REG - Allergy Therapeutics - Allergy Therapeutics plc – Interim Results
03/03/2022 07:00
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RNS Number : 5111D Allergy Therapeutics PLC 03 March 2022
Allergy Therapeutics plc
("Allergy Therapeutics" or the "Company" or the "Group")
Interim Results for the six months ended 31 December 2021
~ US readiness plan underway including two pivotal trials
· Portfolio focused on high value growth products to enhance future
profitability
· Ground-breaking Phase I trial of peanut allergy vaccine on track
to commence in 2022 following recent FDA clearance of IND application with
data expected sooner than previously anticipated
· Pivotal Phase III trial of short-course grass pollen
immunotherapy to commence in Q3 2022 following impressive results from
exploratory field trial
· Solid revenue of £49m, increased cash position of £41m
3 March 2022 Allergy Therapeutics plc (AIM: AGY), the fully integrated
commercial biotechnology company specialising in allergy vaccines, today
announces its unaudited interim results for the six months ended 31 December
2021.
Highlights
Financial
· Solid revenue from commercial portfolio of £48.7m. Strategic
streamlining of older products has affected a short-term revenue decrease of
10% (5% at constant currency* and up 4% on like for like constant currency*
plus phasing) from £54.0m in H1 2021
· Operating profit pre-R&D of £12.5m (H1 2021 £20.5m)
reflecting portfolio streamlining and activity to pre-Covid-19 levels
· Increased cash balance of £41.4m (30 June 2021: £40.3m). Net
cash of £38.5m (30 June 2021 £36.9m)
· £10m revolving credit facility signed post period to replace
previous £7m overdraft facility
· Strong outlook for the full year with operating profit
(pre-R&D) expected to be in line with consensus forecasts
Operational
· IND application cleared by the United States Food & Drug
Administration (FDA) for peanut allergy vaccine candidate, VLP Peanut, with
initial patient treatment due to begin in 2022 and top line data expected H1
2023, earlier than originally intended data readout of Q4 2023
o $8bn per annum market opportunity
o VLP Peanut has the potential to provide long-term immune response in
comparison to continual dosing required by other treatments
· Impressive results from exploratory field trial of wholly owned
short-course grass pollen immunotherapy, Grass MATA MPL, enabling pivotal
Phase III trial to begin in Q3 2022
· Growth of key commercial portfolio products, Pollinex, Venomil
and Acarovac
Manuel Llobet, CEO at Allergy Therapeutics, stated: "This year will see the
Company prepare for entry into the US market where the allergy immunotherapy
market is estimated to be worth $2 billion. Our Company continues to stand out
as a high value hybrid, with its strong commercial business and high science
R&D programmes. We are well placed to create shareholder value through our
pivotal stage grass pollen immunotherapy and our innovative peanut allergy
vaccine, both of which have significant potential in the US market.
"Our strong cash position and commercial capabilities give Allergy
Therapeutics a highly differentiated position and opportunity to investors
compared to solely R&D-focused healthcare companies."
*Constant currency uses prior year weighted average exchange rates to
translate current year foreign currency denominated revenue to give a
year-on-year comparison excluding the effects of foreign exchange movements.
See table in finance review for an analysis of revenue.
This announcement contains inside information for the purposes of Article 7 of
Regulatory (EU) No596/2014.
- ENDS -
Analyst briefing and webcast today
Manuel Llobet, Chief Executive Officer, Nick Wykeman, Chief Financial Officer,
and Alan Bullimore, Head of Business Innovation, will host a virtual
presentation for analysts to provide an update on the Group, followed by a
Q&A session, at 09.30am GMT.
The live webcast can be accessed here
(https://www.lsegissuerservices.com/spark/AllergyTherapeutics/events/fc03dd75-d3c3-41b2-89b2-3894dad74772)
.
For further information, please contact:
Allergy Therapeutics
+44 (0) 1903 845 820
Manuel Llobet, Chief Executive Officer
Nick Wykeman, Chief Financial Officer
Panmure Gordon
+44 (0) 20 7886 2500
Freddy Crossley, Emma Earl, Corporate Finance
Rupert Dearden, Corporate Broking
Consilium Strategic Communications
+44 20 3709 5700
Mary-Jane Elliott / David Daley / Davide Salvi
allergytherapeutics@consilium-comms.com
(mailto:allergytherapeutics@consilium-comms.com)
Stern Investor Relations, Inc.
+1 212 362 1200
Christina Tartaglia
christina@sternir.com (mailto:christina@sternir.com)
Notes for editors:
About Allergy Therapeutics
Allergy Therapeutics is an international commercial biotechnology company
focussed on the treatment and diagnosis of allergic disorders, including
aluminium free immunotherapy vaccines that have the potential to cure disease.
The Group sells proprietary and third-party products from its subsidiaries in
nine major European countries and via distribution agreements in an additional
ten countries. Its broad pipeline of products in clinical development includes
vaccines for grass, tree and house dust mite, and peanut allergy vaccine in
pre-clinical development. Adjuvant systems to boost performance of vaccines
outside allergy are also in development.
Formed in 1999 out of Smith Kline Beecham, Allergy Therapeutics is
headquartered in Worthing, UK with more than 11,000m(2) of state-of-the-art
MHRA-approved manufacturing facilities and laboratories. The Group employs
c.600 employees and is listed on the London Stock Exchange (AIM:AGY). For more
information, please see www.allergytherapeutics.com
(http://www.allergytherapeutics.com) .
Joint Statement from the Chairman and Chief Executive Officer
Operating Review
Overview
2021 provides a strong springboard for pivotal year ahead
2021 was the springboard for Allergy Therapeutics' pivotal year, 2022. This
year will see the Company prepare for entry into the US market with two
significant clinical trials. The Group has generated strong revenue since its
formation in 1999, significantly outperforming the market. We expect that
strong commercial performance to continue.
The Group's innovative and high value pipeline continues to progress at pace
with a successful exploratory field trial paving the way for the pivotal Phase
III Grass MATA MPL trial to start later this year. Clearance by the FDA of the
Investigational New Drug (IND) application and protocol for the upcoming,
ground-breaking, Phase I PROTECT trial investigating the Group's peanut
allergy vaccine candidate, VLP Peanut, was another important step and further
validation of the strength of Allergy Therapeutics' innovative and potentially
disruptive future portfolio.
In order to focus the business, as previously announced, the Group continues
to strategically streamline its portfolio to focus on its high margin,
differentiated short course subcutaneous immunotherapies and innovative
allergy treatments. The Group will continue robust cost controls while its
significant clinical programmes progress.
The Market
Maintaining focus on high value and highly differentiated immunotherapies
Allergy Therapeutics reported solid revenue of £48.7m from its commercial
portfolio. Strategic streamlining of the Group's non-differentiated older
products led to a 10% reduction from £54.0m in 2020 on a reported basis (down
5% on constant currency* basis). This repositioning of the portfolio maintains
focus on high value and highly differentiated short course subcutaneous
immunotherapies (SCIT) and innovative allergy treatments to drive the growth
of the business. On this revised basis, revenues have increased 4% on a
like-for-like product and phasing basis (on constant currency* basis). As most
manufacturing costs are fixed, the lower sales have directly affected the
gross margin along with increased cost of sales and the foreign exchange
impact of the weaker Euro.
Revenues were also affected by phasing, headwinds in Germany and the
continuing effect of Covid-19 in Italy and Germany, which are expected to be
short term. While the supply chain was hampered by the spread of Covid-19,
these delays in delivery were short term and should be recovered this year.
Spain, the Group's second most important market, saw a double-digit growth in
sales, while the Netherlands, UK, and Rest of World (RoW) also grew strongly.
There was double-digit growth for key products Pollinex, Venomil and Acarovac
(on constant currency* basis).
On current internal assumptions and as previously communicated, the Group will
be able to fund the Grass MATA MPL Phase III trial (G306), as well as the VLP
Peanut Phase I PROTECT trial, from existing resources with some additional
debt. The Board continually reviews the Group's funding requirements,
including opportunities to further de-risk its clinical trial programmes to
optimise future value creation. These options include, but are not limited to,
a potential path to a Nasdaq dual listing.
Regulatory Affairs & Clinical Development
Maximising the chances of success in grass pollen immunotherapy
The Group achieved very impressive results from its exploratory field study
(G309) to evaluate the efficacy and safety of its short-course subcutaneous
immunotherapy (SCIT) candidate, Grass MATA MPL, that aims to address the cause
of symptoms of allergic rhinoconjunctivitis due to grass pollen. Results from
the trial indicated a significant reduction in daily symptoms and use of
relief medication among participants receiving Grass MATA MPL. Both dosing
regimens used in the trial were safe and well tolerated.
Given its extensive experience and leadership in allergy focused clinical
development, the Group used a novel study design and methodology in the G309
trial to examine multiple endpoints and enable extensive biomarker analysis.
Learnings from the trial, alongside the excellent results, have enabled the
Company to optimally design its upcoming pivotal G306 Phase III field trial,
to maximise the chances of success and support the Group's future regulatory
plans for entry into the US. The Company has further decided to increase the
confidence interval of the trial, increasing the number of patients and will
fund the extra cost with additional debt.
The Group is now on track to begin patient treatment in the Grass MATA MPL
pivotal Phase III trial (G306) in the autumn of this calendar year.
The total US allergy immunotherapy market is estimated to be worth $2bn with
around 25% of the patients suffering from grass allergy. This could imply
potential peak sales for the Grass MATA MPL product of about $300 to $400m per
annum.
A paradigm shift in the future treatment of peanut allergy
FDA clearance of the Group's IND application for VLP Peanut in January was a
key milestone in the development programme of this peanut allergy vaccine
candidate. Following consultation with experts in the field, the IND
application included a protocol for the upcoming Phase I PROTECT trial that
moves the planned paediatric and adolescent arms into a future Phase II trial.
As a result, top line data from the Phase I PROTECT trial, in adult patients,
are now anticipated in H1 2023, ahead of the original intended Q4 2023 data
readout.
The protocol includes multiple cohorts starting with subcutaneous injection of
healthy subjects, followed by skin prick tests for peanut allergic patients
and then moving to subcutaneous injection of peanut allergic subjects.
Although the trial protocol does not allow reporting of results mid-trial, to
avoid biasing the outcome, the Group expects to communicate the transitions
between cohorts, to update on the trial's progress.
The batch of investigational medicinal product (IMP) intended for use in the
trial has been successfully manufactured, tested and released. Initial dosing
of patients is expected in 2022.
The Group continues to believe that VLP Peanut has the potential to be a
transformative treatment option for one of the most dangerous allergies. The
availability of a safe and effective short-course vaccine that provides
long-term protection and induces a long-lasting protective immune response
would present a paradigm shift in how peanut allergy can be managed and has
the potential to be a significant product in the $8bn worldwide food allergy
market. While currently available immunotherapy products provide an important
treatment approach for patients and families who have, for too long, been
without options, they require continual dosing over the long-term to maintain
a tolerance to peanut, which might limit patient adherence.
Strengthening an innovative immunotherapy portfolio
The Group's portfolio is broad and strong with two additional key MATA MPL
product candidates (Ragweed and Birch/Trees MATA MPL) which currently have
INDs and could be progressed through late-stage development and
commercialisation to join the Grass MATA MPL product in the US. These three
products, along with VLP Peanut, form a strong and compelling portfolio that
would enable the Company to lead the allergy immunology market in the US.
With further paediatric trials, the Group also expects to be able to expand
into the paediatric segment of the market. The state-of-the-art portfolio of
ultra-short course allergy immunotherapies offer greater flexibility and
treatment options for patients. Some of these products are already available
under a named patient basis in Europe.
Investing in infrastructure to maintain leadership
Allergy Therapeutics has a strong track record of quality and compliance with
current Good Manufacturing Practice (cGMP) requirements at its facilities.
Accordingly, the Group continues to upgrade the Worthing site and enhance its
processes to maintain the Group's excellent levels of quality.
The Company has continued its infrastructure investment to ensure Allergy
Therapeutics maintains a sterile, pharmaceutical controlled environment within
its own production facilities, including a more efficient and reliable energy
centre that will be owned and run by the Group.
Financial Review
Streamlining and focus on shareholder value creation
Reported revenue for the first half of the financial year was £48.7m (H1
2021: £54.0m), representing a decrease of 5% at constant currency* (see table
below) and 10% in actual terms. The sales movement has been driven primarily
by the Group's planned streamlining of the product portfolio.
A reconciliation between reported revenue and revenue in constant currency* is
provided in a table at the link below:
http://www.rns-pdf.londonstockexchange.com/rns/5111D_1-2022-3-3.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5111D_1-2022-3-3.pdf)
As in previous years, owing to the seasonality of the pollen allergy market,
between 60%-70% of Allergy Therapeutics' revenue is generated in the first
half of the financial year and, as a consequence, the Group typically reports
profits in the first half of the year and losses in the second half.
Cost of goods sold increased in the period to £12.8m (H1 2021: £11.8m),
mainly due to lower overhead recovery (driven by Covid-19 issues) and labour
cost rises. Gross profit decreased to £35.9m (H1 2021: £42.2m), which
represents a gross margin of 74% (H1 2021: 78%). This reflects the fact that
most of the manufacturing costs are fixed and decreases in sales directly
affect the gross margin along with the lower absorption of overheads and
foreign exchange.
Sales, marketing and distribution costs of £13.1m (H1 2021: £12.4m) were
higher due to increased activity. The increase in administrative expenses to
£10.6m (H1 2021: £9.6m) reflects investment in infrastructure, particularly
IT systems related to cyber security and compliance.
Research and development costs were £5.0m (H1 2021: £4.7m) due to
preparation for the VLP Peanut PROTECT trial as well as the Grass MATA MPL
exploratory field trial which finished in the late autumn.
The tax charge in the period of £0.6m (H1 2021: £0.6m) relates to overseas
subsidiaries.
Property, plant and equipment decreased by £0.5m to £19.0m (H1 2021:
£19.5m) compared with the year before, mainly as a result of a natural
reduction in the remaining leasehold period of leased assets. Goodwill was
£3.3m (H1 2021: £3.4m) and was lower than the prior year due to changes in
foreign exchange rates. Other intangible assets have decreased by £0.2m due
to the amortisation charge being in excess of additions.
Total current assets excluding cash have increased by £0.8m to £21.7m (H1
2021: £20.9m) mainly due to increased stock levels to protect against Brexit,
a longer supply chain and R&D tax credits.
Retirement benefit obligations, which relate solely to the German pension
scheme, decreased to £11.6m (H1 2021: £13.4m) due to currency movements.
Net cash generated by operations was positive but lower than last year mostly
due to lower revenue creating low margins as well as a longer supply chain
with an inflow of £3.7m (H1 2021: £13.0m).
All periods now are based on IFRS16, the new accounting standard on leased
assets. Assets that were previously shown as operating lease assets are now on
the balance sheet with an accompanying liability. The measure of earnings
before interest, tax and depreciation and amortisation has benefited to the
order of £0.9m in comparison with pre IFRS 16 treatment. There is no material
impact on the operating profit.
Financing
Strong cash position
The Group had cash of £41.4m (30 June 2021 £40.3m) and debt on its balance
sheet at the close of the period relating to loans held in the Spanish
subsidiary of £2.9m (H1 2021: £3.8m) with £0.2m due to the exchange rate
movement. The seasonal overdraft was not used during the calendar year 2021.
Following the half year end, the Group signed a £10m revolving credit
facility to replace the £7m overdraft facility that was previously in place.
The Directors believe that the Group will have sufficient facilities for the
foreseeable future and, accordingly, they have applied the Going Concern
principle in preparing these interim financial statements.
Movements in the currency markets between the respective values of the Euro
and Sterling have an effect on the Group's operations. The Group manages its
cash exposure in this respect by foreign currency hedges. Over 90% of our
gross sales are denominated in Euro whereas approximately 60% of costs are
incurred in the United Kingdom and denominated in Sterling.
Outlook
Well placed for an exciting and pivotal year ahead
Allergy Therapeutics is keen to capitalise on the significant opportunities
that lie ahead with the commencement of two important clinical trials in the
US.
The Group's solid commercial performance of its operations is expected to
continue this financial year, while the planned commencement of two important
clinical trials is anticipated to result in increased R&D expenses.
The Board remains confident that market consensus for the operating profit
(pre-R&D) will be achieved despite an expected short-term decline in 2022
revenues partly linked to the strategic streamlining of older products.
The strategic streamlining of the portfolio is expected to continue in
combination with robust cost controls as the Group advances the clinical
development of its candidates VLP Peanut and Grass MATA MPL and rapidly
returns to growth.
Peter Jensen
Chairman
Manuel Llobet
Chief Executive Officer
3 March 2022
ALLERGY THERAPEUTICS PLC
Consolidated income statement
Note 6 months to 6 months to 12 months to
31 Dec 31 Dec 30 Jun
2021 2020 2021
2 £'000 £'000 £'000
unaudited unaudited audited
Revenue 48,696 54,032 84,331
Cost of sales (12,786) (11,788) (22,106)
Gross profit 35,910 42,244 62,225
Sales, marketing and distribution costs (13,080) (12,413) (25,200)
Administration expenses - other (10,630) (9,637) (20,674)
Research and development costs (5,033) (4,695) (12,887)
Administrative expenses (15,663) (14,332) (33,561)
Other income 250 280 567
Operating profit 7,417 15,779 4,031
Finance income 53 36 117
Finance expense (204) (242) (491)
Profit before tax 7,266 15,573 3,657
Income tax (595) (634) (771)
Profit for the period 6,671 14,939 2,886
Earnings per share 3
Basic (pence per share) 1.04p 2.34p 0.45p
Diluted (pence per share) 0.97p 2.19p 0.43p
Consolidated statement of comprehensive income
6 months to 31 Dec 6 months to 12 months to
31 Dec 30 Jun
2021 2020 2021
£'000 £'000 £'000
unaudited unaudited audited
Profit for the period 6,671 14,939 2,886
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of net defined benefit liability (498) 45 1,689
(58)
Remeasurement of investments-retirement benefit (13) (58)
assets
Revaluation gains - freehold land and buildings - - 94
Deferred tax movement - freehold land and buildings - - 5
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 1 (126) (503)
Total comprehensive income 6,116 14,845 4,113
Consolidated balance sheet 31 Dec 31 Dec 30 Jun
2021 2020 2021
£'000 £'000 £'000
unaudited unaudited audited
Assets
Non-current assets
Property, plant and equipment 18,992 19,503 19,717
Intangible assets - goodwill 3,374 3,438 3,343
Intangible assets - other 791 980 1,411
Investment - retirement benefit asset 5,726 5,927 5,760
Total non-current assets 28,883 29,848 30,231
Current assets
Inventories 10,602 10,092 10,838
Trade and other receivables 10,773 10,772 6,222
Cash and cash equivalents 41,385 48,289 40,273
Derivative financial instruments 330 2 525
Total current assets 63,090 69,155 57,858
Total assets 91,973 99,003 88,089
Liabilities
Current liabilities
Trade and other payables (14,942) (14,152) (16,475)
Current borrowings (1,008) (800) (963)
Lease liabilities (654) (1,400) (792)
Total current liabilities (16,604) (16,352) (18,230)
Net current assets 46,486 52,803 39,628
Non-current liabilities
Retirement benefit obligations (11,590) (13,388) (11,291)
Deferred taxation liability (387) (439) (408)
Non-current provisions (150) (304) (208)
Lease liabilities (6,398) (6,769) (6,967)
Long term borrowings (1,870) (3,023) (2,450)
Total non-current liabilities (20,395) (23,923) (21,324)
Total liabilities (36,999) (40,275) (39,554)
Net assets 54,974 58,728 48,535
Equity
Capital and reserves
Issued share capital 652 651 651
Share premium 112,576 112,576 112,576
Merger reserve - shares issued by subsidiary 40,128 40,128 40,128
Reserve - share based payments 3,015 3,200 2,693
Revaluation reserve 1,073 974 1,073
Foreign exchange reserve (1,187) (811) (1,188)
Retained earnings (101,283) (97,990) (107,398)
Total equity 54,974 58,728 48,535
Consolidated statement of changes in equity
Issued share Capital Share premium Merger reserve - shares issued by subsidiary Reserve - share based payment Foreign exchange reserve Retained earnings Total equity
Revaluation reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 December 2020 651 112,576 40,128 3,200 974 (811) (97,990) 58,728
- - - - 99 (377) - (278)
Exchange differences on translation of foreign operations
Valuation gains taken to equity (land and buildings) - net of deferred tax - - - - - - - -
Remeasurement of net defined benefit liability - - - - - - 1,644 1,644
Remeasurement of investments - retirement benefit assets - - - - - - (45) (45)
Total other comprehensive income - - - - 99 (377) 1,599 1,321
Loss for the period - - - - - - (12,053) (12,053)
Total comprehensive income - - - - 99 (377) (10,454) (10,732)
Share based payments - - - 539 - - - 539
Shares issued - - - - - - - -
Transfer of lapsed options - - - (1,046) - - 1,046 -
To retained earnings
Transfer of depreciation on revalued property - - - - - - - -
At 30 June 2021 651 112,576 40,128 2,693 1,073 (1,188) (107,398) 48,535
- - - - - 1 - 1
Exchange differences on translation of foreign operations
Remeasurement of net defined benefit liability - - - - - - (498) (498)
Remeasurement of investments - retirement benefit assets - - - - - - (58) (58)
Total other comprehensive income - - - - - 1 (556) (555)
Profit for the period - - - - - - 6,671 6,671
Total comprehensive income - - - - - 1 6,115 6,116
Share based payments - - - 322 - - - 322
Shares issued 1 - - - - - - 1
At 31 December 2021 652 112,576 40,128 3,015 1,073 (1,187) (101,283) 54,974
Consolidated cash flow statement
6 months to 6 months to 12 months to
31Dec 31Dec 30Jun
2021 2020 2021
£'000 £'000 £'000
unaudited unaudited audited
Cash flows from operating activities
Profit before tax 7,266 15,573 3,657
Adjustments for:
Finance income (53) (36) (117)
Finance expense 204 242 491
Non cash movements on defined benefit pension plan 29 67 85
Depreciation and amortisation 2,400 2,033 4,132
Net monetary value of above the line R&D tax credit (250) (280) (567)
Charge for share based payments 322 96 635
Movement in fair value of derivative financial instruments 150 (818) (1,340)
(Increase)/decrease in trade and other receivables (4,971) (3,702) 2,141
Decrease/(increase) in inventories 32 3 (1,117)
Decrease/increase in trade and other payables (1,385) (189) 548
Net cash generated by operations 3,744 12,989 8,548
Bank loan fees and Interest paid (204) (242) (190)
Income tax received 119 340 41
Net cash generated by operating activities 3,659 13,087 8,399
Cash flows from investing activities
Interest received 53 36 117
Payments for retirement benefit investments (87) (96) (194)
Payments for intangible assets (151) (33) -
Payments for property plant and equipment (996) (665) (2,562)
Net cash used in investing activities (1,181) (758) (2,639)
Cash flows from financing activities
Proceeds from issue of equity shares 1 4 4
Repayment of bank loan borrowings (466) (424) (757)
Repayment of principal on lease liabilities (878) (720) (1,605)
Interest paid on lease liabilities (140) (145) (301)
Proceeds from borrowings - 541 625
Net cash used in financing activities (1,483) (744) (2,034)
Net increase in cash and cash equivalents 995 11,585 3,726
Effects of exchange rates on cash and cash equivalents 117 (258) (415)
Cash and cash equivalents at the start of the period 40,273 36,962 36,962
Cash and cash equivalents at the end of the period 41,385 48,289 40,273
1. Interim financial information
The unaudited consolidated interim financial information is for the six-month
period ended 31 December 2021. The financial information does not include all
the information required for full annual financial statements and should be
read in conjunction with the consolidated financial statements of the Group
for the year ended 30 June 2021, which were prepared under International
Financial Reporting Standards (IFRS) in issue as adopted by the UK and with
those parts of the Companies Act 2006 that are relevant to the Group preparing
its accounts in accordance with UK-adopted IFRS.
The interim financial information has not been audited nor has it been
reviewed under ISRE 2410 of the Auditing Practices Board. The financial
information set out in this interim report does not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The Company's
statutory financial statements for the year ended 30 June 2021 prepared under
IFRS have been filed with the Registrar of Companies. The auditor's report on
those financial statements was unqualified and did not contain a statement
under Section 498(2) of the Companies Act 2006.
2. Basis of preparation
As permitted, this Interim Report has been prepared in accordance with the AIM
rules and not in accordance with IAS 34 "Interim Financial Reporting". The
accounting policies adopted in this report are consistent with those of the
annual financial statements for the year to 30 June 2021 as described in those
financial statements. There are no accounting standards that have become
effective in the current period that would have a material impact upon the
financial statements.
Going Concern
The Group has been profit making in the six months to 31 December 2021, as it
was in the corresponding period ended 31 December 2020.
Detailed budgets have been prepared, including cash flow projections for the
periods ending 30 June 2022 and 30 June 2023. These projections include
assumptions on the trading performance of the operating business and the
continued availability of the existing bank facilities. The Group had a cash
balance of £41.4m at 31 December 2021 and now has in place a £10m revolving
credit facility which commenced in February 2022 and is for three years. After
making appropriate enquiries, which included a review of the annual budget and
latest forecast, by considering the cash flow requirements for the foreseeable
future and the effects of sales and other sensitivities on the Group's funding
plans, the Directors continue to believe that the Group will have sufficient
resources to continue in operational existence for the foreseeable future and
accordingly have applied the Going Concern principle in preparing these
interim financial statements.
3. Earnings per share
6 months to 31 Dec 2021 6 months to 31 Dec 2020 12 months to 30 Jun 2021
unaudited unaudited audited
£'000 £'000 £'000
Profit after tax attributable to equity shareholders 6,671 14,939 2,886
Shares Shares Shares
'000 '000 '000
Issued ordinary shares at start of the period 641,773 637,286 637,286
Ordinary shares issued in the period 1,824 3,506 4,487
Issued ordinary shares at end of the period 643,597 640,792 641,773
Weighted average number of shares in issue for the period 641,794 637,286 639,190
Weighted average number of shares for diluted earnings per share 686,135 681,352 676,658
Basic earnings per ordinary share (pence) 1.04p 2.34p 0.45p
Diluted earnings per ordinary share (pence) 0.97p 2.19p 0.43p
4. Contingent liabilities
On 23 February 2015, the Company received notification that The Federal Office
for Economics and Export ("BAFA") had made a decision to reverse their
preliminary exemption to the increased manufacturers rebate in Germany for the
period July to December 2012. The Company was granted a preliminary exemption
to the increased rebate for this period by BAFA in 2013. The Company
recognised revenue of €1.4m (£1.1m at that time, now £1.2m) against this
exemption in the year ended 30 June 2013. All other preliminary exemptions
(granted for periods up to 30 June 2012) have previously been ratified as
final by BAFA. After taking legal advice, the Company has lodged an appeal
against this decision and is confident that the exemption will be re-instated.
Therefore, as at 31 December 2021, no provision has been recognised for the
repayment of the rebate refund. This position will be kept under review.
In respect of net revenue relating to certain products, there is a risk that
up to £12.5m cumulative revenue (2021: £10.7m) recorded in periods up to and
including December 2021 may be subject to a retrospective change. This is
due to the level of rebate being applied.
5. Events after the balance sheet date
A £10m Revolving Credit Facility was signed after the balance sheet date to
replace the £7m overdraft facility that was in place.
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