Diaceutics PLC
Annual Report 2023

Plain-text annual report

At Diaceutics we believe that every patient should get the opportunity to receive the right test and the right therapy to positively impact their disease outcome. We provide the world’s leading pharma and biotech companies with an end-to-end commercialisation solution for precision medicines through data analytics, scientific and advisory services enabled by our platform DXRX – The Diagnostics Network ®. 01 02 03 04 Contents Strategic report Summary highlights Overview of precision medicine Overview of our services and our market opportunity Statement from the chair Our strategic goal and Diaceutics in action Chief Executive Officer transition Chief Executive Officer review Chief Financial Officer review Environmental, social and governance Risk management Principal risks and uncertainties Stakeholder engagement and S172 statement Corporate governance The Board of Directors Corporate governance report Remuneration committee report Audit committee report Directors’ report Statement of directors responsibilities in relation to the financial statements Auditors report Group financial statements Group profit & loss account Group statement of comprehensive income Group statement of financial position Group statement of changes in equity Group statement of cash flows Notes to the group financial statements Company financial statements Company statement of financial position Company statement of changes in equity Notes to the company financial statements 11 14 16 22 24 28 30 34 40 55 56 60 66 71 78 84 85 88 90 100 100 101 102 103 104 140 142 143 Strategic report 2023 was another year of strong performance and growth for Diaceutics despite it being a challenging year for the wider pharma industry. This growth demonstrates the significant value our customers place on our differentiated offering, as reflected by the increasing number of precision medicines we are working with. The good momentum we enjoyed in 2023 has continued into 2024 to date and we see many opportunities for growth both with existing and potential new customers. Ryan Keeling Chief Executive Officer Financial highlights Revenues 52% of revenues in the period were recurring 2022 : 35% Revenue Growth £23.7m 22% 2022 : £19.5m 19% on a constant currency basis Good visibility on future revenues £26.5m order book value at 31 December of £26.5 million (2022: £16.9 million), of which £12.3 million will be realised in FY 2024 Gross Profit £19.7m 18% 2022 : £16.7m (Loss)/profit before tax  (£2.4m) 2022 : £0.6m Adjusted EBITDA1 £2.4m 2022 : £3.6m Diaceutics remains debt free with cash of £16.7m at 31 December 2022 : £19.8m Gross Margin 83% broadly consistent with the prior year 2022 : 86% Continuing to scale and invest in line with accelerated growth strategy 10 11 Strategic reportDiaceutics PLC Annual Report1Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation and exceptional items.Strategic & commercial highlights Continued progress across our key value drivers and expansion of our team, further enhancing our competitive advantage as we scale the business for future growth Enhancing our lab network, data capabilities and DXRX platform • • • • Further expansion of lab network, data assets and capabilities in Europe Accelerated roll out of DXRX Signal across US markets, which identified over 500,000 patients in 2023 Enhanced platform scale and capabilities improving customer experience and service Significant technical upgrade to DXRX platform involving best in class AI Investing in our team • Leadership team further developed and strengthened - Ryan Keeling appointed Chief Executive Officer, Graham Paterson appointed as a Non- Executive Director and Jillian Beggs appointed Chief Commercial Officer. Co-founder and former CEO Peter Keeling now focussed on business development & partnership opportunities. • Q1 2024 - appointment of Ken Ruppel as VP Scientific & Medical Services and Amie McNiece as VP Marketing Strong commercial progress Current trading & outlook • • Four customers at enterprise level during 2023 (2022: Nil) Two new enterprise-wide engagements in 2024 – bringing total enterprise ARR to £9.0 million • Worked with 69 individual therapeutic brands, an increase of 23% YoY • Q1 2024 - Signed KPMG strategic alliance facilitating joint marketing • May 2024 - hosted Practice Gaps & Economic Forum in Belfast • Continued strong growth in Q1 2024 - Total Contract Value up 82% and revenues up 25% vs Q1 2023 • • Deployment of enhanced technologies across the DXRX platform delivering operational leverage • Continuing to win new business and expand enterprise-wide engagements with existing large pharma customers • Q1 2024 Adjusted EBITDA and cash in line with expectations and accelerated investment strategy to scale for growth continuing to plan • Market opportunity significant and growing, including expansion potential beyond pharma • Strong demand for DXRX insight and engagement solution products driven by customer success 12 13 Diaceutics PLC Annual ReportStrategic reportOverview of precision medicine In 2023, precision medicine continued to dominate new therapeutic introductions, tailoring disease treatment based on patients’ genetic make-up, environment, and lifestyle, aiming to deliver the right treatments to the right patients at the right time. This transformative approach contrasts with the traditional one-size-fits-all model of drug development, where medical treatments are designed for all patients with a particular disease rather than only those who the physician knows will respond well. Precision medicine, on the other hand, recognises the individual variability among patients and seeks to target treatments based on their unique genetic make-up, thereby providing the very best chance of a successful outcome. Life science companies launching new precision medicine drugs require companion diagnostic tests to identify specific genetic characteristics, a practice mandated by regulatory authorities like the Food and Drug Administration (FDA) in the US. These companion tests, often referred to as precision testing, are integral to determining whether patients will respond to a particular therapy. Diaceutics continues to champion better patient testing by linking up the knowledge of where companion tests are available and being undertaken, with the pharma company providing the precision medicine and the physician who is then able to prescribe the precision medicine that is specific for the patient. By advocating the integration of testing with delivery, Diaceutics continues to enhance patient outcomes and drive transformative change in the delivery of healthcare. While precision medicine holds great promise for the future, the current ‘middle era’ sees collaboration among physicians, labs, and the industrial ecosystem to integrate companion testing and treatment choices. Despite progress, many patients still lack access to appropriate tests and treatments, highlighting the ongoing need for innovation and collaboration in the field. Diaceutics remains dedicated to addressing these challenges alongside life science partners, working towards a future where all patients have access to the benefits of precision medicine. Traditional medicine • Radiation • Chemotherapy • Surgery nce d P a v d A e r s o nalised T r e a t m e n t Precision medicine • Genetics • • Immunotherapy Targeted therapies 14 Precision medicine benefits all stakeholders Payers Regulators Patients DX company Doctors Better outcomes for less cost Improved safety and efficacy of health technologies Increased chance of drug response or decreased risk of adverse event New market for products and expanded menu Less time needed to find optimal treatment Labs Increased testing revenue Pharma companies Reduced drug failures Reduction in development costs Reduced time to market Increased drug pricing Fewer patients required in trials Clinical trial success & approval increases 2-10 fold with a biomarker approach 2x likelihood of approval Autoimmune/inflammation 5x likelihood of approval Oncology 10x likelihood of approval Cardiovascular 15 Diaceutics PLC Annual ReportStrategic report Overview of our services Our ongoing collaboration with the world’s largest pharma companies, including 17 of the top 20 over the past 18 years, has been pivotal in supporting major precision medicine drug launches. Through our tailored suite of Insight and Engagement solutions, Scientific and Advisory Services and Scientific Engagement, complemented by our unique data and DXRX platform - The Diagnostic Network® - we continue to drive commercialisation success for these industry leaders, ultimately enhancing patient outcomes. Additionally, our reach extends beyond large pharma, as we provide crucial support to diagnostic and biotech companies, leveraging our experience and innovative solutions to facilitate diagnostic commercialisation. Our proven track record in bringing the majority of precision medicines to market, coupled with our proactive approach to overcoming commercialisation challenges, positions us as the primary partner for precision medicine commercialisation. Insight & Engagement Solutions Insight Solutions provide access to the world’s largest diagnostic testing data repository, combining multiple sources of information to build a complete picture of a patient’s diagnostic journey. Engagement Solutions allow our clients to couple our data insights and digital omnichannel marketing to maximise their therapeutic brand commercial success and market adoption. • Signal • Testing Rate Tracker • Lab Segmentation • Physician Segmentation • Lab Engage - Lab Talks and Lab Alerts • Physician Engage 16 Scientific & Advisory Services Our team of global precision medicine experts specialise in providing a range of strategy development, research and consultancy solutions enabling our clients to integrate best in class precision medicine diagnostics to their therapeutic brand and achieve commercial success. Insights • Strategy and Planning • • Market Access • Education and Content • Impact Assessment • Precision Medicine Consulting Scientific Engagement Our Scientific Engagement solutions enable our clients to accelerate the development, delivery and uptake of their precision medicines by utilising actionable insights from our real-world data to select the most appropriate scientific engagements to connect with labs and physicians and overcome barriers to therapy and biomarker adoption. Lab Report Optimisation • Ring Study • • Pharma Lab Induction Lab Training • • EQA Support What the journey with the Diaceutics team looks like Understand the market DX strategy development DX implementation Tracking Data products and professional services to understand the testing market Professional services to build a strategic launch plan Scientific & Engagement Solutions enable strategies to be executed and testing adopted Understand uptake and conversion to drive adjustments • Lab Segmentation • Strategy & Planning • Lab Engage • Signal • Physician Segmentation • Market Access • Impact Assessment • Scientific Engagement • Scientific Engagement • Testing Rate Tracker • Physician Engage • Education & Content • Pysician Engage • Lab Segmentation • Physician Segmentation 17 Diaceutics PLC Annual ReportStrategic reportDiaceutics and our market opportunity Increasing our addressable opportunity within the growing precision medicine market The total precision medicine sector is estimated to grow at 11.5% CAGR between 2021-2030 to a value of c. US$175.6 bn, driven by the increasing number of precision medicines being brought to market.1 Market estimations conducted in 2022 showed 192 precision medicine therapies available to patients, with 80 of these being oncology related and the remaining 112 falling within other sectors of the market.2 The number of precision medicine therapies receiving FDA approval has been steadily increasing over the last 8 years; starting at 15% of total FDA drug approvals in 2018, and according to the Personalized Medicine Coalition, rising to 34-35% last year.3 These numbers clearly show that the precision medicine pipeline is robust, with the total number of approvals projected to increase further in the coming years. Within this pipeline, Diaceutics estimates that 2,141 precision medicine trials currently exist for oncology, with another 3,056 trials taking place outside the oncology sector. As these trials come to fruition, it is more than possible that over 1,000 new precision medicines (including both new indications and new chemical entities) will come to market over the period to 2030. Diaceutics is ideally positioned to leverage its existing position as a trusted partner to pharma launching therapies, to scale alongside the wider market, as pharma seeks to address the circa $3bn of lifetime precision medicine revenues lost due to inadequate testing and bring its therapies to market more effectively.4 Diaceutics estimates that, on average, the pharma sector allocates a commercialisation budget of US$ 10-15m per therapy brand. Through its current range of offerings, Diaceutics has the ability to service up to $3m of that spend per year, per therapy brand. Over the next 3-5 years Diaceutics will increase its total addressable market opportunity through: • • • • • • • Diseases: Expanding outside oncology into other disease areas Products: Increasing its number of products, for example Engagement Solutions Customers: Expanding its customer base to biotech, life science companies and payers Enterprise: Further enterprise engagements with pharma Geographies: Expansion in Europe and APAC Lifecycle: Expanding into pre-launch clinical trials of precision medicine and established ‘in- market’ drugs pivoting to precision applications Substitution: Replacing established commercialisation spend with Diaceutics’ solutions As the sector scales, Diaceutics forecasts that the total addressable market opportunity for the Group will increase to approximately US$3bn by 2030, from circa US$0.25bn in 2021. n e t r c i s i o e r e m a k o l e p d i c i n W h m e Current Diaceutics addressable market $0.25bn 0.4% of total precision medicine market Future Diaceutics addressable market $3bn 1.7% of total precision medicine market $1m per brand per year $3m per brand per year Diaceutics growth opportunity Expand outside core oncology Europe and APAC Engagement solution offerings Pre-launch clinical trials Biotech, life science and payers Lifecycle management of established ‘in-market’ drugs Pharma enterprise contracts Substituting established commercialisation spend 18 19 Diaceutics PLC Annual ReportStrategic report1Precedence Research: Precision Medicine Market Size, Share, Report 2022 to 2030, April 2023.2The 192 precision medicine therapies available to patients, with 80 being oncology related and the remaining 112 non-oncology, is based on in-house analysis on data obtained from US FDA: Table of Pharmacogenetic Associations and Bioanalysis Zone: Companion diagnostics and precision medicine: an expert overview. March 2023.3 Personalized Medicine Coalition: A Strategic Plan for Advancing Personalized Medicine in 2023. March 2023.4Axis for change series 3/3. Precision Medicine Readiness Report: Unlocking the power of the diagnostic pathway. March 2023. The precision medicine challenge In November 2022, Diaceutics, alongside the Personalized Medicine Coalition and guided by an industry-wide steering committee, published a year- long study which examined clinical practice gaps associated with personalised medicine strategies in Non-Small Cell Lung Cancer (NSCLC). The Practice Gap study, published in the Journal of Clinical Oncology (JCO), analysed the diagnostic pathway to the right treatment for over 32,000 NSCLC patients and identified that remarkably, 64% of those patients received suboptimal treatment due to inadequate testing. This is represented in the schematic below. The Practice Gaps study evidences that whilst so much has been achieved in developing novel precision treatments and biomarkers in the past 25 years, so much remains to be done to align the commercialisation and understanding of diagnostic testing with that of the breakthrough treatments they enable, ensuring more patients are treated the right way and at the right time. For Diaceutics, meeting this “precision medicine challenge” creates a $3bn market opportunity as the pharma industry seeks to fix testing gaps, so that more patients can gain access to their breakthrough treatments. Patients lost during various stages of the diagnostic and treatment pathway Practice gaps Data Source CMS claim data Real-time lab data Biopsy referral Tissue and/or liquid biopsy not performed Biospecimen collection Tissue sufficiency Initial biopsy Re-biopsy Insufficient tumor Evaluation/ Pathology Test ordering Test performance Test result reporting Treatment decision Tumor load overestimation Physicians not ordering testing No results reported (QNS/TNP / inconclusive rates Turnaround time - result not reported within treatment decision window Targeted treatment not selected despite positive test result Premature treatment initiation Test performance / sensitivity 6.6% patients lost 14.6% patients lost 1.76% patients lost 18.1% patients lost 18.4% patients lost 4% patients lost 29.2% patients lost Investment case Helping pharma find patients Growth driven by customer success Significant & growing market opportunity Global pharma rapidly shifting to precision medicine to find more patients, capture lost revenue and increase profitablity. Financial strength • High margins • Recurring revenue driving order book visibility • Blue-chip customers • 3-year revenue CAGR of 23% • Fully self-funded to execute growth plans • Enterprise-wide deal’s will drive momentum Strong competitive advantage Demonstrable track record 3 Unique assets • Global network of labs • World’s largest repository of healthcare data • DXRX platform • Experts in precision medicine and diagnostic commercialisation • Proven track record of successful execution performance & growth • Embedded & trusted precision medicine partner to 17 of the top 20 global pharma Published journals SEER data 1000 Newly diagnosed NCSLC patients potentially eligible for targeted therapy QNS, quantity not sufficient; TNP, test not performed. 356 (64.4%) Newly diagnosed NSCLC patients eligible for targeted therapy tested and properly treated Compelling value proposition • For pharma, labs, physicians & patients • Platform can deliver up to $100 in additional therapy revenue for every $1 invested via DXRX • Value throughout the drug life-cycle 20 21 Diaceutics PLC Annual ReportStrategic ReportStatement from the chair I am pleased to report on another year of significant progress for Diaceutics, as we continue to meet our strategic objectives and advance towards our goal of becoming the primary commercialisation partner for pharma and biotech in precision medicine. In the past year, we announced our accelerated investment strategy which has resulted in enhancements to our data and platform technology. We have also expanded our lab network and successfully rolled out our customer experience teams and enhanced service offerings. These efforts have solidified our position as a trusted pharma partner and reinforced our competitive advantage. Additionally, we have seen increasing traction with our customers at an enterprise-wide, successfully growing our top line through the number of brands we work with, whilst also maintaining the average revenue per brand we generate. An enterprise-wide engagement is characterised by a customer deploying the DXRX solutions across three or more of the precision medicines in their portfolio, or a customer engaging Diaceutics as the primary commercialisation partner for their precision medicine. Our financial performance remained robust despite challenges in the wider pharma industry during 2023, with a 22% increase in revenue to £23.7 million in 2023, growth in future revenue visibility through our order book, and an increasing proportion of our revenue being recurring. This success substantiates our decision to accelerate the investment in the business, demonstrates the value our customers place in our offerings, and gives the Board great confidence in the Group’s continued momentum. A continued commitment to strong governance, social and environmental responsibility Driving Diaceutics’ growth is our commitment to our purpose: that every patient should get the opportunity 22 to receive the right test and the right therapy to positively impact their disease outcome. Eligible patients are not getting access to the medicines they need due to various ‘gaps’ in the diagnostic and treatment pathways. This was startling to see in our groundbreaking practice gaps study (Journal of Clinical Oncology, November 2022). Accessing data and analytics through our DXRX platform helps to overcome these gaps, so physicians can deliver the right medicine to individual patients – realising the promise and opportunity that precision medicine can deliver upon. Our purpose shapes our culture; we believe in the importance of developing our people and supporting each individual’s wellbeing and career. We also recognise the hard work of our teams in helping Diaceutics achieve its strategic goals and purpose. This was demonstrated in the results of our employee pulse survey, with 82% feeling a sense of personal accomplishment, 93% feeling empowered to excel in their roles, and 85% citing motivation to exceed expectations in their work, further underscoring our dedication to nurturing a supportive and fulfilling environment at Diaceutics. With employees operating across 16 countries, and fluent in 17 different languages, the exceptional diversity within our team at Diaceutics not only reflects our global reach, but also fuels our ability to approach challenges from multiple perspectives and embodies our commitment to inclusivity and innovation. At the Board level, we welcomed Graham Paterson as Non-Executive Director in October 2023, replacing Charles Hindson who stepped down after four years and the Board thanks him for his service to Diaceutics. At the end of the year, the successful transition of CEOs took place, with Ryan Keeling taking over as CEO and Peter Keeling, co-founder, transitioning to a corporate development role on the Board. Officer and a series of Vice President appointments during and after the year-end, ensuring we have the right structure to capitalise on the growth in our market, bringing additional expertise and leadership. Diaceutics recognises the importance of maintaining the high standards of corporate governance. We adhere to the principles of the QCA Corporate Governance Code (the “QCA Code”) and will be reporting against the new 2023 QCA Code next year, in respect of the Group’s financial year-ending 31 December 2024. To ensure that the Group is operating to its highest level, we have rigorous processes in place to assess the effectiveness of the Board and its committees and assess how our standards can be improved. I am especially pleased to see us publish our first Streamlined Energy and Carbon Reporting (SECR) report in our annual report. As a board, we take environmental issues seriously and have voluntarily adopted the SECR framework to allow us to better measure and improve on our carbon footprint as we realise our growth ambitions. This echoes many of our pharma customers’ own environmental ambitions and demands on their partners. Global transition towards precision medicine presents a growing opportunity As the global shift towards precision medicine accelerates, Diaceutics is well positioned to seize the opportunities presented. I am grateful to our dedicated team whose hard work has fuelled our growth, and as a result of our accelerated investment strategy, we have the infrastructure in place to deliver our solutions at scale. I am confident in our ability to drive continued progress in the year ahead. As we continue to grow, we have also looked to strengthen our senior leadership team through the appointment of Jillian Beggs as Chief Commercial Deborah Davis Chair 21 May 2024 23 Diaceutics PLC Annual ReportStrategic report Our strategic horizons Horizon 1 : DX Core Business Diaceutics will Grow & Protect its core business 70% of our annual focus Horizon 3 : RX Genuinely New Diaceutics will Explore new future growth opportunities 10% of our annual focus Horizon 2 : DX+ Adjacent to Core Business Diaceutics will Expand its core business 20% of our annual focus We will continue to build infrastructure to deliver our solutions at scale in our target markets of US, EU5 leveraging our fully developed DXRX platform. We will build and deliver our DX+ Solution which joins the diagnostic (DX) journey to the treatment (RX) journey. By year-end 2025, we aim be ready to explore genuinely new business, expanding our core business by leveraging our DX and RX suite of services and solutions. This includes: Further enriching our data and platform products Accelerating the growth and engagement of our lab network and platform- based community Investing in platform scale and capability including automation and AI Transforming our customer experience and service Our strategic goal By the end of 2025 we will be positioned to be the primary commercialisation partner for life science companies launching a precision medicine. We will leverage our core expertise, underpinned by all of our data insight solutions, to find patients eligible for a personalised therapeutic intervention. This ability will be a significant disrupter to established drug commercialisation routes, enabling biotech to launch their own drugs and therapies without the significant upfront investment required in established commercialisation routes, enhancing their return on capital invested in developing the new therapeutic. 24 25 Diaceutics PLC Annual ReportStrategic reportDiaceutics in action Signal is one of Diaceutics’ most important products as it incorporates the DXRX lab network, access to unique real-world data, Diaceutics’ precision medicine expertise and the DXRX platform technology into a powerful just-in-time, actionable, alert to pharma that patients have been tested and are eligible for treatment with a specific personalised therapeutic. Signal alerts pharma to a potential physician who is seeing a patient eligible for their therapeutic brand, during the window that the patient treatment decision is being made and allows pharma to educate the physician around available treatment for therapies in- market, or recruitment onto a therapy clinical trial. Signal identifies suitable patients and helps pharma bridge the largest precision medicine practice gap, aiming to ensure that patients receive the right treatment choice for their disease, thereby maximising pharma’s return on investment. While various factors may impact treatment decisions, Signal strives to optimise precision medicine outcomes. In the case detailed for a pharma customer of Diaceutics with a drug specialising in a rare lung cancer genetic mutation, the customer was able to get a return on investment of $350 for every $1 spent with Diaceutics. The impact Signal had on identifying incremental eligible patients from the point Signal was engaged is stark, effectively doubling the patient pool and addressable market for the pharma customer. The challenge Due to the rarity of certain biomarkers, the identification of eligible patients is challenging. It was critical for the client to maximise the impact of its therapy within the US and accelerate trajectory to peak therapy sales. 494 labs supplying weekly data DXRX Platform Supporting the earliest identification of potentially eligible patients The result: pharma ROI The average sales revenue generated by the client’s therapy in the US was ~$220k per patient. The anticipated return on investment for DXRX Signal was $350 for every $1. The situation A pharma client needed to locate patients with a specific lung cancer mutation so they could smart target physician and sales rep interactions. 26 Helping pharma find patients Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 Week 17 Week 18 Week 19 Week 20 Week 21 Week 22 Week 23 Week 24 Week 25 Week 26 Week 27 Week 28 Week 29 Week 30 Week 31 Week 32 Week 33 Week 34 Week 35 Week 36 Week 37 Week 38 Week 39 Week 40 Week 41 Week 42 Week 43 Week 44 Week 45 Week 46 Week 47 Week 48 Week 49 Week 50 Week 51 Week 52 Patients found Patients found with DXRX Client engages DXRX signal 0 20 40 60 27 Strategic reportDiaceutics PLC Annual ReportCEO transition On 26 September 2023, Diaceutics announced that Peter Keeling, co- founder and CEO of the company for 18 years, would transition from his role as CEO on 1 January 2024. Peter continues to serve on the Board as an Executive Director, focusing on accelerating Diaceutics’ corporate development and further strengthening Diaceutics’ leadership position as the primary partner for pharma companies as they seek to commercialise the new generation of precision medicines across a range of disease areas over the coming months and years. Since co-founding Diaceutics in 2005, Peter has guided the company’s evolution from a niche consulting service provider to a high margin, high growth diagnostic commercialisation platform, now serving 17 of the top 20 global pharma companies, with operations spanning Europe, North America and a network of around 1,000 labs worldwide. On the same day, Ryan Keeling, then Chief Innovation Officer, was appointed CEO Designate and officially assumed the role of CEO on 1 January 2024. Ryan, who joined Diaceutics in 2006 and became a member of the Board upon its IPO in 2019, brings over 17 years of expertise in diagnostic commercialisation. He is the architect of the Company’s data capabilities and DXRX platform, driving its technology advancements and product innovation. I am deeply honoured to take on this new role. Peter’s visionary leadership has laid a strong foundation and I’m committed to building upon it alongside our exceptional team and ground-breaking technology. Ryan Keeling Chief Executive Officer 28 29 Strategic reportDiaceutics PLC Annual ReportChief Executive review Business and strategic overview Transformational year I am delighted to present my first set of results as CEO of Diaceutics. These results are validation of the market opportunity that Diaceutics is pursuing, and I am excited to continue to build upon this success, further establishing Diaceutics as the primary commercialisation partner for all life science companies launching precision medicines. The past year has marked significant progress and strong financial performance for Diaceutics. Our accelerated investment strategy is yielding results, evidenced by in our revenue growth and increasing proportion of recurring revenues, which enhance revenue quality and visibility. Simplified model At the start of the year, we outlined our accelerated investment strategy bringing focus to the business across our 4 value drivers - as depicted in our simplified model. We remain resolutely driven by our purpose; ensuring every patient should get the right test and the right therapy to positively impact their disease outcome. This shapes the strategic decisions we make. o r k Lab N et w O u r T e a m D a t a X Platform R D X Simplified model Lab Network Our Team Expanding our lab partner network has empowered labs to improve the patient diagnostic and treatment journeys. We have augmented our lab networks and datasets, with 941 labs now across 55 countries. Over the last year, Diaceutics has produced and promoted a range of exciting content to engage these labs and encourage a beneficial two-way relationship. At Diaceutics, our purpose – to ensure each patient receives the right treatment – guides every endeavour. Our team’s dedication has been instrumental in driving significant progress, and it has been a privilege to work alongside them in various capacities within the organisation. Investing in our people remains a priority. We have strengthened the team significantly through recruitment and investment in training and development. At a senior leadership level we have recruited a number of Vice Presidents across the business enhancing our industry expertise and supporting our strategic growth. Data DXRX Platform Our competitive advantage continues to be reinforced through our unrivalled depth of data. The expansion of our data supply network has significantly augmented our data coverage particularly in the US market, and the launch of daily alerts via DXRX signal in August 2023 is a ground-breaking innovation which provides Diaceutics’ customers with close to real time data that can be used to identify patients eligible for therapy prescription or clinical trial. To solidify our market leading position, we continually enhance our capabilities. Development of new functionality for the DXRX platform, including patient level linkable data, generative AI (Diaceutics Large Lab Model, DLLM), and comprehensive US datasets that include data on social determinants of health, underscores our commitment to innovation. The deployment of generative AI in the form of Diaceutics’ Large “Lab” Model has enabled the platform to ingest large unstructured data sources from multiple sources on a daily basis, where it is sorted, labelled and communicated on to customers as insights within 24 hours. This technology advancement enabled the launch of daily signal in 2023 and empowers Diaceutics’ customers with even timelier insights, allowing healthcare professionals to be engaged precisely during the treatment decision window and ensuring the most effective drugs or therapies are offered promptly to patients. The successful launch of new subscription offerings and the securing of six enterprise-wide engagements to date align with our objective to transition larger customers onto the DXRX platform, driving platform- based subscription contracts. 52% revenue is now subscription based, with ultimately, 70% of our business expected to be subscription only and platform enabled by the end of 2025, with peak adoption expected to reach 80% two years later. Crucially, we are seeing increasing traction for our enterprise-wide engagements, which offers Diaceutics a significant opportunity to scale. 30 31 Strategic reportDiaceutics PLC Annual Report Our team’s dedication has been instrumental in driving significant progress, and it has been a privilege to work alongside them in various capacities within the organisation. Ryan Keeling CEO Financial performance Strategy validated by strong financial performance Business momentum has continued throughout the year, driven by further DXRX platform adoption by large pharma customers. Increasing both the number of therapeutic brands we work with and the average revenue per brand has allowed us to capture a greater share of customer budget. We worked with 44 customers during the year, adding 13 new therapeutic brands in 2023, and we have increased our average revenue per brand to £0.38 million up from £0.35 million in 2022. Revenue grew 22% to  £23.7 million in 2023 (2022: £19.5 million), 19% on a constant currency basis, with 52% of revenues in the year being recurring (2022: 35%). 72% of revenues were DXRX platform enabled, and our continued progress towards becoming a recurring revenue business is supported by our newly introduced metric of Annual Recurring Revenue (ARR) of £13.7 million as at 31 December 2023. Our robust order book, totalling £26.5 million at December 31, 2023, represents 57% growth in the year (FY 2022: £16.9 million). £12.3 million of the order book will be realised as revenue in FY 2024. The six enterprise-wide engagements secured across 2023 and Q1 2024 have an Annual Recurring Revenue (ARR) of £9.0 million. An enterprise-wide engagement is characterised by a customer deploying the DXRX solutions across three or more of the precision medicines in their portfolio, or a customer engaging Diaceutics as the primary commercialisation partner for their precision medicine. All six current enterprise- wide engagements are with top 20 global pharma companies, and are on auto-renewal contract terms with contact lengths between 12 and 36 months. We are committed to continuing to invest in the expansion of our key value drivers, and our strong balance sheet means we are fully funded to deliver significant growth in line with our strategic roadmap. Our cash at 31 December 2023 was £16.7 million (FY 2022: £19.8 million) and we continue to have no debt. available to Diaceutics is significant and continues to grow. Furthermore, recent collaboration with strategic partners has deepened our understanding of the competitive landscape and has served to validate our unique value proposition and superior market offering. Our success in 2023 and the sustained positive momentum in 2024 to date gives the Board confidence in current market estimates. Ryan Keeling CEO 21 May 2024 Market opportunity Growing market opportunity and reach The rapid expansion of the precision medicine market offers significant opportunities for Diaceutics. As global pharma intensifies their focus and dedicates more resources to this field, aiming to improve patient access, capture lost revenue and increase profitability. Diaceutics is well-positioned to capitalise on these trends. Despite their best efforts, we estimate that pharma is still losing up to US$3 billion¹ of lifetime precision medicine revenues due to inadequate testing. This underlying market strength, combined with pharma’s potential diagnostic commercialisation budget of US$10-15 million per brand, reinforces Diaceutics’ growth ambitions. We are committed to scaling by expanding the number of brands we work with and increasing the average revenue per brand. Capturing the opportunity The Board is confident that Diaceutics has the right offering and competitive advantage to capitalise upon the growing market opportunity. Peter Keeling’s increasing involvement in a corporate development role underscores our commitment to accelerating growth through wider industry partnerships. With our infrastructure investments (our platform, people and lab network) largely complete, we are poised for the next phase of growth, extending our market reach through partnerships and sales and marketing initiatives. Our recent strategic alliance with KPMG, exemplifies our commitment to expanding our commercialisation solutions to life science customers launching precision medicine. The strategic alliance will combine Diaceutics’ and KPMG’s extensive knowledge, expertise and industry reputation, and enable Diaceutics and KPMG to engage their life science customers, through a new sales channel, and with a broader and more comprehensive range of precision medicine services. Quarter 1 2024 trading We are pleased to have seen positive progress in Q1. Notwithstanding the cautious spending of the pharma industry due to macroeconomic concerns observed during 2023, recurring revenues are growing, fuelled by strong demand for our Insight and Engagement Solutions. The Total Contract Value (‘TCV’) of contracts signed grew 82% to £7.3 million and revenues grew 25% to £5.0 million (vs. Q1 2023). The Adjusted EBITDA and cash in Q1 2024 are both performing in line with Diaceutics’ accelerated investment strategy and management expectations. The net headcount increase was 9 between 31 December 2023 and 31 March 2024. The growing demand shows the underlying strength of the market and validates our accelerated investment strategy, and we are confident in sustaining this momentum as we turn our focus to extending our reach through increased sales and marketing activities. We have further strengthened our senior leadership team. In February, Ken Ruppel was appointed Vice President of Scientific and Medical Services, to lead the expansion of our current offering and the development of innovative solution in precision medicine. Most recently, Amie Mc Neice has been appointed Vice President of Marketing, to oversee our three-year marketing vision, brand position, messaging and integration of marketing automation, as part of Diaceutics’ drive to scale its marketing capabilities in the US and Europe. We have also further solidified our central position within the precision medicine industry, announcing in April the formation of our landmark Economic Forum, composed of leading experts in the industry, aiming to urgently address the specific economic gaps limiting the advancement of precision medicine, which is synonymous with our purpose. Outlook Diaceutics continues to grow the number of precision medicines it is working on and is seeing continued strong demand for its insight and engagement solution products from customers, which is in turn, driving order book growth and increased recurring revenues. The importance and positioning of precision medicines in global pharma and biotech drug asset portfolios is maturing as they seek to improve patient access to therapies, capture lost revenue opportunities and increase profitability. As a result, the market opportunity 32 33 Diaceutics PLC Annual ReportStrategic report1 The US$3 billion of lifetime precision medicine revenues lost and US$10-15 million commercialisation budget for pharma are estimates based on Diaceutics market data.  Chief Financial Officer review Diaceutics has delivered another year of strong revenue growth and financial performance in line with market expectations, against the backdrop of a challenging year for the pharma industry and supporting technology and service companies. Despite these headwinds, Diaceutics posted top line growth of 22% in 2023, has a three-year Compound Annual Growth Rate (CAGR) of 23% and recurring revenues of over 50%. The progress Diaceutics continues to make against its strategy, teamed with the growing pharma market demand for data led insights, ensures that the opportunity available to Diaceutics is larger than ever and growing. Accelerated investment strategy With cash flow breakeven achieved in 2022 and a strong balance sheet at the start of 2023 with £19.8 million of cash and no debt, the Company announced its accelerated investment strategy in January 2023. This investment strategy is designed to support the Company’s future revenue and profitability growth, positioning the company as the primary precision medicine commercialisation partner for the global pharma and biotech industry. To fully capitalise on this opportunity, expedite the introduction of additional data offerings to the market, and maintain its first-mover advantage, the Board decided to accelerate and enhance the Company’s investments in data and products, platform capability, and operating model over a two-year period, spanning 2023 and 2024. The total net cash investment was expected to be approximately £7.0 million over the two year period, whilst preserving a robust minimum cash balance of approximately £12.0 million throughout – we are in line with both these metrics. 34 These investments primarily target data acquisition, greater platform functionality, AI capabilities, product innovation, lab network and sales and marketing teams. They are poised to bolster mid-term revenue growth, accelerate the transition towards recurring revenues, and enhance the Group’s scalibility. The Group anticipates that this investment will result in a reduction in EBITDA margin, but remaining EBITDA profitable throughout the two-year investment period. As expected and outlined, the accelerated investment strategy has progressed in line with plans during 2023, and to date during 2024. Notable highlights are: Continued growth in the number of enterprise-wide engagements– six announced to date Improved data coverage and AI automation of data feeds in the US, EU and UK Enhanced Real World Data (RWD) products – daily, linkable, patient level insights The KPMG strategic alliance Alongside these achievements, Diaceutics maintains its position as a pioneering thought leader within the precision medicine sector. Our recent hosting of the groundbreaking Precision Medicine Practice Gaps Economic, Policy, and Operational Solutions Forum on May 1, 2024, underscores our commitment to driving meaningful change within the industry. We look forward to sharing the insights and outcomes from this forum in the near future. KPIs and Alternative Performance Measures (‘APMs’) Alternative Performance Measures (‘APMs’) The Group’s Key Financial Performance indicators are summarised below: Non-Executive  Revenue  Revenue growth constant currency basis* Proportion of revenue which is recurring* Annual Recurring Revenue* Order book  Order book visibility for next 12 months Gross profit Gross profit margin (%) Adjusted EBITDA* EBITDA* EBITDA margin* Profit before tax Cash and cash equivalents * Alternative Performance Measures 19% 52% 13,662 26,517 12,334 19,706 83% 2,357 1,754 7% (2,438) 16,667 2023 £000’s  2022  £000’s 23,699 19,504 Change 22%  - +17 ppts 26% 35% not reported - 16,928 10,898 16,741 86% 3,583 3,583 18% 564 19,841 57% 13% 18% -3 ppts (1,226) (1,829) -11 ppts 3,002 (3,174) In measuring and reporting financial information, management reviews APMs such as EBITDA, adjusted EBITDA, revenue growth on a constant currency basis and recurring revenue, all of which are not defined measures under financial reporting standards. Management believes that these measures, when considered in conjunction with defined financial reporting measures, provide management and stakeholders with a broader understanding of the performance of the business. Operating profit is the financial reporting measure under IFRS most comparable to EBITDA and adjusted EBITDA. EBITDA is defined as earnings before interest, tax, depreciation, amortisation and certain exceptional items, but after share-based payment costs. The Directors may make certain adjustments to EBITDA, for nonrecurring or noncash items, to derive adjusted EBITDA, both measures of which they consider more readily reflect of the Group’s underlying trading performance, enabling better comparisons to be made with prior periods and industry peers. A reconciliation of operating profit to EBITDA and Adjusted EBITDA is included later in this report. Recurring revenue is calculated as the value of revenue generated from auto-renew subscription contracts as a percent of total revenue. The Directors consider this metric to be a key measure of the strength and visibility of the Group’s revenue in the period, and of the Group’s progress towards realising its near-term strategy of transitioning to a platform- based recurring revenue model. Annual Recurring Revenue (ARR) is the annualised value of revenue generated from subscription contracts with auto-renewal clauses as at a point in time. The annualisation calculation assumes that all subscription contracts expiring during the next 12 months will renew. The Directors consider and report revenue and revenue growth in the current reporting period on a constant currency basis. This is because a majority of the 35 Diaceutics PLC Annual ReportStrategic reportreaches the end of its own budget and financial years. The Company saw the second half revenue weighting reducing slightly in 2023 and expect this to continue in future years as a result of the Group’s shift to multi-year recurring revenue contracts. This transition may be impacted in the short term by the strong revenue growth rates experienced by the Company and the ‘accumulation’ effect of the recurring revenue contracts sold in the first half of the year. Scientific and advisory services (‘SAS’)(formerly ‘Advisory Services’ and ‘TES’) revenues were £6.6 million in the year, down slightly on the comparative period of £6.9 million. These services were impacted by the pharmaindustry trading headwinds, and exacerbated by slower spend due to consolidation in the industry. Despite these challenges, SAS remain a fundamental offering of the business and its end-to- end customer precision medicine commercialisation offering. Group’s customer contracts are written in US Dollars and this can result in significant changes in the Group’s performance, relative to the comparative period, based on the prevailing exchange rate in the year. Reporting the current period revenue on a constant currency basis allows stakeholders to better understand the underlying growth of the Group’s activities, before the influence of foreign currency exchange rates. ‘Order book’ is defined under financial reporting standards as the aggregate amount of the revenue transaction price allocated to customer contracts that are partially or fully unsatisfied as at the year-end and are not considered an APM. Order book is disclosed in note 4 of the Group financial statements. We continue to evolve our KPIs and APMs to highlight and evidence the financial and operational performance of the Group and its progress against strategy. Revenue growth and future visibility Revenue for the year grew 22% to £23.7 million (2022: £19.5 million), a 19% increase on a constant currency basis. The underlying organic growth has been driven through the expanded sales and marketing team, account team structures and investment in insight solution delivery systems. Revenue growth has been especially strong within the Insight and Engagement Solutions (‘IES’, formerly ‘Data’ and ‘TES’), growing 36% to £17.2 million (2022: £12.7 million). The IES platform-based solutions now represent 72% of all revenues – a transition which has been achieved in just three years since the platform launch and a standing start in 2021. Scientific and Advisory Services (‘SAS’, formerly ‘Advisory Services’ and ‘TES’) revenues were £6.5 million in the year, down slightly on the comparative year of £6.9 million. These services were impacted by the pharma industry trading headwinds, and exacerbated by slower spend due to consolidation in the industry. Despite these challenges, SAS remain a fundamental offering of the business and its end- to-end customer precision medicine commercialisation offering. As well as achieving impressive overall top-line growth in the year, the Company continues to enrich the quality of its earnings with 52% of all revenues now being recurring (2022: 35%), and the visibility of its earnings with the order book at 31 December 2023 growing 57% to £26.5 million, up from £16.9 million at December 2022. Order book represents the value of future contracted revenue yet to be realised, and in terms of visibility for 2024, stood at £12.3 million, giving coverage of approximately 42% of the consensus guidance revenue forecast for 2024. The Total Contract Value (TCV) secured in the year was £35.9 million, a relatively modest increase on the value of contracts secured in the prior year of £34.3 million. The lower TCV growth in 2023 highlights the importance of the Company’s accelerated growth strategy, specifically the need to investment in more sales and marketing capacity and establish additional sales channels with our existing and new customers. The Group’s customer base is heavily weighted towards blue-chip pharma companies, with 88% of revenue generated by customers based in the USA (2022: 74%). The Group worked with a total of 44 customers during the year (2022: 43) across 69 therapies (2022: 56). The group has increased its average revenue per brand to £0.38 million, up from £0.35 million in 2022, and continues to increase the value of addressable lifetime therapy brand spend secured with 37 brands with lifetime brand spend over $1 million (£0.8 million) (2022: 26). The Group continues to see a higher weighting of revenue, and therefore profitability, in the second half of the financial year. In 2023 the revenue weighting first vs. second half of the year was 42:58 compared to 38:62 in 2022. This weighting has historically been driven by the pharma industry’s propensity to spend more of its budget in the second half of the year, particularly the fourth quarter of the year, as it The table below sets out the revenue split between the key solution offerings: Insight and Engagement solutions Scientific and Advisory service 2023 £000’s  17,150 6,549 2022 £000’s 12,653 6,851 Total revenue 23,699 19,504 Change 36% (4%) 22% Investment in customer service, scale and capacity During 2023 the business focused on delivering against its investment priorities, all of which are key to enabling our future growth and scale. Specifically our investment focused on, and delivered: Investment focus Enrich data and platform products Accelerate growth and engagement of the lab network and platform-based community Invest in platform scale and capability Transform our customer experience and service through customer account teams Delivered in 2023 and 2024 to date Enhanced Real World Data (RWD) products: Improved data geographical and therapeutic area coverage, Daily Signal launched, linkable datasets and European Signal development progressing. Broadening the lab network and relationships and launched first US virtual lab conference Strengthened data supply chain. Enhancing platform functionality and AI capabilities. Launched My DXRX platform iteration for network stakeholders. Seven account teams with a project manager, data analyst, precision medicine expert and key account manager in each team. 13 brands added during the year. Six enterprise-wide engagements with top 20 pharma. Work with 17 of the top 20 pharma. 36 37 Diaceutics PLC Annual ReportStrategic reportThe table below sets out the reconciliation of operating profit to EBITDA and Adjusted EBITDA: 2023 £000’s  2022  £000’s Operating profit (3,018) 575 Depreciation & Amortisation 4,772 3,008  EBITDA 1,754 3,583 EBITDA margin 7% 18% Adjustments for: - US sales tax provision 603 - Adjusted EBITDA 2,357 3,583 Adjusted EBITDA margin 10% 18% tax costs would usually be charged to customers, recovered and remitted to the relevant US state authorities with no impact to the costs of the Group. However, because the Company had not historically registered for sales taxes in certain states, the related costs could not be charged and recovered from customers. As such, the Company is in the process of disclosing this historic position to the relevant state authorities and will settle this liability during 2024. Future sales taxes arising on sales in these states will be charged to customers, recovered and remitted with no significant further impact to the costs of the Group. The Adjusted EBITDA of the Group is £2.4 million, an Adjusted EBITDA margin of 10%, after removing the one-off US sales tax costs incurred. There were no adjusting items included in Adjusted EBITDA in the 2022 year. Profit before tax reduced £3.0 million from a profit of £0.6 million in 2022 to a loss of £2.4 million in 2023. As described above, much of the reduction in profitability was driven by the investment the Company has made in its customer service, scale and capacity initiatives and the one-off US sales tax costs. In addition, the amortisation costs have increased year on year from £2.7 million in 2022 to £4.5 million in 2023, this increase being primarily driven by a change in the estimated Useful Economic Life (UEL) of the data assets from four years to three. Further details regarding this change are included under the ‘Financial Strength’ section. The additional investment undertaken by the business in people saw the headcount increase from 151 at December 2022 to 184 at the end of December 2023, growth of 22% and in line with the top-line growth of the business. The investment in people is critical at this stage to service the recurring revenue model, unlock the business growth opportunity and build scale through technology deployment. The increase in headcount was across people in customer service and delivery teams, platform technology teams and the breadth of senior management (Vice Presidents). EBITDA and profit before tax performance The Group generated an EBITDA of £1.8 million at a margin of 7%, behind that of the prior year at £3.6 million and a margin of 18%. The adjusted EBITDA in 2023 was £2.4 million at a margin of 10% vs. £3.6 million and 18% in 2022. The Company remains EBITDA profitable but has experienced a drop in profitability as a result of the deliberate and measured investment in its customer service, scale and capacity initiatives. The Company continues to invest in its platform development with the overall spend remaining similar year on year, but the value of development costs which are expensed through profit and loss rather than capitalised has increased from £0.2 million in 2022 to £1.0 million in 2023. The intensity of development costs being capitalised will continue to curtail over the coming years, instead being expensed to profit and loss as the business matures. The drop in profitability during 2023 and forecast in 2024 is in line with the accelerated investment strategy communicated to investors in early 2023 and will allow the mid-term rate of revenue growth to increase, accelerate the continued shift towards recurring revenues and to improve the future scalability of the Group. In addition, included within EBITDA in 2023 are one-off US sales tax costs of £0.6 million, which the business has accrued as a liability as at 31 December 2023, but which related to 2023 and prior years. These sales 38 Financial strength At 31 December 2023, the Group reported a strong net asset position of £40.8 million (2022: £42.5 million), with cash and cash equivalents of £16.7 million (2021: £19.8 million) and no debt. During the year, the Group invested in its customer service capabilities, platform development and its data repository. Platform development spend, in the form of technology stack capacity and scale, was £2.0 million of which £1.0 million was capitalised in the year (2022: £2.6 million of total platform development spend of which £2.4 million was capitalised). The intensity of platform development has remained relatively consistent with comparative periods. In line with the continued investment in DXRX platform capacity and scale and as set out in our accelerated investment strategy, the proportion of development costs which are capitalised has decreased from £2.4 million in 2022 to £1.0 million as the platform reaches maturity. As planned and set out in our accelerated investment strategy, the volume of data acquired in 2023 significantly increased resulting in data expenditure of £3.6 million compared with £2.2 million in 2022. The increased data investment has been in sources identified through our lab network and existing data supply chain and has enabled us to procure richer, more unique and more timely data, over a wider geographical spread. We expect this level of data expenditure to continue and more proportionately increase in line with Insight and Engagement Solution (IES) commercial engagements. During 2023 the business updated the estimated Useful Economic Life (UEL) of its data assets from four years to three to more accurately reflect the weighted average timeframes of the data commercial and internal use cases. No data assets were impaired and the change of estimated UEL is a prospective change in amortisation rates from 1 January 2023. The business will continue to monitor and adjust accounting policies and estimates as required. The financial strength of the Group is underpinned by its strong cash reserves, £16.7 million at 31 December 2023. During 2022 the business moved to a position of overall cash flow generation, a pivotal moment which unlocked the confidence in accelerating the investment strategy through 2023 and 2024. Through 2023 the cash received from operations were £0.6 million (2022: £3.7 million). The free cash flow (Net cash inflow from operating activities less capital expenditure less the payment of lease liabilities) for the year was an outflow £3.7 million, a reduction on 2022 which saw an inflow of £0.1 million. The free cash outflow is predominately driven by the increased level of data acquired (up from £2.2 million in 2022 to £3.6 million in 2023) and increased operating cash outflows in customer service, scale and capacity initiatives. After 2024, the growth in operating costs will start to curtail, realising greater levels of profitability and free cash flow, but levels of data acquisition are likely to stay around £5.0 million annually, but subject to business data utility demands. The Group maintained an undrawn multi-currency Revolving Credit Facility for £4.0 million with its primary bank, SVB UK, until it expired in July 2023. Negotiations had progressed with multiple providers to renew the facility in July, however the Board agreed that the advantages of the facility were outweighed by the costs of the facility and the Group’s continued access to its own substantial cash reserves. Outlook While the pharma industry remains cautious in response to macroeconomic concerns and political pressures in the form of drug-pricing policies, Diaceutics continues to grow the number of precision medicines it is working on and is seeing continued strong demand for its insight and engagement solution products, which is in turn driving order book growth and increased recurring revenues. The market opportunity available to Diaceutics is larger than ever and continues to grow at pace as global pharma accelerates the shift to precision medicine to improve patient access, capture lost revenue and increase profitability. The successes of 2023 and the sustained positive momentum in 2024 serve to validate the Group’s growth strategy. Nick Roberts Chief Financial Officer 21 May 2024 39 Diaceutics PLC Annual ReportStrategic reportEnvironmental, Social and Governance At Diaceutics, we are committed to minimising our environmental impact and promoting sustainability across all facets of our operations. 40 Environmental Environmental objectives and practices We maintain clear objectives aimed at reducing our environmental footprint and prioritise engagement with suppliers who share our vision and aspirations. These objectives are regularly reviewed to ensure their consistent application throughout our operational activities and strategic plans. Our sustainable headquarters In 2021, we established our new Company headquarters at Dataworks in the Kings Hall Health and Wellbeing Park in Belfast. Our building boasts an “A” rated energy certificate and utilises renewable energy sources for 58% of its electricity consumption. This location provides direct proximity to Belfast’s major hospitals, universities and innovative medical research facilities, and we are already seeing the benefits of the location as a thriving data hub enabling data analytics companies, medical professionals and patient centric groups to collaborate in this shared space. Research groups and healthcare companies have the option to co-locate alongside Diaceutics or collaborate with our team of highly qualified experts. Through a joint collaboration agreement, they can gain access to our global data repository. Accumulated over the last decade, Diaceutics’ precision medicine data repository provides unparalleled access to in-depth analysis of a vast array of records. Recycling initiatives We actively promote recycling initiatives within our headquarters, providing resources such as DXRX drinking flasks, boiling hot water taps, and low flush toilets. Our facilities management partner, CBRE, facilitates regular recycling of confidential waste-paper with secure recycle bins located externally. Operational carbon footprint While we recognise the importance of minimising our environmental impact, we also acknowledge the necessity of face-to-face interactions with clients. We strive to balance environmental responsibility with meeting client needs, promoting digital communication channels and virtual meetings where possible while recognising the value of in-person engagements. Ecovadis Silver Award The ESG expectations of our global pharma customers are expectedly high. On winning our largest enterprise- wide engagement in June 2023 we have embarked on a journey of active participation in webinars, comprehensive questionnaires, and gap analysis to assess our ESG performance relative to industry peers and our customers desired benchmarks. This effort has enabled us to better understand the expectations set by larger corporations like global pharma, and strengthens the progression of our overall strategic direction. The centrepiece of our progress is our engagement with the leading ESG benchmarking company, Ecovadis, who awarded us Silver status in June 2023, positioning us in the top 78th percentile among companies of our size. Achieving Silver status underscores our dedication to sustainable practices and responsible corporate citizenship. This achievement is not just about the recognition of our ESG efforts; it is also about the tangible impact on our business and society as a whole. By undergoing rigorous assessments and benchmarking, we have gained a clearer understanding of our strengths and identified areas where improvement is needed. This insight empowers us to make informed decisions and channel resources towards initiatives that align with our values and corporate goals. As we continue on our ESG journey, we are not only enhancing our reputation, but also making a positive impact on the environment, society, and the economy. Our ESG initiatives and progress has taken significant strides forward in the past 12 months and we are committed to ensuring that as a company we continue 41 Diaceutics PLC Annual ReportStrategic reportto practise responsible corporate practices. We will continue to build upon the momentum that we have started in 2023, continually raising the bar for our ESG endeavours, and setting an example for other businesses to follow. Future reporting and targets We remain committed to tracking and reporting our energy consumption and carbon emissions through initiatives such as the Streamlined Energy and Carbon Reporting (SECR) and the setting of near term science based targets on the Science Based Targets Initiative (SBTI) platform. These efforts reflect our ongoing commitment to environmental stewardship and sustainability, aiming for continuous improvement year upon year. Streamlined Energy and Carbon Reporting (SECR) 2023 Diaceutics has elected to adopt the requirements of scope 1, 2 and 3 greenhouse gas (GHG) emissions in accordance with the SECR framework ahead of the statutory requirement to do so. The report includes Diaceutics’ stated emissions for the most recent reporting year, the 12 months from 1 January 2023 to 31 December 2023. As this is Diaceutics’ first SECR submission, no prior year comparative data has been included. Methodology Diaceutics is responsible for the internal management controls governing the data collection process and any estimations or extrapolations and has utilised the services of Green Element Limited and Compare Your Footprint Limited, third-party experts on SECR, to aid with the GHG calculations and the resultant emissions statements. Greenhouse gas emissions were calculated according to the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard. This standard is internationally accepted as best practice. Scope and subject matter The boundary of the report includes all UK-based sites which were operational during the reporting period. The only UK site during the year was the Dataworks headquarters in Belfast, Northern Ireland. Key 2023 metrics: Belfast HQ Refrigerant Gas R410A 64.3kg 42 Belfast HQ Water Supply 76m3 Flights 1,209,132km - 6,363km p/FTE C02 Emission = 338,275kg Belfast HQ Electricity 176,718kWh - 58% Renewable Energy Operational Waste - General Waste 1.533 tonnes Paper/Cardboard 1.025 tonnes Rail 6,961km - 36.63km p/FTE C02 Emission = 282.32kg Energy and GHG sources Included in the process Diaceutics Streamlined Energy and Carbon Report 2023 Diaceutics’ following activities and associated GHG emissions have been included: Scope 1: Site consumption of natural gas. Scope 2: Purchased electricity (location-based* and market- based** methods included – this way of dual reporting is outlined in the GHG Protocol Corporate Accounting and Reporting Standard.) Scope 3: Business Travel in employee-owned or hired vehicles. Indirect emissions associated with the upstream production, processing and delivery of any fuel used, and losses due to the transmission and distribution of electricity. Types of GHGs included, as applicable: CO2, N2O, CH4, HFCs, PFCs, SF6, and NF3. The greenhouse gas emissions were calculated using UK government 2023 conversion factors, expressed as tonnes of carbon dioxide equivalent (tCO2e). UK Streamlined Energy and Carbon Reporting (SECR)  Energy consumption (kWh)  Electricity  Gas  Transport fuel  Other stationery fuels Total energy consumption GHG Emissions (tCO2e) Scope 1  Combustion of gas in buildings  Combustion of fuel for transport purposes  Combustion of other stationary fuels Scope 2  Purchased electricity - Location-Based  Purchased electricity - Market-Based Scope 1 & 2  Total Scope 1+2 emissions - Location-Based  Total Scope 1+2 emissions - Market-Based Scope 3  Category 6: Business travel (in rental cars or employee vehicles where Diaceutics PLC is responsible for purchasing the fuel) Category 3: Upstream emissions from purchased fuel and energy - Location-Based  (upstream transmission and distribution losses, and excavation and transport of fuels not included in Scopes 1 and 2) Category 3: Upstream emissions from purchased fuel and energy - Market-Based  (upstream transmission and distribution losses, and excavation and transport of fuels not included in Scopes 1 and 2) Total emissions - location - based Total emissions - market - based Intensity (tCO2e/FTE)  FTE (full-time equivalent employees) EMISSIONS PER FTE - Location-Based EMISSIONS PER FTE - Market-Based Intensity (tCO2e/£m Revenue)  £ million revenue EMISSIONS PER £M - Location-Based EMISSIONS PER £M - Market-Based 2023 177,581.00 2,674.00 32,284.13 - 212,539.13 0.49 - - 36.77 27.54 37.26 28.03 9.88 12.12 8.96 59.26 46.87 184 0.32 0.25 23.7 2.50 1.98 43 Diaceutics PLC Annual ReportStrategic report* Location-based electricity (Scope 2) emissions use the average grid fuel mix in the region/country where the electricity was purchased and consumed. For SECR, location-based is mandatory. ** Market-based electricity (Scope 2) emissions use fuel mix that is specific to the purchased electricity’s supplier and tariff. Where supplier-specific fuel mix data is absent, UK National Grid’s residual fuel mix was used, in accordance with the GHG Protocol. For SECR, market-based is optional. Methodology: GHG Protocol Corporate Accounting and Reporting Standard Calculated and verified as accurate by Green Element Limited and Compare Your Footprint Limited, UK. Energy efficiency and carbon-saving measures Actions taken in 2023: • • • Establishment of sustainable Headquarters: Diaceutics continues to operate its headquarters at Dataworks in Belfast, which is a green building with an “A” rated energy efficiency rating and utilises renewable energy sources for 58% of its electricity consumption. Recycling Initiatives: Several recycling initiatives have been implemented withing headquarters, including the provision of DXRX branded water bottles, boiling hot water taps, and low flush toilets. Confidential wastepaper recycling is also facilitated externally. Future reporting and targets: Diaceutics commits to tracking and reporting energy consumption and carbon emissions through initiatives such as Streamlined Energy and Carbon Reporting (SECR) and setting near term science-based targets on the SBTI platform. Actions planned for 2024: • Electric vehicle incentive scheme • Monitor, and where possible, reduce business related travel • Cycle to work scheme Our team Employees based in 13 countries Length of Tenure 5+ years 35 0-1 year 47 1-2 years 48 3-4 years 18 2-3 years 26 4-5 years 10 Social Our commitment to inclusion and diverstiy extends beyond policies to fostering a positive working environment where all individuals are empowered to thrive and contribute. Age distribution of Diaceutics’ employees 20-29 years 30-39 years 40-49 years 50-59 years 60+ years 2% 11% 27% 22% 38% 44 45 Strategic reportDiaceutics PLC Annual Reportincorporated equality and diversity modules into our leadership training programme. Our Equality, Inclusion and Diversity Policies are integral in the onboarding process for new employees, ensuring that our commitment to fostering an inclusive environment is embedded from the outset. Employee engagement Our regular employee engagement and ‘Pulse’ surveys play a vital role in identifying the factors contributing to our success and pinpointing areas for improvement to enhance job satisfaction among our workforce. These surveys provide valuable insights into the sentiments and experiences of our employees. We are pleased to report that our overall engagement score was 82%, a figure notably higher than the benchmark data from Qualtrics for Companies in the UK, as well as the pharma, biotech and life science industry’s. This achievement reflects our commitment to fostering a supportive and fulfilling work environment where employees feel valued, empowered, and motivated to contribute their best. Our focus on our people A key enabler of our corporate purpose lies in the diverse skill sets brought together by the Diaceutics team. Our workforce encompasses various disciplines including data scientists, lab and diagnostic experts, precision medicine thought leaders and platform engineer. This diversity enables us to design and commercialise a platform which scales across diseases and countries to address the diagnostic practice gaps. We place a high emphasis on the ongoing training and team development of our employees, recording over 4,908 hours of training, averaging 29 hours per person in the company. Our Learning, Training and Development Policy offers various learning options including: • • • • Job Shadowing Job Rotation EFFECTive Leaders Programme (City and Guilds accredited) Career Coaching • Mentoring • • • Diaceutics Fly Higher Training Academy 2.0 Percipio Training Platform External Training Opportunities Inclusion and diversity In addition to overall training and development plans aimed at promoting personalised career growth and fostering leadership skills, Diaceutics places a strong emphasis on inclusion and diversity within its workforce. We strive to cultivate a supportive and inclusive work environment that prioritises well- being, equality, respect and human rights for all employees, collaborators, lab partners, clients, investors, and patients. Our commitment to equality extends to providing opportunities regardless of gender, gender identity and expression, religious belief, political opinion, marital or civil partnership status, race, age, sexual orientation, disability or dependent status. We prioritise gender diversity, with a workforce reflecting a ratio of 40% male and 60% female employees, showing a slight (54%) weighting towards women in middle and senior management positions. This balance underscores our commitment to fostering an inclusive workplace environment where all employees have equal opportunities for growth and advancement. To formalise our dedication to inclusion and diversity, Diaceutics has devised a comprehensive three- year strategy with the aim of maintaining a diverse workforce and fostering an inclusive culture that empowers our community to fulfil our purpose. To support this strategy we have implemented workplace flexibility policies and programmes, building on existing initiatives enabling employees to succeed at work while also fulfilling personal needs such as family obligations, managing health conditions or participating in educational pursuits. Our enhanced family-friendly policies facilitate a more equitable sharing of work and childcare between parents, ensuring that both can realise their full potential at work. Additionally, as a licensed sponsor under the UK Home Office’s Skilled Worker Visa Sponsor, Diaceutics has expanded its talent pool in areas facing skills shortages by sponsoring 11 employees. Given the global and diverse nature of our operations, all employees undergo a diversity training programme, the “Global Diversity Module”, to ensure an understanding and appreciation of diversity in the workplace. Furthermore, we have obtained the Northern Ireland “Diversity Mark” accreditation and At Diaceutics, I’m not just an employee; I’m part of a community driven by purpose and shared values Hannah McDonnell Diaceutics employee 46 47 Diaceutics PLC Annual ReportStrategic reportKey ‘Pulse’ survey statistics 2023: 82% 93% 85% 94% of participants agreed or strongly agreed that their work gives them a “feeling of personal accomplishment” of participants agreed or strongly agreed feel that they are “empowered to do their job” of participants agreed or strongly agreed Diaceutics “motivates them to contribute more than is normally required to complete their work” of participants agreed or strongly agreed Diaceutics “supports their wellbeing” 48 Following the completion of our employee engagement and pulse surveys, all recommendations are followed up with senior management and department leads. These discussions are instrumental in identifying actionable insights and formulating strategic responses to address the feedback provided by our employees. Moreover, we have implemented a robust group-wide Performance Management Framework (‘PMF’) that links each employee’s daily activities to our overall corporate goals. This framework ensures alignment and accountability across all levels of the organisation, fostering a culture of performance excellence. In 2023, we introduced our Engagement Playbook, a comprehensive communication tool designed to empower all employees to actively embody our Company culture and contribute to a culture of engagement. This playbook serves as a guide, outlining best practices and strategies for fostering a positive and inclusive work environment. By equipping our team members with the necessary resources and guidance, we aim to cultivate a workplace culture where every individual feels valued, heard and motivated to thrive. Through these initiatives we are committed to promoting open communication, transparency, and collaboration across all levels of the organisation, reinforcing our collective efforts to drive employee engagement and enhance the overall employee experience. Recruitment and retention Recognising the pivotal role of recruitment, retention, development and motivation in achieving organisational success, Diaceutics has implemented a range of initiatives tailored to attract and retain top talent. These initiatives include a comprehensive global healthcare and benefits programme to support the well-being of our employees. Additionally, we have established a multi-faceted recruitment process to ensure that we attract candidates who align with our purpose and goals. To facilitate the onboarding process and integrate new employees seamlessly into our organisation, we offer a residential onboarding programme at our Belfast headquarters. This programme provides new hires with the necessary tools and resources to acclimatise to their roles and become valuable contributors to our team. In addition to these initiatives, we have undertaken various processes during the performance management review cycle: • • • • • Line manager training: focusing on setting objectives and Individual Development Plans (‘IDP’), and evaluating managers’ roles in providing learning and development opportunities for their teams. Line manager objectives: this includes managers being evaluated on their role providing their team’s learning and development opportunities, ensuring accountability for managing performance, hiring the best people and embedding our culture. Ensuring alignment with strategic imperatives: the Group’s strategic objectives are cascaded down to department and line managers to ensure all individual employee objectives were aligned to the overall Group strategy. Regular performance check ins: conducted through 1:1 meetings with HR and department leads, these are instrumental in tracking employees’ progress towards their objectives and providing support where needed. Succession planning: initiatives have been rolled out in 2023 whereby discussions were facilitated between employees and line managers to align with employee career developmental aspirations, empower employees to take control of their professional development and help retention. Training academy and graduate programmes Diaceutics has also established a Training Academy for student placements and graduates, aiming to support the local community and provide career development opportunities. We are continuing to grow this by developing new, and building upon existing, relationships with local universities via lunch and learn sessions and student presentations, aiming to support the local community and affording the opportunity of careers advice. There is also a dedicated section on the Diaceutics website for graduate and placement opportunities which will be further enhanced with interview skills, CV and application tips. Since the launch of Diaceutics Graduate Academy in 2022 we have taken on 16 graduates within our Data Graduate Academy of whom eight are now permanent employees. A further eight are currently participating in our graduate programme. In 2024 we launched our Operations Graduate Programme as well as continuing to enhance or Data Graduate programme.  Workplace initiatives To support employee engagement and professional development, Diaceutics operates a senior management sponsorship scheme aimed at maximising sales opportunities and success within our pharma and biotech customers. Additionally, a job shadowing and rotation initiative is underway to provide employees with diverse experiences and opportunities for growth within the organisation. We prioritise communication and engagement through quarterly feedback sessions and Company-wide Town Hall meetings aimed at keeping staff up to date with the direction of the Group, and in April 2024 the Company had an all Company in-person meeting in Belfast. This biennial meeting allows all employees to interact and re-energise as the company sets forth its near and medium term goals. These initiatives foster transparency, alignment, and collaboration across the organisation. To support employees well-being, Diaceutics offers an Employee Assistance Programme, providing access to counselling, legal information and services, bereavement support and medical and health risk assessments. All line managers have also been given guidance on how to support staff wellbeing in the workplace. 49 Diaceutics PLC Annual ReportStrategic reportleveraging our DXRX platform to address real-world challenges encountered by labs. Specifically designed to cater to the needs of labs, the DXRX platform offers a secure online environment where labs can enhance their services, showcase their capabilities, obtain accreditation, and access benchmarking, analytics, and support services. Through our partnerships, labs gain access to a global network of industry participants in the lab, diagnostic, and pharma sectors. These collaborations are built to foster growth and establish enduring relationships. We collaborate with organisations specialising in precision medicine diagnostics, covering various areas such as test access and reimbursement, pathology training, health economics, reference standards and External Quality Assessment (EQA). Our ‘Flex days’ programme allows employees to enhance their work-life balance by taking every first and third Friday off work and have proved extremely popular with 99% of the workforce currently opted in. Furthermore, we incentivise employee ownership and engagement through our Share Incentive Plan (‘SIP’), enabling employees to purchase shares up to a value of £1,800 in Diaceutics PLC which are matched by the Company on a one for one basis. As at 31 December 2023, 87 UK and 24 global employees are participating in the scheme representing 60% of total Group employees. Supporting communities and charities Diaceutics is committed to making a positive impact in our communities through our Charity Working Group which targets local and global charities aligned with our purpose. Employees have the opportunity to support charitable causes through sponsorship activities and individual fundraising efforts, with company-matched donations further amplifying our impact. Employees elected to channel sponsorship activities to multiple charities including the Children Cancer Unit, Macmillan and Transplant Sport NI. To further support this initiative employee contributions were matched by donations from the Company and a total of over £8,396 was raised throughout 2023 through numerous events held by Diaceutics including Charity Bake Off, Christmas jumper day, Stormont mile, Boxing event and Seven Seven’s. Customers and suppliers At Diaceutics, we prioritise actively engaging with and listening to our customers to ensure that we meet their evolving needs and expectations. Our customer base includes pharma and biotech companies across several geographical markets including Europe, Asia, and the US. These companies rely on our innovative insights and solutions to support their precision medicine commercialisation requirements effectively. We maintain regular communication with our customers to gather feedback and insights, allowing us to tailor our solutions to address their specific requirements and enhance the patient diagnostic and treatment journey. With the launch of the DXRX platform in October 2020, Diaceutics embarked on a transition toward a technology-led, recurring revenue model throughout 2023, and this progression continues. This strategic shift aims to provide our customers with access to real-time data, analytics and enhanced Advisory and Engagement Solutions, empowering them to make informed decisions in the precision medicine landscape. Customer feedback is a crucial component of our continuous improvement efforts. We collect feedback across the organisation and collate it to ensure that we consider our customers’ expectations and deliver projects to the highest quality standards. Our commitment to gender balance in the workplace has been positively received by our customers, with several indicating that our inclusive approach played a role in their decision to choose Diaceutics over competitors in competitive tender processes. In addition to nurturing strong relationships with our customers, we recognise the importance of maintaining mutually beneficial partnerships with our suppliers. During 2023, we made significant progress in negotiating and securing contracts with key suppliers, including data suppliers. These partnerships are instrumental in ensuring the stability of our market leading data insight solutions, while also delivering value for our investors. At Diaceutics, we strive to strike a balance between fostering strong business relationships with our suppliers and optimising costs to maximise shareholder value. Partners and labs Over the years, Diaceutics has cultivated partnerships with a diverse range of organisations and labs, Being part of the Diaceutics team means constantly learning and evolving in an environment that encourages curiosity and innovation Abhirami Anilprasad Graduate programme, Platform & Data 50 51 Diaceutics PLC Annual ReportStrategic reportGovernance Diaceutics is dedicated to having robust governance protocols and procedures throughout all aspects of our business. These help the business operate to high standards of conduct and to protect and grow the business for the benefit of all stakeholders. At Diaceutics we strive to be a leader in the data governance space and stand out as a company who cares about their patients’ data. We embrace the challenge of complying with the evolving regulatory landscape around data and welcome the highest levels of data governance as an expectation for those operating with patient data in the precision medicine space. Central to this is our commitment to ensuring the security and protection of all personal data that we process. We have built a robust data compliance framework and continue to look for ways to improve our data governance efforts. In 2023 this included enhancements to our platform operational environment which integrates all aspects of data handling, and with our quality management processes. A vital part of Diaceutics’ business is the development and evolution of our DXRX platform. We are excited to be part of a growing digital and data driven sector which is critical to the growth of the Company, but are equally committed to the safeguarding, access, privacy, ethical use, and security of all data. Regulators Diaceutics produces many of its products using data obtained from various channels and is committed to the security, protection and lawful treatment of personal data. We acknowledge that protecting the confidentiality and integrity of personal data is a critical responsibility that we must always take seriously. Diaceutics has a data protection regime in place, which ensures that all personnel are sufficiently trained to handle any personal data in accordance with internal policies and standard operating procedures. This regime continues to evolve to keep abreast of regulatory developments across the globe. Diaceutics’ Legal and Quality and Compliance departments play a key role in administering the data protection regime and ensuring Diaceutics’ activities are fully compliant with relevant regulatory requirements across the globe, including GDPR in the UK and HIPAA in the US. Governance framework and business practices • The Diaceutics board has adopted the Quoted Companies Alliance Corporate Governance Code (the ‘QCA Code’). The Board is well balanced on all aspects of independence, knowledge of the Company’s technology, sector, public company experience and professional standing and this allows it to effectively discharge its duties and responsibilities; pursue the Company’s strategic goals and address anticipated issues in the foreseeable future. • Diaceutics’ financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’), the UK Companies Act and AIM regulations, and on a going concern basis. • There are comprehensive internal procedures for the budgeting and planning, monitoring and reporting of business performance to the board and over the financial year. • Regular risk review meetings take place with senior management level to assess various aspects of risk to the business, with material findings reported to executive directors on a monthly basis, in accordance with the risk reporting framework in place. • Diaceutics has a dedicated legal department which monitors regulatory developments and a Quality and Compliance department which formulates and implements changes required to Diaceutics’ systems and processes. The Quality and Compliance department has implemented a set of mandatory compliance training modules for employees which include, amongst other things, data protection, anti- bribery, cyber security, and remote working. Further department-specific and other appropriate Group wide training sessions pertaining to various aspects of the Group’s business and infrastructures are being developed and rolled out on an ongoing basis. • Systems and processes are in place to ensure compliance with applicable data regulations and to protect against data loss. Recently, the Company has recruited a Cyber Security Officer to assist the Quality and Compliance and IT departments with their information security projects, which will further strengthen the group companies’ IT measures and attain the company vision of information security. • Diaceutics is working towards robust practice models to minimise risk, combining prevention technology with the continuous monitoring of the security framework. Diaceutics is also in the process of implementing key elements of ISO 27001 (Information Security Management System). Key governance and business policies We have in place several key governance and business policies which support the operation of our business including the following: • Data Collection, Retention and Protection • Risk Management • Health and Safety • Conflict of Interest • • • Anti-Bribery and Anti-Corruption Share Dealing and Insider Information Equality, Diversity and Inclusion • Human Rights • Whistleblowing • • Anti-Slavery and Human Trafficking Internal Audit • Matters reserved to the Board of Directors Further governance information, including about how the directors are fulfilling their duties to promote the success of the Company including the interests of our key stakeholders is set out within the Section 172 section of the Annual Report and the Company’s Corporate Governance Statement. Ongoing and future ESG workstreams We have appraised our environmental impact in 2023 through our inaugural Streamlined Energy and Carbon Report (SECR) and our aim is to provide effective environmental awareness and controls, seeking to continually improve all aspects of our environmental performance, as far as economically feasible. 52 53 Diaceutics PLC Annual ReportStrategic report At our HQ there are several recycling initiatives which are in place and encouraged wherever possible. The four other Group sites worldwide in the Republic of Ireland, the USA and Singapore are all small, low occupancy offices used for data and implementation service. Diaceutics is not a significant consumer of water in its business activities. In January 2024, the Group Code of Conduct and Ethics policy was introduced. This covers all our standard policies, procedures and how we expect our colleagues to conduct themselves in line with Company values. Our Graduate Programme continues to evolve with further links being established with educational institutions in addition to Queens University Belfast, University of Ulster and University College Dublin, we have ensured attendance at Careers Fairs and Student Placement Events, hosting and sponsoring Lunch and Learns. We are also exploring the introduction of a Salary Sacrifice Scheme for Electric Vehicles and a Cycle to Work scheme, along with potential carbon offsetting schemes with airlines via our travel agency. During 2024 and beyond we will strive to achieve the following: Continuous improvement: We will prioritise continuous improvement in our ESG practices, setting ambitious targets to reduce carbon emissions, enhance energy efficiency, and promote sustainable resource management. Through rigorous monitoring and evaluation, we aim to identify areas for enhancement and implement innovative solutions to drive positive change. Stakeholder engagement: Engaging with our stakeholders is paramount to our sustainability efforts. In 2024, we will conduct workshops, training sessions, and awareness campaigns to foster a culture of sustainability among employees, customers, suppliers, and investors. By cultivating meaningful partnerships and dialogue, we aim to garner support and collaboration towards achieving our ESG goals. Innovation and collaboration: We recognise the power of collaboration and innovation in driving sustainable solutions. In the year ahead, we will actively seek out partnerships with industry peers to identify and implement best practices in sustainability. Through collective expertise and shared resources, we will accelerate progress towards our sustainability objectives. Transparency and reporting: Maintaining transparency in our operations and reporting remains a cornerstone of our sustainability strategy. In 2024, we will continue to provide regular updates on our ESG performance, including progress towards targets and initiatives undertaken. By upholding transparency and accountability, we aim to build trust with our stakeholders and demonstrate our commitment to responsible corporate citizenship. Seeking external recognition: We are dedicated to seeking external recognition and accreditation for our sustainability efforts. In addition to our Ecovadis Silver recognition, we will actively pursue industry- specific awards and certifications to showcase our achievements and align with globally recognised standards. By earning external validation, we aim to enhance our credibility and reputation as a leader in sustainability. Continuous learning and adaptation: As we navigate the evolving landscape of sustainability, we remain committed to continuous learning and adaptation. In 2024, we will conduct regular reviews and assessments of our ESG performance, soliciting feedback from stakeholders and adjusting our strategies accordingly. By remaining agile and responsive, we will stay ahead of the curve and drive meaningful impact. Risk management Internal control and risk management Risk Management framework The Group identifies principle risks within the business and documents the existing mitigations to those risks. Where the level of risk after existing mitigating actions is still deemed inappropriate, further actions will be designed and implemented to reduce the risks to an acceptable level. Internal controls are key procedures designed and implemented to mitigate and manage the overall level of risk. The Group’s risk management framework developed during 2023 to provide the structure by which the principal risks are managed and reported to the Board. The risk management framework ensures the business can assess the impact of key risks, has appropriate procedures in place to identify emerging and new risks, and can effectively report these risks to the Board. Given the nature and size of the Group’s operations and its continued organic growth, the Board will ensure that the risk management framework is kept under regular review. The Board The Board has overall responsibility for the determination of the Group’s risk appetite, the setting of objectives and policies, and has ultimate reponsibility for managing risk. Internal control systems Audit & Risk Committee The Audit & Risk Committee formally review the material risks facing the Group and the effectiveness of the risk management processes and internal control systems biannually. Senior management Senior management are responsible for reviewing and monitoring the Group’s key risks, overseeing the implementation and operation of the risk management framework and internal control systems. Diaceutics teams Everyone at Diaceutics has a role to play in identifying key risks facing the Group, and in the day-to-day management of risk through applying the appropriate controls, policies and processes. Control environment and procedures The control environment and procedures have been designed to reduce risks to a level where compliance procedures are not disproportionate to the impact, financial or otherwise, of the risk materialising. Indentification and evaluation of risks Financial information Business unit leaders are responsible for collating and maintaining a risk register of their department’s risks. Risks are quantified by likelihood and potential impact. Departmental risk registers are reviewed by Diaceutics’s Senior management team on a quartely basis and collated into a Group risk register. Material risks from the Group risk register are reviewed by the Audit Committee bi-annually and raised with the Board as appropriate. Financial information and reporting are overseen by the Chief Financial Officer (‘CFO’). The CFO reports the financial results to the senior management team and Board on a regular basis. The financial information is subject to a high level of scrutiny both internally and externally. 54 55 Diaceutics PLC Annual ReportStrategic reportPrincipal risks and uncertainities The risk factors that are most significant to the Group’s operations, and where applicable an explanation of how these are managed or mitigated, are outlined below. The risks described do not necessarily comprise all those associated with the Group and are not set out in any particular order of priority. Additional risks and uncertainties that are currently not known by the Directors, or that are currently deemed immaterial, may also have an adverse effect on the Group. Movement Key - 2022 Comparison Increased risk Decreased risk No change to risk New risk 56 Risk Risk Risk Risk Risk Decrease in sales pipeline conversion to contract, or decreased realisation of contracted order book, and resulting impact on revenue growth: Any material cancellations and contract scope changes, or reduction in sales pipeline or subscription renewals may impact the Group’s ability to realise its anticipated revenue growth rates. Loss of key personnel: Realisation of the Group’s ambitious growth strategy and future success will depend, in part, upon the expertise and continued service of certain key personnel. The loss of certain key personnel could adversely affect the Group’s ability to realise its strategic goals, ambitious growth targets, and as a result, improve patient lives and enhanced stakeholder value. Loss of a major customer: A small number of customers, with which the Group has a long-term historical relationship, significantly contribute to annual revenue. The loss of any such major customer may have a direct impact on the revenue growth rate and earnings potential of the business. Restricted availability or disrupted continuity of the DXRX platform: The ongoing operational continuity and availability of the DXRX platform is critical to the Group’s ability to securely hold and utilise its data repository asset as well service customer and lab partner requirements. Access disruption to the DXRX platform could damage the Group’s ability to service operational needs in a timely manner and have a reputational impact. Disruption to data supply chains: Diaceutics acquires data from multiple sources including governments, lab collaborators, commercial providers and public domain sources. As the group becomes more dependent upon data related revenue and insights, the failure to provide timely, accurate or regulatory compliant data may be disruptive to the Group’s operations and commercial reputation. Movement of risk Movement of risk Movement of risk Movement of risk Movement of risk Mitigation Mitigation Mitigation Mitigation Mitigation The Group has increasing visibility over its revenues which is driven by the Group’s migration to multi-year, subscription-based contracts. Changes to customer account teams is supporting customer service levels along with proactive early engagement with customers around subscription renewals. The pipeline of the business is actively reviewed by senior management with both leading and lagging indicators. Using Salesforce, the key account management team and customer plans, provide foresight and momentum for project closure and create the ability to assess the products and capacity required going forward. The Group operates in a number of global precision medicine territories with the aim of increasing its access to market opportunity, and diversifying risk across a number of geographical territories. The senior management team works together with the Board to review the business structure to ensure it continues to support the business model and strategic growth. Succession and retention planning are in place for senior management posts. In addition, steps to further enhance succession planning have been taken by implementing a program to identify employees who wish to undertake job shadowing or job rotation. The Group remains committed to the recruitment, engagement, retention, continuing development and reward of experienced management, and highly skilled scientific, marketing and sales personnel. The Group continues to review and improve its remuneration structure to incentivise and retain key personnel and as such expanded its leadership team. The DXRX platform employs multiple layers of security and monitoring tools to keep the platform secure and monitor functionality. We utilise standard industry cloud-based software and solutions and deploy the platform infrastructure as code, enabling us to restore or rebuild a part or all of our platforms and logic used to operate the business from scripts. Our data is versioned and backed up regularly across multiple platforms. The Group’s customer base is well diversified due to the number of brand teams, both global and in- country, that Diaceutics engages with within each customer, all having individual budget allocations and control. The Group continues to expand the number of customers, brands and products/services it provides to customers. All customer accounts have a senior management allocated sponsor and regularly review the revenue generated by key customers. The Chief Commercial Officer is ultimately responsible for managing the Key Account Managers and day-to-day customer brand team relationships. The Group has established a highly trusted and professional working relationship with all its major customers, and regularly seeks feedback to improve and maintain a high level of customer service. The Group has invested in transforming the customer experience and service over the past year to enhance the support, technology, and precision medicine expertise it brings to all customer interactions. In 2023, one customer contributed 12% of the overall Group revenue (2022: no customers represented more than 10% of overall revenue). Diaceutics has made a significant investment in its data lake and has 941 global labs in its data supply network (2022: 851). The Group captures around 550 million de-identified, real-world, lab patient testing records from multiple geographies and markets. The Group employs a lab liaison team to support launch markets for the pharma industry and has an extensive network of data sources. The Group has identified key labs and data aggregators in key markets which it relies upon for data supply. Moving labs onto the DXRX platform and establishing more formal data supply contracting terms helps to mitigate this risk over time. The Group continues to make improvements on its business continuity plan and risk procedures and is diversifying and securing its data supply chain to ensure continuity. Through 2022 and 2023 there has been a significant increase in the number of key data suppliers, especially supporting data products in the US market. 57 Diaceutics PLC Annual ReportStrategic reportRisk Risk Risk Risk Non-compliance with data privacy laws, industry and ethical regulations/standards and/or changes to the pharma regulatory environment: Data protection laws in different countries are evolving quickly and compliance standards can vary resulting in a complex and misaligned structure of standards. Non-compliance with any one of these relevant privacies or ethical regulations/standards could result in damage the Group’s reputation, ability to provide contracted services, and financial penalties. The regulatory and ethical landscape that pharma operates in is subject to continued scrutiny and change. These changes could result in both short-term and long-term changes in pharma behaviour, including, but not limited to, reduction in outsourced data and consulting service spend or move away from the current precision medicine led approach to drug development. Cyber-Attacks and Information Security breaches: The launch of the DXRX platform and the cloud-based technology solutions it enables, as well as the continued business reliance and enablement of remote working, bring increased stakeholder connectivity and an increased exposure to cyber and information security breaches which could result in operational, reputational and financial risks. Significant and rapidly evolving market and economic conditions: The Group may be affected by the significant and rapidly evolving market and economic conditions which are unrelated to the performance of the Group itself.  An economic downturn, globally or more locally in the pharma sector, including the impact of interest rates, inflation, bank failures and foreign exchange movements, may have an adverse effect on the demand for the Group’s products, its cost base, profitability, growth rates, cash balances and/or cash flow over a sustained period. Business continuity including climate change: There is the possible threat of natural disasters, including pandemics, which could impact the Group’s ability to trade, demand for the Group’s products, its cost base, profitability, growth rates and/or cash flow over a sustained period. The Group continues to face risks, albeit at a lessening level, in relation to the political and economic instability associated with the continued uncertainties around the framework of the UK’s withdrawal from the European Union in relation to Northern Ireland. Movement of risk Movement of risk Movement of risk Movement of risk Mitigation Mitigation Mitigation Mitigation Our patient data continues to be held by the Group on a de-identified basis. The Group’s Legal, Quality and Compliance department monitors changes in data protection laws, assesses and advises on the impact of regulations to the Group. As we continue to leverage our technology and data to innovate in achieving our purpose, ultimately growing our product offerings in new geographies, the risk around data protection and compliance equally increases. The Group engages with subject experts with specialist knowledge in Data Protection and are developing and updating internal frameworks to support ongoing commercial activities. The Group has introduced a Data Governance working group with stakeholders from key internal departments to express the vision and identify and overcome any barriers in the future. We continue to monitor the changing macro regulatory and ethical landscapes, especially in our key geographical regions, including our pharma and biotech customer responses, both public and private, to this changing landscape. A security framework has been developed and is in place, combining prevention technology with continuous threat monitoring. Two-factor identification controls have been implemented and organisation wide training on identification of threats continues to be updated. The incident management and breach response plan have been reviewed and updated. Robust penetration testing is undertaken covering DXRX and remains a core component of our security strategy. The Group is developing an ISO 27001 compliant framework and is continually reviewing and introducing new and improved policies and procedures (IT, Engineering and Compliance documents) bringing clear awareness to the business of their established roles and responsibilities in compliance. There has also been the introduction of threat detection and prevention tools and an upgrade to system operational licenses and security. The Group’s business model includes flexibility in both service offering and cost structure which allow the Group to react to changes in market conditions to lessen the immediate impact. Ongoing engagement with stakeholders, regular dialogue with customers, research and marketing activities and regular strategic reviews of the overall business assist in maintaining a sustainable business. The Group has diversified its concentration of credit risk associated with its substantial cash holdings and is working towards implementing a compressive treasury policy to ensure adequate policies are in place to mitigate risks including credit, liquidity, capital, interest and currency, among others. To help mitigate foreign exchange risk the Group operates multi- currency bank accounts and aims to ensure that the receipts and payments, and assets and liabilities in a particular currency are offset in a natural hedge. In addition, the Group uses other simple hedging techniques such as forward contracts to offset foreign exchanges exposures. The Directors continue to consider the possible impact of another pandemic similar to that of COVID-19. Based on current information, we believe the impact on the Group continues to reduce as the world adapts to the longer-term normality of these events occurring. The UK’s withdrawal from the European Union, especially in terms of the Northern Ireland Protocol, remains a risk. Current available information suggests that this risk is considered more political and potentially disruptive to the movement of goods rather than the services provided by the Group with are predominately in North America and Europe and can be serviced from operational entities based within those jurisdictions. 58 59 Diaceutics PLC Annual ReportStrategic reportStakeholder engagement and S172 We believe that engagement with our principal stakeholders is key to enhancing the Group’s value and promoting its long- term success. The means of engagement are described in the table.  Section 172 statement The Directors are aware of their duty under section 172(1) of the Companies Act 2006, to act in the way which they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard, amongst other matters, to:  a. the likely consequences of any decision in the long term;  b. the interests of the Company’s employees;  c. d. e. the need to foster the Company’s business relationships with suppliers, customers, and others;  the impact of the Company’s operations on the community and the environment;  the desirability of the Company maintaining a reputation for high standards of business conduct; and  f. the need to act fairly between members of the Company.  60 Throughout the year, the Directors have recognised their duty to promote the success of the Company and their responsibilities outlined above (the ‘Section 172 Principles’) and have had regard to these in their decision making, whilst also considering the impact of decisions on the Company’s wider stakeholders.   the key decisions made and Company engagements undertaken during the year with full consideration of the Company’s stakeholders and the Section 172 Principles. The particular Section 172 Principle to which the engagement or decision relates is highlighted in the table below.  The Directors believe that the following groups are the Company’s stakeholders and have set out below The particular Section 172 Principle to which the engagement or decision relates is highlighted in the table below: Our key stakeholders Their principal interests How the business engages How the Directors engaged under Section 172 Customers and suppliers • Professional expertise • Open and transparent business arrangements • Product awareness • DXRX platform  • Our contracts providing real time data, analytics, educational services and support  • • Industry papers Regular customer surveys • Ongoing feedback via dedicated project managers  • Strong product engagement and education • Face-to-face conferences in 2023 allowed immersive engagement with Senior management and Board representatives. (Principle (c)) • A study commissioned with a third party provided key insights into customer needs leading to the incorporation of important customer centric principles within our strategy (Principle (c))  • Our rigour around GDPR and HIPPA compliance and pursuit of ISO 27001 and CSA certification demonstrate our commitment to the highest of business standards (Principle (e))  Continued... Our key stakeholders Their principal interests How the business engages How the Directors engaged under Section 172 Lab network • Trusted partnerships  • DXRX platform  • Online security  • Our lab contracts enable real time data download and support  • Global industry access  • Precision medicine focus  • Accreditation enabling  • Our virtual lab conference • Our landmark Practice Gaps study has identified important gaps in patient treatment practices, including lab testing, which impacts on patient care and outcomes (Principle (d))   •  GDPR and HIPPA compliance and our pursuit of ISO 27001 and CSA certification provides assurance to our lab partners (Principle (e))  Precision medicine and thought leaders • Evidence based information   • Trusted collaboration • DXRX Network Advisory Panel comprises a • Our landmark Practice Gaps study has recruited group of scientific advisors mainly in the field of oncology and pathology which meets quarterly   provided important data and information which impacts the precision medicine industry (Principle (d))  • Industry papers (including the landmark Journal of Clinical Oncology - Practice Gaps study    • Engagement with individual industry consultants • Our early adoption of SECR is indicative of our commitment to our environmental responsibility (Principle (d))  • Compliance  • Strictly controlled regulatory environment  • GDPR and HIPPA compliance and our Regulatory and government bodies • Proactive engagement with new regulations  • Dedicated Quality and Compliance team •  ISO 27001 framework implementation progressing   pursuit of ISO 27001 and CSA certification evidences our work with key regulatory frameworks (Principle (e)) Continued... 61 Diaceutics PLC Annual ReportStrategic report Our key stakeholders Their principal interests How the business engages How the Directors engaged under Section 172 Our key stakeholders Their principal interests How the business engages How the Directors engaged under Section 172 • • • • • • Access to improved testing and diagnosis   Identification of better treatments  Improved treatment outcomes  Positive engagement and wider community benefits  The Group’s overriding aim is to provide earlier and more accurate diagnosis for patients, accelerating patients’ reach to precision medicine and better healthcare outcomes  • Our landmark Practice Gaps study has identified crucial gaps in patient testing which directly impacts patient outcomes (Principle(d)).  The Group engages in charity programmes, graduate training and life science engagement initiatives such as HIRANI, among other activities documented in our ESG report  Patients and communities Our people • Our purpose, strategy • and progress Regular Town Hall presentations held at least quarterly where employee feedback and interaction is encouraged  • Development and progression opportunities • Employee wellbeing and welfare • Diversity, inclusion and ethical behaviour • • • Regular employee engagement and “pulse” surveys The Diaceutics “Employee Assistance Programme” which fosters and encourages wellbeing in the workplace and provides support in many areas including counselling, legal information and services, bereavement, and medical and health assistance.  The core structure of the business culture is based on the key values of Empowerment, Foresight, Fun, Empathy, Communication and Trust, together known as the Diaceutics EFFECT values. Diaceutics has a dedicated group of both official and unofficial Culture Ambassadors, who lead our cultural activities, disseminating our values throughout the organisation and beyond. These EFFECT values are core to both our recruitment and annual Performance Management Framework and are the cornerstone on which our mandatory onboarding programme is based.   • Our approach to our environmental responsibilities is set out in our ESG report and our SECR report (Principle (d))  • Compliance with GDPR and HIPPA is vital to patient data confidentiality (Principles (c)and (e))  • • • The Company holds regular Town Halls led by the CEO which all employees are invited to communicate, disseminate and discuss the Group’s plans and goals allowing our employees to fully engage and align with the culture and strategic goals of the Group (Principles (a) and (b))  In recognition of the important role our people have played in the Group’s success and the unprecedented increase in living costs, all employees were provided above inflation pay rises (Principle (b)).   In 2023 we completed a job evaluation and benchmarking exercise to ensure that all our employees are appropriately remunerated in terms of salary and benefits; that roles are classified and aligned across the organisation to produce a framework which is fair and equitable for current and future use (Principles (a) and (b)).  • In 2023 we announced our strategy acceleration with consideration given to all our key stakeholders (Principle (a))  Continued... • Financial performance  • Investors • Convergence of long- term goals  • Credible strategic • direction  • Good governance and regulatory compliance The Board actively seeks dialogue with its shareholders via investor roadshows, capital market days, one-to-one meetings and regular reporting.   The Chief Executive Officer and Chief Financial Officer hold virtual or face to face meetings each year with most institutional shareholders, as well as facilitating meetings with private investors where practicable. Regular virtual and in-person forums facilitate agile and flexible communications with investors, enabling greater investor interaction  • • In 2023 our accelerated investment strategy was communicated to investors and progress was reported against this over the year (Principles (a) and (f))  The CEO, CFO and CIO have engaged with an increasingly diverse investor group, and continue the development of messaging around Company activities and strategy (Principle (f))  • • • The Senior Management Team at Diaceutics regularly present at investor and industry conferences attended by potential and current investors.  The Company communicates with all shareholders through a mix of formal and less formal communication tools and media, including the Annual Report and financial statements; the Annual General Meeting (AGM) and; the release of news via the London Stock Exchange Regulatory News Service (RNS).   The AGM in 2023 was held in person, allowing all shareholders an opportunity to ask questions or represent their views formally to the Board during the meeting or with Directors after the meeting.   • Corporate information, including Company announcements and presentations, is available to shareholders, investors and the public on the Group’s website www.diaceutics.com. Contact details and the email address for investor queries are listed on our website, which offers a facility to sign up for email alert notifications of the Company’s news and regulatory announcements.  • Less formal communication methods utilised by the Group include webinars, social media such as LinkedIn and Twitter, and news articles made available through the Group’s website. 62 63 Diaceutics PLC Annual ReportStrategic reportCorporate governance Corporate governance report The board of directors Deborah Davis Non-Executive Chair (Remuneration Committee, Audit and Risk Committee) Ryan Keeling Chief Executive Officer Graham Paterson  Non-Executive Director (Remuneration Committee Chair, Audit and Risk Committee Chair, Insider Committee) Peter Keeling Executive Director Nick Roberts Chief Financial Officer (Insider Committee)  Mike Wort Non-Executive Director (Remuneration Committee, Audit and Risk Committee, Insider Committee) 66 67 Diaceutics PLC Annual ReportCorporate governanceDeborah Davis Non-Executive Chair (Remuneration Committee, Audit and Risk Committee) Deborah has extensive global experience in platform business models, software, fintech, telecoms and e-commerce businesses. After completing her undergraduate studies in Australia, Deborah spent over two decades in CEO and European and global senior executive roles including at internet platform businesses PayPal and eBay, and technology companies Symantec and Verizon.  Deborah currently holds non-executive director and board committee positions at the following institutions: Lloyds Banking Group/Scottish Widows Insurance, International Personal Finance plc, IDEX Biometrics ASA, Norway (until May 2024) and, The Institute of Directors UK (until April 2024). Her previous board experience includes Which? Ltd and private equity based i.e. Digital. Deborah is a trustee of the Southern African Conservation Trust.  Deborah is a Chartered Director and a Fellow of the Institute of Directors. She holds a Bachelor of Applied Science (Electronics) Honours degree from the University of Melbourne and a Sloan Master’s in Science (Management) with distinction from London Business School.  Skills: Global strategy, platform business models, partnerships, high growth tech businesses, governance.  68 Ryan Keeling Chief Executive Officer Ryan is an expert in the commercialisation of diagnostics and associated technology, with over 17 years’ experience in the field.  Ryan has led the development and commercialisation of the Group’s technology, including its proprietary data lake. He has played a pivotal role in the Group’s technological and strategic development, previously acting as its chief operating officer until June 2018 and chief innovation officer until January 2024 when he was responsible for driving the Company’s product innovation, with a near term focus on the development of DXRX. Ryan was appointed Chief Executive Officer on 1 January 2024. Prior to joining Diaceutics in 2009, Ryan spent eight years as a software engineer for Aepona Limited, providing network infrastructure and related services to telecommunications operators.  Ryan holds a software engineering degree from Queens University Belfast. He is seen as a thought leader in the field of diagnostic commercialisation and data integration, speaking at precision medicine and healthcare data conferences globally.  Skills: Platform tech, operational management, pharma sector commercialisation  Nick Roberts Chief Financial Officer (Insider Committee) Nick is a highly experienced senior finance professional with a track record of managing and developing finance functions and governance structures in high growth AIM-quoted healthcare and technology companies with global customer bases.  Prior to his appointment to Diaceutics PLC, he was Head of Group Reporting at AIM-quoted Ergomed plc, a full-service pharmacovigilance and specialist clinical trial service provider to the pharma and biotechnology industries. During his tenure, Nick developed and managed the day-to-day group finance reporting requirements for Ergomed plc and oversaw the roll-out of several governance framework and reporting projects, including the financial integration of two US business acquisitions. Prior to this, he was Group Financial Controller at AIM-quoted Ceres Power Holdings plc, a fuel cell and electrochemical technology development company, leading the development of the finance function to accommodate a period of considerable commercial and financial growth over four years.  Nick is a Fellow Chartered Accountant with the Institute of Chartered Accountants in England and Wales (ICAEW) and holds a bachelor’s degree in accounting and finance from the University of Southampton.  Skills: Financial management, AIM public market, high-growth tech and pharma businesses  Peter Keeling Executive Director  Peter stepped down as Chief Executive Officer on 1 January 2024. He has over 36 years’ experience as a leader, entre- preneur and strategist in the Pharma industry. He has led international companies and teams with a focus on novel business models and product launches, including therapies, diagnostics and FMCG products.  Peter started his career as distribution manager at American Monitor Corporation, where he oversaw the distribution of reagents and equipment globally. He subsequently spent a total of 11 years leading projects in both operational and strategic roles at the thera- py division of the Wellcome Foundation, including as sales manager for the Pharma business in North and West Africa, commercial director for a joint venture with Wellcome Indonesia, and as brand director at global product level for Wellcome’s antiviral franchise. Wellcome was merged with Glaxo in 1995. Subsequently he founded and was chief executive officer of Diagnology Inc, a US/Irish based diagnostics company which specialised in the development and commercialisation of tests for sexually transmitted diseases. Peter has led Diaceutics from its inception in 2005 to become a leader in precision testing commercialisation which currently supports the principal market biomarker programmes for the world’s largest pharma companies.  Peter holds a degree in business administration from Queens University Belfast, a Master’s degree in European Marketing from Buckingham University Business School and spent an academic year as a Visiting Fellow at MIT’s Sloan business school in 1994 where he led a multi- corporation US think tank designed to look at disruptive models in future patient health for the pharma industry. Peter has published several peer reviewed papers on precision medicine and is a respected speaker at precision medicine events around the world.  Skills: Pharma sector commercialisation, precision medicine thought leadership, diagnostic landscape  69 Diaceutics PLC Annual ReportCorporate governanceGraham Paterson Non-Executive Director (Remuneration Committee Chair, Audit and Risk Committee Chair, Insider Committee) Graham joined the board as a non-executive director on 1 October 2023. Graham is a seasoned business leader and non-executive director with a wealth of expertise spanning investment, software, and data analytics. As a founding partner of SL Capital Partners LLP, he served as a partner and board member until 2010. In 2013, Graham co-founded TopQ Software Limited, a technology company specialising in software for the private equity sector, later acquired by eVestment Inc (now part of NASDAQ Inc) in 2015, where he was a director of their private markets data and analytics division until early 2018.   Currently, Graham serves as a non-executive director and chairman of the audit committee for Baillie Gifford US Growth Trust plc and Invesco Perpetual UK Smaller Companies Trust Plc. He also chairs the boards of Mobeus Income and Growth 4 VCT plc, Datactics Limited, Plotbox Inc and Substantive Research Limited. Graham is a member of the Institute of Chartered Accountants of Scotland, and holds an Honours degree in Economics and Management from the University of St. Andrews.  Skills: Financial management, high-growth tech businesses, remuneration oversight, governance  Mike Wort Non-Executive Director (Remuneration Committee, Audit and Risk Committee, Insider Committee) Having trained as a microbiologist, Mike brings over 48 years’ experience working with life science companies across the healthcare sector. Initially working with three of the top ten global Pharma companies in a variety of sales, marketing and research positions, he was appointed investor relations manager of Wellcome Plc and was actively involved in the global communications programme for the £2.4 bn secondary offering of Wellcome Plc shares by the Wellcome Trust, which enabled him to develop working relationships with leading City stakeholder groups in the life sciences industry.  Mike was a founding partner in the first specialist communications agency to support the emerging biotechnology industry with City communications. Apart from a period when he was involved as CEO during the privatisation of the Bulgarian Pharma industry, his career has been devoted to working with start-up and growing SMEs to maximise their potential for growth.  Skills: Life science communication, Life science networking, City Finance and Listing  Corporate governance report I am pleased to introduce the Corporate Governance Report for the year-ended 31 December 2023. As an AIM quoted company, we recognise and prioritise the importance of sound corporate governance principles in supporting and delivering the strategy of the Company and its subsidiaries (the “Group”) and embedding these within, and as an integral part of, the operations of the Group. The Board of Directors (the “Board”) adopted the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”) on the Company’s initial public offering to the market in March 2019 and the Company’s Corporate Governance Statement is available to view on the Company’s website at diaceutics.com. I have responsibility for the Group’s corporate governance processes and procedures and compliance with the QCA Code. The Company complies with the principles of the QCA Corporate Governance Code (the “QCA Code”) issued in 2018 and will be reporting against the new 2023 QCA Code next year, in respect of the Group’s financial year- ending 31 December 2024. The Board has overall responsibility for ensuring that appropriate corporate governance principles are in place and that these requirements are followed and applied across the Group. The corporate governance arrangements are designed, inter-alia, to protect and respect the interests of all stakeholders, to ensure that the Company is managed for the long-term benefit of the Group’s shareholders and other stakeholders, and to provide shareholders and other stakeholders the opportunity to express their views and expectations for the Group in a manner that encourages open and ongoing dialogue with the Board. The Governance section of the Report from pages 71 to 77 sets out our approach to governance, provides further information on the operation of the Board and its committees and how the Group seeks to comply with the ten principles of the QCA Code. Deborah Davis Chair 21 May 2024 Board of directors - Governance Board composition and roles Board operation and meetings On 1 October 2023, Graham Paterson was appointed to the Board as a non-executive director and Chair of the Audit and Risk Committee and the Remuneration Committee and a member of the Insider Committee, replacing Charles Hindson who retired as a non- executive director and Chair and a member of the same Committees on that date. The Board comprises three independent non-executive directors (including me as Chair) and three executive directors. Ryan Keeling took over as CEO from Peter Keeling with effect from 1 January 2024, when Peter Keeling transitioned to an executive director role focused on corporate development and further strengthening Diaceutics’ precision medicine leadership position. The Board has adopted a formal schedule of matters reserved solely for its consideration, which may only be amended by the Board. Matters reserved for the Board include approval of overall Group strategy, budgets, major contracts and investments, certain areas of legal and regulatory compliance, key risk and control policy, operational performance, corporate and shareholder matters including corporate capital structure, the annual reports and financial statements and dividends. In 2023 the Board held seven scheduled monthly board meetings, replaced in months without meetings by a board reporting pack and supplemented by additional meetings and meetings with the executive management, where required for the proper management of the business. In addition, the Board held three extended face to face meetings in the year, devoted to a more in-depth review of key strategic areas including people, safety and security, strategy, marketing, and ESG (Environmental, Social and Governance) matters. One of these extended face to face meetings incorporated a strategy session to formulate and evaluate the Group’s near and long-term strategy. The Directors are provided with regular and timely information regarding the Group’s operational and financial performance. This rhythm of meetings will broadly continue throughout 2024. Scheduled board meetings are supplemented with additional meetings and informal discussions between members of the Board, the executive directors and 70 71 Diaceutics PLC Annual ReportCorporate governancesenior operational managers of the Company, in relation to strategic business development and other topics which are key to the Company’s progress. Relevant information is circulated to the Directors in advance of meetings to allow adequate time for discussion or consideration. Board meetings during the year and time committed The Board met 12 times in total during the financial year-ended 31 December 2023 for both scheduled and ad hoc meetings and calls. The following table shows the Directors’ attendance at scheduled Board meetings during the year-ended 31 December 2023: Deborah Davis Peter Keeling Ryan Keeling Nick Roberts Mike Wort Charles Hindson (resigned 1 October 2023) Graham Paterson (appointed 1 October 2023) Board 10/10 9/10 10/10 10/10 10/10 7/7 3/3 Audit Remuneration Insider 4/4 n/a n/a n/a 4/4 3/3 1/1 7/7 n/a n/a n/a 7/7 5/5 2/2 - - - None None None None Each of the executive directors are required to commit at least five days per week to their roles. The non-executive directors to provide such time as is required to fully and diligently perform their duties. All Board members are expected to attend all meetings of the Board and the committees on which they sit, wherever possible. The Directors are encouraged to debate and use independent judgement, based on their respective knowledge and experience, to challenge all matters affecting the business, whether strategic or operational. The Directors have direct access to the advice and services of the Company Secretary and are able to take independent professional advice in the furtherance of the duties, if necessary, at the Group’s expense. The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board. 72 Board committees The Audit Committee was reconstituted by the board of directors on 14 December 2023 as the Audit and Risk Committee with associated and updated terms of reference. The Board is supported by the Audit and Risk Committee, Remuneration Committee and Insider Committee, all of which have formally delegated duties and responsibilities and written terms of reference. The terms of reference of each committee are available from the Group’s website at diaceutics.com The Board and its committees are provided with information in advance of meetings to give time to review and consider the matters at hand. Each committee has access to such resources, information and advice as it deems necessary, at the cost of the Company, to enable each committee to discharge its duties. Audit and Risk committee The Audit and Risk Committee is chaired by Graham Paterson, who replaced Charles Hindson as the Committee Chair on 1 October 2023. The other members of the Committee are Deborah Davis and Mike Wort. It meets at least twice a year at appropriate times in the reporting and audit cycle and otherwise as required. The Committee’s responsibilities are set out in its terms of reference and include, amongst other things, reviewing the adequacy of the Group’s accounting and operating controls, reviewing the financial statements of the Group prior to publication, recommending the appointment of the auditor and review of the scope and results of its audit. It is further responsible for reviewing and monitoring the effectiveness of internal financial controls, risk management systems, overall risk framework and processes and risk appetite and strategy. Committee Chair on 1 October 2023. The other members of the Committee are Deborah Davis and Mike Wort. It meets at least twice a year at appropriate times in the reporting cycle and otherwise as required. The Committee’s responsibilities include, amongst others, responsibility for determining (within the agreed policy) the remuneration for the Chair, the Group’s executive directors and senior management, reviewing the design of share incentive plans, the structure of performance related pay schemes and targets related to those schemes and the processes relating thereto. Insider committee Operational inside or price sensitive information relating to, for example, a significant contract, is typically identified initially by the Senior Management Team (all members of whom are listed on the Company’s Insider List). There is an internal procedure for the assessment and announcement of such information, in discussion with the Company’s advisors, where necessary, and the Board is included on all such announcements. Other, one off or non-operational price sensitive events, would be considered by the Insider Committee, which comprises Nick Roberts, Mike Wort and Graham Paterson and meets on an ad hoc basis as required. It is responsible for assisting and informing the decisions of the Board concerning the identification of non-operational inside information and/or price sensitive information, and to make recommendations about how and when the Company should disclose that information in accordance with the Company’s disclosure manual, the Disclosure Guidance and Transparency Rules, the AIM Rules and the Market Abuse Regulations (‘“MAR’”). The Insider Committee did not meet during 2023, instead the Board favouring to meet in its entirety for matters it considered inside and/or especially price sensitive. Remuneration committee Board appointment, removal and re-election The Remuneration Committee is chaired by Graham Paterson, who replaced Charles Hindson as the The Company’s Articles of Association (the “Articles”) require that one-third of the Directors stand for re- election by shareholders annually by rotation and that any new Directors appointed during the year must stand for re-election at the AGM immediately following their appointment. In accordance with the Articles, Graham Paterson, having been appointed since the date of the last AGM will stand for election and Deborah Davis (non-executive Chair) and Ryan Keeling (CEO) will retire by rotation and stand for re-election at the AGM. On 1 October 2023, Charles Hindson resigned as a non-executive Director and was replaced by Graham Paterson. The Board thanks Charles for his dedicated and long-standing service as a non-executive director since the Company’s IPO in March 2019. Board knowledge, training and skills Directors receive regular and timely information on the Group’s operational and financial performance with information being circulated to the Directors in advance of meetings. The business reports monthly on its performance against its agreed budget. The executive directors maintain broad knowledge and skills via active day to day involvement with leading global experts from the lab, diagnostic, pharma, investor and wider life-science industries. Diaceutics is also a member of the Personalized Medicine Coalition, a pan industry group researching and promoting key dynamics of the precision medicine market. The Directors and employees of Diaceutics continue to be named on thought leading white and peer reviewed papers based on their research and analysis of the precision medicine market, most recently the Practice Gaps paper. Board members may attend such courses or training, as they feel appropriate, to keep up to date. Involvement with a variety of other boards allows the members to witness alternative approaches to similar business issues and to benefit from the advice of more than just the Group’s advisors. All Directors may take independent professional advice in the furtherance of their duties, if necessary, at the Group’s expense. In addition, the Directors have 73 Diaceutics PLC Annual ReportCorporate governancedirect access to the advice and services of the Company Secretary and senior managers in the business. The Chair, together with the Company Secretary, ensure that the Directors’ knowledge is kept up to date on key issues and developments pertaining to the Group, its operational environment and to the Directors’ responsibilities as members of the Board. Board performance and evaluation Two formal and internally orchestrated board effectiveness reviews have taken place since the Company’s IPO in 2019. The first was undertaken in 2019 to 2020 following the establishment of the Board post IPO and this was repeated in the year-ended 31 December 2021. This review was in the form of a structured questionnaire circulated to all Directors, where the Board’s performance was rated in several strategically important areas. Results and outcomes were analysed by the Company Secretary and reported to the Board. The Chair reported and discussed the key themes with the Board, with appropriate recommendations arising from this review being implemented by the Board. With the recent appointment of Graham Paterson to the Board in 2023, a further formal performance evaluation of the Board, the Audit and Risk Committee and the Remuneration Committee will take place during 2024. In addition to the formal appraisal process for Board members, the Chair and Chief Executive Officer regularly discuss the performance of the Board, the senior management team and succession planning for both. Application of QCA code principles Principle 1 Principle 3 Establish a strategy and business model which promote long-term value for shareholders At the centre of Diaceutics is its purpose: that every patient should get the opportunity to receive the right test and the right therapy to positively impact their disease outcome. We believe that by driving to fulfil this purpose we will drive long term stakeholder value and have established a strategy and business model with this purpose at the heart. The Group’s strategy is reviewed each year, and in 2023, underpinned by the strong financial momentum and balance sheet, this review culminated in an increased investment and acceleration of the strategy. The strategy is described in detail on pages 24 to 25. Further details of the investment case can be found on page 21 and our market opportunity on pages 18 to 20. Principle 2 Seek to understand and meet shareholder needs and expectations The Board is committed to maintaining good communications and constructive dialogue with both its institutional and private investors and the interests of shareholders are considered paramount to the decision-making process and strategic direction of the Group. Details of how we communicate with our stakeholders (including shareholders) are set out on pages 60 to 63, ‘Stakeholder engagement and s172’. Take into account wider stakeholder and social responsibilities and their implications for long- term success The Group has strong regard for the importance of its stakeholders, including shareholders, customers and suppliers, partners and labs, patients, the community, regulators and employees. Details of how we identify and engage with the varying principal interests of stakeholders can be found on pages 60 to 63, ‘Stakeholder engagement and S172’, and pages 40 to 54 on ESG. Principle 4 Embed effective risk management, considering both opportunities and threats, throughout the organisation The Board acknowledges its responsibility for reviewing the effectiveness of the systems that are in place to manage risk and to provide reasonable assurance with regard to the safeguarding of the Group’s assets, operations, people and reputation. The Board is responsible for reviewing and approving overall Group strategy and determining the financial structure of the Group including treasury, tax and dividend policies. There are comprehensive procedures for budgeting and planning, for monitoring and reporting to the Board business performance against those budgets and for forecasting expected performance over the financial year. These cover profits, cash flows, capital expenditure and the balance sheet. The principal business and financial risks have been identified and control procedures implemented. Further details on the framework and principal risks and uncertainties can be found of pages 56 to 59. The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. Principle 5 Maintain the board as a well- functioning, balanced team led by the Chair Composition, roles and responsibilities The Board currently comprises the Chair, Deborah Davis, two non-executive directors, Graham Paterson (appointed 1 October 2023), Mike Wort and three executive directors, Ryan Keeling (Chief Executive Officer), Nick Roberts (Chief Financial Officer) and Peter Keeling (Executive Director). The Directors’ biographies, together with their respective Board committee memberships, are set out on pages 66 to 70. The Chair is responsible, inter-alia, for the proper functioning of the Board and the Chief Executive Officer has executive responsibility for running the Group’s business and the development and implementation of the Group’s strategy. The Chief Financial Officer is responsible for all of the Group’s financial and risk management operations and developing the global financial architecture that underpins Group strategy. Since stepping down as Chief Executive Officer on 1 January, Peter Keeling’s primary focus as an Executive Director is to accelerate Diaceutics’ corporate development. The non-executive directors have a particular responsibility for bringing objective challenge, judgement and scrutiny to all matters of the Board. 74 75 Diaceutics PLC Annual ReportCorporate governance They critically challenge proposed strategies and operational performance. The Board considers that the non-executive directors are independent. it to deliver the strategy of the Group, it is nevertheless mindful of the need to continually review the needs of the business to ensure that this remains true. A Code of Conduct for Employees, which includes ethics and ethical behaviour, was introduced in January 2024. The Board considers that it has an appropriate balance between independence, knowledge of the Company’s technology, sector experience and professional standing to allow it to discharge its duties and responsibilities; pursue the Company’s strategic goals and address anticipated issues in the foreseeable future. However, the composition of the Board remains constantly under review and consideration will be given to any potential additions to the Board, to further broaden the experience and effectiveness of the Board as the Group develops. At this stage in the Company’s development the Board does not support the nomination of a senior non-executive director, but this appointment remains under review. See pages 71 to 73 of the Corporate governance report for further information on Board operation and meetings, Directors’ time committed and Board Committees. Principle 6 Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities The biographies of the Board are set out on pages 66 to 70. The Board retains a range of industry, technology, operational and finance experience and there is a good balance of skills, independence, diversity and knowledge of both the Group and the arena in which it operates including pharma, platform technology, innovation, marketing, finance and public markets. The non-executive directors have been appointed on merit and for their specific areas of expertise and knowledge that enables them to bring independence of judgement on issues of strategy and performance and to debate matters constructively. Directors’ key individual skills are listed with their biographies. The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills, knowledge, experience and time committed to enable 76 See pages 66 to 70 which covers the ‘Knowledge, training and skills’ of the Board. Principle 7 Evaluate board performance based on clear and relevant objectives, seeking continuous improvement The Board continually seeks to improve the ways in which it interacts and the manner in which information is presented to it. The processes and information presented to the Board are regularly reviewed to ensure a consistent and informative approach to reporting. This, in turn, facilitates informed analysis and decision making by the Board of all matters at hand. The Board is committed to maintaining appropriate standards for all the Company’s business activities and ensuring that these standards are set out in written policies and procedures to support these standards. These include our Equality, Diversity and Inclusion policy, Anti-Bribery and Anti-Corruption Policy, Human Rights policy, Whistleblowing policy, Data Privacy and Anti-Slavery and Human Trafficking Statement. Our critical vendor assessment policy for new core suppliers, includes a request for information as to their code of ethics thereby seeking to ensure that their culture aligns with our own and assessments of existing suppliers are carried out as part of the regular risk review process. See ESG on pages 40 to 54 and Stakeholder engagement and S172 on pages 62 to 63 for further information on the Group’s corporate culture and our stakeholders. See page 74 of the Corporate Governance Report which deals with the ‘Performance and evaluation’ and page 73 for ’Appointment, removal and re-election’ of the Board. Principle 9 Principle 8 Promote a corporate culture that is based on ethical values and behaviours The core structure of the business culture is based on the key values of Empowerment, Foresight, Fun, Empathy, Communication and Trust, together known as the Diaceutics EFFECT values. Culture activities are led by both Culture Ambassadors, in parallel with the dissemination of our values, throughout the Company, and beyond, to our collaborators, lab partners, clients and investors. These EFFECT values are core to both our recruitment and annual Performance Management Framework and are the cornerstone on which our mandatory onboarding programme is based. Maintain governance structures and processes that are fit for purpose and support good decision- making by the board The Group’s governance structures have been reviewed in the light of the QCA Code and the needs of the business. The Board believes them to be in accordance with best practice as adapted to best comply with the Group’s circumstances and stage of development. The Company complies with the principles of the QCA Corporate Governance Code issued in 2018 and will be reporting against the new 2023 QCA Code next year, in respect of the Group’s financial year-ending 31 December 2024. The Board has overall responsibility for implementing the Group’s strategy and promoting the long-term success of the Group. The executive directors have overall responsibility for managing the day-to-day operational, commercial and financial activities, supported by the senior management team. The non-executive directors are responsible for bringing independent and objective judgement to Board decisions. The Board is confident that its governance structures and processes are consistent with its current size and complexity of the business. The appropriateness of the Group’s governance structures will be reviewed annually to take account of further developments of accepted best practice and the development of the Company. See pages 71 to 74 of the Corporate Governance Report which deals with matters reserved to the board and Board Committees and pages 66 to 70 for Directors’ roles and responsibilities. Principle 10 Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The Company communicates with shareholders inter alia through the Annual Report and financial statements, the announcement of its full-year and half-year results, the AGM and the release of news via RNS channels and by regular one-to-one meetings with large existing or potential new shareholders and by open events with private shareholders. The Group’s workforce is regularly updated as appropriate, with the development of the Group and its performance. Full details of how we communicate with our employees is set out in the ESG section on pages 46 to 49. The Company holds regular All Company Meetings (ACM) to which all employees are invited, to communicate, disseminate and discuss the Group’s plans and goals. The previous ACM was held in 2022 and a further three-day ACM was held in April 2024. This provided the opportunity for the all 200 employees present to fully engage and align with the culture and strategic goals of the Group in an environment which was effective and conducive to this achievement. Please see our stakeholder engagement and S172 on pages 60 to 63 for further information about our engagement with all of our stakeholders. 77 Diaceutics PLC Annual ReportCorporate governanceRemuneration Committee Report On behalf of the Board, I am pleased to present the Remuneration Committee Report for the year- ended 31 December 2023. Remuneration committee I was appointed to the Board as a non-executive director and Chair of the Remuneration Committee on 1 October 2023, replacing Charles Hindson who retired as a non-executive director and Committee chair on that date.  During the period 1 January 2023 to 30 September 2023 the Committee consisted of three non-executive directors: Charles Hindson (as Chair), Deborah Davis and Mike Wort. Following my appointment on 1 October 2023 the Committee has also comprised three non-executive directors: me (as Chair), Deborah Davis and Mike Wort. The Remuneration Committee met seven times during the year-ended 31 December 2023.  Role of the remuneration committee The Remuneration Committee has responsibility for determining and agreeing with the Board the Company’s broad remuneration policy, for the Chair and the executive directors, including pension rights and compensation payments, together with recommending the level and structure of remuneration for senior management. The Remuneration Committee also has responsibility for determining (within the terms of the agreed policy) the total individual remuneration package of the Chair, the executive directors, Company Secretary, and senior executives including bonuses, incentive payments, and share options. The Committee is responsible for the design, setting of targets and approval of total annual payments under the Company’s performance related pay schemes together with the design of all share incentive plans and annual awards thereunder. In performing its duties, the Remuneration Committee takes consideration of the pay and employment conditions across the Group, in determining salary increases. The Board is responsible for the remuneration of the non-executive directors.  78 Policy on executive directors and senior management remuneration  Diaceutics prioritises recruiting and retaining highly skilled and experienced staff to support the success of the Group. The remuneration policy seeks to deliver a fair and balanced remuneration package for each of the executive directors and senior management team, reflecting experience and role. The remuneration policy takes into consideration the Group’s appetite for risk and is aligned to the long-term strategic goals of the Group. In remunerating the executive directors and management, a proportion of the remuneration is structured to link rewards to corporate and individual performance to drive long-term success for the Group.  Basic Salary The basic salaries of the executive directors are reflective of competitive rates, taking into consideration the level of experience and skills which the individual has relevant to the sector and the level of compensation within comparable companies. All executive directors’ salaries are determined on appointment, as part of the individual remuneration package (within the terms of the agreed policy) and are reviewed annually by the Committee. Executive directors’ pay is considered annually, in line with the wider workforce. Changes in basic salaries are considered in the light of changes in responsibilities, roles, and external changes such as inflation.  Ryan Keeling was appointed CEO from 1 January 2024 in place of Peter Keeling who stepped down as CEO on the same date. In line with his service contract, Peter remains an executive director on the Board. In February 2024 the Committee recommended that a review and benchmarking of the salaries and incentive packages (including Long Term Incentive Plans) of the Board (including the Chair of the Board and the non-executive directors) and senior management be undertaken both in absolute and relative terms. External advisors were commissioned to carry out this review and the findings were adopted in May 2024. As a result of this review, the base salary of senior managers will be increased by 5% from May 2024 and backdated to 1 March 2024, in line with the wider employee base. The executive director salaries will be increased from 1 March 2024 as follows: Ryan Keeling, CEO, from £270,880 to £315,000; Peter Keeling, executive director, remains on £297,156; Nick Roberts, CFO, from £194,616 to £225,000.  During the 2023 year the Committee approved a group-wide pay increase which was a mix of both inflationary and performance measures. A 6% salary increase was awarded to eligible employees on 1 January 2023 with a further average increase of 3.2% awarded in April 2023. The total salary increases in 2023 of between 6% and 10% are based upon individual employee performance whilst being representative of the wider inflationary environment. This was in addition to the one-off cost of living payment of £1,000 made to all employees in December 2022. In April 2024, the committee approved a group-wide pay increase, which was a mix of both inflation and performance measures, and which averaged 4.61%, and this was backdated to 1 March 2024. Pension All employees in the UK and Ireland can participate in the Group pension scheme within which the employer makes pension contributions of between 2% and 5% for employees. Enhanced rates can be agreed for particular members of senior management on an individual basis.  The pension arrangements in place during the financial year for the executive directors are that the Company contributed 5% of salary for Peter Keeling and Ryan Keeling and 3% for Nick Roberts. These arrangements were reviewed in 2024 and will all be aligned to 5% from June 2024. Private Healthcare All employees including the executive directors are eligible to participate in the private healthcare arrangements.  Performance related bonuses All executive directors, senior and middle management and other key employees are eligible to receive annual performance-related bonuses. Annual cash bonuses are paid upon the achievement of pre-set financial and strategic objectives of the Group. The Committee, in conjunction with the Board, reviews these targets and sets the objectives at the commencement of each financial year. During 2023, executive directors were eligible to receive an annual cash bonus based on corporate financial targets (Revenue and Profit) of up to 60% of their base salary. In 2023, bonuses equivalent to 44% of the maximum (being 26.4% of basic pay) were paid to executive directors in relation to the Group’s 2022 performance. Based on the Group’s performance for the 2023 financial year, the executive directors are not due to receive an annual cash bonus.  In addition to executive director bonuses, the business paid discretionary performance related bonuses to all eligible employees in relation to the 2022 results.  From 2024, the performance related bonuses for executive directors will be increased from a maximum percentage of 60% of base salary to a maximum percentage of 80% of base salary. Share options Equity-based awards are made to executive directors, senior and middle management, and other key employees. This scheme is intended to provide a long-term incentive plan for eligible employees and ensure employee remuneration is aligned to those of shareholders. The first grant of market value share option awards was made in June 2020 with second and third grants of performance share options with performance criteria based on absolute shareholder return were made in April 2021 and, April 2022. The grant of share options in May and November 2023 had performance criteria equally split between absolute shareholder return and recurring revenue attainment.  The Committee and Board has reviewed the effectiveness of the equity-based awards and performance conditions in 2024 and have made further changes to the performance criteria and value of share option awards in 2024 to ensure they incentivise employees and align employee objectives with long- term shareholder value. During 2023, executive directors were eligible to be awarded LTIP equity awards on an annual basis up to a value of 30% of their base salary. Details of share option awards to Directors are included later in this report. From 2024 executive directors are eligible to be awarded LTIP equity awards on an annual basis up to a value of 100% of their base salary. Share incentive plan All Group employees are entitled to participate in the Group’s Share Incentive Plan (‘“SIP’”). UK employees participate through an HMRC approved share matching scheme and non-UK employees through a share option structure. The SIP enables employees to purchase shares up to a value of £1,800 in the Company which are matched by the Company on a one for one basis. Another window for new and existing employees to join the SIP opened in March 2024 and closed in late April 2024. As of April 2024, there were 95 UK employees and 24 global employees (representing 61% of the Group’s workforce) enrolled in the SIP.  Activity During the Year In the year to 31 December 2023, following on from a recommendation of the Remuneration Committee in the previous year, a job evaluation and remuneration (salaries and benefits) benchmarking exercise was undertaken for all roles below senior management level. The Group engaged with an independent third party to assist with this exercise, the objective of which was to develop a framework whereby jobs are appropriately classified and aligned and which are also fair and equitable for current and future use. A review of UK and Ireland roles was completed in Q1 2023 with Rest of world roles being completed in early Q2 2023. The exercise resulted in a comprehensive benchmarking of all salaries and benefits below senior management, a consistent approach to building job descriptions and responsibilities and a job evaluation framework that the business can utilise going forward. The findings from the exercise started to be rolled out during 2023 and will continue into 2024. The Committee also considered and made recommendations on several other key matters including the interpretation and application of the performance criteria targets for the LTIP share options issued in May 2023; the one-off cost of living payment and performance related pay increases during the year; company performance in relation to bonus payments in relation to the 2022 year and the grant of share options under the LTIP.  Diaceutics continues to build a succession programme and will focus on incentivising and retaining key employees through their development and career progression, as well as incentivising them using remuneration structures that align their goals with the longer-term goals of the Company and shareholders. The performance management process was enhanced in recent years to include job shadowing and job rotation initiatives to provide employees with a broader experience of other roles within the Group. These initiatives operate for all employees apart from senior management, where succession planning is managed by the Chief Executive Officer with the support of the Board. 79 Diaceutics PLC Annual ReportCorporate governanceDirectors’ remuneration The remuneration of the Board of Directors of Diaceutics PLC for the year-ended 31 December 2023 is set out below: Directors’ interests in share options for the year-ended 31 December 2023  The interests of the Board of Directors of Diaceutics PLC in share options for the year-ended 31 December 2023 is set out below: Executive   Basic Salary (£) Bonus¹ (£) Taxable Benefits² (£)  Pension (£) 2023 Total (£) 2022 Total (£) Peter Keeling   296,185 Ryan Keeling   268,994 Nick Roberts³ 186,579 Total 751,758 - - - - -  - 807 807 14,809 13,500 5,663 33,972 310,994 282,494 193,049 786,537 363,235 334,266 149,505 896,900 Non-Executive   Basic Salary (£) Bonus¹ (£) Taxable Benefits² (£)  Pension (£) 2023 Total (£) 2022 Total (£) Deborah Davis   75,000  Mike Wort   39,000  Charles Hindson 45,000  Graham Paterson4  15,000 Total Grand Total 925,758 -  -  -  - - -  -  -  - -  -  -  - 807 33,972 75,000  39000  45,000  15,000 174,000 960,537 70,000 30,000  35,000  - 135,000 1,031,900 Executive   Peter Keeling  Ryan Keeling Nick Roberts Type of Award  LTIP  LTIP  LTIP LTIP LTIP  LTIP  LTIP LTIP LTIP    ESOP   SIP   LTIP  Number of share options at 31 December 2023    Exercise Price  (£) Award Date   17 Apr 2020   1 Apr 2021   1 Apr 2022   18 May 2023  17 Apr 2020   1 Apr 2021   1 Apr 2022   18 May 2023 1 Apr 2022   27 May 2022   180,000   73,542   79,303   102,468  180,000   64,154   72,290   93,407 41,838   50,000   9 Sep 2022 to 31 Dec 2023 2,784 18 May 2023 67,034 Vesting Date   17 Apr 2023   1 Apr 2024    1 Apr 2025   18 May 2026 17 Apr 2023   1 Apr 2024   1 Apr 2025   18 May 2026 1 Apr 2025   18 Mar 2025   Number of share options at 31 December 2022    180,000   73,542   79,303  -  180,000   64,154   72,290  -  41,838  50,000   9 Sep 2025 to 31 Dec 2026   900  18 May 2026 - 1.265  0.002  0.002  0.002 1.265  0.002  0.002  0.002 0.002  0.002  0.002 0.002  80 81 Diaceutics PLC Annual ReportCorporate governance¹ No bonus is payable relation to performance in 2023.  ² Taxable benefits consist of private healthcare provision during the period.  ³ Nick Roberts’ remuneration in 2022 reflects all payments made since his appointment on 18 March 2022 until the year-ended 31 December 2022.  ⁴ Graham Paterson’s remuneration in 2023 reflects all payments made since his appointment on 1 October 2023.  Directors’ interests in shares for the year-ended 31 December 2023  The Directors who held office during 2023 had the following interests in the ordinary shares of £0.002 in the capital of the Company: Executive   Number of Ordinary Shares  held at 31 December 2023   Ordinary Shares as a % of issued share capital   Number of Ordinary Shares  held at 31 December 2022    Peter Keeling   17,252,0491 Ryan Keeling   2,990,6432 Nick Roberts   62,5763 Non-Executive  Deborah Davis     86,000  Mike Wort 144,737   Charles Hindson4       Graham Paterson5 - - 20.42%  3.54%  0.07%  0.10%  0.17%  - - 17,252,049  2,990,643  40,079 86,000 144,737 63,500 - Total 20,536,005 24.30%   20,577,008 Save as described above there were no changes in the shareholdings of the directors between 31 December 2023 and the date of this report.   • On 6 March 2024 Graham Paterson purchased 33,564 Ordinary Shares at a price of £0.985 per share, representing 0.04% of the Company’s issued share capital.   • On 28 March 2024 Peter Keeling and a PCA of Peter Keeling cumulatively sold 1,500,000 Ordinary Shares at a price of £1.02 per Ordinary Share. As a result of the sale, Peter Keeling and the PCA combined shareholding in Diaceutics is 15,752,049 Ordinary Shares representing approximately 18.6% of the Company’s issued share capital.  • During the period from 1 January 2024 to 30 April 2024 a total of 1,194 Ordinary Shares were purchased on behalf of, or issued to, Nick Roberts pursuant to the SIP, of which 597 are purchased shares, and 597 are matching shares which do not vest until three years from the date of purchase. Service Contracts and Non-Executive Directors’ letters of appointment The executive directors have rolling contracts that are terminable on 12 months’ notice except for Nick Roberts whose contract is terminable on 6 months’ notice. The Chair and each of the non-executive directors have a letter of appointment which is terminable on three months’ notice.  From 1 March 2024, the Non-Executive Director salaries will increase to the following: Non-Executive Chair £81,000; Non- Executive Director £39,000. Additional fees are payable to Non-Executive Directors for the following positions: Audit and Risk Committee Chair £5,500; Remuneration Committee Chair £5,500. On 26 September 2023 Peter Keeling gave 12 months’ notice of his resignation as an executive director of the board in accordance with his service contract. The responsibilities of Peter’s CEO position were transitioned to Ryan Keeling up to 1 January 2024. Peter remains an executive director of the board until the end of his notice period.  Committee Evaluation The Committee last underwent a formal performance evaluation as part of the Board’s effectiveness review in respect of the year-ended 31 December 2021. With the recent appointment of Graham Paterson as the Chair of the Committee, it plans to undergo a standalone formal performance evaluation during 2024.  Shareholder Approval of the Directors’ remuneration report Shareholders are asked to approve this directors’ Remuneration Report (excluding the directors’ Remuneration Policy) for the year-ended 31 December 2023 at the forthcoming Annual General Meeting. This resolution is advisory in nature.  Graham Paterson Remuneration Committee Chairman 21 May 2024 82 83 Diaceutics PLC Annual ReportCorporate governance1 includes 8,587,975 shares held by a Person Closely Associated (PCA) with Peter Keeling   2 includes 100,000 shares held by a PCA with Ryan Keeling 3 includes 19,525 shares held by a PCA with Nick Roberts   4 Resigned 1 October 2023  5 Appointed 1 October 2023  Audit committee report On behalf of the Board, I am pleased to present the Audit and Risk Committee Report for the year- ended 31 December 2023. Audit and risk committee I was appointed to the Board as a non-executive director and Chair of the Audit Committee on 1 October 2023, replacing Charles Hindson who retired as a non-executive director and Committee chair on that date. The Audit Committee was reconstituted by the board of directors on 14 December 2023 as the Audit and Risk Committee with associated and updated terms of reference. During the period 1 January 2023 to 30 September 2023 the Committee consisted of three non-executive directors: Charles Hindson (as Chair), Deborah Davis and Mike Wort. Following my appointment on 1 October 2023 the Committee has also comprised three non-executive directors: me (as Chair), Deborah Davis and Mike Wort. The Audit and Risk Committee is convened as required and met four times during the year-ended 31 December 2023 to discharge its responsibilities inter alia in connection with the Group’s Financial Statements for the year-ended 31 December 2022 and the Interim Financial Statements for the six months ended 30 June 2023. Role of the audit and risk committee The Audit and Risk Committee is responsible for ensuring that the financial performance of the Group is properly reported on and reviewed, and its role includes monitoring the integrity of the financial statements of the Group (including annual and interim financial statements and results announcements), reviewing any changes to accounting policies, reviewing and monitoring the extent of the non-audit services undertaken by external auditors, reviewing findings of an audit with the auditors, meeting regularly with the auditors and advising on the appointment of external auditors. It is further responsible for reviewing and monitoring the effectiveness of internal financial 84 controls, risk management systems and overall risk framework and processes, considering appropriate risk appetite and strategy across all major activities, overseeing current and prospective risks faced by the Company and its strategy in relation to future risks, ensuring that risk management is properly considered in Board decisions, and that the risk management function is adequately sourced. The Chief Executive Officer, Chief Financial Officer, the Vice President of Finance and the external auditors normally attend Committee meetings. The Committee also met with the external auditors without management present during the year. Whilst the Board as a whole has a duty to act in the best interests of the Company, the Committee has a particular role, acting independently of management, to ensure that the interests of shareholders are properly protected in relation to financial reporting and the effectiveness of the Group’s systems of financial internal controls. The principal areas of judgement considered by the Committee in relation to the Group’s 2023 financial statements include revenue recognition in accordance with IFRS 15, capitalisation of intangibles, impairment assessment of intangibles and going concern. Each of these areas also received particular focus from the external auditor, who provided detailed analysis and assessment of the matter in their report to the Committee. The key responsibilities of the Committee are to: • Monitor the integrity of the Group’s financial statements and other statements and announcements relating to its financial performance, reviewing and challenging the methodology and assumptions used where necessary • Consider the Group’s accounting policies and practices along with its application of accounting standards and significant judgements • Review and monitor the effectiveness of the Group’s system of internal controls, including financial reporting and controls and risk management systems and overall risk framework and processes • Consider and oversee the Group’s appetite and strategy for risk across all major activities, oversee current and future risks and the management thereof, ensure the proper consideration of risk by the board and adequate resourcing of the risk management function • Review the adequacy and security of the Group’s procedures and controls for whistleblowing; the detection of fraud and the prevention of bribery • Consider and make recommendations to the board on the appointment, reappointment, removal or resignation and remuneration of the external auditors • Oversee the relationship with the Group’s external auditors including consideration of the objectivity and independence of the external audit process. The full terms of reference for the Committee can be found on the Company’s website at diaceutics.com External auditors Ernst & Young were appointed by the Board as the Company’s external auditor on 18 May 2023 for the 2023 reporting year and it is their intention to put themselves forward at the AGM to stand as auditors for the next financial year. There are no contractual obligations that restrict the Board’s choice of external auditors. Committee performance and effectiveness During the year, the Committee: • • • Reviewed the Annual Report and Accounts Reviewed the status of the systems of internal control and monitored progress of the Internal audit and risk management programmes during the current year; and Liaised with the external auditors, including on their appointment, and considered their non- audit work. The Committee last underwent a formal performance evaluation as part of the Board’s effectiveness review in respect of the year-ended 31 December 2021. With the recent appointment of Graham Paterson as the Chair of the Committee, it plans to undergo a standalone formal performance evaluation during 2024. This Audit and Risk Committee Report was reviewed and approved by the Board. Directors’ report The Directors present their annual report and the audited Group financial statements for the year-ended 31 December 2023. These will be laid before the shareholders of the Company at the next Annual General Meeting (AGM).  Diaceutics PLC is incorporated in Northern Ireland, registration number NI055207, and its registered office is First Floor, Building Two, Dataworks at Kings Hall Health and Wellbeing Park, Belfast, County Antrim BT9 6GW. The Company is listed on the Alternative Investment Market of the London Stock Exchange (AIM: DXRX).  Principal activities The principal activities of the Group during the year continued to be the provision of commercialisation solutions for precision medicines to the world’s leading pharma and biotech companies through data analytics, scientific and advisory services enabled by our platform DXRX - The Diagnostics Network ®.The Group engages in research and development activities in the area of precision medicine data and platform software.  Results and dividends Accordingly, the Group continues to adopt the going concern basis in preparing its consolidated financial statements.  Research and development and future developments In line with the Group’s strategy, management intends to further develop the Group’s technology product offering, including its proprietary data lake and DXRX platform, to meet future customer and market demand.  Outlook and financial risk Details of market outlook are disclosed in our market opportunity section on page 18, and financial risks are outlined within principal risks and uncertainties on pages 56 to 59.  Directors The Directors who served during the year, and up to the date the financial statements were signed, were:  • Deborah Davis  • • Peter Keeling  Ryan Keeling  • Nick Roberts   Graham Paterson Audit annd Risk Committee Chair 21 May 2024 The loss after tax for the year amounted to £1,746,000 (2022: profit £724,000).  • Graham Paterson (appointed 1 October 2023)  • Mike Wort No dividends were paid during the year. The directors do not recommend the payment of a dividend.  • Charles Hindson (resigned 1 October 2023)  Going concern The financial performance and balance sheet position at 31 December 2023 along with a range of scenario plans to 31 December 2026 have been considered, applying different sensitives to revenue. Across these scenarios, including at the lower end of the range, there remains significant headroom in the minimum cash balance over the period to 31 December 2026 and therefore the Directors have satisfied themselves that the Group has adequate funds in place to continue in operational existence for the foreseeable future. In accordance with the Articles of Association, Graham Paterson, having been appointed since the date of the last AGM will stand for election and Deborah Davis (non-executive Chair) and Ryan Keeling (CEO) will retire by rotation and stand for re-election at the forthcoming AGM. 85 Diaceutics PLC Annual ReportCorporate governance Directors’ interests and indemnity arrangements  Share capital  Political donations  Post balance sheet events Independent auditors  The Directors’ interests in the shares of the Company are disclosed in the Remuneration Report on pages 80 to 82. The Directors and officers of the Group have the benefit of a Directors’ and Officers’ liability insurance.  No Director had, during or at the end of the year, a material interest in any contract which was significant in relation to the Group’s business except in respect of Peter Keeling’s interest in O’Conner & McCann Ltd, the lessor of the Company’s Dataworks office in Belfast, and service agreements and share options which are disclosed in the Directors’ Remuneration Report.  Details of the Company’s issued share capital and treasury shares are shown in Note 24 to the consolidated financial statements.  The share capital of the Company comprises one class of ordinary shares and these are listed on AIM. At 31 December 2023 there were 84,501,390 fully paid ordinary shares in issue. All shares are freely transferable and rank pari passu for voting and dividend rights.  The Group has not made any political donations during the year (2022: £Nil).  Financial instruments  Information on the Groups’ financial instruments,  together with the Groups’ assessment on financial risk is disclosed in Note 23 and is included in this report by cross reference.  Substantial shareholdings At 31 December 2023, shareholders holding more than 3% of the share capital in Diaceutics PLC were: Non-Executive  Peter Keeling ¹ Gresham House Ordinary Shares Percentage of that class 17,252,049 10,823,500 Canaccord Genuity Wealth Management  7,745,987 Danske Bank AS  Berenberg Bank  Ryan Keeling ² Elizabeth Considine Total 3,853,474 3,633,133 2,990,643 2,962,169 49,260,955 20.42%   12.81%   9.17%  4.56%   4.30%  3.54% 3.51%  58.30% 1 Includes 8,587,975 shares held by a Person Closely Associated (PCA) with Peter Keeling 2 Includes 100,000 shares held by a PCA with Ryan Keeling Save as referred to above, the Directors are not aware of any persons as at 31 December 2023 who were interested in 3% or more of the voting rights of the Company or could directly or indirectly, jointly or severally, exercise control over the Company.  86 The auditors, Ernst & Young, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.  This report was approved by the Board and signed on its behalf.  Ryan Keeling CEO 21 May 2024 The Directors are proposing a special resolution that will be put to shareholders at the AGM to approve a capital reduction. The capital reduction being requested is to cancel the share premium reserve, currently standing at around £37.1 million and release this amount to distributable reserves. On 25th January 2024 the warrant holder exercised their remaining 177,915 warrant shares at a price of £0.76 per share. No further warrant shares remain outstanding. Streamline Energy and Carbon Reporting (SECR) Diaceutics PLC has elected to adopt the requirements of scope 1, 2 and 3 greenhouse gas (GHG) emissions in accordance with the Streamlined Energy and Carbon Reporting (SECR) framework ahead of the statutory requirement to do so. The report includes Diaceutics’ stated emissions for the most recent reporting year, the 12 months from 1 January 2023 to 31 December 2023. As this is Diaceutics’ the first SECR, no prior year comparative data has been included. Further information about the SECR methodology, scope, process and reported numbers are disclosed on pages 42 to 43 and are included in this report by cross reference. Disclosure of information to auditors  Each of the persons who are Directors at the time when this Directors’ Report is approved has confirmed that:  • • So far as the Director is aware, there is no relevant audit information of which the Group’s auditors are unaware; and  The Director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Group’s auditors are aware of that information.    87 Diaceutics PLC Annual ReportCorporate governanceStatement of Directors responsibilities in relation to the financial statements The Directors are responsible for safeguarding the as- sets of the Group and Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.  The Directors are also responsible for keeping ade- quate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company, thus enabling them to ensure that the financial statements comply with the Companies Act 2006.  The Directors are responsible for the maintenance and integrity of the Ccompany’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.  Ryan Keeling CEO 21 May 2024 The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.  Company law requires the Directors to prepare finan- cial statements for each financial year. Under that law, the Directors prepared the group financial statements in accordance with UK-adopted international account- ing standards and the company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law).  Under company law, Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the group for that period. In preparing the financial state- ments, the Directors are required to:  • • Select suitable accounting policies and then apply them consistently;  State whether applicable UK-adopted interna- tional accounting standards have been followed for the group financial statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the company financial statements, subject to any material departures disclosed and explained in the financial state- ments;  • Make judgements and accounting estimates that are reasonable and prudent; and  • Prepare the financial statements on the going concern basis unless it is inappropriate to pre- sume that the group and company will continue in business.  88 89 Diaceutics PLC Annual ReportCorporate governanceIndependent auditor’s report to the members of Diaceutics PLC Opinion In our opinion: • Diaceutics plc’s Group financial statements and parent company financial statements (the “financial statements”) give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2023 and of the Group’s loss for the year then ended; • • • the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practices; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Diaceutics plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year-ended 31 December 2023 which comprise: Group Parent company Group Profit & Loss Account for the year then ended Company Statement of Financial Position as at 31 December 2023 Group Statement of Comprehensive Income for the year then ended Company Statement of changes in equity for the year then ended Group Statement of Financial Position as at 31 December 2023 Related notes 1 to 17 to the financial statements including material accounting policy information Group Statement of Changes in Equity for the year then ended Group Statement of Cash Flows for the year then ended Related notes 1 to 29 to the financial statements, including material accounting policy information The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and parent Company’s ability to continue to adopt the going concern basis of accounting included: Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and parent Company’s ability to continue as a going concern for a period from the date of signing of this audit opinion to 31 December 2026.  • In conjunction with our walkthrough of the Group’s financial close process, we confirmed our understanding of management’s going concern assessment process and also engaged with management early to ensure all key factors were considered in their assessment; Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability to continue as a going concern. • We obtained management’s going concern assessment, including the cash forecast for the going concern period which covers the period from the date of signing of this audit opinion to 31 December 2026; Overview of our audit approach • We tested the factors and assumptions included audit procedures on specific balances for a further 1 component. Audit scope • We performed an audit of the complete financial information of 3 components and Key audit matters • • • The components where we performed full or specific audit procedures accounted for 99% of Loss Before Tax, 100% of Revenue and 99% of Total Assets. Revenue recognition Accounting for capitalised development costs Materiality • Overall Group materiality of £118,500 which represents 0.5% of Group Revenue. in the cash forecast. We considered the appropriateness of the methods used to calculate the cash forecasts and determined through inspection and testing of the methodology and calculations that the methods utilised were appropriately sophisticated to be able to make an assessment for the Group; • We considered mitigating factors that are within control of the Group. This includes review of the Group’s cash outflows and evaluating the Group’s ability to control these outflows as mitigating actions if required; • We have performed reverse stress testing in order to identify what factors would lead to the Group utilising all cash which covers the period from the date of signing of this audit opinion to 31 December 2026; • We reviewed the Group’s going concern disclosures included in the annual report in order to assess that the disclosures were appropriate and in conformity with the reporting standards. 90 91 Diaceutics PLC Annual ReportCorporate governanceAn overview of the scope of the parent company and group audits Tailoring the scope Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile, the organisation of the Group and effectiveness of group wide controls, the potential impact of climate change, changes in the business environment when assessing the level of work to be performed at each company. In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative coverage of significant accounts in the financial statements, of the 5 reporting components of the Group, we selected 4 components covering entities within United Kingdom, United States, Ireland and Singapore, which represent the principal business units within the Group. Of the 4 components selected, we performed an audit of the complete financial information of 3 components (“full scope components”) which were selected based on their size or risk characteristics. For the remaining 1 component (“specific scope component”), we performed audit procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their risk profile. The reporting components where we performed audit procedures accounted for 99% of the Group’s Loss Before Tax (2022: 89% of the Group’s Profit Before Tax), 100% (2022: 100%) of the Group’s Revenue and 99% (2022: 100%) of the Group’s Total Assets. For the current year, the full scope components contributed 91% of the Group’s Loss Before Tax (2022: 79% of the Group’s Profit Before Tax), 99% (2022: 99%) of the Group’s Revenue and 98% (2022: 99%) of the Group’s Total Assets. The specific scope component contributed 8% of the Group’s Loss Before Tax (2022: 10% of the Group’s Profit Before Tax), 1% (2022: 1%) of the Group’s Revenue and 1% (2022: 1%) of the Group’s Total Assets. The audit scope of these components may not have included testing of all significant accounts of the component but will have contributed to the coverage of significant accounts tested for the Group. Of the remaining 1 component it represents 0% (2022: 0%) of the Group’s Revenue. For this component, we performed other procedures, including analytical review, testing of consolidation journals, intercompany eliminations and foreign currency translation recalculations to respond to any potential risks of material misstatement to the Group financial statements. The charts below illustrate the coverage obtained from the work performed by our audit teams. The charts below illustrate the coverage obtained from the work performed by our audit teams. Group’s loss before tax Group’s revenue Group’s total assets 91% full scope components 8% specific scope components 1% other procedures 99% full scope components 1% specific scope components 0% other procedures 98% full scope components 1% specific scope components 1% other procedures Involvement with component teams In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the components by us, as the primary audit engagement team. All audit work performed for the purposes of the audit was undertaken by the Group audit team. Climate Change There has been increasing interest from stakeholders as to how climate change will impact companies. The Group has determined that there are no future impacts from climate change on their operations. This is explained on page 59 in the principal risks and uncertainties which form part of the “Other information,” rather than the audited financial statements. Our procedures on these disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements, or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated.  Our audit effort in considering climate change was focused on evaluating management’s assessment that there is no impact of climate change risk, the adequacy of the Group disclosures in the financial statements and the conclusion that no issues were identified that would impact the carrying values of Intangible assets, Property, Plant and equipment or have any other impact on the financial statements as disclosed on page 110. We also challenged the Directors’ considerations of climate change in their assessment of going concern and associated disclosures. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters. 92 93 Diaceutics PLC Annual ReportCorporate governanceKey observations communicated to the Audit Committee Our observations include an overview of the risk, outline of the audit procedures performed, the judgements we focused on and the results of our testing. Our planned audit procedures in respect of revenue recognition were completed without exception. Risk Our response to the risk Revenue recognition (2023: £23.7m, 2022: £19.5m) Refer to the Audit Committee Report (page 84); Accounting policies (page 105); and Note 4 of the Consolidated Financial Statements (page 112) There is a risk of improper revenue recognition due to management override of controls in order to maximise revenue by inappropriately accelerating recognition by using the incorrect percentage of completion rate for consultancy services. Furthermore, there is also a risk of incorrect revenue recognition in accordance with IFRS 15, Revenue from Contracts with Customers, in respect of identifying and assigning value to performance obligations due to the complexity and non-standard terms and conditions of the Group’s sales contracts, including related Statements of Work (SOW) or variation agreements. In particular, the Group may recognise or allocate revenue that is not included (explicitly or implicitly) in the sales contracts to activities that do not meet the requirements of separable distinct performance obligations. Additionally, revenue may be misstated in respect of discounts, termination clauses, concessions and contract modifications (change orders) not appropriately identified and accounted for correctly. We performed management inquiries and obtained an understanding of the revenue recognition process. We performed walkthroughs of the revenue recognition process, including walkthroughs of the design and implementation of relevant controls. We performed contract analysis and test of details by reviewing the terms of agreements to ensure revenue recognised in accordance with the contract terms, the Group accounting policy and the application of IFRS 15, Revenue from Contracts with Customers. We examined customer contracts, SOWs and variation agreements to verify the identification of separable distinct performance obligations, termination clauses, concessions/discounts, contract modifications and the allocation of consideration to the identified separable distinct performance obligations. We performed look-back procedures for the prior year uncompleted projects that were completed during the year to assess if the budgeting process in 2022 was reasonable and reliable. We assessed the deliverables provided to customers against the milestones outlined in the relevant contracts to determine the reasonableness of the revenue allocated to performance obligations and recognised in the financial statements. For consultancy services revenue (part of Scientific & Advisory Services revenue stream), we tested the reasonableness of the Percentage of Completion (POC) used in the revenue recognition for all uncompleted projects as of end of the year by using the actual hours incurred as indicated in the timesheets over the total budgeted hours for the project. We performed substantive procedures over cut-off, credit memos and other adjustments such as incentives, discounts to obtain appropriate assurances over the recognition of revenue. We performed data analytics procedures on revenue and correlated the relationship between revenue, debtors and cash. We reviewed key financial statement disclosures for compliance with IFRS 15 Revenue from Contracts with Customers. Risk Our response to the risk Capitalisation of intangible assets (2023: £4.7m, 2022: £4.7m) Refer to the Audit Committee Report (page 84); Accounting policies (page 107); and Note 15 of the Consolidated Financial Statements (page 126) The Group capitalise costs associated with the development of the DXRX platform and data lake which are internally developed. These costs are assessed against IAS 38 Intangible Assets to ensure they meet the criteria for capitalisation. There is a risk of incorrect capitalisation of labour cost of £1.0m (2022: £1.9m). The capitalisation cost is determined based on the actual time spent by employees on the platform. We performed management inquiries and obtained an understanding of the internal capitalised cost process. We performed a walkthrough of the process, including walkthrough of the design and implementation of relevant controls. We obtained a schedule of all labour cost capitalised during the year and performed test of details. We agreed a sample of employees’ base salaries with the payslips. We also obtained and reviewed the workings for the capitalisation of labour costs which is based on hourly wage rate and time spent by employees on qualifying development activities. We assessed whether the capitalised payroll cost is in accordance to IAS 38 ‘Intangible Assets’ and directly attributable to the development of the DXRX platform by reviewing employee timesheets. We conducted inquiries and discussions with the project teams involved with the project development to corroborate the inputs used. We reviewed the inputs used by management in the calculation of labour costs which includes uplift on gross pay relating to insurance cost and employer contribution to pension schemes and ensured all uplifts applied were consistent with the country of employment of each employee. We assessed whether the cost capitalised reflects the full cost of employment as described in IAS 19 Employee Benefits. We reviewed key financial statement disclosures for compliance with IAS 38 Intangible assets. Key observations communicated to the Audit Committee Our observations included an overview of the risk, outline of the audit procedures performed, the judgements we focused on and the results of our testing. Our planned audit procedures in respect of capitalisation of intangible assets were completed without exception. In the prior year, our auditor’s report included a key audit matter in relation to the recoverability of intangible assets. In the current year, the same has not been considered based on our assessment of this risk. Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined materiality for the Group to be £118,500 (2022: £97,500), which is 0.5% (2022: 0.5%) of Group Revenue. We believe that 0.5% of Group Revenue provides us with a reasonable basis for setting materiality as it is the primary measure used by the Board and the shareholders in evaluating the performance of the Group given the level of investment made by the Group into the DXRX platform. We determined materiality for the Parent Company to be £143,500 (2022: £97,500), which is 0.5% of Total Assets of Company (2022: 0.5% of Group revenue). During the course of our audit, we reassessed initial materiality and the only change in final materiality was to reflect the actual reported performance of the Group in the year. 94 95 Diaceutics PLC Annual ReportCorporate governance Performance materiality Other information The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. The other information comprises the information included in the annual report set out on pages 1 to 89, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information within the annual report. On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 50% (2022: 50%) of our planning materiality, namely £59,250 (2022: £48,750). We have set performance materiality at this percentage due to various considerations including the past history of misstatements, our ability to assess the likelihood of misstatements, the effectiveness of the control environment and other factors affecting the entity and its financial reporting. Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of performance materiality allocated to components was £11,500 to £46,000 (2022: £9,500 to £48,750). Reporting threshold An amount below which identified misstatements are considered as being clearly trivial. We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £5,925 (2022: £4,875), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion. 96 Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. • We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the directors’ responsibilities statement set out on page 88, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and management. • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most significant are those that relate to the form and content of external financial and corporate governance reporting including company law, tax legislation, employment law and regulatory compliance with General Data Protection Regulation (GDPR). • We understood how Diaceutics plc is complying with those frameworks by making enquiries of management, those responsible for legal and compliance procedures and the General Legal Counsel. We corroborated our enquiries through our review of the Group’s Compliance Policies, board minutes, papers provided to the Audit Committee and correspondence received from regulatory bodies. • We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by meeting with management, including within various parts of the business, to understand where they considered there was susceptibility to fraud. We also considered performance targets and the potential for management to influence earnings or the perceptions of analysts. Where this risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing journals and were designed to provide reasonable assurance that the financial statements were free from fraud or error. • Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved a review of board minutes to identify any non-compliance with laws and regulations, a review of the reporting to the Audit Committee on compliance with regulations, enquiries of internal and external legal counsel and management. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www. frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Roger Wallace (Senior statutory auditor) for and on behalf of Ernst & Young Dublin 21 May 2024 97 Diaceutics PLC Annual ReportCorporate governanceGroup financial statements Group financial statements Group profit and loss account Revenue Cost of sales Gross profit Administrative expenses Other operating income Operating (loss)/profit Finance income Finance costs (Loss)/profit before tax Income tax credit (Loss)/profit for the financial year All results relate to continuing operations. Note 4 5 5 10 5 11 12 13 2023 £000’s 23,699 (3,993) 19,706 (22,784) 60 (3,018) 646 (66) (2,438) 692 (1,746) 2022 £000’s 19,504 (2,763) 16,741 (16,280) 114 575 111 (122) 564 160 724 The notes in page 104 to 137 form an integral part of the Group financial statements. Group statement of comprehensive income for the year-ended 31 December 2023 (Loss)/profit for the financial year Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign operations 2023 £000’s (1,746) 2022 £000’s 724 (378) 440 Earnings per share for the year-ended 31 December 2023 Basic Diluted 14 14 2023 Pence (2.07) (2.07) 2022 Pence 0.86 0.84 Total comprehensive (loss)/income for the year, net of tax (2,124) 1,164 The notes in page 104 to 137 form an integral part of the Group financial statements. All results relate to continuing operations. 100 Group statement of financial position for the year-ended 31 December 2023 The Group financial statements were approved and authorised for issue by the board and were signed on its behalf on 21 May 2024. The notes on pages 104 to 137 form an integral part of the Group financial statements. Nick Roberts Chief Financial Officer 21 May 2024 Note 15 17 16 13 19 13 24 24 24 24 21 13 20 21 Non-current assets Intangible assets Right-of-use assets Property, plant and equipment Deferred tax asset s t e s s A Current assets Trade and other receivables Income tax receivable Cash and cash equivalents Total assets Equity Equity share capital Share premium Treasury shares Translation reserve Profit and loss account Total Equity Non-current liabilities Lease liability Provision for dilapidation Deferred tax liability Current liabilities Trade and other payables Lease liability Total liabilities s e i t i l i i b a L d n a y t i u q E 2023 £000’s 15,262 1,180 719 1,143 18,304 11,367 6 16,667 28,040 46,344 169 37,126 (312) (240) 4,043 40,786 1,059 88 28 1,175 4,237 146 4,383 5,558 2022 £000’s 15,222 1,333 759 46 17,360 9,209 1,846 19,841 30,896 48,256 169 37,126 (263) 138 5,344 42,514 1,205 79 706 1,990 3,628 124 3,752 5,742 Total equity and liabilities 46,344 48,256 101 Diaceutics PLC Annual ReportGroup financial statements Group statement of changes in equity for the year-ended 31 December 2023 Equity share capital £000’s 168 Share premium £000’s 36,864 Treasury shares £000’s (165) At 1 January 2022 Profit for the year Other comprehensive expense Total comprehensive income for the year Transactions with owners, recorded directly in equity Conversion of loan notes Exercise of warrants Share based payment Treasury shares Total transactions with owners At 31 December 2022 At 1 January 2023 Loss for the year Other comprehensive loss Total comprehensive loss for the year Transactions with owners, recorded directly in equity Share based payment Treasury Shares Total transactions with owners - - - 1 - - - 1 169 169 - - - - - - - - - 133 129 - - 262 37,126 37,126 - - - - - - At 31 December 2023 169 37,126 - - - - - - (98) (98) (263) (263) - - - - (49) (49) (312) Translation reserve Profit and loss account £000’s (302) - 440 440 - - - - - 138 138 - (378) (378) - - - £000’s 4,084 724 - 724 - - 536 - 536 5,344 5,344 (1,746) - (1,746) 445 - 445 Total equity £000’s 40,649 724 440 1,164 134 129 536 (98) 701 42,514 42,514 (1,746) (378) (2,124) 445 (49) 396 (240) 4,043 40,786 Group statement of cash flows for the year-ended 31 December 2023 Operating activities (Loss)/profit before tax Adjustments to reconcile (Loss)/profit before tax to net cash flows from operating activities Net finance costs Amortisation of intangible assets Depreciation of right to use asset Depreciation of property, plant and equipment Research and development tax credits Share-based payments Loss on disposal of fixed asset Increase in trade and other receivables Increase in trade and other payables Cash received from operations Tax received Net cash inflow from operating activities Investing activities Purchase of intangible assets Purchase of property, plant and equipment Finance income interest received Net cash outflow from investing activities Financing activities Interest paid Leasehold repayments Purchase of treasury shares Issue of shares on exercise of a warrant Net cash outflow from financing activities Net (decrease)/increase in cash and cash equivalents Net foreign exchange (loss)/ gain Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December Note 15 17 16 9 15 16 11 12 22 24 2023 £000’s (2,438) (580) 4,459 153 161 (42) 445 3 (2,158) 618 621 690 1,311 (4,730) (125) 646 (4,209) (11) (179) (49) - (239) (3,137) (37) 19,841 16,667 2022 £000’s 564 11 2,704 157 147 (86) 536 - (1,594) 1,266 3,705 1,391 5,096 (4,684) (186) 111 (4,759) (59) (163) (98) 129 (191) 146 20 19,675 19,841 102 103 Diaceutics PLC Annual ReportGroup financial statements Notes to the group financial statements for the year-ended 31 December 2023 1. General information Diaceutics PLC (the “Company”) is a public company limited by shares, incorporated, domiciled and registered in Northern Ireland. The Company’s registration number is NI055207, and the registered office is First Floor, Building Two, Dataworks at King’s Hall Health & Wellbeing Park, Belfast, County Antrim, Northern Ireland, BT9 6GW. The consolidated financial statements consolidate those of the Company and its subsidiaries (together referred to as the “Group”). The Company financial statements present information about the Company as a separate entity and not about the Group. The principal activity of Diaceutics PLC (“the Company”) and its subsidiaries (together “the Group”) is data, data analytics and implementation services. The Group has established a core suite of products and outsourced advisory services which help its Pharma customers to optimise and deliver their marketing and implementation strategies for companion diagnostics. Their mission is to design, create and implement innovative solutions that enhance speed to market and increase the effectiveness of all the stakeholders in the personalised medicine industry. The financial statements are presented in pounds sterling. with UK adopted international accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. Judgements in applying accounting policies and key sources of estimates and uncertainty are disclosed in the notes. The material accounting policies adopted in the preparation of these consolidated financial statements are set out below. The material accounting policies have been consistently applied to all the years presented, unless otherwise stated. Going concern The financial performance and balance sheet position at 31 December 2023 along with a range of scenario plans to 31 December 2026 has been considered, applying different sensitives to revenue. Across these scenarios, including at the lower end of the range, there remains significant headroom in the minimum cash balance over the period to 31 December 2026 and the Directors have satisfied themselves that the Group has adequate funds in place to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing its consolidated financial statements. Basis of accounting Basis of consolidation a subsidiary, including the ability to direct the relevant activities at the time that decisions need to be made. Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Employee Benefit Trusts (‘EBTs’), including the UK and Global SIPs, are accounted for under IFRS 10 and are consolidated on the basis that the parent has control, thus the assets and liabilities of the EBT are included on the balance sheet and shares held by the EBT in the Company are presented as a deduction from equity. 2. Accounting policies New and amended IFRS standards that are effective for the current year The Group has applied the following standards and amendments for the first time for their annual reporting year commencing 1 January 2023: These consolidated financial statements have been prepared on a going concern basis and in accordance with international accounting standards in conformity with the Companies Act 2006 applicable to companies reporting under UK adopted international accounting standards. These financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies. The preparation of financial statements in conformity The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company has power over the subsidiary, is exposed, or has rights, to returns from its involvement with the subsidiary; and has the ability to use its power to affect its returns. • • • IFRS 17 Insurance Contracts including Amendments to IFRS 17 Amendments to IAS 12 Income Taxes – Deferred Tax related to Assets and Liabilities arising from a Single Transaction Amendments to IAS 12 Income Taxes: International Tax Reform – Pillar Two Model Rules The Company considers all relevant facts and circumstances in assessing whether it has control over • Amendments to IAS 1 Presentation of Financial 104 Statements and IFRS Practice Statement 2 – Disclosure of Accounting Policies • Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – Definition of Accounting Estimates There has been no material impact on our financial statements as a result of any of these changes. New accounting standards and interpretations not yet adopted by the Group The following new accounting standards, amendments and/or interpretations have been published but not yet endorsed by the UK and are not mandatory for 31 December 2023 reporting year. They have not been early adopted by the Group and these standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions: • • • • Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non-current, Classification of Liabilities as Current or Non-current – Deferral of Effective Date and Non-current Liabilities with Covenants Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability We are still assessing the implications of the new standards and interpretations however it is not expected to have a material impact on the Group. Revenue recognition Revenue comprises the fair value of the consideration received or receivable for the provision of services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax and after eliminating sales within the Group. The Group has two separate products and service lines: Insight & Engagement Solutions (Data and related information services); Scientific & Advisory Services (Professional services). assessment approach with the residual transaction price allocated to the retrospective and prospective data license performance obligations pro-rated depending on the data license period of coverage. The Group’s performance obligations for these revenue streams are deemed to either be the provision of specific deliverables to the customer, at or over a period of time, or subscription-based deliverables. Revenue billed to the customer is allocated to the various performance obligations, based on the relative fair value of those obligations, and is then recognised when it transfers control of a deliverable to a customer as follows: Insight & Engagement Solutions (Data & related information services) Insight & Engagement Solutions (formerly referred to as Data) comprise access to the DXRX platform diagnostic testing data repository to utilise licensed data insight products, typically: Lab Segmentation, Physician Segmentation, Testing Rates Tracker and Physician Signal. The contract with the customer defines the nature, quantity and price of the data license to be provided. Licenses provided under each contract are split into the identifiable and distinct performance obligations which are satisfied at or over time, depending on whether the data license deliverable has retrospective or prospective components, and if there are any data consultancy service components included. In determining the performance obligations for the data consultancy service component of the customer contract, judgment may be required in interpreting the contract wording and customer expectation of the data consultancy as a separately identifiable and distinct service if the contract is not explicit. The transaction price associated with the performance obligation components is determined by reference to the contract and change orders. Where the contract does not determine the transaction price for performance obligations, judgement may be required to determine the transaction price. These judgements include allocating transaction prices to data consultancy services based on an adjusted market Where a contract confers the customer with the right to benefit from existing data insight IP as at a specific date, as is the case for a retrospective data license, that is treated as a right to use licence and the revenue recognised at a point in time when delivered or access is enabled to the data. Where a contract confers the customer with the right to benefit from future data insight IP developments as they occur, as is the case for a prospective data license, that is treated as a right to access licence and revenue recognised on a subscription basis over the period of time that the customer has access to the data and the right to future IP developments. Revenue for data consulting services is recognised as the performance obligation milestones are satisfied. Insight & Engagement Solution services are invoiced based on predetermined activities or milestones. Where there is a timing difference between the recognition of revenue and invoicing under a contract, a contract asset (accrued revenue) or liability (deferred revenue) is recognised. Scientific & Advisory Services (Professional & Tech-Enabled Services) Scientific & Advisory Services (formerly referred to as Advisory Services and Tech-Enabled Services) comprise a range of services developed to help improve patient care by accelerating the development, delivery and uptake of precision medicine, as well as a suite of services designed to solve the challenges affecting precision medicine commercialisation success at a regional and global level. Typically this includes ranges of Consulting, Strategy and Planning, Insights, Education and Content Production, Impact Assessments, Market Access studies, Lab Alerts, Lab Training, Lab Engagement and Physician Engagement. The contract with the customer defines the nature, quantity and price of the various services to be provided. Services provided (including those provided by a third party and reimbursed by the customer) under each contract are split into the identifiable and 105 Diaceutics PLC Annual ReportGroup financial statements 2. Accounting policies continued... distinct performance obligations which are satisfied over time. The Group is the contract principal in respect of both direct services and the use of third parties that support the service. The transaction price is determined by reference to the contract and change orders, including any pass-through or reimbursable expenses, adjusted to reflect the amount the Group expects to be entitled to in exchange for transferring promised goods or services to a customer. • • in a cumulative catch-up adjustment to revenue that affects the corresponding contract asset or liability; the recognition of revenue arising from deferred revenue; and the reclassification of amounts to receivables when a right to consideration becomes unconditional. Revenue for the identifiable and distinct services is recognised as the contract performance obligations are satisfied. The progress towards completion of Scientific & Advisory Services performance obligations is measured at a point in time: where milestones specified within client contract are satisfied or based on an input measure being project costs incurred to date as a proportion of total project costs (including third party costs) at each reporting period, depending on the nature of the service obligation. The service fees for Scientific & Advisory Services are invoiced based on predetermined activities or milestones. Third party costs are invoiced to customers as they are incurred. Where there is a timing difference between the recognition of revenue and invoicing under a contract, a contract asset (accrued revenue) or liability (deferred revenue) is recognised. Significant accrued and deferred revenue can arise for the Scientific & Advisory Services as a result of these timing differences. Cost to obtain and fulfil contracts Contract fulfilment costs in respect of the service line contracts are expensed as incurred. The Group expenses pre-contract bidding costs which are incurred regardless of whether a contract is awarded. Segment reporting The Group currently has one operating segment. This is consistent with the internal organisational and management structure and the internal reporting information provided to the Chief Operating Decision Maker, the Board, who are responsible for allocating resources and assessing performance of the operating segment. The financial results from this one segment are equivalent to the financial statements of the group as a whole. Contract assets and liabilities Government grants The Group recognises contract assets in the form of accrued revenue when the value of satisfied or part- satisfied performance obligations is in excess of the payment due to the Group, and deferred revenue when the amount of unconditional consideration is in excess of the value of satisfied or part satisfied performance obligations. Once a right to receive consideration is unconditional, that amount is presented as a trade receivable. Changes in contract balances typically arise due to: • adjustments arising from a change in the estimate of the cost to complete the project, which results Grants, which include research and development tax credits where the recovery of those credits is not restricted, are recognised at their fair value where there is a reasonable assurance that the grant will be received, and the Group will comply with all attached conditions. Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the periods in which the expenses are recognised, unless the conditions for receiving the grant are met after the related expenses have been recognised. In this case the grant is recognised when it becomes receivable. 106 Grants relating to development projects are included in liabilities as deferred grant income and are credited to the profit and loss account on a straight-line basis over the expected useful economic lives of the related assets. Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in pounds sterling, which is the Group’s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year- end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account. (c) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: • • assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; income and expenses for each profit and loss account are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and • all resulting currency translation differences are recognised in other comprehensive income and disclosed as a separate component of equity in a foreign currency translation reserve. Employee benefits The Group operates a defined contribution pension scheme which is open to employees and Directors. The assets of the scheme are held by investment managers separately from those of the Group. The contributions payable to the scheme are recorded in the profit and loss account in the accounting period to which they relate. The Group also operates a long-term incentive plan (LTIP), an element of which is the ability for eligible employees to be awarded a discretionary cash bonus based on Group performance. These short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Share-based payments The company has one class of shares in issue. Where shares are issued to employees that contain restrictions that mean they have obtained those shares by virtue of their employment, those shares are accounted for as share-based payments. The company’s share-based payments are classified as equity settled share-based payments as the employees will receive the shares after the required service period. For equity settled shares, a fair value of those shares is established at the date the shares are granted and, if the employee is required to complete a period of service before the shares vest, this fair value is spread over that period (vesting period). Taxation The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity respectively. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Group’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. The Group is eligible within the UK to claim tax credits against certain R&D expenditure under the SME R&D regime. The current tax receivable represents the Directors’ best estimate of tax due to the Group at the year end under the SME R&D tax regime. The credit to the profit and loss is recognised in the income tax line (note 13) if in relation to the SME R&D and other income (note 10) in relation to the RDEC. Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity of different taxable entities where there is an intention to settle the balances on a net basis. Intangible assets Research and development Expenditure on research activities and patents is recognised in the profit and loss account as an expense as incurred. Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group intends and has the technical ability and sufficient resources to complete development, future economic benefits are probable, and if the Group can measure reliably the expenditure attributable to the intangible asset during its development. Development activities involve design for, construction or testing of the production of new or substantially improved products or processes. The expenditure capitalised includes the cost of infrastructure and direct labour including employer national insurance. Other development expenditure is recognised in the profit and loss account as an expense as incurred. Capitalised development expenditure is stated at cost until it is brought into use. Capitalised development expenditure that is not available for use is tested for impairment annually. Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses. 107 Diaceutics PLC Annual ReportGroup financial statements 2. Accounting policies continued... Amortisation The estimated useful lives are as follows: Amortisation is charged to the profit or loss on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows: Office equipment 5 years (20% straight line) Leasehold Improvements 10 years (10% straight line) Patents and trademarks 3 years (33.3% straight line) from date of registration Datasets Software 3 years (33% straight line) 5 years (20% straight line) Impairment Depreciation methods, useful lives and residual values are reviewed if there is an indication of a significant change since the last annual reporting date in the pattern by which the Group expects to consume an asset’s future economic benefits. Platform 10 years (10% straight line) Platform algorithms 6 years (16.7% straight line) The Group reviews the amortisation period and method when events and circumstances indicate that the useful life may have changed since the last reporting date. In 2023, the Group changed the estimated useful life of its datasets from 4 years to 3 years. The revised useful life is based on management’s assessment of the period that more accurately reflect the weighted average timeframes of the data commercial and internal use cases. The nature and amount of the effect of the change in useful life of buildings and improvements in the current period and the expected effect in future periods are disclosed in note 3. Intangible assets, property, plant and equipment, and right-of-use assets are tested for impairment at the reporting date, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash- generating units). The Group also considered the potential impact of climate change. This is an area of estimation and judgement. Property, plant and equipment Leases Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. The Group assesses at each reporting date whether there are indicators of impairment. Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of property, plant & equipment. The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets (such as tablets and personal computers, small items of office furniture and telephones). Payments associated with short-term leases of equipment and vehicles and all leases of low- value assets are recognised on a straight-line basis 108 as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low- value assets comprise IT equipment and small items of office furniture. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the Group incremental borrowing rate. Lease payments included in the measurement of the lease liability only consist of fixed lease payments (including in-substance fixed payments), less any lease incentives receivable. The lease liability is presented as a separate line in the consolidated statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made. The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the consolidated statement of financial position. The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the ‘Property, plant & equipment’ policy. Financial assets (a) Classification The Group classifies its financial assets in the following measurement categories: • • Those to be measured at amortised cost; and Those to be measured subsequently at fair value (either through other comprehensive income or through profit and loss). The classification depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows. The Group reclassifies its financial assets when, and only when, its business model for managing those assets changes. (b) Recognition and measurement The Group recognises a financial asset in the statement of financial position when, and only when, the entity becomes party to the contractual provisions of the instrument. At initial recognition, the group measures a financial asset at its fair value. A trade receivable without a significant financing component is initially measured at the transaction price. Subsequent measurement of financial assets depends on the Group’s business model for managing those financial assets and the cash-flow characteristics of those financial assets. Financial assets are classified at amortised cost or at fair value. Assets are measured at amortised cost using the effective interest method. The amortised cost is reduced by expected credit losses. Forward contracts initially have a fair value of nil. Contracts are subsequently marked to market and gains and losses are recognised through profit or loss. Interest income, foreign exchange gains and losses and expected credit losses are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. permitted by IFRS9, which requires expected lifetime losses to be recognised from the initial recognition of the receivables. To measure expected credit losses, trade receivables and other contract assets are analysed based on their credit risk characteristics to determine a suitable historical loss rate. The historical loss rates are adjusted to reflect current and forward- looking information on macroeconomic factors that the Group considers could affect the ability of its customers to settle the receivables. Contract assets are also subject to expected credit loss and the Group applies the simplified approach permitted by IFRS 9. Financial liabilities Financial liabilities comprise trade and other payables and borrowings, due within one year and after one year, which are recognised initially at fair value and subsequently carried at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. The Group does sometimes make use of derivative financial instruments or hedge accounting for foreign currency transactions. Trade payables represent obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade and other payables are classified as current liabilities if payment is due within one year. If not, they are presented as non-current liabilities. Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held on call with banks, other short term highly liquid investments with original maturities of three months or less and bank overdrafts. Only those bank overdrafts that are repayable on demand and that form an integral part of the Group’s cash management practice are considered as cash and cash equivalents. (c) Expected Credit Losses Equity The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. For trade receivables the Group applies the simplified approach Ordinary shares are classified as equity. Incremental costs directly attributable for the issue of new shares are shown in equity as a deduction from the proceeds. The share premium reserve represents the excess over the nominal value of the fair value of consideration received for equity shares, net of expenses on the share issue. Distributions to equity holders Dividends and other distributions to the Company’s shareholders are recognised as a liability in the financial statements in the period in which the dividends and other distributions are approved by the Company’s shareholders. These amounts are recognised in the statement of changes in equity. Related party transactions The Group discloses transactions with related parties which are not wholly owned within the same group. Where appropriate, transactions of a similar nature are aggregated unless, in the opinion of the Directors, separate disclosure is necessary to understand the effect of the transactions on the Group financial statements. Expenses Costs and expenses are generally recognised as incurred. Treasury shares Treasury shares are shares in Diaceutics PLC that are held by the Employee Benefit Trust for the purpose of issuing shares under the Group’s Share Incentive Plan scheme. These are recorded at cost and deducted from the Group’s equity. No gain or loss is recognised in profit or loss on the purchase, sale or issue of the Group’s own equity instruments. 109 Diaceutics PLC Annual ReportGroup financial statements 3. Judgements in applying accounting policies and key sources of estimation uncertainty The preparation of the Group and Company financial statements requires management to make judgements and estimates that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The Group has considered the impact of climate change on the consolidated financial statements, but has concluded that is does not have a material impact in the carrying value of assets, the useful life of assets and provisions as at 31 December 2023. The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements and are summarised below. Source of estimation uncertainty Description Useful economic life (UEL) of intangible assets (Group and Company) Impairment of assets (Group and Company) Discount rate (Group and Company) Revenue (Group and Company) Attrition rate (Group and Company) 110 The assessment of UEL of data purchases and platform requires estimation over the period in which these assets will be utilised, it based on information on the estimated technical obsolescence of such assets and latest information on commercial and technical use. The platform has been assessed to have a UEL of 10 years, platform algorithms six years and data three years. In 2023, the Group changed the estimated useful life of its datasets from 4 years to 3 years. The revised useful life is based on management’s assessment of the period that more accurately reflect the weighted average timeframes of the data commercial and internal use cases. The change in useful lives were accounted for prospectively. The change in the useful lives of datasets increased amortisation expense by Group of £750,000 (Company £433,000) in 2023. There were no changes in useful lives of other intangible assets. Further details are disclosed in note 15 intangibles. The assessment of the recoverable amount of property, plant and equipment, intangible assets, and right-of-use assets is made in accordance with IAS 36 Impairment of Assets. The Group performs an annual review in respect of indicators of impairment, and if any such indication exists, the Group and Company are required to estimate the recoverable amount of the asset. Following this assessment, no impairment indicators were present at 31 December 2023. The Group’s policy is to test non-financial assets for impairment annually, or if events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Group and Company have considered whether there have been any indicators of impairment during the year to 31 December 2023 which would require an impairment review to be performed. Based upon this review, the Group and Company have concluded that there are no such indicators of impairment at 31 December 2023. Further details are disclosed in note 15 – Intangible Assets. With respect to the impairment considerations of an intangible asset, significant estimates are considered within the value in use calculation. The most significant estimate would be the revenue growth rate. Refer to note 15 – Intangible Assets, for details of the impairment review and sensitivity analysis. Application of IFRS 16 requires the Group and Company to make significant estimates in assessing the rate used to discount the lease payments in order to calculate the lease liability. The incremental borrowing rate depends on the term, currency and start date of the lease and is determined based on a series of inputs including the Group commercial borrowing rate of 4.3% (2022: 4.3%). Further details are disclosed in note 21 lease liability. In revenue recognition for certain Scientific & Advisory Services where the input method is used to determine the revenue over a period of time, a key source of estimation will be the total budgeted hours to completion for comparison with the actual hours spent. Further details are disclosed in note 4 revenue and segmental analysis. In the calculation of share-based payments and related costs charge, an assessment of expected employee attrition is used based on expected employee attrition and, where possible, actual employee turnover from the inception of the share option plan. The attrition rate varies depending on the nature of the award, rising to a maximum 3-year rate of 39.9% (2022: 37.6%). Further details are disclosed in note 9 share based payments. Critical accounting judgements Accounting policy Description of critical judgement Revenue (Group and Company) In determining the performance obligations for the data consultancy service component of Insight & Engagement Solutions, judgment may be required in interpreting the contract wording and customer expectation of the data consultancy as a separately identifiable and distinct service, if the contract is not explicit. The transaction price associated with the performance obligation components of Insight & Engagement Solution services is determined by reference to the contract and change orders. Where the contract does not determine the transaction price for performance obligations, judgement may be required to determine the transaction price. These judgements include allocating transaction prices to data consultancy services based on an adjusted market assessment approach with the residual transaction price allocated to the retrospective and prospective data license performance obligations pro-rated depending on the data license period of coverage. Deferred tax (Group and Company) In assessing the requirement to recognise a deferred tax asset, management carried out a forecasting exercise to assess whether the Group and Company will have sufficient future taxable profits on which the deferred tax asset can be utilised. This forecast required management’s judgment as to the future performance of the Group and Company. Intangible assets (Group and Company) The Group capitalises costs associated with the development of the DXRX platform and data lake. These costs are assessed against IAS 38 Intangible Assets to ensure they meet the criteria for capitalisation. 111 Diaceutics PLC Annual ReportGroup financial statements 4. Revenue and segmental analysis Operating Segments The Group currently operates under one reporting segment, there are no individual groups of assets generating distinct and separately identifiable cashflows. Revenue is analysed under two separate revenue streams. Revenue represents the amounts derived from the provision of services which fall within the Group’s ordinary activities, stated net of value added tax. Revenue is principally generated from the DXRX platform Insight & Engagement Solutions lines, as well as the Scientific & Advisory Services lines. Revenue is disaggregated by primary geographic market, timing of recognition and by product/service line. Timing of revenue recognition and product/service line are the primary basis on which management reviews the business. Revenue For all periods reported the Group operated under one reporting segment but revenue is analysed under two separate product / service lines. The following tables present the disaggregated Group revenue for the current and prior financial years: In 2023 there was one customer who had sales which exceeded 10% of total revenue, accounting for £3,659,000 (15.4%) of Group revenues. In 2022 no customers each had sales which exceeded 10% of total. (a) Major product/service line Insight & Engagement Solutions Scientific & Advisory services (b) Timing of recognition Point in time revenue recognition Over time and input method revenue recognition (c) Geographical market by customer location  North America UK Europe Asia and Rest of World 2023 £000’s 17,150 6,549 2022 £000’s 12,653 6,851 23,699 19,504 2023 £000’s 9,359 14,340 2022 £000’s 9,370 10,134 23,699 19,504 2023 £000’s 2022 £000’s 20,832 14,454 352 2,470 45 561 2,696 1,793 23,699 19,504 The receivables, contract assets and liabilities in relation to contracts with customers are as follows: Order Book The aggregate amount of the transaction price allocated to product and service contracts that are partially or fully unsatisfied as at the 2023 year-end (‘Order Book’) are as follows: 2023 £000’s 2022 £000’s Contract assets 2024 £000’s 2025 £000’s Trade receivables 7,430 5,792 Platform based products and services 12,238 9,509 Accrued revenue 2,402 2,582 Advisory services 96 - 2026+ £000’s 4,674 - Total £000’s 26,421 96 Contract liabilities Deferred revenue 305 284 Accrued revenue primarily relates to consideration for work completed but not billed at the reporting date. The contract assets are transferred to trade receivables when the rights become unconditional. Deferred revenue primarily relates to the advance consideration received from customers. There are no significant financing components associated with deferred revenue. There were no significant amounts of revenue recognised in the current or prior year arising from performance obligations satisfied in previous periods. The carrying value of trade receivables and accrued revenue approximates to their fair value at the reporting date. Information about the Group’s exposure to credit risks and expected credit losses for trade receivables and accrued revenue is included in note 19. 12,334 9,509 4,674 26,517 Order Book as at the 2022 year-end: 2023 £000’s 2024 £000’s Platform based products and services 10,621 4,108 Advisory services 277 - 10,898 4,108 2025+ £000’s 1,922 - 1,922 Total £000’s 16,651 277 16,928 The Order Book as at 31 December 2023 and 2022 includes future contracted revenue beyond 2024 and 2023 which, although subject to annual customer break clauses, the Group expects will not be exercised by customers, and the revenue and performance obligations deliverable under these contracts will be realised. 112 113 Diaceutics PLC Annual ReportGroup financial statements 5. Operating (loss)/profit Employee benefit costs Wages and salaries Social security costs Pension costs Benefits Share based payments and related costs 2023 £000’s 2022 £000’s 11,487 1,416 376 325 445 11,045 1,446 317 130 536 Capitalised development costs (1,026) (1,895) Amortisation of intangible fixed assets Depreciation of tangible fixed assets Right-of-use depreciation Subcontractor costs Platform transaction value Travel costs Legal and professional (Loss)/gain on foreign exchanges Other expenses 13,023 4,459 161 153 1,060 1,892 516 1,687 360 3,466 11,579 2,704 147 157 779 907 352 1,202 (130) 1,346 Total cost of sales and administrative expenses 26,777 19,043 13,754 7,464 Included within other expenses in 2023 is the accrual of £0.6 million related to US sales tax costs pertaining to 2023 and prior years. These sales tax costs would usually be charged to customers, recovered and remitted to the relevant US state authorities with no impact to the costs of the Group. However, because the Group had not historically registered for sales taxes in certain states, the related costs could not be charged and recovered from customers. As such, the Company is in the process of discloising this historic position to the relevant state authorities and will settle this liability during 2024. Future sales taxes arising on sales in these states will be charged to customers, recovered and remitted with no significant further impact to the costs of the Group. 114 6. Auditor’s remuneration 8. Directors’ emoluments Included within administrative expenses (legal and professional): Audit of parent and subsidiary financial information 2023 £000’s 2022 £000’s 480 480 171 171 Directors Aggregate emoluments Pension contributions 2023 £000’s 927 34 961 2022 £000’s 991 35 1,026 Pension contributions were made for three Directors during the period (2022: four). 7. Staff numbers The average monthly number of employees during the year was as follows: Highest paid director The highest paid director did not exercise any share options and received the following emoluments: Administration Technical Business development Finance 2023 Number 2022 Number 24 106 21 7 158 31 89 12 10 142 Aggregate emoluments Pension contributions Key senior management Key senior management received total compensation as follows: Aggregate emoluments Pension contributions Share based payments and related costs 2023 £000’s 296 15 311 2023 £000’s 1,720 76 221 2,017 2022 £000’s 347 16 363 2022 £000’s 1,665 73 278 2,016 115 Diaceutics PLC Annual ReportGroup financial statements9. Share-based payments The Company currently has an Employee Share Option Plan (“ESOP”) for employees, a Long-Term Incentive Plan (“LTIP”) for key management and mid- management levels, a Share Incentive Plan (“SIP”) open to all employees and “Ad-Hoc” share option issues. The ESOP, LTIP and Ad-Hoc plans are designed to provide long-term incentives for senior management and above, and certain employees (including executive directors) to deliver long-term shareholder returns and promote staff retention. The SIP plan is designed to encourage employee participation in the ownership of the Company and as a means to promote staff retention. Under these schemes, employees are granted options which only vest if certain performance standards are met. For the ESOP options, that are outstanding as at 31 December 2023, the only performance obligations attached are continued employment to date of vesting, with no more than two unsatisfactory performance reviews. These same conditions apply to the LTIP options issued in 2020. The 2021 LTIP options are underpinned by a Total Shareholder Return (TSR) target, with the percentage of shares vesting increasing from nil at a TSR of less than £1.1885 rising to 100% at a TSR of £1.9105. TSR is measured by the aggregate of dividends declared and paid, and average share price over the applicable period. The LTIP options issued in 2022 are underpinned by a (TSR) target, with the percentage of shares vesting increasing from nil at a TSR of less than £1.75 rising to 100% at a TSR of £2.80. For the LTIP options issued in 2023, 50% of options awarded have a TSR performance condition with the percentage of shares vesting increasing from nil at a TSR of less than £1.32 rising to 100% at a TSR of £1.70. SIP options were issued to employees on a 2-for-1 matching basis for the first year of the plan and on a 1-for-1 basis thereafter. The only performance obligation attached being continued employment to date of vesting. The only performance obligation attached to Ad-Hoc options is also continued employment to date of vesting. The total expense recognised in the year in relation to share based payment charges and related costs is £538,000 (£445,000 share-based payments and £93,000 social security) (2022: £621,000 (£536,000 share-based payments and £85,000 social security)). Set out below are summaries of options granted under the plans: ESOP: 2023 2022 Weighted average exercise price per share option Number of options Weighted average exercise price per share option Number of options As at 1 January Granted during the year Exercised during the year Forfeited during the year As at 31 December £0.002 £0.002 £0.002 £0.002 £0.002 478,800 79,800 (50,400) (21,000) 487,200 £0.002 £0.002 £0.002 £0.002 £0.002 420,000 117,600 (23,119) (35,681) 478,800 9. Share-based payments continued... LTIP: 2023 2022 Weighted average exercise price per share option Number of options Weighted average exercise price per share option Number of options As at 1 January Granted during the year £0.741 £0.002 Exercised during the year - Forfeited during the year As at 31 December £0.669 £0.455 1,902,593 1,305,441 - (207,065) 3,000,969 £0.741 £0.002 £0.002 £0.669 £0.455 1,750,119 876,411 (68,727) (655,210) 1,902,593 SIP: 2023 2022 Weighted average exercise price per share option Number of options Weighted average exercise price per share option Number of options As at 1 January Granted during the year £0.002 £0.002 Exercised during the year - Forfeited during the year As at 31 December £0.002 £0.002 206,290 127,023 - (28,667) 304,646 £0.002 £0.002 - £0.002 £0.002 105,272 136,096 - (35,078) 206,290 116 117 Diaceutics PLC Annual ReportGroup financial statements9. Share-based payments continued... Ad-Hoc: 2023 2022 Weighted average exercise price per share option Number of options Weighted average exercise price per share option Number of options As at 1 January £0.002 170,000 Granted during the year Exercised during the year Forfeited during the year As at 31 December - - £0.002 £0.002 - - (20,000) 150,000 £0.002 £0.002 £0.002 £0.002 £0.002 55,720 200,000 (16,716) (69,004) 170,000 Share options outstanding at the year-end have the following expiry dates and exercise prices: ESOP: Grant Date Expiry Date Exercise Price Share options at 31 December 2023 Share options at 31 December 2022 June 2019 June 2020 June 2021 June 2022 June 2023 LTIP: June 2022 June 2023 June 2024 June 2025 June 2026 £0.002 £0.002 £0.002 £0.002 £0.002 75,600 113,400 113,400 105,000 79,800 96,600 147,000 121,800 113,400 - Grant Date Expiry Date Exercise Price Share options at 31 December 2023 Share options at 31 December 2022 April 2020 April 2021 April 2022 April 2023 April 2024 April 2025 April & Nov 2023 April 2026 £1.265 £0.002 £0.002 £0.002 653,307 372,803 712,672 1,262,187 682,167 413,967 806,459 - 9. Share-based payments continued... SIP: Grant Date May 2021 June 2021 July 2021 August 2021 September 2021 October 2021 November 2021 December 2021 January 2022 February 2022 March 2022 April 2022 May 2022 June 2022 July 2022 August 2022 September 2022 October 2022 November 2022 December 2022 January 2023 February 2023 March 2023 April 2023 May 2023 June 2023 July 2023 August 2023 September 2023 October 2023 November 2023 December 2023 Expiry Date May 2024 June 2024 July 2024 August 2024 September 2024 October 2024 November 2024 December 2024 January 2025 February 2025 March 2025 April 2025 May 2025 June 2025 July 2025 August 2025 September 2025 October 2025 November 2025 December 2025 January 2026 February 2026 March 2026 April 2026 May 2026 June 2026 July 2026 August 2026 September 2026 October 2026 November 2026 December 2026 Exercise Price Share options at 31 December 2023 Share options at 31 December 2022 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 5,112 6,794 10,502 10,260 10,296 10,226 10,762 11,188 10,082 11,350 10,492 9,342 4,791 6,204 5,931 9,400 9,559 10,467 11,096 11,154 8,731 7,308 8,173 8,467 10,328 9,989 11,017 9,723 10,695 12,120 11,438 11,649 5,730 7,490 11,604 11,428 11,452 11,412 11,984 12,454 11,260 12,658 11,690 10,434 5,375 6,932 6,631 10,494 10,673 11,684 12,423 12,482 - - - - - - - - - - - - 118 119 Diaceutics PLC Annual ReportGroup financial statements9. Share-based payments continued... One-off under ESOP: Grant Date Expiry Date Exercise Price Share options at 31 December 2023 Share options at 31 December 2022 December 2020 May 2022 December 2021 – December 2023 September 2022 – May 2025 £0.002 £0.002 - 150,000 - 170,000 The weighted average remaining contractual life of options outstanding at the end of the year was 1.83 years (2022: 1.34 years). No options expired during the year. Fair value of options granted: The weighted average fair value at grant date of options granted during the year was £0.550 per option (2022: £0.562). The fair value at grant date is independently determined using an adjusted Black-Scholes model for ESOP and SIP options and a Monte-Carlo model for LTIP options. These models take into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and the expected price volatility of the underlying share, and the risk-free interest rate for the term of the options. 902,307 share options are exercisable as at the end of the year (2022: 116,600). These options have a weighted average exercise price of £0.002. ESOP LTIP SIP Ad-Hoc 2023 2022 2023 2022 2023 2022 2023 Ex Price Grant date Expiry Date £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 £0.002 June 2023 June 2022 April & Nov 2023 April 2022 Jan-Dec 2023 Jan-Dec 2022 May 2022 June 2026 June 2025 April 2026 April 2025 Jan-Dec 2026 Jan-Dec 2025 Sep 2002 – May 2023 Share price at Grant date £0.85 Volatility Risk-free rate Fair Value 43% 5.08% £0.85 £0.92 46% 1.90% £0.92 £0.85 43% 3.99% £0.49 £1.12 46% 1.25% £0.33 £0.97 43% 4.19% £0.97 £0.96* 45%* 2.32%* £0.95* £1.10 46% 1.65%** £1.10 *Average share price, volatility, risk-free rate and fair value for options issued monthly during 2022 and 2023. **Average risk-free rate The expected price volatility is based on the historical volatility and companies within similar industry’s. 10. Other operating income 11. Finance income 12. Finance costs Government grants Research and developments credits 2023 £000’s 2022 £000’s 18 42 28 86 60 114 2023 £000’s 2022 £000’s Bank interest received and receivable 646 111 Revolving credit facilities 646 111 Interest on convertible loan notes Lease interest Other 2023 £000’s 2022 £000’s 11 - 55 - 56 3 61 2 66 122 120 121 Diaceutics PLC Annual ReportGroup financial statements13. Income tax a. Tax on profit/ (loss) Current income tax: UK corporation tax on (loss)/profit for the year Adjustments in respect of previous years Foreign tax: US corporation tax on profits for the year Adjustments in respect of previous years Total current tax Deferred tax: Origination and reversal of temporary differences Adjustments in respect of previous years Impact of change in tax rates Total deferred tax 2023 £000’s 2022 £000’s (53) 367 314 796 2 798 1,112 (1,625) (179) - (1,804) (471) (199) (670) 422 (86) 336 (334) 43 98 33 174 Total tax credit (692) (160) The Income tax receivable balance in the Group statement of financial position consists of an Income tax receivable amounting to £231,000 (2022: £1,846,000) and an Income tax liability of £225,000 (2022: £Nil), netting to an Income tax receivable of £6,000 (2022: £1,846,000). b. Factors affecting the tax credit for the year The tax assessed for the year differs from the effective standard rate of corporation tax in the UK of 23.5% (2022: 19.00%). The differences are reconciled below: (Loss)/profit before tax 2023 £000’s (2,438) Tax using the UK corporation tax rate of 23.5% (2022: 19.00%) (574) Effects of: Tax rates in foreign jurisdictions Non-taxable income Non-deductible expenses Share based payments Difference in statutory tax rates (UK & overseas) Impact of change in tax rates Research and development Research and development rate difference Deferred tax not recognised Movement in deferred tax previously not recognised Adjustments in respect of previous years Total tax credit - (5) 93 (193) 10 (81) (55) 58 (135) - 190 (692) 2022 £000’s 564 107 128 - 102 - - 35 (553) 146 105 (43) (187) (160) Non-deductible expenses are made up of various non-deductible expenses including legal and professional fees and depreciation on non-qualifying assets. A change in the main UK corporation tax rate, announced in the budget on 3 March 2021, was substantively enacted on 24 May 2021. From 1 April 2023 the main corporation tax rate increased from 19% to 25% on profits over £250,000. 122 123 Diaceutics PLC Annual ReportGroup financial statements c. Deferred tax The deferred tax included in the statement of financial position is as follows: Deferred tax balance Asset/(liability) at January 2022 Credited/(charged) to the profit and loss account Translation Asset/(liability) at 31 December 2022 Credited/(charged) to the profit and loss account Translation Tax losses £000’s 1,722 (7) 2 1,717 825 (1) Asset/(liability) at 31 December 2023 2,541 Bonus accrual £000’s Property, plant and equipment £000’s Other temporary differences £000’s Research & development £000’s Share-based payments £000’s Bad debt accural £000’s Total £000’s - 31 - 31 (1,839) (197) - (2,036) (34) 327 3 - (1,709) 27 (103) - (76) 72 (3) (7) (380) 89 (44) (335) 309 (22) (48) 26 13 - 39 255 294 - - - - 50 (6) 44 (444) (174) (42) (660) 1,804 (29) 1,115 The deferred tax balance expected to unwind within one year is £746,000 (2022: £250,000). The deferred tax balance consists of a deferred tax asset amounting to £1,143,000 (2022: £46,000) and a deferred tax liability of £28,000 (2022: £706,000), netting to an asset of £1.115m (2022: a liability of £660,000). The deferred tax asset is recognised on the basis that the Group has forecasted sufficient taxable profits on which the deferred tax asset can be utilised. Tax losses carried forward amount to £10,205,000 (2022: £7,193,000) within Diaceutics PLC. In addition, the Group has tax losses arising in subsidiary undertakings. Due to the uncertainty of the recoverability of the tax losses within these subsidiaries, a potential deferred tax asset of £224,000 (2022: £366,000) has not been recognised. Deferred tax assets and liabilities have otherwise been recognised as they arise. 14. Earnings per share Basic earnings per share are calculated based on the (loss)/profit for the financial year attributable to equity holders divided by the weighted average number of shares in issue during the year. Basic earnings per share are calculated based on the (loss)/profit for the financial year. Diluted earnings per share is calculated on the basic earnings per share adjusted to allow for the issue of ordinary shares on the conversion of the convertible loan notes and employee share options. In the current year there are no exceptional items and therefore there is no adjustment required to basic earnings per share or to diluted earnings per share. Profit attributable to shareholders (Loss)/profit for the financial year Weighted average number of shares to shareholders Shares in issue at the end of the year Weighted average number of shares in issue Less treasury shares 2023 £000’s (1,746) 2023 Number 2022 £000’s 724 2022 Number 84,501,390 84,472,431 84,478,882 84,357,387 (252,063) (207,791) Weighted average number of shares for basic earnings per share 84,226,819 84,149,596 Effect of dilution of Share Options - 1,939,925 Weighted average number of shares for diluted earnings per share 84,226,819 86,089,521 Profit attributable to shareholders Basic Diluted 2022 Pence (2.07) (2.07) 2022 Pence 0.86 0.84 The group has outstanding share warrants and share options that could potentially dilute basic earnings per share in the future. These were not included in the calculation of diluted earnings per share during the year because these are antidilutive for the period. 124 125 Diaceutics PLC Annual ReportGroup financial statements15. Intangible assets Cost At 1 January 2022 Transfer from development expenditure to platform Foreign exchange translation Additions At 31 December 2022 Foreign exchange translation Transfer from development expenditure to platform Additions At 31 December 2023 Amortisation At 1 January 2022 Foreign exchange translation Charge for the year At 31 December 2022 Foreign exchange Charge for the year At 31 December 2023 Net book value at 31 December 2023 At 31 December 2022 126 Patents and trademarks Datasets Development expenditure* Platform Software Total £000’s £000’s £000’s £000’s £000’s £000’s 1,144 - 59 1 1,204 (25) - - 1,179 1,085 59 41 1,185 (26) 15 1,174 5 19 4,849 - 228 2,169 7,246 (164) - 3,554 10,636 1,692 77 1,313 3,082 (64) 2,944 5,962 4,674 4,164 216 (2,401) 4 2,359 178 - (178) - - - - - - - - - - 178 9,727 2,401 301 - 12,429 (159) 178 918 13,366 721 35 1,112 1,868 27 1,316 3,157 10,209 10,561 562 - 1 155 718 (1) - 258 975 179 1 238 418 (1) 184 601 374 300 16,498 - 593 4,684 21,775 (349) - 4,730 26,156 3,677 172 2,704 6,553 (118) 4,459 10,894 15,262 15,222 Intangible assets relate to patents, trademarks, software, DXRX platform and datasets which are recorded at cost and amortised over their useful economic life which has been assessed as three to ten years. During the year-ended 31 December 2023, £178,000 was transferred out of development expenditure and into the Group’s DXRX platform (2022: £2,401,000).The Group assesses the useful life of all assets on an annual basis. In 2023, the Group changed the estimated useful life of its datasets from 4 years to 3 years. The change in useful lives were accounted for prospectively. The Group has determined that the useful life of data and platform is a significant area of estimation. The platform has been assessed to have a useful life of 10 years based on information on the estimated technical obsolescence of such assets. However, the actual asset useful life may be shorter or longer than 10 years depending on technical innovations and other external factors. If the useful life were reduced by 2 years, the carrying amount of the asset at 31 December 2023 would reduce by £267,000 (2022: £283,000) to £9,943,000 (2022: £10,278,000). If the useful life of the asset were increased by 2 years, the carrying amount of the asset at 31 December 2023 would increase by £267,000 (2022: £170,000) to £10,476,000 (2022: £10,731,000). On reviewing the useful life of the datasets it was determined that based on latest information on commercial and technical use, that three years represented the best estimate of the useful life of such assets, as this reflects the period over which this data can provide meaningful insights to support client projects. However, the actual asset useful life may be shorter or longer than three years depending on technical innovations and other external factors. If the useful life were 2 years (2022: 3 years), the carrying amount of the asset at 31 December 2023 would reduce by £454,000 (2022: £482,000) to £4,220,000 (2022: £3,682,000). If the useful life of the asset were 4 years (2022: 5 years), the carrying amount of the asset at 31 December 2023 would increase by £993,000 (2022: £259,000) to £5,667,000 (2022: £4,423,000). These are all definite life intangible assets. There were no impairment indicators identified at 31 December 2023 and 2022 and therefore no impairment. The combined recoverable value of intangible assets is determined based on a value–in use calculation which incorporates cash flow projections based on financial budgets approved by management covering a five- year period. Cash flows beyond the five-year period are extrapolated using an estimated long-term growth rate. The key assumptions used in the impairment review are as follows, and were determined with consideration to past performance and management’s expectations of future development: • • The rate of forecast revenue growth which is on average 25% (2022: 25%) Average gross margin (excluding amortisation) assumption of 84% (2022: 85%) • Long term growth rate of 5% (2022: 2%) • • • An applied pre-tax discount rate of 12% (2022: 12%) Average annual operational cost increase of 15% (2022:20%); and Average annual capital expenditure of £5.5m in FY25 growing by £0.5m per year thereafter (2022: £6.0m). Our modelling shows that forecast revenue growth can fall by approximately 4% (2022: 14%), without moderating forecast capital expenditure to reflect lower growth rates, in each year before an impairment would be required. In a separate scenario, our modelling shows that forecast gross margins can drop by approximately 13% (2022: 14%) before an impairment would be required. Amortisation in respect of Platform, Datasets, Patents and Trademarks and Software is expensed to the profit and loss account as administrative expenses. Management has determined the values assigned to each of the above key assumptions as follows: Assumption Approach to determining values Revenue Growth Average annual growth rate over the five-year forecast period; based on management’s expectations of market development. Gross Margin Based on past performance and management’s expectation for the future. Long-term growth rate This is the weighted average growth rate used to extrapolate cash flows beyond the budget period. The rates are consistent with forecasts included in industry reports. Pre-tax discount rate Reflects specific risks relating to the Group and the countries in which we operate. Operational cost For the purpose of this review, administrative expenses increased with inflation at 5% per annum or on a headcount basis if appropriate. Average capital For the purpose of this review, a reduction in capital expenditure was not considered. 127 Diaceutics PLC Annual ReportGroup financial statements*Development expenditure relates to an asset under construction and as such no amortisation has been charged. This expenditure is subject to the same annual impairment review as the other intangible assets. 16. Property, plant and equipment Leasehold Improvements £000’s Office equipment £000’s Cost At 1 January 2022 Foreign exchange translation Additions At 31 December 2022 Foreign exchange translation Disposals Additions At 31 December 2023 Accumulated Depreciation At 1 January 2022 Charge for the year Foreign exchange translation At 31 December 2022 Charge for the year Disposals Foreign exchange translation At 31 December 2023 Net book value At 31 December 2023 At 31 December 2022 128 478 - 54 532 - - - 532 16 50 - 66 55 - - 121 411 466 482 5 132 619 (2) (14) 125 728 226 97 3 326 106 (11) (1) 420 309 293 Total £000’s 960 5 186 1,151 (2) (14) 125 1,260 242 147 3 392 161 (11) (1) 541 719 759 17. Right-of-use assets Buildings £000’s Cost At 1 January 2022 Additions At 31 December 2022 Adjustment At 31 December 2023 Accumulated depreciation At 1 January 2022 Charge for the year At 31 December 2022 Charge for the year At 31 December 2023 Carrying amount At 31 December 2023 At 31 December 2022 1,460 79 1,539 - 1,539 49 157 206 153 359 1,180 1,333 During 2021, the group entered into a new lease for its property at Dataworks, Kings Hall Health & Wellbeing Park, Belfast, BT9 6GW. The lease term is 10 years. This resulted in additions to right-of- use assets of £1,460K in 2021. In 2022, an adjustment was made to the asset balance in relation to creating a provision for dilapidations. The Group’s obligations are secured by the lessors’ title to the leased assets for such leases. The maturity analysis of lease liabilities is presented in note 21. Amounts recognised in profit and loss Depreciation expense on right-of-use assets Interest expense on lease liabilities 2023 £000’s 153 55 2022 £000’s 157 61 129 Diaceutics PLC Annual ReportGroup financial statements 18. Investments Group undertakings The following were subsidiaries of the Company at 31 December 2023: Country of incorporation Percentage of shares held Diaceutics Ireland Limited Republic of Ireland Labceutics Limited Northern Ireland Diaceutics Inc Diaceutics Pte Ltd USA Singapore 100% 100% 100% 100% The principal business of all the subsidiary undertakings is data and implementation services. All entities were incorporated before 1 January 2021. During the year Diaceutics Pte Ltd liquidated its wholly-owned Chinese subsidiary Diaceutics Precision Medicine Technology (Guangzhou) Ltd as part of ongoing Group business review. The liquidation had no impact to the Group. 19. Trade and other receivables 2023 £000’s 7,430 2,402 294 1,241 11,367 2022 £000’s 5,792 2,582 207 628 9,209 Trade receivables Contract Assets Other receivables Prepayments 130 Other receivables primarily consist of recoverable taxes and as such are considered to have low credit risk. Derivative financial instruments consist primarily of foreign currency forward contracts and are considered to have low credit risk. The maturity period of these assets were less than 12 months, and given their nature, the expected credit loss allowance recognised in the period against these assets were £Nil (2022: £Nil). Trade receivables are non-interest bearing, are generally on 90-day terms and are shown net of a provision for impairment. Management’s assessment was that the trade receivables are fully recoverable except for the specific provision netted against the trade receivables balance of £175,000 (2022: Nil). Most of our customers are large- pharma; we do not foresee any credit difficulties within our customer base. The maximum exposure to credit risk is the carrying value of each class of receivables and cash and cash equivalents. The Group does not hold any collateral as security. The Group and Company’s exposure to credit, currency and liquidity risk related to trade and other receivables are disclosed in note 23. The age profile of the trade receivables and contract assets are as follows: 2023 2022 Total £000’s 9,832 8,374 0-30 days 31-60 days 61-90 days >90 days £000’s £000’s £000’s £000’s 5,864 6,568 1,472 1,354 1,635 319 861 133 The Group’s contract assets as at the statement of financial position date are expected to be invoiced and received in the following year. The maturity period of these assets were less than 12 months, and given their nature, the expected credit loss allowance recognised during the period against these assets were £Nil (2022: £Nil). The following table shows the movement in contract assets: Contract assets recognised at start of the year Revenue recognised in prior year that was invoiced in the current year 2023 £000’s 2,582 (2,582) Amounts recognised in revenue in the current year that will be invoiced in future years 2,402 Balance at the end of the year 2,402 The carrying amount of trade and other receivables are denominated in the following currencies: UK sterling Euro US dollar Canadian Dollars Singapore dollars 2023 £000’s 1,105 382 9,762 73 45 2022 £000’s 1,003 (1,003) 2,582 2,582 2022 £000’s 881 504 7,737 31 56 11,367 9,209 131 Diaceutics PLC Annual ReportGroup financial statements20. Trade and other payables 2023 £000’s 2022 £000’s The carrying amount of trade and other payables are denominated in the following currencies: Creditors: falling due within one year Trade payables Accruals Other payables Other tax and social security Contract liabilities Deferred grant income 1,065 2,255 38 471 305 103 759 1,996 39 423 284 127 UK sterling Euro US dollar Singapore dollars Other 2023 £000’s 2,062 415 1,587 130 43 2022 £000’s 3,079 203 326 16 4 4,237 3,628 4,237 3,628 Contract liabilities of £305,000 (2022: £284,000) which arise in respect of amounts invoiced during the year for which revenue recognition criteria have not been met by the year-end. The Group’s contracts with customers are typically less than one year in duration and any contract liabilities would be expected to be recognised as revenue in the following year. In 2022, the amount of deferred grant income was previously included within contract liabilities. The Group and Company’s exposure to currency, liquidity and interest rate risk related to trade and other payables is disclosed in note 23. The following table shows the movement in contract liabilities: Contract liabilities recognised at start of the year 2023 £000’s 284 2022 £000’s 208 Amounts invoiced in prior year recognised as revenue in the current year (284) (208) Amounts invoiced in the current year which will be recognised as revenue in the later years 305 284 Balance at the end of the year 305 284 21. Lease Liability Maturity analysis: Year 1 Year 2-5 +5 Year Analysed as: Non-current Current 2023 Discounted 2023 Undiscounted 2022 Discounted 2022 Undiscounted 146 598 461 1,205 1,059 146 1,205 195 731 488 1,414 1,219 195 1,414 124 573 632 1,329 1,205 124 1,329 179 731 683 1,593 1,414 179 1,593 All lease liabilities are denominated in pounds sterling. 22. Interest bearing loans and borrowings In 2019, the Group issued a £100,000 Convertible Loan Notes at 10% interest rate payable annually from 1 April 2019. These convertible loan notes were converted to ordinary shares in April 2022. The following table shows the changes in liabilities arising from financing activities: Balance at 1 January Interest on convertible loan notes Convertible loan note conversion to equity Balance at 31 December 2023 £000’s - - - - 2022 £000’s 130 3 (133) - (a) Revolving credit facility The Group has no such facilities in place at 31 December 2023 (2022: £4,000,000). (b) Convertible loan notes These loan notes have been converted into ordinary shares in the Company during 2022. 132 133 Diaceutics PLC Annual ReportGroup financial statements22. Interest bearing loans and borrowings continued... The following table shows the net (debt)/funds: Net debt as at 1 January 2022 Cashflows Other changes Net debt as at 31 December 2022 Cashflows Other changes Net funds as at 31 December 2023 Convertible loan notes £000’s (130) - 130 - - - - Lease liability £000’s Subtotal £000’s (1,431) (1,561) 163 (61) 163 69 (1,329) (1,329) 179 (55) 179 (55) (1,205) (1,205) Cash £000’s 19,675 166 - 19,841 (3,174) - 16,667 Total £000’s 18,114 329 69 18,512 (2,995) (55) 15,642 134 23. Financial instruments Classification of financial instruments The principal financial instruments used by the Group from which financial instrument risk arises are trade and other receivables (excluding contract assets which are not yet invoiced), cash and cash equivalents and trade and other payables, loans, the revolving credit facility, and convertible loan notes. The impact of the discounting of financial instruments is not material. The Group’s financial instruments are classified as follows: Assets Measured at amortised cost Trade receivables Other receivables Cash at bank and in hand Liabilities Trade payables Lease liability Convertible loan notes 2023 £000’s 7,430 294 16,667 2023 £000’s 1,065 1,292 2022 £000’s 5,792 207 19,841 2022 £000’s 759 1,329 Derivative financial instruments – foreign currency forward contracts The group has entered several foreign currency derivative contracts during the year. The nominal value of the Group’s forward contracts is £1,571,833 (2022: £Nil) principally to sell US Dollars. Forward contracts initially have a fair value of nil. Contracts are subsequently marked to market and gains and losses are recognised through profit or loss. The Group’s foreign currency forward contracts are not traded in active markets. These contracts have been fair valued using observable forward exchange and interest rates corresponding to the naturing of the contract. The effects of non-observable inputs are not significant for foreign currency forward contracts. Credit risk Credit risk is the risk that the counterparty fails to discharge their obligation in respect of the instrument. The Group trades only with recognised, creditworthy third parties. Receivable balances are monitored on an on-going basis with the result that exposure to bad debts is normally not significant. As the Group trades only with recognised third parties there is no requirement for collateral. The credit risk on cash and cash equivalents is considered to be limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The Group primarily operates bank accounts with HSBC UK Bank (‘HSBC’), Barclays Bank (‘Barclays’) and Goldman Sachs (‘Goldman’) where the accounts are domiciled in the UK, Ireland, Denmark, USA, China and Singapore. The loan notes were converted into Ordinary Shares in the Company during 2022. Liquidity risk Liquidity risk arises from the Group’s management of working capital and is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Group policy is that funding is reviewed in line with operational cash flow requirements and investment 135 Diaceutics PLC Annual ReportGroup financial statements23. Financial instruments continued... 24. Equity Share capital strategy. Repayment terms and conditions are approved by the Board in advance of acceptance of any facility. At each Board meeting, and at the reporting date, the cash flow projections are considered by the Board to confirm that the Group has sufficient funds and available funding facilities to meet its obligations as they fall due. Cash flow projections are used to plan for those occasion when funds will need to be translated into different currencies so that exchange rate risk is minimised. The carrying amount of cash and cash equivalents are denominated in the following currencies: Interest rate risk Cash flow interest risk arises from the Group’s external loans and revolving credit facilities, which carry interest based on underlying base rates in the UK, US and the EU. The Group has no such facilities in place at 31 December 2023 (2022: £4,000,000). Fair value The management assessed that the fair values of cash and cash equivalents, trade and other receivables and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments. Foreign currency risk Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group seeks to transact the majority of its business in its reporting currency (pound sterling). However, many customers and suppliers are outside the UK and a proportion of these transact with the company in US dollars and euro. For this reason, the Group operates current bank accounts in US dollars and euro as well as in its reporting currency and has a revolving credit facility available which can be drawn in US dollars, pound sterling or euro. The Group makes use of foreign currency derivative contracts to manage currency risk. To the maximum extent possible, receipts and payments in a particular currency are made through the bank account in that currency to reduce the amount of funds translated to or from the reporting currency. 136 UK sterling Euro US dollar Singapore dollars Other 2023 £000’s 16,278 105 261 2 21 2022 £000’s 14,997 445 4,314 45 40 16,667 19,841 The carrying amounts of the Group’s financial assets and liabilities by currency at the reporting date are disclosed in the relevant notes. Note 19 details the exposure of trade and other receivables of foreign currency risk and note 20 discloses the exposure of trade and other payables foreign currency risk. If the exchange rate between sterling and the US dollar had been 10% higher/lower at the reporting date, the effect on profit would have been approximately (£163,000)/£179,000 respectively (2022: (£147,000)/£180,000). If the exchange rate between sterling and euro had been 10% higher/ lower at the reporting date the effect on profit would have been approximately (£20,000/£22,000) respectively (2022: £35,000)/(£43,000). If the exchange rate between sterling and the US dollar had been 10% higher/lower at the reporting date, the effect on equity would have been approximately (£342,000)/£376,000 respectively (2022: (£418,000)/£511,000). If the exchange rate between sterling and euro had been 10% higher/lower at the reporting date the effect on equity would have been approximately(£418,000)/ £460,000 respectively (2022: (£409,000)/£500,000). Allotted, called up and fully paid 84,501,390 (2022: 84,472,431) Ordinary shares of £0.002 each Authorised 84,501,390 (2022: 84,472,431) 2023 £000’s 2022 £000’s 169 169 169 169 Treasury shares Treasury shares are shares in Diaceutics Plc that are held by the Diaceutics Employee Share Trust for the purpose of issuing shares under the Diaceutics Plc SIP scheme (see note 9 for further information). Shares issued to employees are recognised on a first in, first out basis. Number of shares £000’s Details 2023 2022 2023 2022 Acquisition of shares by the Trust 44,272 74,791 49 98 252,063 207,791 312 263 All ordinary shares rank pari passu in all respects including voting rights and the right to receive all dividends and other distributions, if any, declared or made or paid in respect of ordinary shares. Reserves Share premium account: This reserve records the amount above the nominal value received for shares sold, less transaction costs. Translation reserve: This reserve records foreign exchange differences on translation of foreign operations. 25. Commitments and contingencies There are no material capital commitments, financial commitments or contingent liabilities at the statement of financial position date not provided for in these financial statements. 26. Related parties The remuneration of key management personnel and details of directors’ emoluments are shown in note 8. In 2021 the Group entered a 10-year lease for its new Belfast offices at a commercial business rate. The lessor is O’Connor & McCann Ltd, a private limited company in which Peter Keeling is a director and Ryan Keeling is a shareholder. A £178,750 lease payment was made in the year (2022: £162,500). Refer to notes 17 and 21 for further details of the lease. 28. Capital risk management The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The group monitors capital based on the gearing ratio. Net funds are calculated as total borrowings (current and non-current) as shown in the group statement of financial position less cash and cash equivalents. Gearing ratio is calculated as total borrowings divided by total equity. The gearing ratios at 31 December were as follows: Note 2023 £000’s 2022 £000’s Total borrowings 23 1,205 1,329 Less: cash and cash equivalents (16,667) (19,841) Net funds Total equity Gearing ratio (15,462) (18,512) 40,786 42,514 3.0% 3.1% 27. Ultimate controlling party 29. Post balance sheet events The Company is controlled by its shareholders. There is no one party which is the ultimate controlling party of the Group and Company. The Directors are proposing a special resolution that will be put to shareholders at the AGM to approve a capital reduction. The capital reduction being requested is to cancel the share premium reserve, currently standing at around £37.1 million and release this amount to distributable reserves. On 25th January 2024 the warrant holder exercised their remaining 177,915 warrant shares at a price of £0.76 per share. No further warrant shares remain outstanding. 137 Diaceutics PLC Annual ReportGroup financial statements Company financial statements Company statement of financial position as at 31 December 2023 Notes 2023 £000’s 2022 £000’s Assets Non-current assets Intangible assets Right-of-use assets Property, plant and equipment Investments Deferred tax asset Current assets Trade and other receivables Income tax receivable Cash and cash equivalents Total Assets 6 8 7 10 9 11 12 8,821 1,180 718 313 1,132 12,164 6,487 230 16,292 23,009 35,173 9,865 1,333 750 251 - 12,199 7,561 1,462 16,742 25,765 37,964 Equity and Liabilities Equity Equity share capital Share premium Treasury shares Profit and loss account - including loss for the year of £2,475,000 (2022: Loss of £2,002,000) Total Equity Non-Current Liabilities Lease liability Provision for dilapidation Deferred tax liability Current liabilities Trade and other payables Lease liability Total liabilities Total equity and liabitlies Notes 2023 £000’s 2022 £000’s 15 15 14 9 13 14 169 37,126 (312) 169 37,126 (263) (5,559) (3,563) 31,424 33,469 1,059 88 - 1,147 2,456 146 2,602 3,749 35,173 1,205 79 321 1,605 2,766 124 2,890 4,495 37,964 The Company financial statements were approved and authorised for issue by the board and were signed on its behalf on 21 May 2024. The notes on pages 143 to 151 form an integral part of the Company financial statements. Nick Roberts Chief Financial Officer 21 May 2024 140 141 Diaceutics PLC Annual ReportCompany financial statements Company statement of changes in equity for the year-ended 31 December 2023 Called up share capital £000’s Share premium account £000’s Treasury shares £000’s Profit and loss account £000’s 168 36,864 (165) At 1 January 2022 Loss for the year Total comprehensive (loss) for the year Transactions with owners, recorded directly in equity Conversion of loan notes Exercise of warrant Share-based payments Treasury shares Total transactions with owners - - 1 - - - 1 At 31 December 2022 169 Loss for the year Total comprehensive loss for the year Transactions with owners, recorded directly in equity Share-based payments Treasury shares Total transactions with owners - - - - - - - 133 129 - - 262 37,126 - - - - - - - - - - (98) (98) (263) - - - (49) (49) (312) (2,097) (2,002) (2,002) - - 536 - 536 (3,563) (2,475) (2,475) 479 - 479 Total equity £000’s 34,770 (2,002) (2,002) 134 129 536 (98) 701 33,469 (2,475) (2,475) 479 (49) 430 At 31 December 2023 169 37,126 (5,559) 31,424 Notes to the Company financial statements for the year-ended 31 December 2023 1. General information Diaceutics PLC is incorporated and domiciled in Northern Ireland. These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). The Company’s financial statements are presented in pound sterling. These financial statements are the stand-alone financial statements of the parent company. Parent company profit and loss account In these financial statements the Company has applied the exemptions available under FRS 101 in respect of the following disclosures: • Cash flow statement and related notes; • Certain disclosures regarding revenue; • Comparative period reconciliations for share capital; • Disclosures in respect of capital management; The Directors’ have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and have not presented profit and loss account for the company alone. • • Related Party Disclosures entered into between two or more members of a group; The effects of new but not yet effective IFRSs; and The results of Diaceutics PLC are included in the consolidated financial statements of Diaceutics PLC which are available from Building Two, Dataworks at King’s Hall Health & Wellbeing Park, Belfast, County Antrim, Northern Ireland, BT9 6GW. Basis of accounting These financial statements have been prepared on a going concern basis. The financial statements are prepared under the historical cost convention unless otherwise specified within these accounting policies, in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework and in accordance with The Companies Act 2006 as applicable to companies using FRS 101. The accounting policies which follow set out those policies which apply in preparing the financial statements for the year-ended 31 December 2023. The accounting policies have been applied consistently to all the years presented, unless otherwise stated. • Disclosures in respect of the compensation of Key Management Personnel. As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures: • IFRS 2 Share based Payments in respect of Group settled share-based payments; • Details of key assumptions used for the purposes of impairment testing; and • IFRS 7 Financial Instrument Disclosures. Going concern The financial performance and balance sheet position at 31 December 2023 along with a range of scenario plans to 31 December 2026 has been considered, applying different sensitives to revenue. Across these scenarios, including at the lower end of the range, there remains significant headroom in the minimum cash balance over the period to 31 December 2026 and therefore the Directors have satisfied themselves that the Company has adequate funds in place to continue in operational existence for the foreseeable future. 2. Accounting policies Overview The accounting policies applied in the Company financial statements for the current and preceding periods are the same as those accounting policies applied to the Group financial statements, which are detailed on pages 104 to 109, except for: • • any exemptions which are set up in section 1 of these Company financial statements (‘General information’); and accounting policies which differ from or are in addition to those accounting policies outlined in the Group financial statements, further details of which are set out below. Investments Investments in subsidiaries are held at historical cost less any provisions for impairment in value. The carrying values of investments are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Share-based payments in relation to employees of subsidiary companies are treated as a capital contribution in the Company Financial Statements. 142 143 Diaceutics PLC Annual ReportCompany financial statements 3. Judgements in applying accounting policies and key sources of estimation uncertainty The preparation of the Company financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for income and expenditure during the year. Details of the judgements, estimates and assumptions and the effect they have on the Company financial statements is detailed in the Group financial statements, section 3 (‘Judgements in applying accounting policies and key sources of estimation uncertainty’) on pages 110 to 111. 6. Intangible assets Intangible assets relate to patents, trademarks, software, DXRX platform and datasets which are recorded at cost and amortised over their useful economic life which has been assessed as three to ten years. During the year-ended 31 December 2023, £145,000 was transferred out of development expenditure and into the Groups’ DXRX platform (2022: 1,558,000). The Company assesses the useful life of all assets on an annual basis. On reviewing the useful life of the datasets it was determined that based on latest information on commercial and technical use, three years represented the best estimate of the useful life of such assets. In 2023, the Company changed the estimated useful life of its datasets from 4 years to 3 years. The change in useful lives were accounted for prospectively. The change in useful lives were accounted for prospectively. The change in the useful lives of datasets increased amortisation expense by £433,000 in 2023. There were no changes in useful lives of other intangible assets. 144 4. Employee cost 5. Staff numbers 6. Intangible assets continued... Wages and salaries Social security costs Other pension costs Shared based payments 2023 £000’s 8,382 1,323 328 385 2022 £000’s 9,384 1,321 427 280 The average monthly number of employees during the year was as follows: 2023 Number 2022 Number Administration Technical Business development Finance 24 91 20 7 30 77 12 10 10,418 11,412 142 129 The Company has determined that the useful life of data and the platform is a significant area of estimation. The platform has been assessed to have a useful life of 10 years based on information on the estimated technical obsolescence of such assets. However, the actual asset useful life may be shorter or longer than this period depending on technical innovations and other external factors. If the useful life were reduced by two years, the carrying amount of the asset would reduce by £189,000 (2022: £184,000) to £6,787,000 (2022: £6,939,000). If the useful life of the asset were increased by 2 years, the carrying amount of the asset would increase by £170,000 (2022: £120,000) to £7,146,000 (2022: £7,243,000). Datasets have been assessed to have a useful life of three years based on information on the estimated commercial and technical use of such assets. However, the actual asset useful life may be shorter or longer than three years depending on technical innovations and other external factors. If the useful life were 2 years (2022: 3 years), the carrying amount of the asset would reduce by £102,000(2022: £277,000) to £1,379,000(2022: £2,022,000). If the useful life of the asset were 4 years (2022: 5 years), the carrying amount of the asset would increase by £472,000(2022: £163,000) to £1,953,000(2022: £2,462,000). Amortisation in respect of platform, datasets, patents and trademarks and software is expensed to the profit and loss account as administrative expenses. These are all definite life intangible assets. While these assets are owned by entities across the Group, they are operated as a single asset. Refer to Group note 15 – Intangible assets for details of impairment review and sensitivity analysis. Patents and trademarks £000’s Datasets £000’s Development expenditure* £000’s Platform £000’s Software £000’s Total £000’s Cost At 1 January 2022 Transfer from development expenditure to platform Additions At 31 December 2022 Transfer from development expenditure to platform Additions At 31 December 2023 Amortisation At 1 January 2022 Charge for the year At 31 December 2022 Charge for the year At 31 December 2023 Net book value At 31 December 2023 At 31 December 2022 188 - 1 189 - - 189 129 40 169 15 184 5 20 3,165 - 1,120 4,285 - 679 4,964 1,183 803 1,986 1,497 167 (1,558) 1,536 145 (145) - - - - - - 3,483 - 1,481 2,299 - 145 6,782 1,558 8,340 145 598 9,083 461 756 1,217 890 2,107 6,976 7,123 551 - 140 691 - 258 949 178 235 413 177 590 359 278 *Development expenditure relates to an asset under construction and as such no amortisation has been charged. 10,853 - 2,797 13,650 - 1,535 15,185 1,951 1,834 3,785 2,579 6,364 8,821 9,865 145 Diaceutics PLC Annual ReportCompany financial statements 7. Property, plant and equipment 8. Right-of-use assets Leasehold improvements £000’s Office equipment £000’s 478 54 532 - 532 16 50 66 54 120 412 466 431 130 561 125 686 189 88 277 103 380 306 284 Total £000’s 909 184 1,093 125 1,218 205 138 343 157 500 718 750 Cost At 1 January 2022 Additions At 31 December 2022 Additions At 31 December 2023 Accumulated depreciation At 1 January 2022 Charge in the year At 31 December 2022 Charge in the year At 31 December 2023 Net book value At 31 December 2023 At 31 December 2022 146 Cost At 1 January 2022 Additions At 31 December 2022 Additions At 31 December 2023 Accumulated depreciation At 1 January 2022 Charge for the year At 31 December 2022 Charge for the year At 31 December 2023 Carrying amount At 31 December 2023 At 31 December 2022 Buildings £000’s 1,460 79 1,539 - 1,539 49 157 206 153 359 1,180 1,333 During 2021, the group entered into a lease for its property at Dataworks, King’s Hall Life Sciences Park, Belfast, BT9 6GW. The lease term is 10 years. This resulted in additions to right-of-use assets of £1,460,000 in 2021. In 2022, an adjustment was made to the asset balance in relation to creating a provision for dilapidations. The Company’s obligations are secured by the lessors’ title to the leased assets for such leases. The maturity analysis of lease liabilities is presented in note 14. 2023 £000’s 2022 £000’s Amounts recognised in profit and loss Depreciation expense on right-of-use assets Interest expense on lease liabilities 153 55 157 61 147 Diaceutics PLC Annual ReportCompany financial statements 9. Deferred tax asset/(liability) The following were subsidiaries of the Company at 31 December 2023: Tax losses £000’s Property, plant and equipment £000’s Other temporary differences £000’s Research & development £000’s Share-based payments £000’s Asset/(liability) at 1 January 2022 1,723 (1,838) Credited/(charged) to the profit and loss account Asset/(liability) at 31 December 2022 Credited/(charged) to the profit and loss account (51) 1,672 858 (197) (2,035) 326 Asset/(liability) at 31 December 2023 2,530 (1,709) 2 1 3 14 17 - - - - - 26 13 39 255 294 Total £000’s (87) (234) (321) 1,453 1,132 Investment in subsidiaries £000’s 226 109 (84) 251 62 - 313 During the year-ended 31 December 2023, the Company made capital contributions amounting to £62,000 (2022: £109,000) to certain subsidiaries in respect of share- based payment awards.The Company has an investment/receivable due from its subsidiary Diaceutics PTE which was established to facilitate the Group’s provision of services to customers based in Singapore and the wider APAC region. Due to the Group’s strategic shift to a platform business and the lessening requirement for local regional presence in the region to service customers, the value of the investment/ receivable due from Diaceutics PTE is unlikely to be recoverable in the foreseeable future and has been fully provided at the year-ended 31 December 2023. A provision of £Nil (2022:£84,000) has been provided by the Company for its investment in its subsidiary Diaceutics Pte Limited due to uncertainty around the recoverability of this balance. 10. Investments At 1 January 2022 Additions Provision for impairment At 31 December 2022 Additions Provision for impairment At 31 December 2023 148 Registered office Country of incorporation Percentage of shares held Diaceutics Ireland Limited Unit 3, Creative Spark, Clongtara Drive, Muirhevnamon, Dundalk, County Louth Republic of Ireland Labceutics Limited 727 Antrim Road, Belfast, BT15 4EJ Diaceutics Inc 2001 Route 46, Waterview Plaza Suite 310, Parsippany, New Jersey, 07054 Northern Ireland Northern Ireland 100% 100% 100% Diaceutics Pte Limited 6 Temesak Boulevard, #20-00 Suntec Tower Four, Singapore Singapore 100% The principal business of all the subsidiary undertakings is data and implementation services. All entities were incorporated before 1 January 2022. During the year Diaceutics Pte Ltd liquidated its wholly-owned Chinese subsidiary (Diaceutics Precision Medicine Technology (Guangzhou) Ltd as part of ongoing group business review. 149 Diaceutics PLC Annual ReportCompany financial statements11. Trade and other receivables 13. Trade and other payables 15. Equity share capital Trade receivables Contract assets 2023 £000’s 462 135 2022 £000’s 5 419 Creditors: amounts falling due within one year Trade payables Amounts owed by Group undertakings 4,750 6,660 Amounts owed to group undertakings Accruals Contract liabilities Deferred grant income Other tax and social security 2023 £000’s 2022 £000’s 384 202 1,362 - 103 405 592 - 1,685 10 127 352 Allotted, called up and fully paid 84,501,390 (2022: 84,472,431) Ordinary shares of £0.002 each Authorised 84,501,390 (2022: 84,472,431) 2023 £000’s 2022 £000’s 169 169 169 169 All ordinary shares rank pari passu in all respects including voting rights and the right to receive all dividends and other distributions, if any, declared or made or paid in respect of ordinary shares. Treasury shares Refer to Group note 24 for details of treasury shares that are held by the Diaceutics Employee Share Trust for the purpose of issuing shares under the Diaceutics PLC SIP scheme. 2,456 2,766 Reserves Other debtors Prepayments 217 923 168 309 6,487 7,561 All amounts are due within one year. Amounts owed to Group undertakings are unsecured, interest free and repayable on demand. Management’s assessment was that the trade receivables are fully recoverable and the amount of the provision netted against the trade receivables balance was £Nil (2022: £Nil). The Company has an investment/receivable due from its subsidiary Diaceutics PTE, which was established to facilitate the Group’s provision of services to customers based in Singapore and the wider APAC region. Due to the Group’s strategic shift to a platform business and the lessening requirement for local regional presence in the region to service customers, the value of the investment/receivable due from Diaceutics PTE is unlikely to be recoverable in the foreseeable future and has been fully provided at the year ended 31 December 2023. The company is owed £1,175,000 (2022: £2,265,000) by its subsidiary Diaceutics Pte Limited. A full provision has been made by the Company for this balance due to uncertainty around the recoverability of this debt in both 2023 and 2022. 12. Income tax receivable Balance at 1 January Expensed/credited to the profit and loss account 2023 £000’s 1,462 (1,232) 2022 £000’s 2,256 (794) Balance at 31 December 230 1,462 150 Contract liabilities of £Nil (2022: £10,000) which arise in respect of amounts invoiced during the year for which the performance obligation has not been met by the year-end. Contract liabilities would be expected to be recognised as revenue in the following year. 14. Lease liability 2023 Discounted £000’s 2023 Undiscounted £000’s 2022 Discounted £000’s 2022 Undiscounted £000’s Maturity analysis: Year 1 Year 2-5 +5 Year Analysed as: Non-current Current 146 598 461 195 731 488 124 573 632 179 731 683 1,205 1,414 1,329 1,593 1,059 146 1,205 1,219 195 1,414 1,205 124 1,329 1,414 179 1,593 All lease liabilities are denominated in pound sterling. Share premium account: This reserve records the amount above the nominal value received for shares sold, less transaction costs. Translation reserve: This reserve records foreign exchange differences on translation of foreign operations. 16. Commitments and contingencies There are no material capital commitments, financial commitments or contingent liabilities at the statement of financial position date not provided for in these financial statements. 17. Related party transactions As outlined in note 1 the Company has taken advantage of the exemption available in FRS 101 in relation to IAS 24 “Related Party Disclosures” from disclosing transactions between two or more members of a group, provided that any subsidiary which is party to the transaction is wholly owned by such a member. During 2021, the Company entered into a 10-year lease for its new Belfast offices. The lessor is O’Connor & McCann Ltd, a private limited company in which Peter Keeling is a director and Ryan Keeling is a shareholder. A £178,750 lease payment was made in the year (2022: £162,500). There were no other transactions which fall to be disclosed under the terms of IAS 24. 151 Diaceutics PLC Annual ReportCompany financial statements Corporate information Directors Ms D Davis Mr P Keeling Mr R Keeling Mr N Roberts Mr G Paterson Mr M Wort Company Secretary Mrs S Craig Primary Bankers Silicon Valley Bank Alphabeta 14-18 Finsbury Square London EC2A 1BR Registered Office Solicitors Registered Number NI055207 First Floor, Building Two, Dataworks at Kings Hall Health and Wellbeing Park Belfast County Antrim DAC Beachcroft LLP The Wallbrook Building 25 Wallbrook London EC4N 8AF Independent Auditors Nominated Advisor & Broker Ernst & Young Chartered Accountants EY Building Harcourt Centre Harcourt Street Dublin 2 Ireland Stifel Nicolaus Europe Limited 150 Cheapside London EC2V 6ET We care about our environment This document has been printed on 100% recycled paper. 

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