Novacyt announces the financial impacts of the agreement with DHSC

Clinical diagnostics specialist Novacyt has announced a financial update following its agreement with the UK Department of Health and Social Care (DHSC). The company could see a net increase in its cash flow of around £7 million due to the VAT recovery.

The agreement, dated June 11, 2024, requires Novacyt to pay £5 million to DHSC. The unpaid £20 million bill from December 2020 will be written off as a bad debt. The product warranty provision of £19.8 million will be cancelled. The settlement costs of £5 million will be recognized as exceptional items.

Novacyt has requested a refund of £12.2 million in VAT paid to HMRC. If this request is granted, net cash flow will increase by £7 million. Details will be discussed at the Annual General Meeting on July 18, 2024.