts.
And look, as we get following that development process, we will share with you the products. And I don't want to get into specific product areas at this stage. We are still working at them, but we may have to share those to you soon. So we've been -- we're remaining faithful to the strategy we set out last year in terms of the target areas we're going after. That hasn't changed. We're just getting on developing products in those spaces. That's where the main R&D effort is going when it comes to reagents.
When you look at instrumentations and workflow, as I think I mentioned, we need our instrumentations to continue evolving, become more capability -- have more capability as the diagnostic energy moves to more multiplexing. And we're going to continue working on things like extraction systems, sample handling. This is not a static market. You can't develop something based on requirements at the moment. You have to keep reaching forward and customers expect better and better outcomes. So we will continue to work on that work flow instrumentation piece as well.
Operator
Perfect. The next question here just follows. How is the IVDR and CTDA advancing for new products and how the A/G LFT self-test, respectively?
James McCarthy
Okay. So let me try and break that down. There's probably 3 questions in there. I mean IVDR is -- I mean, we've talked about in the last since, to value our industry. But IVDR is a significant advertisement shift for the diagnostics industry in terms of product development.
So not only have development time is down from, let say, on 6 months to 24 months. If you think of where does that extra time come from. And at the moment, about half that 24 months is products have to go through now third party and Novacyt body. So as a diagnostic developer, you hand your products to a third-party for validation. And those third parties are at capacity because as you can imagine, there was a lot of people trying to get the products through IVDR. So there's definitely a capacity issue in terms of Novacyt bodies and a transparency issue. It is very hard to get a detailed timeline for some of these.
And that uncertainty is not helpful. It's absolutely not helpful when you're trying to build launch plans and commercialization. So that's why I think I mentioned we are using our RUO expertise to develop RUO of some of these in the next kind of levels of development. Do some client work with that in the RUO space, and try and make sure, if you go down the IVDR route, you're pretty damn sure, you're on a winner. Because it's a pretty expensive process to go down there and applying two years later. This thing doesn't maybe have the market reach that you thought, or you're a struggling with client. So it definitely has raised the bar about terms of the IVDR development pathways.
CTDA, look, CTDA has been predominantly a COVID testing requirements for the U.K. only. And we've been very, very successful. We have, I think now seven products approved including Winterplex. And I think the future of COVID-only tests -- it is honestly very uncertain, right? I mean I think we would all assume that there's going to be very few COVID testing going forward, is what's exactly how we are running our business.
But just on CTDA also for you and as I said, it's in U.K., our Winterplex product, which is a panel, it happens to have COVID within the panel, but it's a respiratory panel that also has to go to CTDA. So to the extent that the product has still got the COVID lessen it and start of the panel as we tested. I don't think CTDA is the issue for us going forward. I don't think there'll be a lot more of our development follow the CTDA. But it's really an IVDR issue going forward. So I don't think we need to worry too much about CTDA.
And the last one, the third part of that be the LFT self-test is a product we see which is going to go through CTDA. And look, there's a fair argument to say, well [indiscernible]? Do you really need another self-test product approved in the U.K. And our view at the moment is we've gone so far with that product. It would be a shame not to have it CTDA qualified. So I think that's the journey we're going on. That in itself isn't a short process. And again, it's almost exactly clear how long will take but we certainly would like to take that from CTDA and see how we go on. Because I think for the incremental efforts having had the product C-marked for their incremental effort, I think it's worth it to have another U.K. self-test that we could use, in the event that, that demand came back. So that's our company thinking out.
Operator
Okay. Perfect. Thanks very much, James. Do you plan to replace Edwin Snape with the new non-exec?
James McCarthy
Well, that's probably more a question for my Chairman than me, but I'll be brains to give you an answer anyway. Look, first of all, I'd like to just add my thanks to what I think James had probably big time for a service to Novacyt because I think it was outstanding. I mean, I think we've seen the business probably not the longer selling director must be closed and certain large issue of the business, and we have great support for the business. And I think at the moment, I think there's five directors. I think we'll always look for talent, right?
So such as it is a replace aid. It's more a question of what is the business need going forward. So I think if James Wakefield was here, we probably echo that, we will always look for talent, always try and keep the board refreshed. But this thing doesn't happen, obviously quickly, right? So this is something that will happen in the background.
Operator
Perfect. Thanks very much. And can you give us an update on how the business is performing in terms of geographic sales?
Steve Gibson
This is Steve. So I think I covered it earlier in the presentation. Maybe just go over it again. So in terms of 2022, the U.K. region, accounted for around 50% of our sales, and that's why we have the most boots on the ground. So there's not a surprise there. In the Americas region and Europe, excluding the U.K., both of those regions generated around 20% of our total turnover. And then the balance was from Asia Pac, Middle East and Africa. And when you look at our Q1 sales 2023, the total about £1.7 million, it's broadly a similar geographic split as well. So it continues to trend at 2022.
Operator
Perfect. Thanks very much, Steve. Perhaps time for maybe one final question. Can you provide an update on the situation with the DHSC?
James McCarthy
Sure. I mean I have a lot cameo at this, it's obviously very tricky in terms of the score right. So I'm very general with what I can say about a live living case, which is following now is. We have shared, I think, everything with the market that we can. So we try and keep you up to date on all the milestones around the case. I mean there's a quick recap, it became a leader and came in April '22. And we now -- we updated you on this, we have a date for the court case, which is June 2024, which is a little over a year. So we've got a court date booked, and that's really the date we're working towards.
But I think I would say to everybody we will still work to resolve the case anyway we can, in advance of the court case I think brought down to still obliged to do that. And we're so willing and keen to try and come to a settlement if we could in advance. And I think -- but I think it's also important to know it doesn't really have a major impact on the data they're running in the business, right? So this isn't -- it's not a major draw on our resources. It's not a distraction for the business and an operating standard and we can pretty much just get on with our business, run our business and continue to invest.
That's important from an investor's point of view. This is not dragging us down. And look, it's always unsatisfactory. I think the answer was to DHSC, but I think you just have to appreciate a case, I guess, is not something you can really adjust the goals in public. So beyond I just said, less changes along the way, of course, we update you as we always do and we see other changes along the way, will update you as we can. Okay.
Operator
James, Steve. Thank you much for that. I think you've actually addressed all of those questions you can from investors. And of course, the company will review all the questions submitted today and perhaps the responses on the Investor Meet Company platform. But just before redirecting investors to provide you with their feedback, which knows particularly important to you both, James, could I just ask you for a few closing comments.
James McCarthy
I think the only comment is to thank people for participating in the call. Thank you for shareholders for sticking with us. This has not been an easy road. By any specialty imagination it's been incredibly volatile and a very difficult time. I hope we're starting to lay out the formal direction. I think there's some really good strength from which the business can build and sort of proven track record of developing products, which we believe we can carry forward when well-funded. So we support ourselves and I think we're in a market where there are actually more opportunities to invest. So I think we're in a good place as we go forward. We have to prove it. We know that, and we will come back in a transparent review in terms of how the business is performing as we move forward. And again, just to thank everybody for their participation today.
Operator
James, Steve. Thanks once again for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This only take a few moments to complete, but I'm sure it would be greatly valued by the company. On behalf of the management team of Novacyt, I'd like to thank you for attending today's presentation, and good afternoon to you all.
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Novacyt S.A. (NVYTF) Q4 2022 Earnings Call Transcript