REG - Allergy Therapeutics - Unaudited Preliminary Results 2022
29/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220929:nRSc0796Ba&default-theme=true
RNS Number : 0796B Allergy Therapeutics PLC 29 September 2022
Allergy Therapeutics plc
("Allergy Therapeutics", "ATL" or the "Group")
Unaudited Preliminary Results for the Year ended 30 June 2022
- Phase I VLP Peanut PROTECT trial, incorporating ground-breaking VLP
technology, commencing shortly
- Highly successful exploratory field trial for Grass MATA MPL,
achieved 40% improvement in combined symptom and medication score compared to
placebo, with pivotal Phase III trial on track to start in Q4 2022
- Robust 2022 trading with revenue of £72.8m (2021: £84.3m) on
streamlined portfolio
- Continued growth of key commercial products, Pollinex, Venomil and
Acarovac
29 September 2022 Allergy Therapeutics (AIM: AGY), the fully integrated
specialty pharmaceutical company specialising in allergy vaccines, today
announces its unaudited preliminary results for the year ended 30 June 2022.
Highlights (including post-period events)
Financial
- Robust sales of £72.8m (2021: £84.3m) from commercial
portfolio. Strategic streamlining of older products to focus on high value
growth products has resulted in a decrease of 14% in actual terms (9%* in
constant terms)
- Operating profit pre-R&D of £3.4m (2021: £16.9m)
reflecting portfolio streamlining, COVID-19 headwinds and investment in supply
chain
- Strong cash balance of £20.5m (2021: £40.3m) providing ongoing
support for the Group's two key clinical trials
- Full year net loss of £13.8m (2021: Net profit of £2.9m)
- Announced the fundraise today for £7m (before expenses) and
loan notes to the value of £10m to complete funding of October's Phase I VLP
Peanut PROTECT trial, Phase III Grass MATA MPL trial as well as preparations
for use of placebo arm of Grass MATA MPL trial to increase safety database and
Phase II development of VLP Peanut. Fundraise supported by a number of the
Company's largest shareholders.
Operational
- Acceptance by the US FDA of IND application for VLP Peanut with
Phase I PROTECT trial in the US due to commence shortly
- Highly successful exploratory field trial for Grass MATA MPL,
achieving 40% improvement in combined symptom and medication score compared to
placebo
- Continued growth of key commercial products, Pollinex, Venomil
and Acarovac, in streamlined portfolio
Manuel Llobet, CEO of Allergy Therapeutics, stated:
"Over the past financial year, we have made significant progress in advancing
our clinical pipeline and we are excited to be approaching the start of two
key clinical trials in our innovative immunotherapy pipeline. The
first-in-human PROTECT trial of our peanut allergy vaccine candidate and the
pivotal phase III trial for our grass pollen immunotherapy are significant
milestones in our journey to bring these potentially life-changing treatments
to patients.
"While market conditions remain challenging for many companies, our leading
core European commercial business has been resilient. With a solid cash
position and strong, established commercial capabilities that set us apart
from solely R&D focused health companies, we are uniquely positioned to
create value for our shareholders."
*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 meeting and
webcast for analysts and investors at 12pm UK time today. The live webcast can
be accessed here
(https://www.lsegissuerservices.com/spark/AllergyTherapeutics/events/760ce343-dd5f-4b19-b065-76c57a4a47a3)
. Please contact Consilium Strategic Communications for more details on
allergytherapeutics@consilium-comms.com
(mailto:allergytherapeutics@consilium-comms.com) .
For further information, please contact:
Allergy Therapeutics
+44 (0) 1903 845 820
Manuel Llobet, Chief Executive Officer
Nick Wykeman, Chief Financial Officer
Panmure Gordon (Nominated Adviser and Broker)
+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, which,
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) .
Chairman's Report
Introduction
2022 has been an important year of evolution for our business: firstly,
preparing for entry into the US market with the start of two significant
clinical trials and, secondly, strategically streamlining our commercial
portfolio with a focus on differentiated, high margin and innovative allergy
treatments. We are uniquely positioned to create shareholder value, combining
a strong commercial business with an innovative R&D business. As such, we
continue to benefit both from a solid trading performance and from the future
opportunities provided by our innovative technologies.
Impressive results from the exploratory field trial investigating the Group's
short-course grass pollen immunotherapy, Grass MATA MPL, alongside the
industrial scale up and acceptance of the US Food and Drug Administration's
(FDA) Investigational New Drug (IND) application for VLP Peanut, our peanut
allergy vaccine candidate, incorporating virus-like particle (VLP) technology,
have both set the business up very well for the coming year.
2023 will be a calendar year of great significance for our clinical
development programmes as we anticipate clinical trial results from these two
pipeline candidates which have potential to reshape the Group's future
portfolio. Grass MATA MPL and VLP Peanut are both highly innovative products
that could offer a paradigm shift in the treatment of allergic disorders.
Performance
The actions of firstly, strategic streamlining the Group's non-differentiated
older products and secondly, repositioning the portfolio to maintain focus on
high value, innovative and highly differentiated short-course subcutaneous
immunotherapies (SCIT) are key to the continued success and growth of Allergy
Therapeutics. The short-term revenue reduction from this streamlining,
alongside continued headwinds from the COVID-19 pandemic and wider challenging
economic conditions, during a time of regulatory uncertainty as the German
therapy allergen ordinance (TAV) process comes into its final years, have
challenged the business. From 2026, all allergy therapies in Germany will need
to have acquired marketing authorisation through this process, underlining the
importance of the Group's focus on high quality clinical evidence to support
its portfolio. Despite the challenging environment, the business has remained
resilient throughout, achieving a positive trading position, which is a
testament to the quality of the team and the robust business model that
Allergy Therapeutics operates.
Board changes
As we shift our focus towards a global future, with entry into the US market,
we have strengthened our Board of Directors with a key addition.
We have appointed Cheryl MacDiarmid, Head of Global Commercial Strategy at
ViiV Healthcare (a joint venture between GSK, Pfizer and Shionogi), as a
Non-Executive Director. Cheryl brings unparalleled, industry-leading
experience of commercialising products in the US as well as excellent general
management skills as a former member of the GSK US Executive team leading the
respiratory sales and marketing team. She is a values-driven leader with
significant experience managing commercial risk, compliance and alliance
governance.
Nick Wykeman will step down as Chief Financial Officer in order to pursue a
non-executive career, leaving the business in November 2022. On behalf of the
Board and everyone at Allergy Therapeutics I would like to take this
opportunity to thank Nick for his contribution and wish him the very best for
the future.
Outlook
Allergy Therapeutics is built on a mission to deliver transformational
outcomes for allergy patients through its pioneering research and products.
The coming year will be key to advancing this mission as we commence our
pivotal Phase III Grass MATA MPL trial and Phase I VLP Peanut PROTECT trial.
The successful progression of these trials has the potential to transform both
this business and the lives of allergy patients.
Whilst we anticipate a return to near double digit revenue growth next year,
our portfolio adjustment and ongoing business requirements, including an
increase in clinical development delivery, will shift the performance of the
business to target a trading profit pre-R&D that is in the low millions.
This will also reflect further investment in the supply chain and the likely
continuing challenging trading environment.
Finally, I would like to thank all our employees at Allergy Therapeutics for
their performance during the year and their continued commitment to make 2023
a year of significant progress.
CEO Report
Introduction
Allergy Therapeutics' focus on innovative allergy immunotherapies with the
potential to transform the lives of patients is proving successful,
illustrated by the promising results seen within our innovative pipeline. Our
grass pollen immunotherapy candidate, Grass MATA MPL, showed an unprecedented
40% improvement in the combined symptom and medication score compared to
placebo in an exploratory field study and our peanut allergy vaccine
candidate, VLP Peanut, which will very soon enter the clinic, has continued
its excellent progress through strong pre-clinical trials and scale-up.
The second pillar of our strategy, our commercial business in Europe, has
performed well in its fundamentals, despite trading challenges from factors
affecting the wider market. This reflects the quality of the Group's portfolio
and the robustness of the business.
The third pillar of the strategy, entry into the US market, moves closer, with
the upcoming pivotal Phase III Grass MATA MPL trial. The total US allergy
immunotherapy market is estimated to be worth $2bn with around 25% of the
patients suffering from grass allergy. This indicates potential peak sales for
Grass MATA MPL of approximately $300 to $400m per annum.
Clinical development
Delivering a step change in the management of grass pollen allergy
Clinical development of our short-course grass pollen immunotherapy, Grass
MATA MPL, has continued to deliver positive results with the highly successful
exploratory field trial (G309) achieving an efficacy of 40% in an extended
posology, a result which, we believe, has not previously been achieved by any
allergy company in a field trial. The purpose of the trial was to evaluate
efficacy and safety, and the results 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.
The exploratory field trial incorporated a novel study design and methodology
to examine multiple endpoints, minimise the placebo effect and enable
extensive biomarker analysis. Learnings from the trial, alongside the
excellent results, have allowed us to optimally design our upcoming pivotal
Phase III field trial (G306), which includes increasing the confidence level
of the trial, to maximise the likelihood of success and support our future
regulatory plans for entering the US market.
That pivotal Phase III trial is expected to commence before the end of 2022,
recruiting approximately 1,200 patients at sites across Europe and the US. The
first data read out is planned for Q4 2023. Treatment will last for an
extended 13 weeks with a six-injection posology. Subject to success with this
trial, the only further requirement before a Biological Licence Application
(BLA) can be filed with the FDA will be completion of the safety database. To
submit a regulatory filing in Germany, a one-year paediatric trial will be
required. This is budgeted in clinical development plans for 2023 and 2024,
subject to a successful outcome of the phase III trial and further funding.
Data from that paediatric trial can also potentially be used to support the
paediatric US filing.
We strongly believe that this product candidate has the potential to be a
best-in-class therapy for patients suffering from allergic rhinoconjunctivitis
due to grass pollen and could demonstrate higher efficacy compared to standard
care, with improved adherence due to its short course nature. Although rarely
a life-threatening condition, allergic rhinitis can lead to 'Asthma March', a
gradual progression of asthma symptoms, which can potentially become life
threatening. New treatment approaches are vital.
A positive outcome of the upcoming Phase III trial would create the potential
for Allergy Therapeutics to commercialise the only ultra-short course allergy
vaccine in the world. No other company has been able to overcome the enormous
difficulties associated with the major placebo effect that we were able to do
in our exploratory field study. The innovative methodology tested in that
study should allow us to successfully develop a state-of-the-art grass pollen
immunotherapy that aims to guarantee patient compliance. Such a product
profile has the potential to establish the Group's MATA MPL platform in a
dominant worldwide position in the specific immunotherapy market.
Once the Phase III Grass MATA MPL trial has been completed, the Company
intends to undertake its paediatric trial investigating Grass MATA MPL as well
as a Phase III Birch MATA MPL trial in order to strengthen the approved
product platform in Europe and potentially the US.
A next-generation peanut allergy immunotherapy
Our highly innovative peanut allergy vaccine candidate, VLP Peanut, has been
successfully scaled up ready for the first-in-human Phase I PROTECT trial,
which is expected to begin dosing trial participants via subcutaneous
injection shortly. Following acceptance by the US FDA of the Group's IND
application and successful site initiations, skin prick tests among
peanut-allergic patients are about to start, marking another major milestone
in the clinical development of this product. The Group expects to communicate
the transitions between cohorts that will serve to update on the trial's
progress.
VLP Peanut is a truly novel, next-generation allergy immunotherapy candidate
with potential to be disease-modifying. The likely posology of VLP Peanut is
just three injections, followed by a further boost after a number of years,
representing a significantly lower burden of dosing for patients compared with
currently available oral treatments. These only increase tolerability to the
peanut allergen and require daily dosing over many months or years, which can
limit adherence. While transient monoclonal antibody treatments have shown
potential in the field of peanut allergy therapeutics, they remain expensive,
require regular treatment and are not disease modifying.
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. VLP Peanut reflects the Company's commitment to the development of
transformative treatment options, with the ultimate goal of improving the
patient experience and delivering better patient outcomes.
Financial Performance
Overview
The Group performed robustly, achieving sales of £72.8m. This represents a
14% reduction in actual terms (9%* in constant currency terms) compared to
£84.3m in 2021. This short-term revenue decrease is primarily due to the
previously disclosed strategic streamlining of older products to maintain
focus on high value and highly differentiated SCIT and innovative allergy
treatments. The underlying business continues to perform.
Rapid spread of the COVID-19 Omicron variant impacted Group performance, with
physicians in Germany being redeployed to support the COVID-19 vaccination
efforts. The challenges to the supply chain caused by the continued spread of
COVID-19 and manufacturing upgrades, which led to delays in shipping in 2022,
are expected to improve in 2023. The regulatory environment continues to be a
challenge. The Group is managing this by continuing to invest in market access
expertise. The Group sees the transition from a named-patient product market
to a registered market to be an important mid-term opportunity. This is being
capitalised on through investments in clinical trials such as the upcoming
Grass MATA MPL Phase III trial and VLP Peanut's Phase I PROTECT trial.
The business has performed robustly and continued to grow in most markets in
2022. Pollinex, Venomil and Acarovac sales all grew, while Pollinex Quattro
was affected by the market disruption as a named patient product in Germany.
A new Paper Wasp (Polisties) allergy immunotherapy treatment, based on the
Group's Venomil product, was launched in Spain in June, where the incidence of
this type of allergy, as well as the need for new treatment options, is high.
The Group has successfully implemented cost saving strategies to achieve the
planned operating profit pre-R&D. Capital investment in infrastructure and
personnel training is also ensuring the Group's continuing compliance with the
latest GMP standards, with further investment expected in future years to
maintain the required high levels of quality.
Post period, on 29 September 2022, the Company announced a subscription to
raise £7 million (before expenses) along with £10m of loan notes and the
issue of associated warrants. The fundraise is conditional on shareholder
approval at a General Meeting to be held on 18 October 2022. This funding will
complete the funding of the Phase I VLP Peanut PROTECT trial and the pivotal
Phase III trial for Grass MATA MPL, enable preparation for the future
extension of the Grass MATA MPL field trial to treat placebo patients
(reducing the size of the final safety database trial) and manufacture
clinical batches for a Phase II VLP Peanut trial. The Board continues to
review 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 once conditions in the market improve.
Outlook
Next year will be an important year for the business with the pivotal Grass
MATA MPL Phase III trial expected to read out in Q4 2023 and results from the
Phase I VLP Peanut PROTECT trial also becoming available in the summer of
2023.
The trading business is in a transition process with the Grass and Birch MATA
MPL products in the TAV process. This means that the outlook for next year is
likely to show a recovery, with near double-digit growth expected.
While expenses in the current financial year have been suppressed by the
effect of COVID-19 on business travel and a reduced scientific conference
circuit, alongside robust cost control measures, this is unlikely to continue
next year. The end of COVID-19 restrictions will allow for a return to
scientific conference attendance and execution of a normalised commercial
strategy. The Group also intends to make further investment in the supply
chain. This is likely to create an operating profit before R&D in the low
single millions.
Financial Review
Overview
The Group made an operating profit excluding R&D(1) of £3.4m (2021:
£16.9m) for the year to 30 June 2022 reflecting the planned strategic
streamlining of the product portfolio, COVID-19 and commercial headwinds in
Germany. Including R&D expense of £15.7m (2021: £12.9m), the Group
reported an operating loss of £12.2m (2021: operating profit of £4.0m).
The net loss after tax for the period was £13.8m (2021: net profit of
£2.9m). The impact of IFRS 16, Leases for 2022 has been similar to that
of 2021, with all the Group's leases shown on the balance sheet as a
'right‑of‑use' asset and lease liability with the 2022 EBITDA uplifted
by £1.8m (2021: £1.9m) and the operating profit by £0.2m (2021: £0.2m).
Revenue
Reported revenue decreased by 13.6% to £72.8m (2021: £84.3m). The weighted
average Euro exchange rate in the year was €1.17 to £1 compared to €1.12
in 2021. Revenue at constant currency(2) was 9.4% lower, as shown in the
table below.
Revenue from Germany was 59% (2021: 64%) of total reported revenue, reflecting
the streamlining of the product portfolio which solely affected Germany,
COVID-19, supply disruption due to upgrades and commercial headwinds. Sales of
Venomil, Pollinex and Acarovac continued to grow. Total sales from other
products contributed £3.3m for the year ended 30 June 2022 (2021: £4.0m).
Revenue in Germany decreased in the year with revenue at constant currency(2)
down to £44.8m (2021: £53.8m), a decrease of 17%.
Some European markets exhibited good sales growth at constant currency(2) with
Spain showing 11%, the Netherlands 8%, Czech Republic 7% and UK 5%. The Group
continues to develop new and existing markets to broaden its reach and reduce
reliance on any one market or product.
Gross profit
Cost of sales increased to £23.3m (2021: £22.1m) reflecting investment in
the supply chain and the fixed nature of the manufacturing facility costs. The
gross margin was 68% (2021: 74%) reflecting investment in manufacturing,
leading to a gross profit of £49.5m (2021: £62.2m).
2022 2021
Germany Other Total Germany Other Total
£m £m £m £m £m £m
Revenue 42.6 30.2 72.8 53.8 30.5 84.3
Adjustment to retranslate at prior year foreign exchange rate 2.2 1.4 3.6
Revenue at constant currency(2) 44.8 31.6 76.4 53.8 30.5 84.3
1. Operating profit (pre-R&D) is calculated by adding back total
R&D expenditure for the year to the operating (loss)/profit of the year
to arrive at an operating profit (pre-R&D) of £3.4m (2021: £16.9m).
2. 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.
Operating expenses
Total overheads were £3.7m higher than prior year at £62.5m (2021:
£58.8m). This included R&D expenditure that rose by £2.8m to £15.7m
(2021: £12.9m) due to investment in the VLP Peanut and Grass MATA MPL
studies.
Non-R&D operating costs of £46.8m increased by £0.9m (2021: £45.9m)
due to further investment in compliance and rising labour costs partly offset
by cost savings.
Sales, marketing and distribution costs increased by £0.8m to £26.0m
(2021: £25.2m) mainly as a result of recovery post COVID-19. Other
administration expenses were broadly in line with last year at £20.8m (2021:
£20.7m).
Other income in the year of £0.7m (2021: £0.6m) was due to R&D tax
credits in the UK.
Tax
The current and prior year tax charges are predominantly made up of provisions
for tax in the Italian and German subsidiaries.
The overall charge in the income statement is £1.1m (2021: £0.8m). IFRIC23
continues to impact the overall charge.
Balance sheet
Property, plant and equipment (including IFRS 16) increased by £0.5m to
£20.2m (2021: £19.7m) reflecting investment in the Worthing energy centre
and upgrade of plant in the UK.
Goodwill remained the same at £3.3m (2021: £3.3m), whilst other intangible
assets increased by £0.3m to £1.7m (2021: £1.4m).
Total current assets, excluding cash, increased to £21.9m (2021: £17.6m).
Inventory increased by £0.6m due to more raw materials being held to protect
against worldwide shortages resulting from COVID 19. Trade and other
receivables have increased by £4.2m, mainly due to prepayments related to
R&D trial activities. Cash and cash at hand decreased to £20.5m from
£40.3m and there was a net cash outflow of £20.2m in the year (2021: net
inflow of £3.7m) as a result of trading losses, investment in R&D and
capital items.
The fair value of derivative financial instruments was a liability of £0.1m
in 2022 (2021: asset of £0.5m) due to exchange rate fluctuations.
Currency
The Group uses forward exchange contracts to mitigate exposure to the effects
of exchange rates. The current policy of the Group is to cover, on average,
about 70% of the net Euro exposure for a year on a declining basis.
Financing
Post period, on 29 September 2022, the Company announced a subscription to
raise £7 million (before expenses) as well as loan notes to the value of
£10m with associated warrants. The subscription is conditional on shareholder
approval at a General Meeting. This funding will enable Allergy Therapeutics
to secure complete funding for the Phase I VLP Peanut PROTECT trial and the
pivotal Phase III trial for Grass MATA MPL, and enable preparation for the
future extension of the Grass MATA MPL field trial to treat placebo patients.
The funding will also allow the production of the batches for the Phase II VLP
Peanut trial, reducing the timeline of development as well as supporting the
extended R&D in house resources for the trials in process and to come.
The Group's existing bank debt on its balance sheet consists mainly of bank
loans arranged to fund development of products in the Spanish market. Group
borrowing totalled £2.4m (2021: £3.4m) at 30 June 2022. In February 2022
the Group agreed a secured revolving credit facility (RCF) of £10m with
NatWest Bank plc. The RCF replaced the previous £7m overdraft facility
provided by NatWest Bank plc. The facility is for a three-year period with the
ability to extend annually for a further two years. This new facility is
intended to provide additional security to the Group's credit facilities. The
£10m RCF was unused at 30 June 2022
The Directors believe that the Group will have adequate facilities for the
foreseeable future and accordingly they continue to adopt the going concern
basis in preparing the full-year results. For further details, see Note 1,
Going concern.
Unaudited consolidated income statement
for the year ended 30 June 2022
Year to Year to Year to Year to
30 June 2022 30 June 2022 30 June 2021 30 June 2021
Note £'000 £'000 £'000 £'000
Revenue 3 72,768 84,331
Cost of sales (23,262) (22,106)
Gross profit 49,506 62,225
Sales, marketing and distribution costs (26,004) (25,200)
Administration expenses - other (20,828) (20,674)
Research and development costs (15,659) (12,887)
Total administrative expenses (36,487) (33,561)
Other income 5 740 567
Operating (loss)/profit (12,245) 4,031
Finance income 7 257 117
Finance expense 6 (669) (491)
(Loss)/profit before tax (12,657) 3,657
Income tax (1,119) (771)
(Loss)/profit for the period (13,776) 2,886
(Loss)/earnings per share 8
Basic (pence per share) (2.14)p 0.45p
Diluted (pence per share) (2.14)p 0.45p
Unaudited consolidated statement of comprehensive income
for the year ended 30 June 2022
Year to Year to
30 June 2022 30 June 2021
Note £'000 £'000
(Loss)/profit for the period (13,776) 2,886
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of retirement benefit obligations 3,094 1,689
Remeasurement of investments - retirement benefit assets (193) (58)
Revaluation gains - freehold land and buildings - 94
Deferred tax movement - freehold land and buildings - 5
Total other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 265 (503)
Total comprehensive (loss)/income (10,610) 4,113
Unaudited consolidated balance sheet
as at 30 June 2022
Note 30 June 2022 30 June 2021
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 20,190 19,717
Intangible assets - goodwill 3,347 3,343
Intangible assets - other 1,688 1,411
Investments - retirement benefit asset 5,962 5,760
Total non-current assets 31,187 30,231
Current assets
Inventories 9 11,410 10,838
Trade and other receivables 10 10,468 6,222
Cash and cash equivalents 20,515 40,273
Derivative financial instruments - 525
Total current assets 42,393 57,858
Total assets 73,580 88,089
Liabilities
Current liabilities
Trade and other payables (15,669) (16,475)
Current borrowings 11 (952) (963)
Lease liabilities (1,064) (792)
Derivative financial instruments (116) -
Total current liabilities (17,801) (18,230)
Net current assets 24,592 39,628
Non-current liabilities
Retirement benefit obligations (8,319) (11,291)
Deferred taxation liability (406) (408)
Non-current provisions (144) (208)
Lease liabilities (7,016) (6,967)
Long-term borrowings 11 (1,497) (2,450)
Total non-current liabilities (17,382) (21,324)
Total liabilities (35,183) (39,554)
Net assets 38,397 48,535
Equity
Capital and reserves
Issued share capital 12 654 651
Share premium 112,576 112,576
Merger reserve 40,128 40,128
Reserve - share-based payments 2,799 2,693
Revaluation reserve 1,073 1,073
Foreign exchange reserve (923) (1,188)
Retained earnings (117,910) (107,398)
Total equity 38,397 48,535
Unaudited consolidated statement of changes in equity
for the year ended 30 June 2022
Reserve - Foreign
Issued Share Merger share-based Revaluation exchange Retained Total
capital premium reserve payment reserve reserve earnings equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 30 June 2020 647 112,576 40,128 3,104 974 (685) (112,961) 43,783
Exchange differences on translation of foreign operations - - - - - (503) - (503)
Valuation gains taken to equity (land and buildings) - net of deferred tax - - - - 99 - - 99
Remeasurement of net defined benefit liability - - - - - - 1,689 1,689
Remeasurement of investments - retirement benefit assets - - - - - - (58) (58)
Total other comprehensive income - - - - 99 (503) 1,631 1,227
Profit for the period after tax - - - - - - 2,886 2,886
Total comprehensive income - - - - 99 (503) 4,517 4,113
Transactions with owners:
Share-based payments - - - 635 - - - 635
Shares issued 4 - - - - - - 4
Transfer of lapsed options to retained earnings - - - (1,046) - - 1,046 -
At 30 June 2021 651 112,576 40,128 2,693 1,073 (1,188) (107,398) 48,535
Exchange differences on translation of foreign operations - - - - - 265 - 265
Valuation gains taken to equity (land and buildings) - net of deferred tax - - - - - - - -
Remeasurement of net defined benefit liability - - - - - - 3,094 3,094
Remeasurement of investments - retirement benefit assets - - - - - - (193) (193)
Total other comprehensive income - - - - - 265 2,901 3,166
Loss for the period after tax - - - - - - (13,776) (13,776)
Total comprehensive income - - - - - 265 (10,875) (10,610)
Transactions with owners: - - - - - - - -
Share-based payments - - - 469 - - - 469
Shares issued 3 - - - - - - 3
Transfer of lapsed options to retained earnings - - - (363) - - 363 -
At 30 June 2022 654 112,576 40,128 2,799 1,073 (923) (117,910) 38,397
Unaudited consolidated cash flow statement
for the year ended 30 June 2022
Year to Year to
30 June 2022 30 June 2021
Note £'000 £'000
Cash flows from operating activities
(Loss)/profit before tax (12,657) 3,657
Adjustments for:
Finance income 7 (257) (117)
Finance expense 6 669 491
Non-cash movements on defined benefit pension plan 27 85
Depreciation and amortisation 4,166 4,132
Net monetary value of above-the-line 5
R&D tax credit (740) (567)
Charge for share-based payments 469 635
Movement in fair valuation of derivative financial instruments 640 (1,340)
(Increase)/decrease in trade and other receivables (3,885) 2,141
(Increase) in inventories (586) (1,117)
(Increase)/decrease in trade and other payables (1,872) 548
Net cash (used)/generated by operations (14,026) 8,548
Bank loan and interest paid (296) (190)
Income tax (paid)/received (51) 41
Net cash (used)/generated by operating activities (14,372) 8,399
Cash flows from investing activities
Interest received 257 117
Payments for retirement benefit investments (179) (194)
Payments for intangible assets - -
Payments for property, plant and equipment (3,276) (2,562)
Net cash used in investing activities (3,198) (2,639)
Cash flows from financing activities
Proceeds from issue of equity shares 3 4
Repayment of bank loan borrowings (957) (757)
Repayment of principal on lease liabilities (1,311) (1,605)
Interest paid on lease liabilities (373) (301)
Proceeds from borrowings - 625
Net cash used in financing activities (2,638) (2,034)
Net (decrease)/increase in cash and cash equivalents (20,209) 3,726
Effects of exchange rates on cash and cash equivalents 451 (415)
Cash and cash equivalents at the start of the period 40,273 36,962
Cash and cash equivalents at the end of the period 20,515 40,273
Cash at bank and in hand 20,515 40,273
Bank overdraft - -
Cash and cash equivalents at the end of the period 20,515 40,273
Notes to the financial statements
For the year ended 30 June 2022
1. Basis of preparation
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in Section 435 of the Companies Act
2006. The financial statements are unaudited.
Allergy Therapeutics is an international commercial biotechnology Group
focused on the treatment and diagnosis of allergic disorders including
immunotherapy vaccines that have the potential to cure disease.
The Group's financial statements have been prepared in accordance with 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.
Allergy Therapeutics plc is the Group's parent company. The Company is a
limited liability company incorporated and domiciled in England. The address
of Allergy Therapeutics plc's registered office and its principal place of
business is Dominion Way, Worthing, West Sussex BN14 8SA and its shares are
listed on the AIM.
The consolidated financial statements for the year ended 30 June 2022
(including comparatives) have been prepared under the historical cost
convention except for land and buildings, and derivative financial
instruments, which have been measured at fair value. They were approved and
authorised for issue by the Board of Directors on 28 September 2022.
New standards adopted
There are no IFRS or IAS interpretations that are effective for the first time
in this financial period that have had a material impact on the Group.
Standards, amendments and interpretations to existing standards that are not
yet effective and have not been adopted early by the Group
At the date of authorisation of these financial statements, several new, but
not yet effective, standards and amendments to existing standards and
interpretations have been published by the IASB. None of these standards or
amendments to existing standards have been adopted early by the Group.
Management anticipates that all relevant pronouncements will be adopted for
the first period beginning on or after the effective date of the
pronouncement. New standards, amendments and interpretations not adopted in
the current year have not been disclosed as they are not expected to have a
material impact on the Group's financial statements.
Going concern
Operating loss in the period was £12.2m (2021: £4.0m profit); net cash
outflow from operations was £14.4m (2021: £8.4m net cash inflow). The
outflow was due to the planned strategic streamlining of the product
portfolio, COVID-19 and commercial headwinds in Germany. Excluding the R&D
expenditure, the Group would have reported an operating profit of £3.4m
(2021: £16.9m).
The going concern period has been assessed as 12 months from the date of
approval of the financial statements, hence the reason for this review period.
Detailed budgets have been prepared, including cash flow projections for the
periods ending 30 September 2023. These projections include assumptions on the
trading performance of the operating business and the continued availability
of the existing bank facilities as well as the equity raise of £7m and the
£10m loan notes announced today. The Group had a cash balance of £20.5m as
at 30 June 2022 and the new £10m revolving credit facility which was taken
out in February 2022 remained unused. The Directors have made appropriate
enquiries, which included a review of the annual budget and latest forecast,
by considering the cash flow requirements for the forecast period and the
effects of sales and other sensitivities, such as Brexit, COVID-19, Ukraine
conflict and other risks as noted in the principal risks section of the Annual
Report, on the Group's forecast cash balances.
This was carried out via sensitivity modelling which included reducing sales
by 5% compared to budget which the Directors consider to be a severe but
plausible scenario. Sufficient mitigating actions were identified to ensure
adequate funds remain available to the Group. As a result of this review, the
Directors have concluded that the Group will have adequate resources to
continue in operational existence for the foreseeable future and accordingly
have applied the going concern principle in preparing these financial
statements.
2. Accounting policies
The principal accounting policies adopted in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all years presented unless otherwise stated.
Consolidation
The Group's financial statements consolidate those of the parent company and
all of its subsidiaries drawn up to 30 June 2022. The parent controls a
subsidiary if it is exposed, or has rights, to variable returns from its
involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated on the date control
ceases.
Intercompany transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated except for unrealised
losses if they show evidence of impairment.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring accounting policies used into line with those used in
the Group.
The Group applies the acquisition method in accounting for business
combinations. The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition date fair values of
assets transferred, liabilities incurred, and the equity interests issued by
the Group, which includes the fair value of any liability arising from a
contingent consideration arrangement. Acquisition costs are expensed as
incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a
business combination regardless of whether they have been previously
recognised in the acquiree's financial statements prior to the acquisition.
Assets acquired and liabilities assumed are measured at their acquisition
date fair values.
Goodwill is stated after separate recognition of identifiable intangible
assets. It is calculated as the excess of the sum of: a) fair value of
consideration transferred; b) the recognised amount of any non-controlling
interest in the acquiree; and c) acquisition date fair value of any existing
equity interest in the acquiree, over the acquisition date fair values of
identifiable net assets. If the fair values of identifiable net assets exceed
the sum calculated above, the excess amount (i.e. gain on a bargain purchase)
is recognised in profit or loss immediately.
Goodwill
Goodwill arising from business combinations is the difference between the fair
value of the consideration paid and the fair value of the assets and
liabilities and contingent liabilities acquired. It is initially recognised
as an intangible asset at cost and is subject to impairment testing on an
annual basis or more frequently if circumstances indicate that the asset may
have been impaired. Details of impairment testing are described in the
accounting policies.
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are identified and
recognised separately from goodwill where they satisfy the definition of an
asset and can be identifiable. The cost of such intangible assets is their
fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortisation and
accumulated impairment losses. Intangible assets are amortised over their
useful economic life as follows:
Trade names 15 years
Customer relationships 5 years
Know-how and patents 10 years
Distribution agreements 15 years/period of contract
Externally acquired intangible assets
Intangible assets acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost
less any accumulated amortisation and any accumulated impairment losses.
Intangible assets are amortised over their useful economic life as below and
assessed for impairment whenever there is an indication that the intangible
asset may be impaired. The amortisation period and the amortisation method for
intangible assets is reviewed at least at each financial year end:
Computer software 7 years
Other intangibles 15 years
Changes in the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are accounted for by changing
the amortisation period or method, as appropriate, and are treated as changes
in accounting estimates. The amortisation expense on intangible assets is
recognised in the consolidated income statement in the expense category
consistent with the function of the intangible asset in either administration
costs or marketing and distribution costs.
Internally generated intangible assets
An internally generated intangible asset arising from development (or the
development phase) of an internal project is recognised if, and only if, all
of the following have been demonstrated:
· the technical feasibility of completing the intangible asset so
that it will be available for use or sale;
· the intention to complete the intangible asset and use or sell
it;
· the ability to use or sell the intangible asset;
· how the intangible asset will generate probable future economic
benefits;
· the availability of adequate technical, financial and other
resources to complete the development and to use or sell the intangible asset;
and
· the ability to measure reliably the expenditure attributable to
the intangible asset during its development.
The amount initially recognised for internally generated intangible assets is
the sum of the expenditure incurred from the date when the intangible asset
first meets the recognition criteria listed above. Where no internally
generated intangible asset can be recognised, R&D expenditure is charged
to the consolidated income statement in the period in which it is incurred.
After initial recognition, internally generated intangible assets are reported
at cost less accumulated amortisation and accumulated impairment losses.
Amortisation shall begin when the asset is available for use, i.e. when it is
in the location and condition necessary for it to be capable of operating in
the manner intended by management.
Amortisation of all intangible assets is calculated on a straight-line basis
over the useful economic life using the following annual rates:
Manufacturing know-how 15 years
Non-competing know-how 4 years
Other intangibles 15 years
These periods were selected to reflect the assets' useful economic lives to
the Group.
The cost of amortising intangible assets is included within administration
expenses in the consolidated income statement.
Segmental reporting
The Group's operating segments are market based and are reported in a manner
consistent with the internal reporting provided to the Group's Chief Operating
Decision Maker ("CODM") which has been identified as the Executive Directors.
The CODM is responsible for allocating resources and assessing the performance
of the operating segments.
In identifying its operating segments, management follow the Group's revenue
lines which represent the main geographical markets within which the Group
operates. These operating segments are managed separately as each requires
different local expertise, regulatory knowledge and a specialised marketing
approach. Each market‑based operating segment is engaged in production,
marketing and selling within a particular economic environment that is
different from that in segments operating in other economic environments. All
inter-segment transfers are carried out at arm's length prices.
Foreign currency translation
Functional and presentational 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 Group's presentational currency
is Sterling, which is also the functional currency of the Group's parent.
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 reporting period end exchange rates, of monetary
assets and liabilities denominated in foreign currencies, are recognised in
the consolidated income statement. Non-monetary items are carried at
historical cost or translated using the exchange rate at the date of the
transaction or a weighted average rate as an approximation where this is not
materially different.
Foreign operations
In the Group's financial statements, all assets, liabilities and transactions
of Group entities with a functional currency other than Sterling are
translated into Sterling upon consolidation. The functional currency of the
entities in the Group has remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into Sterling at
the closing rate at the reporting date. Goodwill and fair value adjustments
arising on the acquisition of a foreign entity have been treated as assets and
liabilities of the foreign entity and translated into Sterling at the closing
rate. Income and expenses have been translated into Sterling at the weighted
average rate over the reporting period which approximates to actual rates.
Exchange differences are charged or credited to other comprehensive income
("OCI") and recognised in the currency translation reserve in equity. OCI
includes those items which would be reclassified to profit or loss and those
items which would not be reclassified to profit or loss.
Revenue recognition
The Group's revenue recognition policy is as follows:
Revenue generated from a contract for the sale of goods is recognised on
delivery when all conditions have been fulfilled to the customer, such as the
supply of vaccines.
The Group recognises revenue in accordance with the requirements of IFRS 15
and in the five‑step model set out within the standard as follows:
STEP 1 Identifying the contract with the customer
The Group accounts for contracts with customers within the scope of IFRS 15
only when all of the following criteria are met:
a. the Group and the customer have approved the contract (in writing,
orally or in accordance with other customary business practices) and are
committed to perform their respective obligations;
b. the Group can identify each party's rights regarding the services to be
transferred;
c. the Group can identify the payment terms for services to be
transferred;
d. the contract has commercial substance (i.e. the risk, timing or amount
of the Group's future cash flows is expected to change as a result of the
contract); and
e. it is probable that the Group will collect the consideration to which
it will be entitled in exchange for the services that will be transferred to
the customer. In evaluating whether collectability of an amount of
consideration is probable, the Group considers only the customer's ability and
intention to pay that amount of consideration when it is due.
Significant new contracts with distributors are reviewed by senior management
to ensure the relevant terms are identified and agreed.
Substantially all sales are via purchase orders received from the customer
which specify the product to be delivered.
STEP 2 Identifying the performance obligations
At contract inception, the Group assesses the goods or services promised
within the contract and identifies as a performance obligation, each promise
to transfer to the customer either:
a. a good or service that is distinct; or
b. a series of distinct services that are substantially the same and that
have the same pattern of transfer to the customer.
With the exception of trivial amounts, the only identifiable performance
obligation is the delivery of products.
STEP 3 Determining the transaction price
For the majority of supplies, the goods are sold at an agreed list price (or a
variation of the list price as agreed between the parties). In these cases
there is no variable consideration.
There is no material difference between the timing of cash receipts and the
timing of revenue recognition in respect of revenue contracts.
STEP 4 Allocating the transaction price to the separate performance
obligations
There is only one performance obligation and accordingly the transaction price
is allocated to the delivery of the product.
STEP 5 Recognising revenue when performance obligations are satisfied
The performance obligation is satisfied at the point in time when the product
is delivered to the customer. Each transaction is recognised as a separate
chargeable event. There are no further obligations.
Agent vs principal considerations
Upon inception of a contract with a customer, the Group considers whether it
is acting as agent or as principal in accordance with IFRS 15. The Group
considers that it is acting as a principal if it controls the specified good
or service before that good or service is transferred to a customer. In doing
so, the Group has determined that it has acted as a principal and not as an
agent as part of all of its contracts with customers. In reaching this
conclusion, the Directors considered the following arrangements:
Arrangements for sales through distributors
For all distributor arrangements, the distributor is invoiced at the time of
delivery and title to the product passes upon full and final settlement of the
invoice to which the delivery relates. The distributor has full discretion
over the setting of the final selling price to the end customer and is
responsible for all customer returns of product.
Arrangements for sales through agents
For all agreements with agents, the agent places orders with the Group and
goods are then shipped to them. The Group, however, holds title to these
products until they are sold on to a third party. The selling price to the
end user is set by the relevant government body and the agent receives a fixed
percentage of this selling price. The agent notifies the Group monthly on
stock levels and this is reconciled to a statement which generates an invoice
for payment by the agent. The Group is responsible for any customer returns of
product. Revenue is recognised by the Group when the products are sold by the
agent.
Statutory rebates
In Germany, pharmaceutical companies are required to pay a manufacturer's
rebate to the government as a contribution to the cost of medicines paid for
by the state and private health funds. The rebates are not considered to meet
the definition of variable consideration as set out in IFRS 15.50-53. This is
because at the point of entering into a contract with a customer on which a
rebate is likely to apply (for example, the supply of an allergy vaccine to a
patient in Germany), there is no variability relating to the consideration to
be received by the Group in exchange for the supply of the goods - the sales
price and associated rebate is crystallised at the point of the supply. The
calculation of the rebate to be repaid by the Group is carried out and
invoiced in arrears by the various health insurer rebate centres in Germany.
Accordingly, the rebate is considered to be a reduction in the selling price
and is therefore deducted from the transaction price.
IFRS 15 other disclosures
All revenue recognised in the income statement is from contracts with
customers and no other revenue has been recognised.
Disclosures regarding impairment losses are detailed in Note 10, Trade and
other receivables.
A disaggregation of revenue is reported in Note 3, Revenue. Revenue by segment
is reported in Note 4, Segmental reporting.
Revenue for each item is recognised when the goods are provided to the client
and the obligation to pay the Group arises at the same time. Control passes to
the customer once the goods are delivered, at which point the Group becomes
entitled to consideration for the goods provided. The Group sells on credit
and debtors are typically recovered between 20 to 90 days later. Further
details regarding this are detailed in Note 10, Trade and other receivables.
As at 30 June 2022 there were no remaining performance obligations for revenue
recognised in the year.
All obligations pertaining to revenue recognised have been met. No revenue was
recognised relating to obligations not yet performed. No revenue has been
recognised in the period relating to obligations met in the preceding period.
Significant judgements regarding the timing of transactions or price are
detailed in Note 2, Judgements in applying accounting policies.
The transaction price is set out in individual contractual agreements and
there is a range of prices based on the goods sold.
No assets were recognised from costs to obtain or fulfil a contract with any
customer.
Presentation of material items
In preparing the financial statements the Directors consider whether there
have been any material or unusual items. These items are disclosed separately
on the face of the primary financial statements.
Expenditure recognition
Operating expenses are recognised in the consolidated income statement upon
utilisation of the service or at the date of their origin.
Leasing
The right‑of‑use asset is initially measured at the amount of the lease
liability plus any lease payments made at or before the commencement date
(less any lease incentives received), plus any initial direct costs incurred
in agreeing the lease, plus an estimate of future dismantling, removal and
restoration costs. After the initial measurement, the right‑of‑use asset
is accounted for using the cost model set out in IAS 16, Property, Plant and
Equipment, which is based on depreciating the asset over the estimated useful
economic life.
In connection with the Group's right‑of‑use assets, as at 30 June 2022
there were no lease payments that had been made prior to the commencement of
the lease, nor any lease incentives, nor has the Group made any structural or
other changes to any right‑of‑use assets that would require material costs
in respect of dismantling, removal or restoration.
The initial recognition of the lease liability has been based on discounting
the cash flows associated with the lease using the rate implicit in the lease
agreement, or where this is not available, the Group's incremental borrowing
rate, which the Directors consider to be similar to the Group's bank borrowing
rate, currently 3.4%. After initial measurement the Group charges the lease
liability with the interest cost to unwind the discount factor and reduces the
liability by the amount of contractual payments made annually.
In reviewing the leases, the Directors took into consideration those which
were long‑term leases, those which were short‑term leases, the underlying
asset value and the lease and non-lease components.
Leases of low‑value assets and short‑term leases with a term of 12 months
or less have continued to be recognised as an operating expense and it was
determined that all of these short‑term leases had termination clauses of
three months or less and therefore could be readily terminated if required.
The Directors have set a guideline of £5,000 or less lease value as the
threshold for determining the value of a potential lease asset. All the
short-term leases are therefore also considered low‑value assets and have
been excluded from right‑of‑use assets.
Low‑value and short-term leases
Where the Group is a lessee, payments on low‑value and short-term operating
lease agreements are recognised as an expense on a straight‑line basis over
the lease term. Associated costs, such as maintenance and insurance, are
expensed as incurred. Benefits received and receivable as an incentive to
enter an operating lease are also spread on a straight-line basis over the
lease term.
Inventories
Inventory is carried at the lower of cost or net realisable value. The costs
of raw materials, consumables, work in progress and finished goods are
measured by means of weighted average cost using standard costing techniques.
The cost of finished goods and work in progress comprises direct production
costs such as raw materials, consumables, utilities and labour, and production
overheads such as employee costs, depreciation on equipment used in
production, maintenance and indirect factory costs. Standard costs are
reviewed regularly to ensure relevant measures of utilisation, production lead
time and appropriate levels of manufacturing expense are reflected in the
standards.
Net realisable value is calculated based on the selling price in the normal
course of business less any costs to sell.
Use of accounting estimates and judgements
Many of the amounts included in the financial statements involve the use of
judgement and/or estimation. These judgements and estimates are based on
management's best knowledge of the relevant facts and circumstances, having
regard to prior experience, but actual results may differ from the amounts
included in the financial statements. Information about such judgements and
estimation is contained in the accounting policies and/or the notes to the
financial statements and the key areas are summarised below:
Judgements in applying accounting policies
a) Capitalisation of development costs requires analysis of the technical
feasibility and commercial viability of the project concerned. Capitalisation
of the costs will be made only where there is evidence that an economic
benefit will accrue to the Group. To date, no development costs have been
capitalised and all costs have been expensed in the income statement as
R&D costs. Costs expensed in the year amounted to £15.7m (2021: £12.9m).
Sources of estimation uncertainty
a) Determining whether goodwill is impaired requires an estimation of the
value in use of the CGU to which the goodwill has been allocated. This
value-in-use calculation requires an estimation of the future cash flows
expected to arise from the CGU and a suitable discount rate to calculate the
present value.
In relation to the goodwill in respect of the German CGU, there is no likely
scenario in which this goodwill would be impaired. Discount rates would have
to rise beyond 950% or annual cash inflows would have to reduce by more than
£20m p.a. before the goodwill would be impaired.
In relation to the goodwill in respect of the Spanish CGU, possible impairment
was sensitised with a discount rate of 24% and alternatively with reduced
annual cash inflows of £0.75m, with neither of these scenarios indicating an
impairment.
b) The Group operates equity-settled share-based compensation plans for
remuneration of its employees comprising LTIP schemes. employee services
received in exchange for the grant of any share-based compensation are
measured at their fair values and expensed over the vesting period. The fair
value of this compensation is dependent on whether the provisional share
awards will ultimately vest, which in turn is dependent on future events which
are uncertain. The Directors use their judgement and experience of previous
awards to estimate the probability that the awards will vest, which impacts
the fair valuation of the compensation.
The key variables to be estimated are the number of awards that will lapse
before the vesting date due to leavers, and the number of awards that will
vest in relation to the non-market condition performance tests.
c) The Group operates a partly funded non-contributory defined benefit
pension scheme for certain employees in Germany. The defined assets and
liabilities of this scheme are estimated using actuarial methods by an
independent expert
3. Revenue
An analysis of revenue by category is set out in the table below:
2022 2021
£'000 £'000
Sale of goods at a point in time 72,768 84,331
72,768 84,331
4. Segmental reporting
The Group's operating segments are reported based on the financial information
provided to the Executive Directors, who are defined as the CODM, to enable
them to allocate resources and make strategic decisions.
The CODM reviews information based on geographical market sectors and assesses
performance at an EBITDA (operating profit before interest, tax, depreciation
and amortisation) and operating profit level. Management have identified that
the reportable segments are Central Europe (which includes the following
operating segments: Germany, Austria, Switzerland and the Netherlands),
Southern Europe (Italy, Spain and Other), the UK and Rest of World.
For all material regions that have been aggregated, management consider that
they share similar economic characteristics. They are also similar in respect
of the products sold, types of customer, distribution channels and regulatory
environments.
Revenue by segment
Revenue Inter- Total Revenue Inter- Total
from external segment segment from external segment segment
customers revenue revenue customers revenue revenue
2022 2022 2022 2021 2021 2021
£'000 £'000 £'000 £'000 £'000 £'000
Central Europe
Germany 42,579 - 42,579 53,802 - 53,802
Austria 5,229 - 5,229 5,604 - 5,604
Netherlands 4,281 - 4,281 4,166 - 4,166
Switzerland 3,295 - 3,295 3,137 - 3,137
55,384 - 55,384 66,709 - 66,709
Southern Europe
Italy 3,402 - 3,402 3,967 - 3,967
Spain 8,871 - 8,871 8,422 - 8,422
Other 562 - 562 532 - 532
12,835 - 12,835 12,921 - 12,921
Rest of World (including UK) 4,549 39,371 43,920 4,701 53,981 58,682
72,768 39,371 112,139 84,331 53,981 138,312
Revenues from external customers in all segments are derived principally from
the sale of a range of pharmaceutical products designed for the immunological
treatment of the allergic condition.
Rest of World revenues include sales through distributors and agents in
several markets including the Czech Republic, Slovakia, Canada and South
Korea. Inter-segment revenues represent sales of product from the UK to the
operating subsidiaries. The price is set on an arm's-length basis which is
eliminated on consolidation.
The CODM also reviews revenue by segment on a budgeted constant currency
basis, to provide relevant year-on-year comparisons.
The Group has no customers which individually account for 10% or more of the
Group's revenue.
Depreciation and amortisation by segment
2022 2021
£'000 £'000
Central Europe 1,173 1,244
Southern Europe 728 795
Rest of World (including UK) 2,265 2,093
4,166 4,132
EBITDA by segment
2022 2021
£'000 £'000
Allocated EBITDA
Central Europe 4,186 2,803
Southern Europe 1,187 1,080
Rest of World (including UK) (13,452) 4,280
Allocated EBITDA (8,079) 8,163
Depreciation and amortisation (4,166) (4,132)
Operating (loss)/profit (12,245) 4,031
Finance income 257 117
Finance expense (669) (491)
(Loss)/profit before tax (12,657) 3,657
Total assets by segment
2022 2021
£'000 £'000
Central Europe 24,526 23,820
Southern Europe 11,686 12,052
Rest of World (including UK) 79,209 89,779
115,421 125,651
Inter-segment assets (9,278) (5,937)
Inter-segment investments (32,563) (31,625)
Total assets per balance sheet 73,580 88,089
Included within Central Europe are non-current assets to the value of £2.6m
(2021: £2.6m) relating to goodwill and within Southern Europe assets to the
value of £3.5m (2021: £3.8m) relating to freehold land and buildings. There
were no material additions (excluding foreign exchange differences) to
non-current assets in any country except the UK where non-current asset
additions totalled £2.6m and comprised plant and machinery £1.9m, fixtures
and fittings £0.2m, computer equipment £0.1m and computer software £0.4m
(2021: £2.0m total).
Total liabilities by segment
2022 2021
£'000 £'000
Central Europe (16,618) (22,266)
Southern Europe (10,046) (11,301)
Rest of World (including UK) (17,797) (11,924)
(44,461) (45,491)
Inter-segment liabilities 9,278 5,937
Total liabilities per balance sheet (35,183) (39,554)
5. Other income
2022 2021
£'000 £'000
Net monetary value of above-the-line R&D tax credit 740 567
6. Finance expense
2022 2021
£'000 £'000
Interest on borrowing facility 168 85
Net interest expenses on defined benefit pension liability 128 105
Interest on lease liabilities 373 301
669 491
7. Finance income
2022 2021
£'000 £'000
Bank interest 55 39
Interest on investment assets 199 68
Other finance income 3 10
257 117
Other finance income relates to the unwinding of the discount on accrued
revenue.
8. (Loss)/earnings per share
2022 2021
£'000 £'000
(Loss)/profit after tax attributable to equity shareholders (13,776) 2,886
Shares Shares
'000 '000
Issued Ordinary Shares at start of the period 641,773 637,286
Ordinary Shares issued in the period 2,332 4,487
Issued Ordinary Shares at end of the period 644,105 641,773
Weighted average number of Ordinary Shares for the period 642,990 639,190
Potentially dilutive share options 41,086 37,468
Weighted average number of Ordinary Shares for diluted earnings per share 684,076 676,658
Basic earnings per Ordinary Share (pence) (2.14)p 0.45p
Diluted earnings per Ordinary Share (pence) (2.14)p 0.45p
The diluted loss per share for 2022 does not differ from the basic loss per
share as the exercise of share options would have the effect of reducing the
loss per share and is therefore not dilutive under the terms of IAS 33.
9. Inventories
2022 2021
£'000 £'000
Raw materials and consumables 3,598 2,969
Work in progress 3,265 2,737
Finished goods 4,547 5,132
11,410 10,838
The value of inventories measured at fair value less cost to sell was
£719,000 (2021: £949,000). The movement in the value of inventories
measured at fair value less cost to sell during the year gave rise to a credit
of £230,000 which was included within the costs of goods sold in the
consolidated income statement.
10. Trade and other receivables
2022 2021
£'000 £'000
Trade receivables 2,694 2,960
Other receivables 1,950 1,219
VAT 1,261 439
Prepayments and accrued revenue 4,563 1,604
10,468 6,222
All amounts due as shown above are short term. The carrying value of trade
receivables is considered a reasonable approximation of fair value. All trade
and other receivables have been reviewed for indicators of impairment. During
the year, £27,000 of trade receivables were written back and none of the
provision utilised. The impaired trade receivables are mostly due from private
customers in the Italian market who are experiencing financial difficulties.
The Group applies the IFRS 9 simplified model of recognising lifetime expected
credit losses for all trade receivables as these items do not have a
significant financing component.
All of the Group's trade receivables in the comparative periods have been
reviewed for indicators of impairment. The impaired trade receivables are
mostly due from customers in the business‑to‑business market that are
experiencing financial difficulties.
In measuring the expected credit losses, the trade receivables have been
assessed on a collective basis as they possess shared credit risk
characteristics. They have been grouped based on the days past due and
according to the geographical location of customers.
The expected loss rates are based on the payment profile over the past 24
months to 30 June 2022 and 30 June 2021 respectively as well as the
corresponding historical credit losses during that period. The historical
rates are adjusted to reflect current and forward‑looking macroeconomic
factors affecting the customer's ability to settle the amount outstanding.
Trade receivables are written off (i.e. derecognised) where there is no
reasonable expectation of recovery. An allowance is made for credit losses
when there is an indication that the debt may not be recovered. Failure to
make payments within five months from the invoice due date is considered an
indicator of possible non‑recovery.
Expected loss allowance
2022 2021
£'000 £'000
Balance brought forward 432 541
Foreign exchange adjustments 1 (28)
Write back of previous credit losses (27) (81)
Utilised - -
Balance carried forward 406 432
This note includes disclosures relating to the credit risk exposures and
analysis relating to the allowance for expected credit losses. Both the
current and comparative impairment provisions apply the IFRS 9 expected loss
model.
On the above basis, the expected credit loss for trade receivables as at 30
June 2022 and 30 June 2021 was determined as follows:
2022 2021
Expected Gross Lifetime Expected Gross Lifetime
credit carrying expected credit carrying expected
loss rate amount credit loss loss rate amount credit loss
% £'000 £'000 % £'000 £'000
Trade receivables
Current - 1,980 - - 2,514 -
Not more than three months - 532 - - 240 -
More than three months but not more than six months 5% 100 5 1% 164 1
More than six months but not more than one year 33% 60 20 40% 27 11
More than one year 89% 428 381 94% 447 420
3,100 406 3,392 432
11. Borrowings
2022 2021
£'000 £'000
Due within one year
Bank loans 952 963
952 963
2022 2021
£'000 £'000
Due in more than one year
Bank loans 1,497 2,450
1,497 2,450
In February 2022, the Group agreed a revolving credit facility ("RCF") of
£10m with NatWest Bank plc. The RCF replaced the previous £7m overdraft
facility provided by NatWest Bank plc. The facility is for a three-year period
with the ability to extend annually for a further two years. This new facility
is intended to provide additional security to the Group's credit facilities.
Interest on the RCF is at the bank's base rate plus a margin of 2.25% on the
amount borrowed. The facility is secured in favour of NatWest Bank plc by
means of debentures granted by Allergy Therapeutics (Holdings) Ltd, Allergy
Therapeutics (UK) Ltd and pledge agreements by Bencard Allergie GmbH and
Allergy Therapeutics Netherlands B.V. as security against the banking
facilities. The Group had a cash balance of £20m as at 30 June 2022 and the
£10m RCF was unused at 30 June 2022 (2021 overdraft: £nil).
The loans below were taken out by Allergy Therapeutics Iberica S.L. and are
secured by way of a charge on land and buildings owned by Allergy Therapeutics
Iberica S.L.
Capital repayments due
<1 year 1‑5 years >5 years
Interest rate £'000 £'000 £'000
BBVA Fixed rate of 2.5% 126 317 -
Bank Inter 1 month Euribor +5.0% 36 151 -
Tecnoalcala Interest free 25 - -
Santander (1) Fixed rate of 2.5% 272 - -
CDTI (1) Interest free 37 147 49
Santander (2) Fixed rate of 2.3% 87 142 -
CDTI (2) Fixed rate of 0.2% 50 31 -
Santander (3) Fixed rate of 2.3% 319 660 -
952 1,448 49
No new loans were taken out during the year. In the prior year, Allergy
Therapeutics Iberica S.L. took out a loan for €0.6m to further expand the
Group's manufacturing and quality control facilities. Warranties in respect
of this €0.6m loan were provided by Allergy Therapeutics plc.
12. Issued share capital
2022 2021
Shares £'000 Shares £'000
Authorised share capital
Ordinary Shares of 0.10 pence each
1 July and 30 June 790,151,667 790 790,151,667 790
Deferred shares of 0.10 pence each
1 July and 30 June 9,848,333 10 9,848,333 10
Issued and fully paid
Ordinary Shares of 0.10 pence
At 1 July 641,772,718 641 637,285,804 637
Issued during the year:
Share options exercised 2,331,903 3 4,486,914 4
At 30 June 644,104,621 644 641,772,718 641
Issued and fully paid
Deferred shares of 0.10 pence
At 1 July 9,848,333 10 9,848,333 10
Issued during the year - - - -
At 30 June 9,848,333 10 9,848,333 10
Issued share capital 653,952,954 654 651,621,051 651
The deferred shares have no voting rights, dividend rights or value attached
to them.
Share options issued on vesting of LTIP awards were exercised in the year with
proceeds of £2,000 (2021: £4,000).
13. Related party transactions and ultimate control
There is no overall ultimate controlling party.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FFFIIATITFIFRecent news on Allergy Therapeutics
See all newsREG - Allergy Therapeutics - Further detail from G306 Phase III field trial
AnnouncementREG - Allergy Therapeutics - Director Resignation
AnnouncementREG - Allergy Therapeutics - Interim Results for six months ended 31 Dec 2023
AnnouncementREG - Allergy Therapeutics - Update on funding
AnnouncementREG - Allergy Therapeutics - VLP Peanut PROTECT Trial Update
Announcement