Good afternoon, and welcome to the Novacyt full year results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated in the right-hand corner of your screen. Just simply type in your questions and press Send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. For the benefit of those attendees joining us from France. Now I'd like to hand over to David Allmond, CEO. Good afternoon to you.
Good afternoon. Good afternoon, everybody, and thank you for joining, and welcome to the call. I'm looking forward to covering the 2021 full year results and operational highlights. Sitting here today with James McCarthy, CFO. Without further ado, if we could go to the next slide, please, James. For the disclaimer, I won't read through it word by word, but please take the disclaimer as read. Next slide, please. Let me start by talking about Novacyt's core competencies, capabilities, which were built in the pandemic, but built prior to the pandemic.
This bench strength we have in our capabilities now from the talent across the company, the research and development organization, the manufacturing and supply chain at scale, and a globally deployed commercial team now set us in a great position for future value creation and shareholder value. Since joining the company in October of last year, we have now aligned the company around the vision for the company going forward, and we are committed to becoming a leading global clinical diagnostics company focused in infectious diseases. It is palpable in the corridors of Primerdesign and Camberley, and its sites that our purpose and mission is to protect lives, as we have done in the pandemic, from the invisible threats by enabling informed clinical decision-making through clinical diagnostics delivered in the right place at the right time.
It is with passion and pride across this company that we believe in the vision and the purpose, and I hope you see that coming through as we go through this presentation. Next slide, please, James. My background is in global roles, latterly in mid-stage growth companies, working on strategy to execution across the globe. That's why I joined Novacyt, to bring that experience and leadership into the team. It's not just about me. I'm joined here with James, a key member of the team, and you can see at the bottom of this slide our executive team who bring a huge wealth of knowledge and bench strength to the organization, and we also have a very supportive board. Most importantly, it's the broader Novacyt team, which is full of talented individuals that will bring this plan to life. Next slide, please.
With that said, I'm gonna hand over to James for the next few slides, talking around the full year results and the operational highlights. Then what I wanna do is come back and talk in some detail about the future corporate strategy. Thanks, James.
Okay. Thank you, Dave. I'm gonna start off with some of the key highlights for the 2021 results. I just picked out a few things that really underlines what Dave has been saying about the capabilities of the business. If you look at the agility and speed of innovation of the company, you know, we launched 50 new products in 2021, and pivoted the business rapidly towards private testing market. The second thing was if you look at our platform technology and instrumentation capabilities, how we launched that into VersaLab, which is a successful integration of reagents and instrumentation. If you look at our position in key markets, where we've signed new contracts with WHO and UNICEF, you know, just to underline our geographic spread.
Additionally today we're announcing that we concluded our review of Lab21 and Microgen and the strategic review. We have a proposal to discontinue those businesses at the moment. This is a real opportunity to simplify the business and increase the focus on the core molecular diagnostics platforms. Finally, a few words on DHSC. Tuesday's announcement of litigation signals a novel step in what's been a very slow dispute process. However, it doesn't change our belief that the company has strong grounds to assert its contractual rights. As you'll appreciate, we're limited in what we can say further at this time, and I'm sure there's loads of questions on that, but I think you just have to be patient with us on that.
We will continue to update you as appropriate. Just finally, I think it's important to recognize that the board is determined to carry on with the core business and to use the company's balance sheet to invest in both continued organic and M&A to support the strategic aims, so we can work as normal. If we turn to the 2021 financial highlights, I'd like to start with revenue. Group revenue for 2021 was GBP 95.8 million compared to GBP 277 million in 2020, which was in line with management's guidance. Revenue in 2021 excludes GBP 40.9 million of revenue shipped to DHSC in 2021, which became part of the contractual dispute in which we've explained earlier in the year.
Revenue from COVID accounted for 86% of total revenue in 2021 compared to 95% in 2020. There was a significant shift in 2021 revenue away from large centralized and mainly government contracts towards private laboratories. Private laboratories revenue almost doubled from GBP 28 million in 2020 to almost GBP 56 million in 2021, including over GBP 10 million with NGOs. This means that private testing accounted for 58% of revenue in 2021 versus only 10% in 2020. We also saw a more balanced geographical spread, and with the UK being less important. It accounted for 45% of revenue in 2021, which is still pretty important, but compared to 79% in 2020. Moving on to gross profit.
The group delivered an underlying gross profit of GBP 65.4 million or 68% of revenue, which is below the 2020 gross margin of 76%. Now, 2020 was a pretty exceptional year in many ways as a comparator. The two main reasons for that change were higher stock obsolescence of COVID-19 products in 2021, as variants and testing shifted rapidly through the course of the year, which required many new products as I talked about some of the innovations earlier. Also more obsolescence. You know, as some of the variants were short-lived, some of the testing regimes changed very rapidly. Some margin dilution also in 2021 as a result of increased instrument sales, as we roll out our instruments and increase the installed base.
Those gross profit figures, the underlying gross profit figures, are before taking a GBP 35.8 million exceptional charge in cost of sales in relation to the DHSC contract. There was two main elements to that as we explained earlier in the year. Just over GBP 26 million of stock provision for products the group purchased to fulfill expected demand from DHSC, which did not materialize, and GBP 6.9 million cost of sales or cost of stock which relates to product we shipped to DHSC which is now in dispute. The cost, we've taken full expense of that product. That reduces the reported gross profit to 31% or GBP 29.7 million.
If we move on to OpEx, the group operating costs fell from GBP 35.4 million in 2020 to GBP 28.4 million in 2021, just over GBP 7 million. That was mainly a result of the long-term incentive program in 2020 of GBP 19 million. If you strip that out, the underlying OpEx cost has gone up because there's been significant investment in the capabilities of the business. If I just call out two important ones, R&D investment increased threefold from GBP 1.6 million in 2020 to GBP 4.8 million in 2021. Sales, our sales and distribution effort, increased by over 50% from GBP 4.5 million in 2020 to just over GBP 7 million in 2022.
A clear focus on the front end of the business. The overall headcount of the business increased from 237 at the end of 2020 to 283 at the end of 2021. When you put all that together, we delivered an adjusted EBITDA of GBP 37.1 million in 2021, which was in line with the guidance we had given, and EBITDA margins of 39%. It means an operating profit of GBP 28 million also excluding exceptional costs. When you add in the exceptional costs, we go to an operating loss of GBP 7.8 million and an after-tax loss of GBP 9.7 million.
Just a footnote on tax, it doesn't affect 2021 tax computation, but you may see in our results that we announced that a patent was granted at the end of March, which will qualify us for Patent Box relief. Patent Box relief is all profits attributed to that patent will be taxed at a reduced tax rate. It'll be 10% rather than the 19%. We can apply that to profits back to the date the patent was filed. Even though it was granted at the end of March this year, it was filed back in October 2020. This is quite valuable for us, and it's something though that will be a carried forward credit against our tax liabilities rather than a refund.
Still highly valuable to be carried forward to the future. If I move on to balance sheet and cash at the end of December was GBP 101.7 million compared to GBP 91.8 million at the end of December, driven by the strong underlying performance. Working capital significantly reduced post the DHSC contract adjustment. Capital expenditure increased by about GBP 3 million-GBP 4 million in 2021, which is probably the highest CapEx this business has ever seen in a single year. And in the new phase of this company it's also quite a high number. That was mainly because we insourced quite a lot of production from using subcontractors to bring it in-house to protect margins.
Also spent quite a bit of CapEx in kitting out our laboratories, supporting well, both R&D product development and quality systems. Quite a lot of investment there. That was offset by a reduction in acquisition spend. I mean, we had a IT-IS acquisition in 2020 with no acquisitions in 2021. Overall, the company remains debt-free and to reiterate, in a very strong position balance sheet-wise to support M&A and organic development. Okay?
Thank you, James.
Thank you, Dave.
Okay, next slide. What I want to do in the next few slides is walk you through corporate strategy, and following on from January where we promised to come back on this very topic, I want to give you more color and detail in this next section. Starting here with the problem we face, all of us, all of you have and continue to endure a global pandemic. It's a wake-up call, in that case a zoonotic disease likely jumping between species into humans and then human to human, but it won't be the last. We've seen it with influenza. It may be something else. That, I think, has accelerated and given momentum to the diagnostics business at large in terms of innovation and deployment.
In other areas of infectious disease, which is our primary focus now, you know, antimicrobial resistance, it poses a major threat to human health as we seek to treat infectious disease with antibiotics that become redundant due to the overuse in various settings. Or climate change, where warmer climates allow vectors, mosquitoes for example, to change habitat and bring diseases into a broader habitat or geographic areas such as Zika and dengue or whether it's a protozoan like malaria. So it is what drives us. This is what Novacyt is here to do is to contribute to these challenges in global health. Next slide, please. I've put this schematic together, which is illustrative, and let me walk you through it because I think it poses some of the questions and answers on all of our minds.
If you look down the bottom left-hand corner, this organization was a GBP 10 million-GBP 15 million life science research's only business prior to the pandemic. I'm gonna give credit now to the wider team. I wasn't in the company for a large part of that period when the COVID pandemic hit. This organization delivered the first CE mark product in Europe, and then a very impressive portfolio to respond there and workflows to respond on the front line to protect lives in the pandemic. That illustrative peak and subsequent tailing down of the pandemic, it is one of our opportunities but one of our challenges. Because coming back off the response, you need a firm base business.
Therefore you see on the right-hand side of this chart two primary areas of focus for corporate strategy. Number one is build the base. What do I mean by build the base? It's build a strong foundation for growth, sustainable, predictable growth, in the future in three major buckets. Number one, in human in vitro diagnostics. I'm gonna share with you future areas of targeting in a moment in the next few slides beyond COVID-19 assays and workflow. Secondly, on the bottom you see life sciences RUO. That is the legacy portfolio of Primerdesign. We have neglected it to some extent in the last two years while all hands were on the pump to respond to the pandemic. We have a huge product range, we have the network to commercialize. We're going to revitalize that portfolio.
Instruments are intentionally in the middle here because they are integrated with either the life science portfolio where the chemistry can go through the MyGo range, for example, or integrated with our human IVD portfolio, and I'm gonna show you a workflow in a moment. The other point I would make on this slide is that sustainable growth is the engine room for innovation. Enabling us to serve outbreaks in the future, either with front-runner research use products followed by IVD products, or just because of the depth and breadth of that portfolio with primers and probes that can target hundreds of different pathogens that we have in our hands.
Hopefully this illustration gives you confidence that we in the future won't just be relying on outbreaks, but we will remain agile to respond, and we will strengthen the base. Next slide. The proof point, if you like, for the global first responder is this is not fantasy. The company has responded rapidly to outbreaks over a number of years to swine flu in 2009, to an Ebola outbreak in 2015, to a Zika outbreak in 2017, and latterly to the global pandemic with COVID-19. And as I said, we intend to continue to be agile and responsive and enhance our surveillance for such potential outbreaks in the future. Next slide, please.
The other question on my mind since day one of joining this organization, and I'm sure on everybody's mind on this call, is how do you transition from a company that by its last two years of responsiveness has become more reliant upon COVID revenues at 80% of revenues in 2021, from COVID and 20% non-COVID revenues in that year. How do you take that over the coming years to be over 90% from non-COVID related revenues and perhaps some residual COVID portfolio revenues depending on the shape of the pandemic at that point? If the product even if the disease is endemic, there's still potential for testing in the future. Really looking below on this slide, there's four buckets of driving that transition.
The first one, which we're gonna go into a bit more detail in a second, is portfolio development. We will relaunch the research facility portfolio in the H2 of this year, beginning of the H2 of this year. We are going to enhance the channels for that and revitalize the distributor networks which were built and maintained, but we need to strengthen those going forward. We're going to also leverage the COVID portfolio globally. It varies by country as to the rates of testing in different sectors. We're going to develop non-COVID clinical in vitro diagnostics portfolio and integrate our instrumentation into those workflows. As I said earlier, these portfolios talk to each other. They're not separate. They work well as one.
We are continuing to enhance our geographic reach and expansion. We have a direct presence in a number of markets now. We have a UK team, as you know. We have boots on the ground in Germany now. We have EMEA experienced leadership, and we're also covering Southern Europe now, partly through distributors, but also some direct initial presence. Beyond that, I'll show you later some of the other parts of the world where we're managing through third parties or directly some of our business. Lastly on this slide, which I'll go into further in detail later, is business development. James has already alluded to this, and we are very passionately pursuing three areas from innovation to accelerating the molecular portfolio through to strategic transactions.
I'm gonna describe that a bit more in a moment. Next slide, please. When I joined the company, I felt, and I believe the same today, with the advent of IVDR and the clinical requirements and the regulatory hurdles in the future, we better be absolutely confident in where we place our investments for organic R&D in the future. What you can see on this slide is that we've conducted extensive market research. This is a piece of primary research, secondary research, and advisory boards in order to inform where we focus in the future. I'll walk you through some of that. Here you can see the market attractiveness on the bottom axis and the elements of market attractiveness are described on the top right-hand bullet.
On the left-hand axis, would this be a strategic fit for Novacyt? Therefore, things that migrate up to the top right-hand corner of the chart and the size of those bubbles, which is indicative, are the most attractive. I'm gonna walk through some of these in just a second in some more detail. Before I do that, you might be looking at insect-borne viruses and thinking, "Well, that's actually not at the top right." Well, the reason for that is this is Western market research. This particular piece of research was done in Germany, Nordic, U.K.
It came up, by the way, but actually the reason I'm gonna show you in a minute that we're interested in panels in that setting is much more to do with our work with the WHO and the NGOs and the Southern Hemisphere concerns over arboviruses. The WHO has just launched an initiative because they see major threat from dengue, Zika, yellow fever, and the likes. That's why it's featuring low here, but it's a significant opportunity globally. Next slide, please. Let's just give that a bit more color. And I want to underline something here, that this is the initial prioritization. This is not the end, though, this is the beginning of our transition to a broadened, diversified, non-COVID portfolio.
Let me just walk through this without every last word, otherwise I, you know, I'd take up the whole time, but let me just give this some color. Number one, the most obvious adjacency for the organization is respiratory disease. This is confirmatory for us. We already have a winter panel on the genesig platform for this winter, and we'll be developing that for PROmate going forward. That then to bring in additional respiratory panels for some of the viruses mentioned here, perhaps also for atypical pneumonia and the like, is an obvious adjacency for the company. The research confirmed that's a huge opportunity for us.
The other area that was confirmatory was in transplantation, and I'm pleased to say that we already have developed the EBV, BKV assays, and the CMV is fast behind them, which is and that is the most common CMV, you know, virus in this context for monitoring the risk of organ rejection. There is a range of other viruses that we can add into the mix over time. We were on that track, and we're confirming it through our research with customers. The new areas here, GI, gastrointestinal disease, though are exciting. Very large opportunities, very significant unmet needs for us to serve. Viral GI, I'm sure you're familiar with the problems of norovirus that's rearing its head as we come back out of pandemic in schools and ships and the like.
Bacterial panels for you know bacterial GI infections. I did mention on the previous slide you know separate to this piece of primary research we've done a lot of work on with advisors and secondary research and the WHO thinking about how we support the emergence of viral vector-borne disease in developing world. We're also developing an assay there too. Let me just finish this slide on one reading out one of these quotes. There were many other quotes in the research. Let me just read one of them. "An extraction-less workflow would be great for these tests." This is referring to GI. "It would be quicker, and because there are a billion bugs I wouldn't have to worry about any decrease in sensitivity." That's from a Nordics laboratory director.
I just read that out because we heard many such comments around some of the workflow offerings that I'm gonna share with you in a second. Next slide, please. This slide hopefully gives you three key points to take away. Number one, it shows you we have a broad commercial portfolio now to commercialize, and we are doing exactly that as we strengthen our reach and our global team. Number two, it shows you that we have a deep development pipeline that we're investing in.
That pipeline, although it will take in brand new assay development because of IVDR and the clinical development needs 18+ months to bring to market, there are double arrows on some of these lines, and they're what they're there to indicate is we are not starting from scratch in all of these areas. We already have winter panel. We're late stage development with the dry formulation of PROmate for COVID-19. We have transplant assays near completion. The way to think about the IVD timelines here is we'll have a flow of new product launches over time, and as we seek to diversify away from the COVID-19 alone. The research use only, we're good to go H2 . We're just working on the primer probe relevancy to make sure they're up to date.
We're looking at the customer base. Team are gonna be redeployed and trained up with the right materials to revitalize that portfolio. We'll integrate the instrumentation where we have, you know, good to go Q Series, MyGos, and our CO-Prep recently launched, which I'm going to describe to you in a moment. Something new on this slide is we do have a partnership where we are investigating pre-proof of principle, proof of concept, a biosensor platform for future longer term potential application in point of care. Next slide, please. Back to first principles, which you'd expect from a marketing guy, is I want to know what customers need and what customers want. When we ask them that question in the recent research we've just completed, you can see they want. These are rank order.
They want performance, they want ease and convenience of workflow, they want relatively quick turnaround time, flexibility, and practicable lab logistics. When you break that out by, you know, test, assay, feature, you can see the top seven here, and I'm gonna talk about PROmate workflow in a second. Really from rank order, sensitivity, specificity, low risk of contamination, no extraction required, simplicity of the assay setup, standard reaction parameters, rapid amplification time and potential for decentralized use. Well, we have a competitive differentiated solution for ticking against those seven customer expectations, and I'm really, really excited because the one thing that I care about is serving our customers ultimately who help to protect lives. Next slide. Here we are as a workflow example.
I wanna just walk you through this because it's not about linear thinking here of assays versus instruments versus research use portfolio. It's about how this works together in a decentralized or near patient setting. Here's an example of an integrated workflow with PROmate direct PCR for medium throughput scalable solution to take diagnostics to the front line. You could take this workflow to the front line in Africa because you could put it in a VersaLab or in a briefcase with the q16, with the exception of the CO-Prep if you were going that far into the field. This is highly versatile for spoke laboratories, for maybe ward settings, private laboratories, perhaps shipping, perhaps nursing homes. This is really exciting to bring this together. CO-Prep is an automated liquid handler, simple workflow, sample stewardship.
The convenience with walkaway time for lab staff is a desirable need they've identified. We can reduce contamination and human error by deploying the CO-Prep in this workflow. Many of you are familiar on the right-hand side, that's a q32, 32-well PCR device. Rapid results, high sensitivity and specificity with a direct PCR assay such as PROmate. This workflow, I'll show you in a second, I believe is highly competitive for Novacyt to win in its chosen segments in the future. Next slide, please. Let me describe that a little bit more.
If you take a view of the market in three main segments, if I start here on the right-hand side, I do not want and we never will go head to head with the big guns. We are not gonna go fighting against Roche, QIAGEN, Abbott and Hologic. They're. They have the instrumentation, they have the assays, they serve the central labs. We actually do supply products into the central labs, and we will in the future where we see unmet need, but it's not our primary focus. Our primary focus, I'll come to in a second, but before that, think of the other side of this chart on the left-hand side where you see point of need also occupied by some key players from BioFire to QIAGEN to Roche.
In that segment where you typically see syndromic testing, low volume, low plex, high plex, low throughput, relatively high cost per test. That's not our primary focus today. We might play in that growing segment in the future if we bring our biosensor platform to bear. But today, Novacyt's workflow and its offerings sit in what we call the decentralized setting or near patient setting, where we believe we have the winning formula to be differentiated and highly competitive versus competition with the only qPCR solution. As we add menu, you know, we can really compete here.
When I showed you that workflow earlier, you could imagine, if you wanted to, you could deploy eight q32s off the back of one CO-Prep, and you could be cranking out 1,000 tests a day in a relatively near patient setting of your choosing with or without a VersaLab combination. We really can go for precision and scale on the front line. Next slide, please. I said to you earlier, I'll give you more color on the global reach of the company. Let me just walk around this quickly and give you a bit more insight. Starting in the UK, we have the direct team. We deal with UK sales, both public and private, with a direct commercial team. We've enhanced our EMEA team. We have a head of EMEA.
We have North South sales leadership, and we have enhanced our distributor network across EMEA. As I said, we're now present, for example, in Germany, which is the biggest market in the EMEA. You're aware we're present in the U.S. We manage that business through distributors, and we have the boots on the ground to manage them in, you know, in the U.S., in U.S. time. We continue to do that. The same in Latin America. We have boots on the ground. We manage our distributors proactively in Latin America. Distributors chosen for the appropriate portfolio, who know how to commercialize, whether it's RUO or IVD.
We've been highly successful, as James pointed out, in the WHO, UNICEF, NGO world, and we continue to do that, going forward, and we manage that from our global key accounts team. Similarly, it was very successful historically in APAC, and now our global key accounts team, not just instrumentation, is taking the portfolio across our APAC distributor network. This, coupled with the bench strength of talent in global marketing and commercial leadership we've brought into the company, is a growing strength of the company. Next slide, please. I also said to you earlier on that I would give you more, a bit more color on this inorganic strategy. There's not a day goes by where I don't look at opportunities on the business development side. It's an absolute priority now for the company.
James made, I think, a really, really important point I want to underline. That is we plan to deploy the capital that we've accrued to drive inorganic growth and deliver shareholder value across three main buckets. Number one, innovation. We've done it already with CO-Prep. We bought it in early, co-developed, viable product launched. We've got a biosensor platform in proof of concept development with partners now. We are looking at CRISPR. We're looking at microfluidics. We're looking at next gen sequencing. I don't know what else fits there yet, but we're going to build earlier stage innovation. If I placed all the bets on that though, that would be a long game. It might be a winning game, but therefore we have two other buckets. Number two is what we call acceleration.
That is where if we take our time, which because of IVDR and clinical development regulatory requirements to develop our own future portfolio for non-COVID assays, we can accelerate that portfolio. We've dedicated now a task force for that very purpose, seeking additional chemistry to run on our workflows, looking at extraction capability if it's required in that workflow for sensitivity reasons, because higher sensitivity comes with extraction if it's an absolute requirement, and also other devices such as lateral flow digital readers. Last but by no means least, we are very active now, proactive in seeking strategic transactions through M&A to diversify and build Novacyt for scale. Next slide, please. Let me just sum up from what I've said, and I'm gonna hand back to James for a slide before I put some closing remarks.
I hope what I've shared with you convinces you that our portfolio development now with integrated instrumentation workflows, still leveraging the COVID-19 portfolio across the world, which varies according to need, bringing in the dry formulation and so on. The pandemic's not gone, but now increasingly bringing in other assays on our platforms, PROmate and sometimes genesig. We will enhance that from a BD point of view in terms of breadth or depth of that portfolio. We do have a very comprehensive research use portfolio. We are revitalizing and relaunching, including e-commerce channel. We have that near patient capability now, which is a highly differentiated competitive moat. You know, mid-size scalable workflow, taking testing to the front line.
Impressive global reach through our team directly and through our hand-selected partners who we are enhancing the relationship and the motivation for us to commercialize our portfolios in the future. As I've hopefully convinced you, business development is at the center of the inorganic growth strategy now to supplement our organic investments. All of that gives us the right to be a global first responder. We have been one, and we will continue to be. We'll remain agile, and we have the innovation engine to contribute materially to global health. With that, I will hand to James to give us a bit more color on the 2022 and longer-term outlook before I come back to wrap up.
Okay. Thank you, David. Just looking at 2022 and beyond that. Perhaps just to start with how we got on in Q1 2022. We posted just over GBP 13 million of revenue compared to GBP 34.4 million last year. That's on a like-for-like basis. The COVID element of those sales were just over GBP 10 million this year versus GBP 31 million last year. If you do the math, that's a 67% decline, just 2/3 decline. When we talked about guidance or gave an indication in January, we were thinking of COVID sales being about 50%, so falling at about like about half 2022 versus 2021. This looks like it's accelerating faster.
Look, if that continues for the balance of the year, you're looking at a sales range between GBP 35 million and GBP 45 million, which is still, I guess, quite a wide range. COVID revenues are still very, very difficult to predict. I mean, it feels like it's gone away forever. I suspect that's not going to be the case. I think we're, you know, there's another winter comes, and things can look very different. That's our guidance at the moment. Just for clarity, that excludes any revenue from Lab21 and Microgen. I've talked earlier of our proposal to discontinue those businesses. Just to be clear, for this forecast, they're taken out of the numbers. If that proposal goes ahead, they'll be treated as discontinued for the whole of 2022.
in effect, as if they were discontinued from January 4th, 2022. Look, I think the important strategic element for us, as we go through this year and beyond, is growing that non-COVID piece. I'm not about to repeat everything David shared with you, but a lot of the elements are about, you know, trying to drive that non-COVID portfolio, whether it's organic or inorganic, you know, support. That's really the focus for 2022 and beyond. In terms of profitability, you know, we make a statement here, we will aggressively manage our costs to keep at least double-digit EBITDA for the full year of 2022.
This is a balancing act because, of course, we want to keep some investment behind the organic development and product development and all the other, you know, great things that Dave talked about. That's our commitment for 2022. If you look farther ahead, we're calling out a figure here of about, you know, we could get to GBP 100 million of revenue as a total business in five years. Just again to be clear, that doesn't include any acquisition activity. This is organic growth. Acquisitions, of course, you know, may accelerate that target, may make it bigger. I mean, acquisition is very difficult to predict, but just I think for everybody's clarity, that 100 million is an organic number. Okay.
Yeah.
Dave, I'll just hand back to you.
Thank you, James. Just one more wrap up. You've seen this slide at the beginning, but I think it's important just to round up, round off with it now. I think that there are strong foundations now in Novacyt built before and during the pandemic that allow us to drive for growth and future value creation, ultimately to protect lives in infectious disease and contribute to global health. Our vision and purpose now are clear, and we hold those with passion and pride to make those real. I think we've made it real in the past, and we can continue to do so. Now it's all about execution. It's all about disciplined execution to bring to life what I've shared with you today across the business.
That is what we're doing, and we look forward to updating you with progress on that as we go forward. With that, next slide, James. With that, I'll stop there because I suspect there may be some questions that we can address, and thank you for your attention. Q&A, please.
David, James, thank you very much for your presentation. Ladies and gentlemen, please continue to submit your questions using the Q&A tab situated in the top right corner of your screen. Just while the company takes a few minutes to look at those questions, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. David, James, as you can see, we've received a number of questions throughout today's presentation and ahead of today's event. Thank you to all the investors for submitting those. Perhaps I could start the Q&A session with this one here. Can you give further detail on your product pipeline, and how do you anticipate growing this beyond COVID-19?
Yeah. You know, hopefully I've given some of that detail in this presentation, and there's more to come. I think there's a couple of points I would make though. One is that I wanna underline the point I made about initial focus. Yes, we're gonna go broader in respiratory. Yes, we're going to develop GI transplantation, insect-borne viral panels, but I said to you that was the beginning. We are going to thereafter consider other areas of interest. They may be, and I can't tell you which ones other than they may be sexually transmitted infections, it may be urinary tract infection, it may be hospital-acquired infections, for example, you know, antimicrobial resistance issues and so on. There are so many opportunities. Meningitis is another one and sepsis. There are so many.
I don't want to embark on any further commitments until we've done more homework, but we wanted to get started on that portfolio right away. In terms of instrumentation, we've been enhancing the instruments. They're good to go. We do have to consider future instrument development, which we will do strategically or whether that's more inorganic or organic. I've flagged some of the areas of instrumentation. We're working with partners with the CO-Prep, the biosensor platform. We've got a very strong team up at Stokesley who from design to execution in the instrument space. We continue in that area.
As you all know, you know, we are a global leader in respect of research use portfolio, and we are going through the key primer and probe master mix combinations that to make sure that our research use portfolio is fit for purpose for targeting pathogens in a research context. We'll be launching that shortly. I think the best thing to say is that this is an area where we need to execute. We need to supplement with the inorganic piece, as I've described, and then we need to keep you up to date on our progress.
Thank you very much for that. The next question reads as follows: What update is there on the DHSC, and what impact do you expect Tuesday's announcement to have?
James?
Yeah, I'll take that one. I think the update really is, as I shared earlier, and I know it's a source of great frustration that we can't say more, but there are restrictions in, you know, what we can say. There's a confidential dispute resolution process which we're engaged with. I see Tuesday as just another step along the process. It doesn't change our belief that we've got strong grounds to assert our contractual rights, and it doesn't affect us in focusing on our core business, using our strong balance sheet and continuing to invest.
I understand the frustration, I understand everybody would like to, you know, get into the detail of that. I think that's all we can share, plus a commitment to continue to share with you as and when, you know, appropriate. Okay?
Perfect. Thank you very much. The next question's really around cash and asks what the primary use will be of your cash in the bank, and will it be for organic growth or M&A, and if both, what split do you anticipate?
Yeah. I think, I mean the simple answer is if we take our cash resources, that would be primarily used for inorganic, third-party acquisition and partnerships, et cetera. I mean, the growth so far, the organic, the internal resources we were funding from the business, it's been internally funded. That's been absolutely true in 2021. The commitment in 2022 to maintain double digit EBITDA margins would mean from an operating point of view, an operating cash flow point of view would also be positive. We would've funded our internal costs. That's really how we look at it at the moment. It's primarily the cash will be used for M&A and partnership type activity.
Thank you very much for that, James. Next question asks if you white label any of your tests at present, and will this be a focus of the business post-COVID-19, and if so, where do you intend to form partnerships?
Yeah, let me take that. I'll just take that question in two halves, if that's okay. One is, there's sort of inbound and outbound. Yes, we have OEM product inbound. We have a lateral flow portfolio that covers 12 pathogens, including COVID-19 lateral flow offering already under the name of PathFlow. We're not the primary manufacturer for that. As I said, we want to accelerate the molecular portfolio while we turn the machinery of our own R&D. We may see some more OEM chemistry if it's a fit for purpose for our workflows to either broaden our portfolio of menu or be front runner to our organic R&D when we may come with a preferred product or, you know, at lower costs, for example.
There's a whole piece around you know, the white label, the incoming portfolio. In terms of outgoing, absolutely we are willing and are in discussion with large corporates who approach us. There is no, you know, news today on something signed up, but we're absolutely willing to participate either through chemistry or through instrumentation or both to work with partners to, you know, to supply OEM products to them, you know, case by case. Absolutely that is an opportunity. We're in some discussions. If there's any material news on that, you'll be the first to know.
Perfect. Thank you very much for that, James. This question asks, how do you anticipate increasing institutional support in the business, and is this important to you?
I'll take that. Look, I think the first thing is to acknowledge and thank the existing shareholder base. It is predominantly retail shareholder base. I'm very conscious of there's been a lot of twists and turns along the way, so it certainly hasn't been an easy ride. I think institutional investors, yes, it's desirable. It's something that I think the strategy will attract. I think part of unveiling the strategy today, giving all future investors more certainty around where we're gonna invest our money, how big a business we think we can grow, you know, our right to succeed in the chosen areas we compete. That's part of building the strategy and the story.
you know, I think, and I hope that will attract institutional investors and reward existing shareholders, because I mean, that's clearly a priority.
Perfect. Thank you for that. In the presentation you talk about Novacyt's global capabilities. Can you give us some specifics? You highlight your capabilities in the U.S., but can you explain how these have changed in the last 12 months? Is there any update on interactions with the FDA? Thank you.
Yeah. Going back in your minds to the global slide I showed you, yeah, the U.S. we continue to do significant business in the U.S. through the distributors. We have boots on the ground. You know, one day we may be able to enhance that's in our minds to be more substantive in the U.S. But I think today for me the focus is, you know, we have CE mark products, that's the whole of the European Economic Area that they can be commercialized with limited regulatory hurdle with some exceptions. We need to make sure we optimize that, while we continue to support the US with boots on the ground, our distributor network.
We've done the same in Latin America, we've had significant business in Asia Pacific. There with our NGO and WHO successes and a dedicated team now, which we've put onto that global key accounts and Asia Pacific to drive and support those businesses, as well. In terms of the U.S. specifically, there was a question there about the FDA. While we do have, you know, emergency use approval for one product, we are pursuing it for lateral flow. In the future, you know, if we decide to invest more substantively, then of course you have to go into more, you know, appropriate clinical research, 510(k) regulatory type filings.
That's a significant time and money investment, and you'd have to have the strategy to commercialize either, you know, with partners or directly. I'm not saying today we're not gonna do that. We will, but one step at a time. Let's get the business transitioned to non-COVID reliance. Let's grow that base and then and conduct the M&A and the business development activities, and let's consider our strategic options for, you know, the next move, as it were, beyond what I've shown you today.
Thank you very much. Next question reads as follows: Historically, you've mentioned the U.S. and European markets such as that of Germany is high importance. Are these still the key targets, and what's split of revenues from ex-U.K. sales?
Germany absolutely is a key market, and we have now deployed headcount in Germany, and we're to assess how best to develop that with partners and directly. Absolutely, Germany is key. There are other key markets across Europe, obviously, that we are starting to address with that dedicated EMEA team who come with years of experience in building commercial success across the region from Europe, Middle East, Africa. I think that's well underway, but we are judicious with SG&A. You know, we're not gonna deploy huge sums of money in headcount and hope they will come. We will build one step at a time as we generate success.
In terms of contribution, you know, U.K. last in 2021 was less than half of the business, so I'm glad that we're not over-reliant on one market. You'll see that trend continue as we enhance our global revenue. Europe is 34%, and then you go down in the 10% range for Americas and then APAC, and then there's some other smaller pieces. That mix, I think you'll see U.K., as I say, come proportionally down as we grow the other areas. Europe, we're gonna really leverage the CE mark and certificates of free sale from CE mark ex Europe. Americas and LatAm, let's continue to support our distributors with direct presence managing them on the ground.
You will see that mix grow ex-UK over time.
Thank you very much. Potentially just time for one final question. Have your biosurveillance activities highlighted anything in the last two years beyond COVID-19 which might highlight a future outbreak? What split do you think there will be between base and global first responder activities?
Yeah. The biosurveillance capability we have is largely deployed to ensure our COVID portfolio is currently relevant for all variants of concern. I'm delighted to say that given, and this is the bioinformatics group and the clinical R&D team who get credit for this, since day one, our products with the ORF1ab target and other targets chosen by that specialist team remain relevant for all variants of concern, including Omicron. From a specific biosurveillance point of view, that is a strength of this company. You know, we've got a great design team. They're also freshening up the primers and probes for the multi-pathogens we can cover in the research use portfolio to make sure they are currently and relevant. I guess the broader question being asked here is around general surveillance for outbreak.
What we're gonna be doing there is pulling together in a systematic way a method of, you know, scanning through internet-based algorithms, media, social media, also scanning for third parties who focus on this. There are large organizations around the world who do this very work so that we're on the front foot of hearing of outbreaks and issues. Whether we respond to them all is more a matter for judgment, and we will instill a COBRA-like task force mentality that if something is significant and we really need to move quickly, we'll have, you know, the internal wherewithal to consider those as the company proudly has done with COVID. I don't pray for another major outbreak, but it certainly will happen at some point.
There'll be other viral disease outbreaks, et cetera, and we will be responsive. Yes, we're enhancing it, and yes, we continue with the rigorous biosurveillance on our existing portfolio.
David, James, thank you very much for addressing those questions from investors. Of course, the company will review all questions submitted today and will publish those responses on the Investor Meet Company platform. Just before redirecting investors, provide you with their feedback, which I know is particularly important to you both. David, could I just ask you for a few closing comments?
Yeah. I just wanted to close out by firstly thanking everybody who's joined this call for your time for your investments for your attention in this call. I hope we've gone a long way towards giving you some clarity on the future strategy of the company and some of our ambition, and we will work tirelessly to execute against that plan, and we will seek to update you on material information and news going forward so that you have you know the level of information you need. I'd just finish up by thanking you again and wishing you a great rest of the afternoon and day. Thank you very much.
David, James, thanks once again for updating investors today. Could I please ask investors not to close the session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Novacyt, we'd like to thank you for attending today's presentation, and good afternoon to you all.