Covid test manufacturer cuts 60 jobs after Government refuses to pay millions of pounds it owes
Covid-19 test manufacturer Abingdon Health has reduced its workforce by one-third because of cashflow problems it blames on the Government withholding millions of pounds.
The Yorkshire life sciences company won two Government contracts to produce a rapid antibody test but those agreements are now subject to a legal challenge by the Good Law Project about the way the deals were agreed.
It says the Department for Health and Social Care (DHSC) has now said it won’t pay the £6.7m plus interest it is owed until after the judicial review proceedings are complete, even if Abingdon takes legal action to recover the money.
60 people have left the business in the last four months, with 130 people now left at its York and Doncaster sites.
Abingdon chairman Dr Chris Hand said the company had “stepped up to what was asked of us at a time of national emergency”.
He added: “Some of our employees have unfortunately lost their jobs as a direct consequence of the DHSC not paying for products they have taken delivery of, are using and told us were passed for payment in January 2021. I apologise to those colleagues who have left the company.”
The manufacturer says it is owed £5.2m for AbC-19 kits it delivered in a three-month period to January and £1.5m for components it bought on behalf of the DHSC.
Abingdon said “the pressure on cash flow will increase the longer that payment by DHSC is outstanding”.
As reported earlier this week, the Judicial Review proceedings were issued by not-for-profit campaign organisation Good Law Project, on the grounds that the Government contracts for the COVID-19 tests were awarded to Abingdon Health without competition, on the basis of profoundly flawed research. Abingdon countered that it has done nothing wrong.
In a statement to investors, Abingdon said: “As a small UK company that stepped up to support the UK Government when asked and a company that has no political affiliations at all it feels that the only people directly affected by the judicial review process are Abingdon’s employees, investors and other stakeholders.”
A trading update also released today showed revenues were up 123% to £11.6m in the year to June. It recorded an adjusted EBITDA loss of £3.3m.
As of 30 June 2021 the company had net cash of £4.9m.
Abingdon notes it has completed the second stage of its manufacturing build at both its York and Doncaster sites.
This investment has provided the company with state-of-the-art manufacturing capability and significant manufacturing capacity.
Chris Yates
Chris Yates, chief executive officer, said: “Abingdon continues to see material opportunities for the AbC-19 rapid test both in the UK and internationally and we anticipate the onus switching to a more integrated testing approach which utilises the potential cost and practical benefits of neutralising antibody testing alongside both PCR and antigen testing.
“We have worked hard with our academic partners to build a robust bank of data that supports the performance of the AbC-19™ test and its potential role in a range of use cases.
“In addition, Abingdon has continued to build its contract manufacturing customer base with the signing of several important manufacturing contracts both within and without COVID-19 which we believe will contribute meaningfully to our FY 21/22 revenues.
“Our operational expansion has provided us with significant manufacturing capability and our key priority now is to grow our manufacturing volumes with existing and new customers to maximise our utilization of this capacity.”
A DHSC spokesman said: “We do not comment on details relating to ongoing legal proceedings, but we have been always been clear Government contracts must deliver value for taxpayer money and we will take action in instances where this does not happen.”
