REG - Indivior PLC - Half-year Report
28/07/2022 07:16
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RNS Number : 0027U Indivior PLC 28 July 2022
http://www.rns-pdf.londonstockexchange.com/rns/0027U_1-2022-7-27.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/0027U_1-2022-7-27.pdf)
July 28, 2022
Strong H1 and Q2 2022 results announced; Increases SUBLOCADE NR guidance for
FY 2022;
Pursuing shareholder approval for US listing
Period to June 30th Q2 Q2 % Change H1 H1 % Change
2022 2021 2022 2021
$m $m $m $m
Net Revenue 221 201 10 428 381 12
Operating Profit 63 73 -14 117 130 -10
Net Income 48 62 -23 89 142 -37
Diluted EPS (cents per share) 7 8 -13 12 18 -33
Adjusted Basis
Adj. Operating Profit* 60 66 -9 114 117 -3
Adj. Net Income* 45 49 -8 86 87 -1
Adj. Diluted EPS* 6 6 - 12 11 9
*Adjusted Basis excludes the impact of exceptional items as referenced and
reconciled in Notes 4 and 6. Adjusted results are not a substitute for, or
superior to, reported results presented in accordance with International
Financial Reporting Standards.
Comment by Mark Crossley, CEO of Indivior PLC
"We delivered another strong performance in the second quarter driven by the
team's relentless focus on our strategic priorities as well as benefits from
our incremental investments behind SUBLOCADE® (buprenorphine
extended-release) and PERSERIS® (risperidone). Second quarter SUBLOCADE net
revenue grew 61% to $98m, as our Organized Health System strategy resulted in
broadened account access and increased depth of prescribing. Based on our
stronger-than-expected H1 performance, we are increasing our full year
guidance for SUBLOCADE to $390m to $420m. Our PERSERIS national expansion also
continues to deliver against expectations with net revenue increasing 75% in
the second quarter.
We continue to focus on delivering value for all shareholders as demonstrated
by our disciplined capital allocation policy which has allowed us to maintain
a strong and flexible balance sheet while also executing on the $100m share
repurchase program announced in May. Additionally, we have completed extensive
consultations with key stakeholders on the potential for an additional US
listing and based on positive feedback we now intend to seek shareholder
approval for this important strategic step at a September EGM."
H1 / Q2 2022 Financial Highlights
· H1 2022 total net revenue (NR) of $428m increased 12% (H1 2021:
$381m); Q2 2022 total NR of $221m increased 10% (Q2 2021: $201m). Net revenue
growth in each period was primarily driven by SUBLOCADE.
· H1 2022 reported operating profit of $117m decreased 10% (H1 2021:
$130m); Q2 2022 reported operating profit of $63m decreased 14% (Q2 2021:
$73m). On an adjusted basis, H1 2022 operating profit of $114m decreased 3%
(Adj. H1 2021: $117m). Adj. Q2 2022 operating profit of $60m decreased 9%
(Adj. Q2 2021: $66m). Declines in both reported and adjusted operating profit
in each period reflect the impact of an expected increase in operating
expenses, mainly SG&A investments to grow SUBLOCADE and PERSERIS.
· H1 2022 reported net income of $89m decreased 37% (H1 2021: $142m); Q2
2022 reported net income of $48m decreased 23% (Q2 2021: $62m). On an adjusted
basis, H1 2022 net income of $86m decreased 1% (Adj. H1 2021 net income:
$87m). Adj. Q2 2022 net income of $45m decreased 8% (Adj. Q2 2021: $49m).
· Gross cash and investments totalled $1,015m at the end of Q2 2022
(FY 2021: $1,102m). See discussion of Group obligations in Notes 9 & 10.
· Cash used in operations was $14m. Excluding exceptional litigation
settlement payments of $108m, cash generated from operations was approximately
$94m.
H1 / Q2 2022 Operating Highlights
· H1 2022 SUBLOCADE NR of $183m (+76% vs. H1 2021); Q2 SUBLOCADE NR
of $98m (+61% vs. Q2 2021 and +15% vs. Q1 2022) reflects strong growth in the
OHS channel and increased new US patient enrolments. The Group has now
achieved access to its targeted 500+ OHS priority accounts. SUBLOCADE Q2 2022
NR growth was 81% excluding the $7m large order from a new criminal justice
system (CJS) customer in the year-ago quarter. Q2 2022 US dispenses were
approx. 75,500 units (+76% vs. Q2 2021 excluding the CJS order and +18% vs. Q1
2022). Total SUBLOCADE patients on a 12-month rolling basis at the end of Q2
2022 were approximately 65,000 (+76% vs. Q2 2021 and +14% vs.Q1 2022).
· H1 2022 PERSERIS NR of $12m (+50% vs. H1 2021); Q2 2022 PERSERIS
NR of $7m (+75% vs. Q2 2021 and +40% vs. Q1 2022) reflects investment in
national field force coverage and improving commercial access in the US
healthcare system.
· SUBOXONE (buprenorphine & naloxone) Film share in Q2 2022
averaged 19% (Q2 2021: 20%) and exited the quarter at 19% (Q2 2021: 20%).
· Aelis Farma commenced the 330-patient Phase 2b study of AEF0117
in the treatment of moderate to severe cannabis use disorder
(ClinicalTrial.gov identifier: NCT05322941).
Share Repurchase Program
On May 3, 2022, the Group announced a share repurchase program of up to $100m.
Through June 30, 2022, the Group repurchased and cancelled 7,627,542 of the
Group's ordinary shares at a daily weighted average purchase price of 301.83p
at a cost of approximately $29m, which includes directly attributable
transaction costs. See Note 14 for further discussion.
Optimal Listing Structure for Indivior Shares
On March 31, 2022, Indivior announced the commencement of shareholder
consultations on the potential for an additional listing for Indivior shares
on a major US exchange. The Group believes an additional US listing will be
beneficial in elevating Indivior's visibility and profile in its largest
market, and in potentially attracting a broader group of biopharma investors.
Since the March 31 announcement, the Group has consulted extensively with
institutional shareholders representing the majority of Indivior's issued
share capital and, together with its advisers, has carefully considered the
shareholder feedback received. Having completed this consultation process, the
Board confirms that it intends to seek shareholder approval in September 2022
to facilitate an additional listing in the US, which would be expected to take
place in Spring 2023. In addition, due to US exchange requirements for share
price minimums and norms, the Group will pursue a share consolidation (based
on a to-be-determined ratio) as part of this process later this year.
The Group expects to incur pre-tax costs of $10m to $15m in FY 2022 as it
prepares for an additional US listing, of which approximately 50% are expected
to be recorded as exceptional.
FY 2022 Guidance
The Group is updating SUBLOCADE guidance for FY 2022. Net revenue guidance for
SUBLOCADE is being increased following the stronger-than-expected performance
in the year to date period. Total Group net revenue and adjusted operating
income guidance are being maintained based on the potential impact on US
SUBOXONE Film share from a fourth buprenorphine/naloxone sublingual film
generic entering the US market and on unfavorable currency translations. All
guidance commentary assumes that constraints in the US healthcare system
related to COVID-19 continue to ease.
· Total FY 2022 expected NR range maintained at $840m to $900m (+10%
vs. FY 2021 at the mid-point).
· SUBLOCADE FY 2022 expected NR range increased to $390m to $420m
(from $360m to $400m; now +66% vs. FY 2021 NR at the mid-point), primarily
based on continued expected strong penetration and growth in the OHS channel.
· Risk of accelerated market share loss for SUBOXONE Film in the
second half of 2022 due to the potential launch of a fourth generic sublingual
film competitor in the US. While the Group has no visibility on commercial
availability of the additional generic, it has assumed launch at the start of
the fourth quarter and that SUBOXONE Film will consequently be subject to an
accelerated rate of share erosion. Indivior will provide a further update, if
or when required, but with its Q3 results in October at the latest.
· PERSERIS FY 2022 NR expected to be in the range of $27m to $32m
(unchanged vs. prior guidance, +74% vs. FY 2021 at the mid-point).
· Adjusted gross margin expected to be in the low- to mid-80% range
(unchanged vs. prior guidance), reflecting higher cost inflation and the
relative share resilience of SUBOXONE Film in the first half of 2022.
· Adjusted SG&A expected to be in the range of $440m to $455m
(unchanged vs. prior guidance), primarily reflecting the annualization of
growth investments behind SUBLOCADE and PERSERIS and costs related to the US
listing.
· R&D expected to be in the range of $80m to $85m (unchanged vs.
prior guidance), primarily reflecting additional SUBLOCADE lifecycle
management studies, SUBLOCADE manufacturing capacity expansion and early-stage
asset advancement; phasing of these activities is expected to result in higher
R&D expenditures in the second half of 2022 versus the first half of 2022.
· Adjusted operating income expected to be broadly similar to FY
2021's adjusted operating income of $187m (unchanged vs. prior guidance).
· Guidance assumes no material change in exchange rates for key
currencies compared with average year to date rates, notably USD/GBP and
USD/EUR; the impact of unfavorable translations on total NR guidance is now
anticipated to be higher than previously expected due to further strengthening
of the USD.
US Opioid Use Disorder (OUD) Market Update
In Q2 2022, the US buprenorphine medication-assisted treatment (BMAT) market
grew in mid-single digits. The Group continues to expect long-term US market
growth to be sustained in the mid- to high-single digit percentage range due
to increased severity and overall public awareness of the opioid epidemic and
approved treatments, together with regulatory and legislative actions that
have expanded OUD treatment funding and treatment capacity. The number of
physicians, nurse practitioners and physician assistants who have received a
waiver to administer medication-assisted treatment and those able to treat up
to the permitted level of 275 patients continued to grow in Q2 2022.
As a result, there is increasing patient access to BMAT. Indivior supports
efforts to encourage more eligible healthcare practitioners (HCPs) to provide
BMAT, and the Group continues to expand its compliance capabilities for the
growing number of BMAT prescribers and patients.
The Group's focus is to continue to expand access to SUBLOCADE amongst OHS and
core HCPs to ensure availability of this potentially important treatment
option to the estimated 1 million+ patients per month in the US who are
prescribed BMAT by HCPs.
Financial Performance in H1 and Q2 2022
Total net revenue in H1 2022 increased 12% to $428m (H1 2021: $381m) at actual
exchange rates (+14% at constant exchange rates). In Q2 2022, total net
revenue increased 10% at actual exchange rates (+12% at constant exchange
rates) to $221m (Q2 2021: $201m).
US net revenue increased 21% in H1 2022 to $344m (H1 2021: $284m) and by 16%
in Q2 2022 to $179m (Q2 2021: $154m). Strong year-over-year SUBLOCADE net
revenue growth, along with underlying BMAT market growth were the principal
drivers of the net revenue increase in both periods.
Rest of World (ROW) net revenue decreased 13% at actual exchange rates in H1
2022 to $84m (H1 2021: $97m) (-6% at constant exchange rates). In Q2 2022, ROW
net revenue decreased 11% at actual exchange rates to $42m (Q2 2021: $47m)
(-2% at constant exchange rates). Positive contributions from new products
(SUBLOCADE / SUBUTEX prolonged release and SUBOXONE Film) were more than
offset by unfavorable foreign currency translation, austerity measures and
ongoing competitive pressure on legacy tablet products in Western Europe and
Canada. H1 2022 and Q2 2022 SUBLOCADE / SUBUTEX prolonged release net revenue
in ROW were $12m and $6m (at actual exchange rates), respectively.
Gross margin as reported in H1 2022 was 82% (H1 2021: 84%) and 83% in Q2 2022
(Q2 2021: 85%), respectively. The expected gross margin decline for H1 2022
and Q2 2022 mainly reflects unfavorable product mix due to the continued
market share resilience of SUBOXONE Film in certain government channels, which
are less profitable.
SG&A expenses as reported in H1 2022 were $217m (H1 2021: $168m) and $109m
as reported in Q2 2022 (Q2 2021: $85m). H1 2022 and Q2 2022 included $2m of
exceptional consulting costs incurred in preparation for a potential
additional listing of Indivior shares on a major US exchange. H1 2021 and Q2
2021 included $12m and $7m, respectively, of exceptional benefits primarily
due to a release of provisions related to US Department of Justice (DOJ)
matters.
On an adjusted basis, H1 2022 SG&A expense increased 19% to $215m (Adj. H1
2021: $180m); Q2 2022 adjusted SG&A expense increased 16% to $107m (Adj.
Q2 2021: $92m). The increases in H1 2022 and Q2 2022 primarily reflect sales
and marketing investments to grow the Group's long-acting injectable
technologies, SUBLOCADE and PERSERIS, along with increased travel and
entertainment expenses.
H1 2022 and Q2 2022 R&D expenses were $23m and $14m, respectively (H1
2021: $22m; Q2 2021: $13m). The increases over the year-ago periods reflect
higher R&D activity generally, as certain projects and post-market studies
were slowed in 2021 due to the pandemic.
H1 2022 and Q2 2022 net other operating income was $4m and $3m, respectively,
(H1 2021: $1m; Q2 2021: $nil). H1 2022 included unrealized losses on equity
investments, net proceeds received from the out-licensing of nasal naloxone
opioid overdose patents and a Directors & Officers insurance claim
settlement which were recorded as exceptional other operating income.
H1 2022 operating profit as reported was $117m (H1 2021: $130m). Exceptional
benefits of $3m are included in the current period. Net exceptional benefits
of $13m were included in H1 2021. On an adjusted basis, H1 2022 operating
profit was $114m (H1 2021: $117m). The decrease on an adjusted basis primarily
reflects higher net revenue offset by higher expenses, mainly related to
increased sales and marketing investments to grow the Group's long-acting
injectable technologies, SUBLOCADE and PERSERIS, along with increased travel
and entertainment expenses.
Q2 2022 operating profit as reported was $63m (Q2 2021: $73m). Exceptional
benefits of $3m are included in the current period. An exceptional benefit of
$7m is included in the Q2 2021 result. On an adjusted basis, Q2 2022 operating
profit was $60m (Adj. Q2 2021: $66m). The decrease on an adjusted basis
primarily reflects higher net revenue offset by higher operating expenses.
H1 2022 net finance expense as reported was $11m (H1 2021: $11m expense). An
exceptional expense of $1m is included in the year-ago period which is due to
the write-off of deferred financing costs related to the previous term loan.
On an adjusted basis, H1 2022 net finance expense was $11m (Adj. H1 2021: $10m
expense).
H1 2022 reported tax expense was $17m, or a rate of 16% (H1 2021 tax benefit:
$23m, -19%). There were no exceptional tax items recorded in H1 2022 and Q2
2022. Excluding the $43m tax benefit on exceptional items in H1 2021, tax
expense was $20m, or an effective rate of 19%. Q2 2022 reported tax charge was
$10m, or a rate of 17% (Q2 2021: $4m, 6%). Excluding the exceptional tax
expense of $7m in Q2 2021, tax expense was $11m, or an effective rate of 18%.
H1 2022 reported net income was $89m (H1 2021 net income: $142m). On an
adjusted basis, H1 2022 net income was $86m and excludes the $3m after-tax
impact from exceptional items (Adj. H1 2021: $87m). The decrease in net income
on an adjusted basis primarily reflects higher net revenue being more than
offset by the increase in operating expense, primarily SG&A investments
behind SUBLOCADE and PERSERIS. Q2 2022 net income on a reported basis was $48m
(Q2 2021: $62m), and $45m on an adjusted basis excluding the net after-tax
impact from exceptional items (Adj. Q2 2021: $49m). Lower Q2 2022 net income
on an adjusted basis was primarily due to the same factors described above.
Diluted earnings per share on a reported and adjusted basis were 12 cents in
H1 2022 (H1 2021: 18 cents earnings per share on a diluted basis and 11 cents
earnings per share adjusted diluted basis). In Q2 2022, diluted earnings per
share was 7 cents and 6 cents on an adjusted diluted basis (Q2 2021: 8 cents
and 6 cents earnings per share on a diluted and adjusted diluted basis,
respectively).
Balance Sheet & Cash Flow
The Company's gross liquidity, defined as cash and investments, totaled
$1,015m at the end of Q2 2022 (FY 2021: $1,102m). Cash used in operations was
$14m. Excluding exceptional litigation settlement payments of $108m, cash
generated from operations was approximately $94m. The cash impact from
settlement payments was partially mitigated after quarter-end (July 2022) with
the return of $64m of cash collateral as a result of settlement with Dr.
Reddy's Laboratories, S.A., and Dr. Reddy's Laboratories Inc. (collectively,
"DRL"). Gross borrowings, before issuance costs, were $248m at the end of H1
2022 (ending FY 2021: $249m).
Net working capital (inventory plus trade receivables, less trade and other
payables) was negative $388m on June 30, 2022, versus negative $423m at the
end of FY 2021. The change in the period was primarily a result of expected
unwind of trade payables.
Cash used in operations during H1 2022 was $14m (H1 2021 cash generated:
$161m). Excluding exceptional litigation settlement payments of $108m, cash
generated from operations was approximately $94m. Net cash outflow from
operating activities was $40m in H1 2022 (H1 2021 cash inflow: $160m)
reflecting higher interest paid on the Group's term loan facility, interest
paid on settlement payments and income taxes paid in H1 2022 vs. income tax
refunds received in H1 2021.
H1 2022 cash outflow from investing activities was $162m (H1 2021 cash
outflow: $30m) which reflects the net investment in a portfolio of
investment-grade debt securities and ordinary shares of Aelis Farma.
H1 2022 cash outflow from financing activities was $34m (H1 2021 cash inflow:
$11m) which reflects payments made for the Group's share repurchase program
and principal lease payments.
R&D / Pipeline Update
Indivior's quarterly R&D and pipeline update may be found here
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.
Risk Factors
The Group utilizes a formal process to identify, evaluate and manage
significant risks. The Directors have reviewed the principal risks and
uncertainties for the remainder of the 2022 financial year. The principal
risks and uncertainties affecting the Group's business activities are detailed
on pages 47 to 56 of the Indivior PLC Annual Report and Accounts 2021. The
principal risks and uncertainties include:
· Business Operations
· Product Pipeline, Regulatory and Safety
· Commercialization
· Economic and Financial
· Supply
· Legal and Intellectual Property
· Compliance
The nature and potential impact of the principal risks, uncertainties, and
emerging risks facing the Group did not change in the first half of 2022, and
are not expected to change in the second half of 2022, except for supply:
Supply - The global supply chain continues to experience significant
challenges disrupting all industries. The Ukraine/Russia war compounded supply
chain troubles caused by the COVID-19 pandemic which include: shortages of
materials and labor; unprecedented demand for goods and services; constricted
logistics capacity; and raising commodity and energy prices. The Group has
noted lead time extension, constricted capacity and minor disruption in some
supply components. Through ongoing management and proactive mitigation, as
described in our Annual Report and Accounts on page 53, the Group has not
experienced any significant disruption to its supply-to-patient delivery
process to date. However, despite these mitigating measures, if major delays
or shortages occur, the delivery of products to our patients could be
disrupted and impact the short-term Group's financial performance.
Exchange Rates
The average and period end exchange rates used for the translation of
currencies into US dollars that have most significant impact on the Group's
results were:
6 Months to June 30, 6 Months to June 30,
2022 2021
GB £ period end 1.2194 1.3884
GB £ average rate 1.3015 1.3883
€ Euro period end 1.0524 1.1923
€ Euro average 1.0952 1.2059
Webcast Details
There will be a live webcast presentation at 13:00 BST (8:00 am EDT) hosted by
Mark Crossley, CEO. The details are below. All materials will be available on
the Group's website prior to the event at www.indivior.com
(http://www.indivior.com) .
Webcast link:
https://edge.media-server.com/mmc/p/n3frngii
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Participants may access the presentation telephonically by registering with
the following link:
https://register.vevent.com/register/BI73d5563731f344dbbe611807e18a276d
(https://register.vevent.com/register/BI73d5563731f344dbbe611807e18a276d)
(Please note this is a change from prior calls - registrants will have an
option to be called back directly immediately prior to the call or be provided
a call-in # with a unique pin code following their registration)
For Further Information
Investor Enquiries Jason Thompson VP, Investor Relations +1 804 402 7123
Indivior PLC jason.thompson@indivior.com
Tim Owens Director, Investor Relations Indivior PLC +1 804 263 3978
timothy.owens@indivior.com
Media Enquiries Jonathan Sibun Tulchan Communications +44 (0) 2073 534200
+1 804 594 0836
US Media Inquiries Indiviormediacontacts@indivior.com
Corporate Website www.indivior.com
This announcement does not constitute an offer to sell, or the solicitation of
an offer to subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to make such
offer or solicitation.
About Indivior
Indivior is a global pharmaceutical company working to help change patients'
lives by developing medicines to treat substance use disorders (SUD) and
serious mental illnesses. Our vision is that all patients around the world
will have access to evidence-based treatment for the chronic conditions and
co-occurring disorders of SUD. Indivior is dedicated to transforming SUD from
a global human crisis to a recognized and treated chronic disease. Building on
its global portfolio of OUD treatments, Indivior has a pipeline of product
candidates designed to both expand on its heritage in this category and
potentially address other chronic conditions and co-occurring disorders of
SUD, including alcohol use disorder and cannabis use disorder. Headquartered
in the United States in Richmond, VA, Indivior employs more than 900
individuals globally and its portfolio of products is available in over 40
countries worldwide. Visit www.indivior.com
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to learn more. Connect with Indivior on LinkedIn by
visiting www.linkedin.com/company/indivior
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Forward-Looking Statements
This announcement contains certain statements that are forward-looking.
Forward-looking statements include, among other things, statements regarding
the Indivior Group's financial guidance for 2022 and its medium- and long-term
growth outlook, the potential for an additional US stock exchange listing,
expected market growth rates, expected changes in market share, future
exchange rates, its operational goals, its product development pipeline,
ongoing litigation and other statements containing the words "subject to",
"believe", "anticipate", "plan", "expect", "intend", "estimate", "potential",
"project", "may", "will", "should", "would", "could", "can", the negatives
thereof, variations thereon and similar expressions.
By their nature, forward-looking statements involve risks and uncertainties as
they relate to events or circumstances that may or may not occur in the
future. Actual results may differ materially from those expressed or implied
in such statements because they relate to future events.
Forward-looking statements speak only as of the date that they are made and
should be regarded solely as our current plans, estimates and beliefs. Except
as required by law, we do not undertake and specifically decline any
obligation to update, republish or revise forward-looking statements to
reflect future events or circumstances or to reflect the occurrences of
unanticipated events. Various factors may cause differences between Indivior's
expectations and actual results, including, among others, the risk factors
described in the most recent Indivior PLC Annual Report and in subsequent
releases, and: factors affecting sales of Indivior Group's products and
financial position; the outcome of research and development activities;
decisions by regulatory authorities regarding the Indivior Group's drug
applications or authorizations; the speed with which regulatory
authorizations, pricing approvals and product launches may be achieved, if at
all; the outcome of post-approval clinical trials; competitive developments;
difficulties or delays in manufacturing and in the supply chain; disruptions
in or failure of information technology systems; the impact of existing and
future legislation and regulatory provisions on product exclusivity; trends
toward managed care and healthcare cost containment; legislation or regulatory
action affecting pharmaceutical product pricing, reimbursement or access;
challenges in commercial execution; claims and concerns that may arise
regarding the safety or efficacy of the Indivior Group's products and product
candidates; risks related to legal proceedings, including the Indivior Group's
compliance with its agreements with the US Department of Justice and with the
Office of Inspector General of the Department of Health and Human Services,
non-compliance with which could result in potential exclusion from
participating in US Federal health care programs; the ongoing investigative
and antitrust litigation matters; the opioid national multi-district
litigation and securities class action litigation; the Indivior Group's
ability to protect its patents and other intellectual property; the outcome of
patent infringement litigation relating to Indivior Group's products,
including the ongoing ANDA lawsuits; changes in governmental laws and
regulations; issues related to the outsourcing of certain operational and
staff functions to third parties; risks related to the evolving COVID-19
pandemic and the potential impact of COVID-19 on the Indivior Group's
operations and financial condition, which cannot be predicted with confidence;
uncertainties related to general economic, political, business, industry,
regulatory and market conditions; and the impact of acquisitions,
divestitures, restructurings, internal reorganizations, product recalls and
withdrawals, changes in inflation or foreign exchange rates, and other unusual
items.
Condensed consolidated interim income statement
For the three and six months ended June 30 Notes Unaudited Unaudited Unaudited Unaudited
Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Net Revenue 2 221 201 428 381
Cost of sales (38) (30) (75) (62)
Gross Profit 183 171 353 319
Selling, general and administrative expenses 3 (109) (85) (217) (168)
Research and development expenses 3 (14) (13) (23) (22)
Net other operating income 3 3 - 4 1
Operating Profit 63 73 117 130
Operating profit before exceptional items 60 66 114 117
Exceptional items 4 3 7 3 13
Finance income 2 1 2 3
Finance expense (7) (8) (13) (14)
Net Finance Expense (5) (7) (11) (11)
Net finance expense before exceptional items (5) (6) (11) (10)
Exceptional items within finance expense 4 - (1) - (1)
Profit Before Taxation 58 66 106 119
Income tax (expense)/benefit 5 (10) (4) (17) 23
Taxation before exceptional items (10) (11) (17) (20)
Exceptional items within taxation 4 - 7 - 43
Net Income 48 62 89 142
Earnings per ordinary share (cents)
Basic earnings per share 6 7 8 13 19
Diluted earnings per share 6 7 8 12 18
Condensed consolidated interim statement of comprehensive income
For the three and six months ended June 30 Unaudited Unaudited Unaudited Unaudited
Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Net income 48 62 89 142
Other comprehensive (loss)/income
Items that may be reclassified to profit or loss in subsequent years:
Net exchange adjustments on foreign currency translation (14) 1 (20) 2
Other comprehensive (loss)/income (14) 1 (20) 2
Total comprehensive income 34 63 69 144
The notes are an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated interim balance sheet
Notes Unaudited Audited
Jun 30, 2022 Dec 31, 2021
$m $m
ASSETS
Non-current assets
Intangible assets 73 82
Property, plant and equipment 53 58
Right-of-use assets 33 37
Deferred tax assets 5 101 105
Investments 7 81 -
Other assets 8 38 106
379 388
Current assets
Inventories 100 95
Trade receivables 196 202
Other assets 8 95 32
Current tax receivable 5 16 13
Investments 7 77 -
Cash and cash equivalents 857 1,102
1,341 1,444
Total assets 1,720 1,832
LIABILITIES
Current liabilities
Borrowings 9 (3) (3)
Provisions 10 (5) (5)
Other liabilities 10 (82) (61)
Trade and other payables 13 (684) (720)
Lease liabilities (8) (8)
Current tax liabilities 5 (5) (7)
(787) (804)
Non-current liabilities
Borrowings 9 (237) (239)
Provisions 10 (6) (76)
Other liabilities 10 (428) (474)
Lease liabilities (32) (36)
(703) (825)
Total liabilities (1,490) (1,629)
Net assets 230 203
EQUITY
Capital and reserves
Share capital 14 70 70
Share premium 7 7
Capital redemption reserve 4 3
Other reserve (1,295) (1,295)
Foreign currency translation reserve (40) (20)
Retained earnings 1,484 1,438
Total equity 230 203
The notes are an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated interim statement of changes in equity
Notes Share Share Capital redemption Other Foreign Retained Total equity
capital premium reserve reserve currency earnings
translation
reserve
Unaudited $m $m $m $m $m $m $m
Balance at January 1, 2022 70 7 3 (1,295) (20) 1,438 203
Comprehensive income
Net income - - - - - 89 89
Other comprehensive loss - - - - (20) - (20)
Total comprehensive income - - - - (20) 89 69
Transactions recognized directly in equity
Shares issued 1 - - - - - 1
Share-based plans - - - - - 7 7
Settlement of equity awards - - - - - (10) (10)
Shares repurchased and cancelled (1) - 1 - - (29) (29)
Transfer to share repurchase liability - - - - - (13) (13)
Deferred taxation on share-based plans - - - - - 2 2
Balance at June 30, 2022 70 7 4 (1,295) (40) 1,484 230
Balance at January 1, 2021 73 6 - (1,295) (13) 1,311 82
Comprehensive income
Net income - - - - - 142 142
Other comprehensive income - - - - 2 - 2
Total comprehensive income - - - - 2 142 144
Transactions recognized directly in equity
Share-based plans - - - - - 4 4
Deferred taxation on share-based plans - - - - - 3 3
Balance at June 30, 2021 73 6 - (1,295) (11) 1,460 233
The notes are an integral part of these condensed consolidated interim
financial statements.
Condensed consolidated interim cash flow statement
For the six months ended June 30 Unaudited Unaudited
2022 2021
$m $m
CASH FLOWS FROM OPERATING ACTIVITIES
Operating Profit 117 130
Depreciation, amortization, and impairment 7 8
Gain on disposal of intangible assets (1) (1)
Depreciation and impairment of right-of-use assets 4 4
Share-based payments 7 4
Impact from foreign exchange movements (6) (3)
Unrealized loss on equity investment 2 -
Settlement of tax on employee awards (10) -
Decrease in trade receivables 3 9
Decrease in current and non-current other assets 3 27
(Increase)/decrease in inventories (10) 1
(Decrease)/increase in trade and other payables (29) 6
Decrease in provisions and other liabilities(1) (101) (24)
Cash (used in)/generated from operations (14) 161
Interest paid (13) (10)
Interest received 1 -
Exceptional tax refund - 31
Taxes paid (21) (14)
Transaction costs related to debt refinancing (1) (8)
Net cash (outflow)/inflow from operating activities (48) 160
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (2) (1)
Purchase of investments (171) -
Sale of investments 10 -
Purchase of intangible asset - (30)
Proceeds from disposal of intangible assets 1 1
Net cash outflow from investing activities (162) (30)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings - 250
Repayment of borrowings (1) (235)
Payment of lease liabilities (4) (4)
Shares repurchased and cancelled (29) -
Net cash (outflow)/inflow from financing activities (34) 11
Exchange difference on cash and cash equivalents (1) 1
Net (decrease)/increase in cash and cash equivalents (245) 142
Cash and cash equivalents at beginning of the period 1,102 858
Cash and cash equivalents at end of the period 857 1,000
(1)Changes in the line item provisions and other liabilities for H1 2022
include exceptional litigation settlement payments totaling $108m to the DOJ,
DRL and RB (H1 2021: $10m to RB). $4m of interest paid on the DOJ Resolution
in H1 2022 has been recorded in the interest paid line item.
The notes are an integral part of these condensed consolidated interim
financial statements.
Notes to the condensed consolidated interim financial statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a public limited company incorporated on
September 26, 2014 and domiciled in the United Kingdom. In these condensed
consolidated interim financial statements ('Condensed Financial Statements'),
reference to the 'Group' means the Company and all its subsidiaries.
The Condensed Financial Statements have been prepared in accordance with UK
adopted International Accounting Standard 34, "Interim Financial Reporting"
("IAS 34"). The Condensed Financial Statements should be read in conjunction
with the Annual Report and Accounts for the year ended December 31, 2021,
which have been prepared in accordance with UK-adopted International
Accounting Standards and in conformity with the Companies Act 2006 as
applicable to companies reporting under those standards. In preparing these
Condensed Financial Statements, the significant judgments made by management
in applying the Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial
statements for the year ended December 31, 2021, except for changes in
estimates that are required in determining the provision for income taxes. In
2022, the Group purchased ordinary shares of a listed company and invested in
a portfolio of investment-grade debt securities and has therefore adopted new
accounting policies as disclosed in Note 7. The Q2 and H1 2021 condensed
consolidated income statement and Note 3 have been expanded to present net
other operating income as a separate line item to provide a consistent
comparative presentation.
The Condensed Financial Statements have been reviewed and are unaudited and do
not include all the information and disclosures required in the annual
financial statements and therefore should be read in conjunction with the
Group's Annual Report and Accounts as at December 31, 2021. These Condensed
Financial Statements were approved for issue on July 27, 2022.
As disclosed in Note 10 the Group has liabilities and provisions totaling
$478m (FY 2021: $537m) for the Department of Justice (DOJ) Resolution, False
Claims Act Allegations, and the Reckitt Benckiser (RB) settlement. The
Directors have assessed the Group's ability to comply with the minimum
liquidity covenant in the Group's debt facility, maintain sufficient
liquidity to fund its operations and fulfill obligations under the DOJ
resolution and RB agreement. The Directors have also modeled the risk that
SUBLOCADE will not meet revenue growth expectations (considering a 15%
decline on forecasts), an accelerated reversion to generic analogues for
SUBOXONE Film, and the risk the ongoing legal proceedings may result in
reasonably possible payments in a severe but plausible downside scenario as
part of the Group's going concern assessment. These risks were balanced
against the Group's current and forecast working capital position. As a result
of the factors set out above, the Directors have a reasonable expectation
the Group has adequate resources to continue in operational existence for at
least one year from the approval of these Condensed Financial Statements and
therefore consider the going concern basis to be appropriate for the
accounting and preparation of these Condensed Financial Statements.
The financial information contained in this document does not constitute
statutory accounts as defined in section 434 and 435 of the Companies Act
2006. The Group's statutory financial statements for the year ended December
31, 2021, were approved by the Board of Directors on March 17, 2022, and
delivered to the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain any statement under section 498 of the Companies Act 2006.
2. SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker ('CODM'). The CODM,
who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer (CEO).
The Group is predominantly engaged in a single business activity, which is the
development, manufacture, and sale of buprenorphine-based prescription drugs
for treatment of opioid dependence and related disorders. The CEO reviews
disaggregated net revenue on a geographical and product basis. Financial
results are reviewed on a consolidated basis for evaluating financial
performance and allocating resources. Accordingly, the Group operates in a
single reportable segment.
Net revenue and non-current assets
Revenues are attributed to countries based on the country where the sale
originates. The following tables represent net revenues from continuing
operations and non-current assets, net of accumulated depreciation and
amortization, by country. Non-current assets for this purpose consist of
intangible assets, property, plant and equipment, right-of-use assets, and
other assets. Net revenues and non-current assets for the three and six months
to June 30, 2022 and 2021 were as follows:
Net revenue:
For the three and six months ended June 30 Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
United States 179 154 344 284
Rest of World 42 47 84 97
Total 221 201 428 381
On a disaggregated basis, the Group's net revenue by major product line:
For the three and six months ended June 30 Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Sublingual/other 116 136 233 269
SUBLOCADE 98 61 183 104
PERSERIS 7 4 12 8
Total 221 201 428 381
Non-current assets:
Jun 30 Dec 31
2022 2021
$m $m
United States 68 133
Rest of World 210 150
Total 278 283
3. OPERATING EXPENSES AND NET OTHER OPERATING INCOME
The table below sets out selected operating costs and expense information:
Operating expenses
For the three and six months ended June 30
Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Research and development expenses (14) (13) (23) (22)
Selling and marketing expenses (55) (40) (107) (78)
Administrative and general expenses (54) (45) (110) (90)
Selling, general, and administrative expenses (109) (85) (217) (168)
Depreciation, amortization, and impairment(1) (3) (4) (6) (7)
(1) Depreciation and amortization expense is included in research and
development and selling, general and administrative expenses. Additionally,
depreciation and amortization expense in H1 2022 of $5m (H1 2021: $5m) for
intangibles and ROU assets is included within cost of sales.
Medical affairs functional costs are included in administrative and general
expenses. Administrative and general expenses include exceptional items in the
current and prior period as outlined in Note 4.
Net other operating income
For the three and six months ended June 30
Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Net other operating income 3 - 4 1
Net other operating income is credited to the income statement as incurred. H1
2022 included unrealized losses on equity investments, net proceeds received
from the out-licensing of nasal naloxone opioid overdose patents, and a
Directors & Officers insurance claim settlement, which were recorded as
exceptional other operating income as outlined in Note 4.
4. EXCEPTIONAL ITEMS AND ADJUSTED RESULTS
Exceptional items
Where significant expenses or income occur that do not reflect the Group's
ongoing operations, these items are disclosed as exceptional items in the
income statement. Examples of such items could include income or restructuring
and related expenses from the reconfiguration of the Group's activities and/or
capital structure, impairment of current and non-current assets, gains and
losses from the sale of intangible assets, certain costs arising as a result
of material and non-recurring regulatory and litigation matters, and certain
tax related matters. Exceptional items are excluded from adjusted results
consistent with the internal reporting provided to Management and the
Directors. Adjusted results are not a substitute for, or superior to, reported
results presented in accordance with IFRS. Management performs a quantitative
and qualitative assessment to determine if an item should be considered for
exceptional treatment.
The table below sets out exceptional income/(expense) recorded in each period:
For the three and six months ended June 30 Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Exceptional items within SG&A
Legal expenses/provision(1) - 8 - 13
Debt refinancing(2) - (1) - (1)
US listing costs(3) (2) - (2) -
Total exceptional items within SG&A (2) 7 (2) 12
Exceptional items within net other operating income
Other operating income(4) 5 - 5 1
Total exceptional items within other operating income 5 - 5 1
Exceptional items within net finance expense
Finance expense(2) - (1) - (1)
Total exceptional items within finance expense - (1) - (1)
Total exceptional items before taxes 3 6 3 12
Exceptional tax item(5) - 7 - 43
Total exceptional items 3 13 3 55
1. Negotiation with DOJ related qui tams in Q2 2021 and H1 2021 led to
a change in the Group's provision for these matters and a release of $8m and
$13m, respectively.
2. Debt refinancing costs in Q2 2021 consist of advisory and legal
fees incurred related to the Group's June 2021 debt refinancing. These costs
are included in SG&A. Additionally, in Q2 2021 the Group wrote-off $1m of
unamortised deferred financing costs due to extinguishment and settlement of
the previous term loan. These costs are included within finance expense.
3. In Q2 2022, the Group recognized $2m exceptional consulting costs
in preparation for a potential additional listing of Indivior shares on a
major US exchange. The Group expects to incur pre-tax costs of $10m to $15m in
FY 2022 as it prepares for an additional US listing, of which approximately
50% are expected to be recorded as exceptional.
4. The Group recognized $5m of exceptional income in Q2 2022 related
to the proceeds received from a Directors & Officers insurance
reimbursement claim. Exceptional other operating income in H1 2021 relates to
the proceeds received from the out-licensing of nasal naloxone opioid overdose
patents.
5. Exceptional tax benefit recorded in Q2 2021 relates to the tax
impact of settlement costs incurred with RB which was recorded in FY 2020.
Exceptional tax benefit recorded H1 2021 relates to the approval of tax
credits by the Internal Revenue Service in relation to development credits for
SUBLOCADE claimed for years 2014 to 2017 and the benefit recorded in Q2 2021.
Adjusted results
The Board and management team use adjusted results and measures to provide
incremental insight to the financial results of the Group and the way it is
managed. The tables below show the list of adjustments between the reported
and adjusted results for both Q2/H1 2022 and Q2/H1 2021.
Reconciliation of operating profit to adjusted operating profit
For the three and six months ended June 30 Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Operating profit 63 73 117 130
Exceptional selling, general and administrative expenses 2 (7) 2 (12)
Exceptional other operating income (5) - (5) (1)
Adjusted operating profit 60 66 114 117
Reconciliation of profit before taxation to adjusted profit before taxation
For the three and six months ended June 30 Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Profit before taxation 58 66 106 119
Exceptional selling, general and administrative expenses 2 (7) 2 (12)
Exceptional other operating income (5) - (5) (1)
Exceptional finance expense - 1 - 1
Adjusted profit before taxation 55 60 103 107
Reconciliation of net income to adjusted net income
For the three and six months ended June 30 Q2 Q2 H1 H1
2022 2021 2022 2021
$m $m $m $m
Net income 48 62 89 142
Exceptional selling, general and administrative expenses 2 (7) 2 (12)
Exceptional other operating income (5) - (5) (1)
Exceptional finance expense - 1 - 1
Tax exceptional - (7) - (43)
Adjusted net income 45 49 86 87
5. TAXATION
The Group calculates tax expense for interim periods using the expected full
year rates, considering the pre-tax income and statutory rates for each
jurisdiction. To the extent practicable, a separate estimated average annual
effective income tax rate is determined for each taxing jurisdiction and
applied individually to the interim period pre-tax income of each
jurisdiction. Similarly, if different income tax rates apply to different
categories of income (such as capital gains or income earned in particular
industries), to the extent practicable a separate rate is applied to each
individual category of interim period pre-tax income. The resulting expense is
allocated between current and deferred taxes based upon the forecasted full
year ratio.
In the six months ended June 30, 2022, the reported total tax expense was
$17m, or a rate of 16% (H1 2021 tax benefit: $23m, -19%). There were no
exceptional taxation items recorded in H1 2022 and Q2 2022. The tax expense on
H1 2021 adjusted profits amounted to $20m, excluding the $43m tax benefit on
exceptional items, which represented an effective tax rate of 19%. The change
in the effective tax rate on adjusted profits was primarily driven by the
relative contribution to pre-tax income by taxing jurisdiction in the period
and remains lower than the statutory tax rate in the UK due to permanent items
such as the availability of tax incentives for innovation.
The Group's balance sheet at June 30, 2022 includes a current tax receivable
of $16m (FY 2021: $13m), a current tax payable of $5m (FY 2021: $7m), and
deferred tax asset of $101m (FY 2021: $105m).
The Group recognizes deferred tax assets to the extent that sufficient future
taxable profits are probable against which these future tax deductions can be
utilized. At June 30, 2022, the Group's net deferred tax assets of $101m
relate primarily to inventory costs capitalized for tax purposes, litigation
liabilities (including exceptional items that are not expected to recur),
share-based compensation, and other short term timing differences. Recognition
of deferred tax assets is driven by the Group's ability to utilize the
deferred tax asset which is reliant on forecast taxable profits arising in the
jurisdiction in which the deferred tax asset is recognized. The Group has
assessed recoverability of deferred tax assets using Group-level budgets and
forecasts consistent with those used for the assessment of viability and asset
impairments, particularly in relation to levels of future sales. These
forecasts are therefore subject to similar uncertainties to those assessments.
This exercise is reviewed each quarter and, to the extent required, an
adjustment to the recognized deferred tax asset may be made. With the
exception of specific assets that are not currently considered accessible,
Management have concluded full recognition of deferred tax assets to be
appropriate and do not consider there a significant risk of a material change
in their assessment in the next 12 months.
Other tax matters
In 2019, a European Commission review into State Aid concluded that the UK's
Finance Company Partial Exemption rules are only partly justified. The UK
government was required to initiate recovery of the alleged State Aid where
they assess a benefit of the potential State Aid has been received. As HMRC
previously confirmed there has been no such benefit to the Group and therefore
the enquiry in relation to this matter up to December 31, 2017 is closed. HMRC
had opened enquiries in relation to the years ended December 31, 2018 and
December 31, 2019 in relation to this matter but has concluded that there has
been no benefit in relation to years 2018 and 2019 and the enquiry in relation
to this matter is closed. Based on the similar fact pattern applicable to the
later years, the Group had determined no provision is required.
The enacted United Kingdom Statutory Corporation Tax rate is 19% for the year
ended December 31, 2022. On March 3, 2021, the UK Chancellor announced an
increase in the corporation tax rate from 19% to 25% with effect from April 1,
2023. The increase to the corporation tax rate was substantively enacted on
May 24, 2021. The effect of the rate change on these financial statements is
immaterial. During 2021, the OECD published a framework for the introduction
of a global minimum effective tax rate of 15%, applicable to large
multinational groups. On 20 July 2022, HM Treasury released draft legislation
to implement these 'Pillar 2' rules with effect from 1 January 2024 in the UK.
The Group will review these draft rules to understand any potential impacts.
As a multinational group, tax uncertainties remain in relation to Group
financing, intercompany pricing, the location of taxable operations and the
tax treatment of exceptional items. Management have concluded tax provisions
made to be appropriate and do not believe a significant risk of material
change to uncertain tax positions exists in the next 12 months.
6. EARNINGS PER SHARE
For the three and six months ended June 30 Q2 Q2 H1 H1
2022 2021 2022 2021
cents cents cents cents
Basic earnings per share 7 8 13 19
Diluted earnings per share 7 8 12 18
Adjusted basic earnings per share 6 7 12 12
Adjusted diluted earnings per share 6 6 12 11
Basic
Basic earnings per share ("EPS") is calculated by dividing profit for the
period attributable to owners of the Company by the weighted average number of
ordinary shares in issue during the period.
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company has dilutive potential ordinary shares
in the form of stock options and awards. The weighted average number of shares
is adjusted for the number of shares granted assuming the exercise of stock
options.
The weighted average number of ordinary shares outstanding for Q2 2022 (on a
basic basis) includes the favorable impact of 33,763,488 ordinary shares
repurchased in FY 2021 and 7,627,542 ordinary shares repurchased through H1
2022. See Note 14 for further discussion. In 2022, conditional awards of
7,491k (2021: 14,175k) were granted under the Group's Long-Term Incentive
Plan.
Weighted average number of shares 2022 2021
thousands thousands
On a basic basis 703,565 734,435
Dilution from share awards and options 30,481 45,905
On a diluted basis 734,046 780,340
Adjusted Earnings
The Directors believe that diluted earnings per share, adjusted for the impact
of exceptional items after the appropriate tax amount, provides more
meaningful information on underlying trends to shareholders in respect of
earnings per ordinary share. A reconciliation of net income to adjusted net
income is included in Note 4.
7. INVESTMENTS
Investments comprise holdings in equity and debt securities. Investments in
equity securities held for trading or for which the Group has not elected to
recognize fair value gains and losses through other comprehensive income are
initially recorded and subsequently measured at fair value through profit or
loss (FVPL). Investments in debt securities are initially recorded at fair
value plus or minus directly attributable transaction costs and remeasured on
the basis of the Group's business model and the contractual cash flow
characteristics. Interest income from debt securities is included in finance
income using the effective interest method.
Current and non-current investments Jun 30 Dec 31
2022 2021
$m $m
Equity securities at FVPL 8 -
Debt securities held at amortized cost 69 -
Total investments, current 77 -
Debt securities held at amortized cost 81 -
Total investments, non-current 81 -
Total 158 -
Equity securities at FVPL
In February 2022, the Group purchased ordinary shares of Aelis Farma. The
shares are subject to a holding period of 365 days from the acquisition. The
investment is classified as a current investment at June 30, 2022 as the
holding period expires in less than 12 months. Unrealized loss recorded in H1
2022 was $2m and included as an offset within net other operating income.
Debt securities held at amortized cost
In January 2022, the Group initiated purchases of a portfolio of
investment-grade corporate debt securities. The Group's investments in debt
securities are held at amortized cost based on the Group's intention to hold
the investments to maturity and collect contractual cash flows that are solely
payments of principal and interest. Debt securities held at amortized cost are
classified as non-current investments, except for those with maturities less
than 12 months from the end of the reporting period, which are classified as
current investments.
The Group's investments in debt securities do not result in significant
changes to the Group's credit risk, liquidity risk, or interest rate risk. All
the Group's investments in debt securities are considered to be of low credit
risk based on investment-grade credit ratings from Standard and Poor's or
Moody's (BBB-/Baa3 or higher). The majority of the Group's debt securities are
issued at fixed interest rates and changes in floating rates would not have a
significant impact on interest rate risk.
The Group applies an expected credit loss impairment model to financial
instruments held at amortized cost. The recognition of a loss allowance is
limited to 12-month expected credit losses unless credit risk increases
significantly, which would require lifetime expected credit losses to be
applied. When measuring expected credit losses, investments are grouped based
on similar credit risk characteristics. The Group uses judgment in selecting
the inputs to the impairment model based on historical loss rates for similar
instruments, current conditions, and forecasts of future economic conditions.
As of June 30, 2022, expected credit losses for the Group's investments in
debt securities are deemed to be immaterial.
Fair value hierarchy
Fair value is the price that would be received to sell an asset or transfer a
liability in an orderly transaction between market participants at the
measurement date. The different levels have been defined as follows:
• Level 1: Quoted prices (unadjusted) in active markets for identical assets
or liabilities
• Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly
• Level 3: Unobservable inputs for the asset or liability
The Group's only financial instruments which are measured at fair value are
equity securities at FVPL. The fair value of equity securities at FVPL is
based on quoted market prices on the measurement date.
The following table categorizes the Group's financial assets measured at fair
value by valuation methodology used in determining their fair value at June
30, 2022.
Financial assets at fair value Level 1 Level 2 Level 3 Total
$m $m $m $m
Equity securities at FVPL 8 - - 8
The Group also has certain financial instruments which are not measured at
fair value. The carrying value of cash and cash equivalents, trade
receivables, other assets, and trade and other payables is assumed to
approximate fair value due to their short-term nature. At June 30, 2022, the
carrying value of debt securities held at amortized cost was below the fair
value by $2m. The fair value of the debt securities held at amortized cost was
calculated based on quoted market prices which would be classified as Level 1
in the fair value hierarchy above.
8. CURRENT AND NON-CURRENT OTHER ASSETS
Current and non-current other assets Jun 30 Dec 31
2022 2021
$m $m
Short-term prepaid expenses 10 18
Other current assets 85 14
Total other current assets 95 32
Long-term prepaid expenses 19 22
Other non-current assets 19 84
Total other non-current assets 38 106
Total 133 138
Other current and non-current assets primarily represent the funding of surety
bonds in relation to intellectual property related matters (see Note 12 for
further discussion). As a result of the settlement agreement with DRL, the
surety bond holders have returned $64m of collateral in July 2022, causing a
reclassification between current and non-current as of June 30, 2022.
Long-term prepaid expenses relate primarily to payments for contract
manufacturing capacity.
9. FINANCIAL LIABILITIES - BORROWINGS
In April 2022, the Group completed an amendment to its existing term loan
which provides the Group greater flexibility in the use of cash being
generated and changes the variable interest rate base from USD LIBOR to USD
SOFR plus a credit spread adjustment of 26 bps. As part of the modification,
the Group incurred $1m of issuance costs, banking fees and legal fees which
are deemed to be incremental and directly attributable to the amendment.
Accordingly, the Group capitalized these costs, which were netted against the
total amount borrowed and are amortized over the maturity period.
The table below sets out the current and non-current portion obligation of the
Group's term loan:
Term loan Jun 30 Dec 31
2022 2021
$m $m
Term loan - current (3) (3)
Term loan - non-current (237) (239)
Total term loan (240) (242)
*Total term loan borrowings reflect the principal amount drawn including debt
issuance costs of $8m (FY 2021: $7m).
At June 30, 2022, the term loan fair value was approximately 99% (FY 2021:
99%) of par value. The key terms of the term loan in effect at June 30, 2022,
are as follows:
Currency Nominal interest margin Maturity Required annual repayments Minimum
liquidity
Term Loan facility USD SOFR + 26bps + 5.25% 2026 1% Larger of $100m or 50% of Loan Balance
• Nominal interest margin is calculated USD SOFR plus a credit spread
adjustment of 26 bps, subject to a floor of 0.75%.
· The minimum liquidity is the larger of $100m or 50% of the outstanding
loan balance.
· There are no revolving credit commitments.
10. PROVISIONS AND OTHER LIABILITIES
Provisions
Current and non-current provisions Current Non-Current $m Total Current Non-Current $m Total
$m Jun 30 2022 $m $m Dec 31 2021 $m
Federal false claims allegations (5) - (5) (5) - (5)
Intellectual property related matters - (3) (3) - (73) (73)
Other - (3) (3) - (3) (3)
Total provisions (5) (6) (11) (5) (76) (81)
Provisions are recognized when the Group has a present legal or constructive
obligation as a result of past events, an outflow of resources to settle that
obligation is probable, and the amount can be reliably estimated. Provisions
are measured at the present value of management's best estimate of the
expenditure required to settle the present obligation at the reporting date.
The Group carries a provision of $5m (FY 2021: $5m) pertaining to all
outstanding False Claims Act Allegations as discussed in Note 12. These
matters are expected to be settled within the next 12 months.
The provision for intellectual property related matters has been
substantially transferred to other liabilities as a result of the settlement
with Dr. Reddy's Laboratories S.A. and Dr. Reddy's Laboratories, Inc.
(together, "DRL"). See Note 12, Intellectual property related matters - ANDA
litigation.
Other provisions totaling $3m (FY 2021: $3m) primarily represent retirement
benefit costs which are not expected to be settled within one year.
Other liabilities
Current and non-current other liabilities Current Non-Current $m Total Current Non-Current $m Total
$m Jun 30 2022 $m $m Dec 31 2021 $m
DOJ resolution (51) (390) (441) (53) (439) (492)
Intellectual property related matters (10) (11) (21) - - -
RB indemnity settlement (8) (24) (32) (8) (32) (40)
Share repurchase (13) - (13) - - -
Other - (3) (3) - (3) (3)
Total other liabilities (82) (428) (510) (61) (474) (535)
Other liabilities represent contractual obligations to third parties where the
amount and timing of payments is fixed. Where other liabilities are not
interest-bearing and the impact of discounting is significant, other
liabilities are recorded at their present value, generally using a risk-free
rate.
On July 24, 2020, the Group settled with the United States Department of
Justice (DOJ), the US Federal Trade Commission (FTC), and US state attorneys
general the criminal and civil liability in connection with a multi-count
indictment brought in April 2019 by a grand jury in the Western District of
Virginia, a civil lawsuit joined by the DOJ in 2018, and an FTC investigation.
In November 2020, the first payment of $103m (including interest) was made. In
January 2022, an additional payment of $54m (including interest) was made
pursuant to the resolution agreement. Subsequently, five annual instalments of
$50m will be due every January 15 from 2023 to 2027 with the final instalment
of $200m due in December 2027. Interest accrues on certain portions of the
resolution which will be paid together with the annual instalment payments.
For non-interest-bearing portions, the liability has been recorded at the net
present value based on timing of the estimated payments. The discount rate and
interest rate are 1.25%. In H1 2022, the Group recorded interest expense
totaling $3m (H1 2021: $3m).
· Under the terms of the resolution agreement with the DOJ, the
Group has agreed to compliance terms regarding its sales and marketing
practices. Compliance with these terms is subject to annual Board and CEO
certifications submitted to the US Attorney's Office.
· As part of the resolution with the FTC and as detailed in the
text of the stipulated order, for a ten-year period Indivior Inc. is required
to make specified disclosures to the FTC and is prohibited from certain
conduct.
· In addition to the resolution agreement, the Group entered into a
five-year Corporate Integrity Agreement with the HHS Office of the Inspector
General (HHS-OIG), pursuant to which the Group committed to promote compliance
with laws and regulations and committed to the ongoing evolution of an
effective compliance program, including written standards, training,
reporting, and monitoring procedures. The Group is subject to reporting and
monitoring requirements, including annual reports and compliance
certifications from key management and the Board's Nominating & Governance
Committee, which is submitted to HHS-OIG. In addition, the Group is subject to
monitoring by an Independent Review Organization, which submits audit findings
to HHS-OIG, and review by a Board Compliance Expert, who prepared a compliance
assessment report in the first reporting period and will prepare a compliance
assessment report in the third reporting period.
· To date, the Group reasonably believes it has met all of the
requirements specified in these three agreements.
The Group carries other liabilities for intellectual property related matters
totaling $21m (FY 2021: $73m; previously classified as a provision), which
relates to a settlement in intellectual property litigation with DRL as
outlined in Note 12, Intellectual property related matters - ANDA litigation.
As announced in June, 2022, the Group together with Aquestive Therapeutics,
Inc. entered into a settlement agreement with DRL resolving the historical
intellectual property litigation. Under the settlement agreement, the Group
made a settlement payment to DRL in June 2022 with final payments in 2023 and
2024. This provision has been recorded at the net present value, using a
risk-free rate, considering the timing of payments. In H1 2022, the Group
recorded $1m of finance expense (H1 2021: $1m) for time value of money on the
liability.
On January 25, 2021, the Group reached a resolution with RB to resolve claims
which RB issued in the Commercial Court in London on November 13, 2020,
seeking indemnity under the 2014 Demerger Agreement. Pursuant to the
settlement, RB withdrew the US $1.4b claim to release the Group from any claim
for indemnity under the Demerger Agreement relating to the DOJ and FTC
settlements which RB entered into in July 2019, as well as other claims for
indemnity arising from those matters. The Group has agreed to pay RB a total
of $50m and has agreed to release RB from any claims to seek damages relating
to its settlement with the DOJ and the FTC. The Group made an initial payment
of $10m in February 2021, followed by an installment payment of $8m in January
2022. Subsequently, annual instalment payments of $8m will be due every
January from 2023 to 2026. The Group carries a liability totaling $32m (FY
2021: $40m) related to this settlement. The effect of discounting was not
material.
Other liabilities primarily represent deferred revenue related to a supply
agreement.
11. CONTINGENT LIABILITIES
The Group has assessed certain legal and other matters to be not probable
based upon current facts and circumstances, including any potential impact the
DOJ resolution could have on these matters. Where these matters are determined
to be possible, they represent contingent liabilities. Except for those
matters discussed in Note 12 under "False Claims Act Allegations" and
"Intellectual Property Related Matters - ANDA Litigation", for which
liabilities or provisions have been recognized, Note 12 sets out the
contingent liabilities for legal and other disputes for which the Group has
assessed as contingent liabilities. Where the company believes that it is
possible to reasonably estimate a range for the contingent liability this has
been disclosed. Refer to Note 5 for discussion on State Aid and other tax
related contingent liabilities.
12. LEGAL PROCEEDINGS
There are certain ongoing legal proceedings or threats of legal proceedings in
which the Group is a party, but in which Group believes the possibility of an
adverse impact is remote and they are not discussed in this Note 12.
False Claims Act Allegations
· In August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against certain entities
within the Group predicated on best price issues and claims of retaliation.
See United States ex rel. Miller v. Reckitt Benckiser Group PLC et al., Case
No. 1:15-cv-00017 (W.D. Va.). The suit also seeks reasonable attorneys' fees
and costs. The Group was served with the complaint in January 2021. The Group
filed a Motion to Dismiss in June 2021. The case was stayed for mediation in
September 2021, but the parties did not reach agreement. In March 2022,
Relator submitted a request for oral argument on the Motion to Dismiss. On
July 21, 2022, the Court entered an order staying the action and reserving a
decision on the Group's Motion to Dismiss pending rehearing en banc by the
U.S. Court of Appeals for the Fourth Circuit in U.S. ex rel. Sheldon v.
Allergan Sales, LLC, which rehearing is currently not scheduled until
September 2022.
· In May 2018, Indivior Inc. received an informal request from the
United States Attorney's Office ("USAO") for the Southern District of New
York, seeking records relating to the SUBOXONE Film manufacturing process. The
Group is discussing with the USAO certain information and allegations that the
government received regarding SUBOXONE Film.
Intellectual Property Related Matters
ANDA Litigation
· The Group filed actions against DRL in the United States District
Court for the District of New Jersey ("NJ District Court") alleging that DRL's
generic buprenorphine/naloxone film product infringes US Patent Nos. 9,687,454
and 9,931,305 ("the '454 and '305 Patents") in 2017 and 2018, respectively.
The cases were consolidated in May 2018. In July 2018, the NJ District Court
granted the Group a Preliminary Injunction (PI) pending the outcome of a trial
on the merits of the '305 Patent and required the Group to post a surety bond
for $72m in connection with the PI. In November 2018, the Court of Appeals for
the Federal Circuit (CAFC) issued a decision vacating the PI against DRL.
Separately, DRL filed an amended answer alleging various antitrust
counterclaims. The parties reached a settlement following mediation in June
2022, and the case accordingly was dismissed on June 27, 2022. See Note 10
for further discussion regarding settlement payments and timing of those
payments.
· The Group filed actions against Alvogen Pine Brook LLC and
Alvogen Inc. (together, "Alvogen") in the NJ District Court alleging that
Alvogen's generic buprenorphine/naloxone film product infringes the '454 and
'305 Patents in 2017 and 2018, respectively. The cases were consolidated in
May 2018. In January 2019, the NJ District Court granted Indivior a temporary
restraining order ("TRO") to restrain the launch of Alvogen's generic
buprenorphine/naloxone film product pending a trial on the merits of the '305
Patent and Indivior was required to post a surety bond of $36m. Indivior and
Alvogen entered into an agreement whereby Alvogen was enjoined from selling in
the US its generic buprenorphine/naloxone film product unless and until the
CAFC issued a mandate vacating Indivior's separate PI against DRL. The CAFC's
mandate vacating Indivior's PI as to DRL issued in February 2019 and Alvogen
launched its generic product. Any sales in the US by Alvogen are on an
"at-risk" basis, subject to the ongoing litigation against Alvogen in the NJ
District Court. In November 2019, Alvogen filed an amended answer alleging
various antitrust counterclaims. In January 2020, Indivior and Alvogen
stipulated to noninfringement of the '305 Patent under the court's claim
construction, but Indivior retained its rights to appeal the construction and
pursue its infringement claims pending appeal. Indivior's infringement claims
concerning the '454 patent and Alvogen's antitrust counterclaims remain
pending in the NJ District Court. Summary judgment motions have been fully
briefed, but the NJ District Court has not ruled on those motions. No trial
date has been set. In June 2022, the parties participated in court-ordered
mediation. The parties did not reach settlement. The court has scheduled oral
arguments on the parties' summary motions for August 29, 2022.
Antitrust Litigation and Consumer Protection
Antitrust Class and State Claims
· Civil antitrust claims have been filed by (a) a class of direct
purchasers, (b) a class of end payor plaintiffs, and (c) a group of states,
now numbering 41, and the District of Columbia. The various plaintiffs
generally allege, among other things, that Indivior violated US federal and/or
state antitrust and consumer protection laws in attempting to delay generic
entry of alternatives to SUBOXONE Tablets. Plaintiffs further allege that
Indivior unlawfully acted to lower the market share of these products. These
antitrust cases are pending in federal court in the Eastern District of
Pennsylvania. The court has not set a trial date. Summary judgment motions
related to the Direct Purchaser, End Payor, and States actions were fully
briefed and were argued in December 2021. The deadline for the class exclusion
or "opt out" was June 5, 2022.
· In 2013, Reckitt Benckiser Pharmaceuticals, Inc. (now known as
Indivior Inc.) received notice that it and other companies were defendants in
a lawsuit initiated by writ in the Philadelphia County (Pennsylvania) Court of
Common Pleas. See Carefirst of Maryland, Inc. et al. v. Reckitt Benckiser
Inc., et al., Case. No. 2875, December Term 2013. The plaintiffs include
approximately 79 entities, most of which appear to be insurance companies or
other providers of health benefits plans. The Carefirst Plaintiffs have not
served a complaint, but they have indicated that their claims are related to
those asserted by the plaintiffs in In re SUBOXONE, MDL No. 2445 (E.D. Pa.).
The Carefirst case remains pending.
· The Group has evaluated the antitrust class and state claims in
light of the DOJ settlement under which a Group subsidiary pled guilty to one
count of making a false statement relating to health care matters in one state
in 2012 (as discussed above under DOJ Resolution). The Group continues to
believe its defenses and continues to vigorously defend itself. Select
plaintiffs in these matters previously made settlement demands, which were not
accepted and are not current offers, totaling approximately $290m, which was
used for contingency planning only to model possible downside financial
effects. The final aggregate cost of these matters, whether resolved by
litigation or by settlement, may be materially different. If the Group were to
entertain further settlement discussions, we make no representations as to
what amounts, if any, it may agree to pay, nor regarding what amounts the
plaintiffs will demand.
Other Antitrust and Consumer Protection Claims
· In 2020, the Group was served with lawsuits filed by several
insurance companies, some of whom are proceeding both on their own claims and
through the assignment of claims from affiliated companies. Cases filed by (1)
Humana Inc. and (2) Centene Corporation, Wellcare Healthcare Plans, Inc., New
York Quality Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC were
pending in the Eastern District of Pennsylvania. The complaints were dismissed
in July 2021. Plaintiffs filed Notices of Appeal in August 2021 to the United
States Court of Appeals for the Third Circuit ("Third Circuit"). The Third
Circuit heard oral arguments on this appeal on March 31, 2022. Humana also
filed a Complaint in state court in Kentucky with substantially the same
claims as were raised in the Federal Court case. That case has been stayed
pending a decision in the Third Circuit appeal. Cases filed by (1) Blue Cross
and Blue Shield of Massachusetts, Inc., Blue Cross and Blue Shield of
Massachusetts HMO Blue, Inc., (2) Health Care Service Corp., (3) Blue Cross
and Blue Shield of Florida, Inc., Health Options, Inc., (4) BCBSM, Inc. (d/b/a
Blue Cross and Blue Shield of Minnesota) and HMO Minnesota (d/b/a Blue Plus),
(5) Molina Healthcare, Inc., and (6) Aetna Inc. (collectively, the "Roanoke
Plaintiffs") are pending in the Circuit Court for the County of Roanoke,
Virginia. These plaintiffs have asserted claims under federal and state RICO
statutes, state antitrust statutes, state statutes prohibiting unfair and
deceptive practices, state statutes prohibiting insurance fraud, and common
law fraud, negligent misrepresentation, and unjust enrichment. In June 2021,
defendants' motion to stay was denied and certain claims were dismissed
without prejudice. The Roanoke Plaintiffs have filed amended complaints, and
the Group has filed demurrers, seeking dismissal of some of the asserted
claims. Oral arguments on the demurrers are scheduled to occur on September 1,
2022.
· The Group has begun its evaluation of the claims, believes in its
defenses, and intends to vigorously defend itself. Engagement with the
claimants has been minimal. Accordingly, no estimate of the range of potential
loss can be made at this time.
Civil Opioid Litigation
· The Group has been named as a defendant in more than 400 civil
lawsuits brought by state and local governments, public health agencies
against manufacturers, distributors, and retailers of opioids alleging that
they engaged in a longstanding practice to market opioids as safe and
effective for the treatment of long-term chronic pain to increase the market
for opioids and their own market share, as well as individuals alleging
personal injury claims. Most of these cases have been consolidated and are
pending in a federal multi-district litigation (MDL) in US District Court for
the Northern District of Ohio. Litigation against the Group in the MDL is
stayed. Motions to remand are currently being considered by the court in over
50 cases to which the Group is a party (among numerous other defendants).
· The Court in the MDL held a status conference on June 22, 2022,
with county and municipality plaintiffs and certain manufacturer defendants
(including the Group) and distributor defendants to discuss what information
the parties needed to proceed, whether the parties would entertain settlement
and whether there should be any bellwether trials from this subset of
plaintiffs and defendants. The court agreed no additional bellwether trials
are needed, provided that all of the parties were progressing on a settlement
track. Additionally, the court ordered a status conference with this same
group of plaintiff and defendants for September 23, 2022.
· Separately, the Group's response to five individual complaints
filed in West Virginia state court that have not been transferred to the MDL
is due by August 5, 2022.
· Given the status and preliminary stage of litigation in both the
MDL and state courts, no estimate of possible loss in the opioid litigation
can be made at this time.
13. TRADE AND OTHER PAYABLES
Jun 30 Dec 31
2022 2021
$m $m
Sales returns and rebates (438) (436)
Trade payables (107) (137)
Accruals (128) (136)
Other tax and social security payables (11) (11)
Total (684) (720)
Sales return and rebate accruals, primarily in the US, are provided in respect
of the estimated rebates, discounts, or allowances payable to direct and
indirect customers. Accruals are made at the time of sale while the actual
amounts to be paid are based on claims made some time after the initial
recognition of the sale. The estimated amounts may not reflect the final
outcome and are subject to change dependent upon, amongst other things, the
payor channel (e.g., Medicaid, Medicare, Managed Care, etc.) and product mix.
Accrual balances are reviewed and adjusted quarterly in the light of actual
experience of rebates, discounts or allowances given and returns made and any
changes in arrangements. Future events may cause the assumptions on which the
accruals are based to change, which could affect the future results of the
Group.
14. SHARE CAPITAL
Equity ordinary shares Nominal value paid per share Aggregate nominal value
$m
Issued and fully paid
At January 1, 2022 702,439,638 $0.10 70
Ordinary shares issued 3,840,414 $0.10 1
Shares repurchased and cancelled (7,883,597) $0.10 (1)
At June 30, 2022 698,396,455 70
Equity ordinary shares Nominal value paid per share Aggregate nominal value
$m
Issued and fully paid
At January 1, 2021 733,635,511 $0.10 73
Ordinary shares issued 1,203,975 $0.10 -
At June 30, 2021 734,839,486 73
Ordinary shares issued
During the period 3,840,414 ordinary shares (H1 2021: 1,203,975) were issued
to satisfy vesting/exercises under the Group's Long-Term Incentive Plan and US
Employee Stock Purchase Plan.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced a share repurchase program for an
aggregate purchase price up to no more than $100m or 39,698,610 of ordinary
shares, which is expected to end no later than March 31, 2023. Through June
30, 2022, the Group has repurchased and cancelled 7,883,597 of the Company's
ordinary shares for an aggregate nominal value of $1m ($0.10 per share),
including 256,055 ordinary shares purchased as part of the Group's share
repurchase program executed in 2021 and cancelled in January 2022. All
ordinary shares repurchased under the share repurchase program were cancelled
resulting in a transfer of the aggregate nominal value to a capital redemption
reserve. The total cost of the purchases made under the share repurchase
program during the period, including directly attributable transaction costs,
was $29m. A net repurchase amount of $13m has been recorded as a financial
liability and reduction in retained earnings which represents the amount to be
spent under the program for the month of July 2022, the period closed for
modification or termination of the program. The effect of discounting is not
material. Total purchases under the share repurchase program will be made out
of distributable profits.
15. RELATED PARTIES
On July 7, 2022 the Group announced that it has amended the existing
relationship agreement with Scopia. Under the original terms, the Relationship
Agreement terminated in the event that Scopia (and its affiliates) ceased to
have interests in at least 10% of the Company's issued share capital. As
announced on July 1, 2022, Scopia has sold interests in the Company
representing 2.28% which has taken the total holding of Scopia (and its
affiliates) to 9.71%, below this 10% threshold, and down from 16.9% at
origination of the agreement.
The Group has agreed not to exercise its right to terminate the Relationship
Agreement immediately, and instead has agreed:
· To continue with the agreement until the expiration of its
original term of December 31, 2023, unless the Relationship Agreement is
otherwise extended by mutual agreement or terminated earlier in accordance
with its terms; and
· The threshold for automatic termination will be amended, such
that the Relationship Agreement will terminate in the event that Scopia (and
its affiliates) cease to have interests in at least 5% of the Company's issued
share capital (reduced from 10% under the original terms).
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
· This set of condensed consolidated interim financial statements,
which have been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting" ("IAS 34"), gives a true
and fair view of the assets, liabilities, financial position, and profit or
loss of Indivior; and
· The interim management report gives a fair review of the
information in line with regulations 4.2.7 and 4.2.8 of the Disclosure
Guidance and Transparency Rules.
The Directors are responsible for the maintenance and integrity of the Group's
website. Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Details of Indivior PLC's Directors are available on our website at
www.indivior.com (http://www.indivior.com)
By order of the Board
Mark Crossley Ryan Preblick
Chief Executive Officer Chief Financial Officer
July 27, 2022
Independent review report to Indivior PLC
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Indivior PLC's condensed consolidated interim financial
statements (the "interim financial statements") in the H1 and Q2 2022 Results
of Indivior PLC for the three and six month periods ended 30 June 2022.
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed consolidated interim balance sheet as at
30 June 2022;
· the Condensed consolidated interim income statement and Condensed
consolidated interim statement of comprehensive income for the three and six
month periods then ended;
· the Condensed consolidated interim statement of changes in equity
for the six month period then ended;
· the Condensed consolidated interim cash flow statement for the
six month period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the H1 and Q2 2022 Results of
Indivior PLC have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom (ISRE). A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the H1 and Q2 2022 Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with this ISRE. However, future events or
conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The H1 and Q2 2022 Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the H1 and Q2 2022 Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the H1 and Q2 2022 Results,
including the interim financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the H1 and Q2 2022 Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 July 2022
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