Allergy Therapeutics
plc(“Allergy Therapeutics”, “ATL” or the “Group”)
Preliminary Results for the Year ended 30
June 2021
- Record pre-R&D operating profit
ahead of market expectations reflecting continued sales growth
- Successful ex-vivo VLP Peanut
biomarker study showing 24-fold reduction in allergenicity and
beneficial efficacy profile paving the way for first-in-human trial
in 2022
- Strong cash balance of £40.3m
providing sufficient funds with a small amount of debt under
current assumptions to support Grass MATA MPL pivotal Phase III
field studies and Phase I VLP Peanut PROTECT trial
23 September
2021 Allergy
Therapeutics (AIM: AGY), the fully integrated specialty
pharmaceutical company specialising in allergy vaccines, today
announces its preliminary results for the year ended 30 June
2021.
Financial
highlights
- 8% revenue growth in actual
terms and 6% at constant rate* to £84.3m (2020: £78.2m)
- 19% increase in pre-R&D
operating profit to £16.9m (2020: £14.2m) as a result of sales
growth and lower overhead cost growth
- Strong cash balance of £40.3m at 30
June 2021 (2020: £37.0m)
- Net profit of £2.9m for the year
(2020: Net profit of £7.1m including cash settlement of £3.2m)
Operating
highlights (including post
period)
- Successful ex-vivo VLP Peanut
biomarker study ahead of Phase I trial (named PROTECT) anticipated
in Q1 2022
- Robust growth across all key
products and countries in a challenging year
- Successful launch of ImmunoBON in
Germany and Austria
- Grass MATA MPL exploratory field
trial to read out in autumn 2021
- Registration of Venomil in
Austria
Manuel Llobet, CEO
of Allergy
Therapeutics, stated: “Allergy
Therapeutics has performed well in 2021, driving our European
commercial business and progressing our clinical programmes amid
challenging conditions. Our commercial and pipeline products
demonstrate our commitment to allergy and immunology solutions to
help people worldwide.
“Engaging with our stakeholders is key to our
success as a business. They trust us to deliver safe and effective
products on time, to stand by our values and to operate our
business with high standards of quality and integrity. Our three
core values – Vision, Commitment and Menschlichkeit (Humanity),
shape the way in which we work and are at the heart of every
decision we make. I would like to thank our team and all our
partners for their contribution to another successful year.”
*Constant currency uses prior year weighted
average exchange rates to translate current year foreign currency
denominated revenue to give a year on year comparison excluding the
effects of foreign exchange movements. See table in finance review
for an analysis of revenue.
This announcement contains inside
information for the purposes of Article 7 of Regulatory (EU)
No596/2014.
- ENDS
-
Analyst briefing and webcast
today Manuel Llobet, Chief Executive Officer, Nick
Wykeman, Chief Financial Officer, and Alan Bullimore, Head of
Business Innovation, will host a virtual presentation for analysts
to provide an update on the Group, followed by a Q&A session,
at 09.30am BST.
The live webcast can be accessed here.
For further information, please
contact:
Allergy Therapeutics+44 (0)
1903 845 820Manuel Llobet, Chief Executive OfficerNick Wykeman,
Chief Financial Officer
Panmure Gordon+44 (0) 20 7886
2500Freddy Crossley, Emma Earl, Corporate FinanceRupert Dearden,
Corporate Broking
Consilium Strategic
Communications+44 20 3709 5700Mary-Jane Elliott / David
Daley / Carina Jursallergytherapeutics@consilium-comms.com
Stern Investor
Relations, Inc.+1 212 362 1200Christina
Tartagliachristina@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 include 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 11,000m2 of state-of-the-art MHRA-approved manufacturing
facilities and laboratories. The Group, which has achieved over 9%
compound annual growth since formation, employs c.600 employees and
is listed on the London Stock Exchange (AIM:AGY). For more
information, please see www.allergytherapeutics.com.
Chairman’s Report
PerformanceThis has been
another year of growth for Allergy Therapeutics with impressive
financial performance and the delivery of strong operating profit,
well ahead of market expectations. The Group also made encouraging
progress with key products in its innovative pipeline of potential
new immunotherapeutic treatments for allergy patients. At the same
time, we successfully managed the continued challenges posed by
COVID-19, the logistical challenges of Brexit and continuing
changes in the regulatory environment.
Research and Development
Developing innovative and patient-focused products remains the
Group’s priority. Results from the ex-vivo virus-like particle
(VLP) Peanut biomarker study with Imperial College London, although
early stage, demonstrate the exciting potential behind this next
generation peanut allergy vaccine candidate. The R&D and
regulatory teams have worked incredibly hard on the scale up and
regulatory pathway for this potentially transformational product,
and that hard work now continues. We look forward to providing the
market with further updates as this candidate enters the clinic in
2022. Work has also continued on the Group’s other main platform,
Pollinex Quattro, with the Grass MATA MPL exploratory field study
(G309) fully recruited and the treatment phase complete. The study
remains on track, with results expected in the autumn.
Board changesSteve Smith, who
joined the Board at the AIM listing in 2004 and who has supported
the business through a number of significant challenges over the
years, will step down as a Director at the Group’s next Annual
General Meeting. I would like to take this opportunity to thank
Steve for his wise counsel and contribution over the years. He has
been a highly valued and appreciated member of the Board.
New auditorAs announced in
April and following a competitive tender process, the Board
appointed BDO LLP as Group external auditor in place of Grant
Thornton LLP. On behalf of Allergy Therapeutics, I would like to
thank Grant Thornton for its service over the past 13 years.
Sustainable long-term
value Our purpose is to transform the lives of our
patients and the people around them. Guided by our vision and
values, we generate value for all our stakeholders. During the
coming year, the business will adopt an environmental, social and
governance (ESG) framework defining responsibilities in this area
across the whole business and holding us to account over the coming
years. We will aim to achieve net zero carbon emissions by 2030 and
will publish defined timelines for this in 2022. All our activities
are underpinned by a commitment to health & safety and ethical
practices.
OutlookAllergy Therapeutics
continues to develop and innovate. The coming year will see further
investment in the Group’s infrastructure as the business matures as
a well-established and growing European business. The Group also
continues to invest in its pipeline of next generation allergy
immunotherapeutics. Upcoming results from the Grass MATA MPL
exploratory field study, the pre-Investigational New Drug (IND)
application meeting with the U.S. Food and Drug Administration
(FDA) for VLP Peanut, followed by the commencement of the Phase I
trial (called PROTECT) in the U.S are all promising and exciting
developments and set the course for the future of the business.
Finally, on behalf of the Board, I would like to
thank the leadership team and all members of staff for their
determination, creativity and commitment throughout the last year
with the continuing challenges of COVID-19 and Brexit.
CEO Report
Allergy Therapeutics has performed strongly in
the period, as demonstrated by the Group’s market
expectation-beating growth, further cementing its technology
leadership in the allergy immunotherapy field.
Financial PerformanceThe
business continued to grow well, despite challenging market
conditions, with revenue up 8% in actual terms at £84.3m (2020:
£78.2m) and 6% at constant rate over the prior year. Growth from
the year came from Northern Europe and Germany in particular, due
to the benefit of allergy clinics being situated outside of
hospitals and therefore able to maintain consultations with allergy
patients during COVID-19 restrictions. Sales in Spain have also
continued to grow and, overall, Southern Europe has defended its
market share well, gaining market share, in some cases, in a
depressed market due to COVID-19. The impact of COVID-19 will
likely remain next year even if hospitals return to normal, due to
the number of patients who missed their first year of treatment
this year and would have been expected to return in the following
year.
In our commercialised portfolio, our
subcutaneous vaccines Pollinex Quattro, Pollinex, Acarovac and
Venomil continued to lead the way with good growth, especially
Germany (10%) and Austria (7%), in spite of a preference towards
the use of oral products during the confinement period.
Non-R&D operating costs for the year at
£45.9m (2020:£44.5m) were up 3% on the prior year, with
approximately half of that increase due to exchange rates. This
lower than expected increase in costs reflects the constricting
impact of COVID-19 on travel and a reduction in scientific
conference attendance and other promotional events. This reduction
in costs significantly outstripped further investment made
throughout the year in IT, pharmacovigilance and the additional
costs of transport and testing due to the impact of Brexit. We
continue to build first-class infrastructure to prepare the Group
for the future. The Group also benefited from the spot revaluation
of forward currency contracts to the value of £1.3m (2020: £0.4m
loss).
Operating profit pre-R&D increased by 19% to
£16.9m (2020:£14.2m), reflective of a strong Group performance in
challenging market conditions, driven by continued growth in sales
and cost savings due to COVID-19 and foreign exchange.
R&D expenditure in the year was £12.9m, up
from the £9.0m last year (excluding legal cost recovery), as the
Group invested significantly in its pipeline, with the successful
manufacturing scale up of batches of VLP Peanut for the upcoming
Phase I PROTECT trial and execution of the Grass MATA MPL G309
exploratory field trial. The Group achieved a net
profit of £2.9m (2020:£7.1m).
Cash at the end of June 2021 stood at £40.3m
which will be sufficient, under current assumptions, to fund the
two Grass MATA MPL trials as well as the Peanut Phase I PROTECT
trial, with a small amount of additional debt. If the Grass MATA
MPL trials are successful, the only further trial that will be
required before submission of the Biological Licence Application
(BLA) is the completion of the safety database. The Board
continually reviews the Group’s funding requirements and options
for the future including, but not limited to, a potential path to a
Nasdaq dual listing.
Clinical developmentThe
exciting results of the ex-vivo VLP Peanut biomarker study, with
Imperial College London, provide us with further confidence in this
development programme and the huge potential of this vaccine
candidate. In tests with human blood samples from peanut allergic
patients, the results showed an impressive 24-fold reduced basophil
reactivity and basophil histamine release response (basophils are
white blood cells playing a crucial role in allergic reactions)
after treatment with VLP Peanut compared to Ara h 2 (the major
peanut allergen) indicating that the product is likely to be
hypoallergenic (the target was a 10 fold reduction), and unlikely
to cause an allergic reaction in patients burdened by peanut
allergy. In addition, the secondary endpoints demonstrated support
for a beneficial efficacy profile promoting a class switch from the
allergic Th2 pathway to the more tolerogenic Th1 pathway These
results, which are consistent with our preclinical data package,
form an important part of the submission to the FDA for the opening
of the upcoming IND application. A Pre-IND meeting with the FDA is
imminent.
We believe this product has the potential to be
a ground-breaking, next-generation immunotherapy for peanut allergy
sufferers and follows our strategy of developing ultra-short course
treatments for patients that provide a long-lasting protective
immune response. Though the current generation of peanut allergy
products tend to increase the body’s tolerance to peanuts, they
require repeat administration and do not offer the same potential
for long-term protection and a significant reduction in allergic
reactions. The Group believes that VLP Peanut, incorporating our
novel VLP technology platform, has the potential to provoke a
disease-modifying effect and to bring a significant positive impact
to the lives of patients and families affected by peanut allergy,
and to health systems. The current US market for peanut allergy
sufferers is estimated to be worth approximately $5bn. Around 6% of
all children suffer from this life-threatening allergy with the
number of sufferers increasing by 4% each year.
Completion of the treatment phase in the Group’s
innovative G309 exploratory field study to evaluate the safety and
efficacy of our Grass MATA MPL product in May 2021 was an important
milestone. This trial represents a truly innovative way to
concurrently test a variety of dosing regimens in an allergy trial
and will provide valuable information to optimise the study design
of the pivotal Phase III study (G306). Results from the exploratory
study are expected in the autumn. Following the data readout, work
will begin to prepare for the pivotal trial, in parallel with
readiness planning for the Group’s commercial approach to the US
market.
The Group has also registered Venomil in Austria
to extend the markets where this important venom treatment is
approved.
PipelineBeyond the significant
progress being made in our peanut and grass allergy development
programmes, preparatory work continues on a future Birch MATA MPL
pivotal field trial (B302) which, subject to funding, would be
expected to start following results from the Grass MATA MPL pivotal
trial (G306). The Birch product would form part of the Group’s US
portfolio, along with a Ragweed MATA MPL product.
In addition to our VLP Peanut vaccine candidate,
the Group continues to pursue the potential of VLP technology in
applications beyond the allergy immunotherapy field. Following the
exclusive licence agreement signed with Saiba AG and DeepVax GmbH
in 2020 to use its patented VLP technology platform to develop and
commercialise vaccines targeting asthma, solid cancer tumours,
atopic dermatitis and psoriasis, early stage work has begun on two
new VLP candidate programmes – melanoma and asthma. These
programmes will build on the Group’s technological skills,
subcutaneous expertise and experience of adjuvant systems – a key
element of Allergy Therapeutics' strategy given their potential to
create immunotherapies that act faster, generate a sustained
response, and work more efficiently than traditional therapies.
Mild allergy – a new market
segmentImmunoBON, the novel, patented protein-based oral
product, which mimics the so-called ‘farm effect’, has made a
strong start in our German and Austrian commercial markets. While
sales of ImmunoBON are not yet material to the business, the
product has significant potential across Europe and in major
pharmaceutical markets worldwide.
ImmunoBON provides not only relief for a wide
variety of allergies, but also targets mild allergy patients,
providing Allergy Therapeutics with a commercial product in the
largest segment of the allergy market as an over-the-counter
product. The product also has the advantages of being natural and,
with a relatively short treatment period of three months, offers
the potential for higher patient compliance compared to longer
course allergy treatments. Existing early data support its use as a
treatment for birch and house dust mite allergies and the Group is
exploring its potential against grass, cat, dog and horse
allergies.
Environmental, Social and Governance
(ESG)Like many other businesses, the Group is developing
its ESG agenda. We are aiming to achieve net zero carbon by
2030 and we are focused on managing our operations responsibly. We
seek to generate positive outcomes for all our stakeholders,
ensuring good standards of professional ethics and corporate
governance whilst maintaining an inclusive and diverse culture.
This year we have launched our Leading Together programme which
helps to develop our senior managers into business leaders. Our
employees are key to our success and we promote an innovative
culture which allows employees to reach their potential whilst
creating value for our stakeholders.
We have a clear purpose, to transform the lives
of our patients and the people around them. That purpose and our
values shape the Group’s vision which provides us with a long-term
approach to deliver value and generate benefits for our
stakeholders.
OutlookAs previously indicated
in the Group’s June 2021 trading update, revenue in the financial
year to 30 June 2022 is expected to grow at low single-digits at a
constant rate, reflecting a combination of factors. The Group is
improving the quality of its portfolio by streamlining a number of
non-differentiated older products to maintain its focus on short
course subcutaneous immunotherapy (SCIT) and innovative allergy
treatments. This, alongside the ongoing impact of COVID-19, means
that sales are expected to grow at low single-digit levels at
constant rates.
Non-R&D operating costs are expected to be
around 20% higher than 2021 due to delayed 2021 commercial
projects, further investment in infrastructure and increased
R&D activities, and some delayed costs from 2021. Continued
investments in infrastructure including IT, pharmacovigilance,
market access and regulatory affairs, reflect the Group’s growth
and need to maintain business resilience within a challenging
environment. Low sales growth and higher overheads are expected to
affect operating margin.
Research and development expenditure next year
is expected to be in the region of £4m more than 2021, reflecting
completion of the Grass MATA MPL G309 exploratory field study and
commencement of the VLP Peanut Phase I PROTECT trial.
The Group looks forward to the results of the
Grass MATA MPL exploratory field study in the autumn as well as the
start of the VLP peanut Phase I PROTECT trial in 2022. That trial
is expected to read out in H2 2023, but the design of the trial
should allow interim reporting of progress. Overall, the next year
provides multiple key inflection points with clinical and
regulatory progress, and we look forward to providing the market
with further updates.
Financial Review
OverviewThe Group has continued to
grow profitably, achieving an operating profit excluding R&D1
of £16.9m (2020: £14.2m) for the year to 30 June 2021 despite the
impact of continued challenges of COVID-19 and Brexit. As in 2020,
COVID-19 especially impacted Southern Europe with lower Italian
sales and slower growth in Spain as can be seen in the segmental
reporting section (see Note 4). Including R&D expense of £12.9m
(2020: £5.8m after offsetting receipt from settlement of legal
claims totalling £3.2m), the Group reported an operating profit of
£4.0m (2020: £8.3m).The net profit after tax for the period was
£2.9m (2020: £7.1m).The impact of IFRS 16, Leases, for 2021 has
been similar to that of 2020 with all the Group’s leases shown on
the balance sheet as a ‘right-of-use’ asset and lease liability
with the 2021 EBITDA uplifted by £1.9m (2020: £1.9m) and the
operating profit by £0.2m (2020: £0.3m).
RevenueReported revenue increased
by 8% to £84.3m (2020: £78.2m). The weighted average
Euro exchange rate in the year was €1.12 to £1
compared to €1.14 in 2020. Revenue at constant currency 2
was 6% higher as shown in the table below:
|
2021 |
2020 |
|
Germany |
Other |
Total |
Germany |
Other |
Total |
|
£m |
£m |
£m |
£m |
£m |
£m |
Revenue |
53.8 |
30.5 |
84.3 |
48.0 |
30.2 |
78.2 |
Adjustment to retranslate at prior year foreign exchange rate |
(1.0) |
(0.5) |
(1.5) |
|
|
|
Revenue at constant currency2 |
52.8 |
30.0 |
82.8 |
48.0 |
30.2 |
78.2 |
- Operating profit (pre-R&D) is
calculated by adding back total R&D expenditure for the year to
the operating profit of the year to arrive at an
operating profit (pre-R&D) of £16.9m (2020: £14.2m).
- 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.
Revenue from Germany was 64% (2020: 61%) of
total reported revenue reflecting the relative impact of Covid 19
with clinics in Northern Europe staying open for most of the time
while those in Southern Europe, which are inside hospitals, were
closed. Rebates were higher this year due to increased revenue.
Sales of Venomil and Pollinex continued to grow strongly while
Oralvac and Pollinex Quattro achieved reasonable growth. Total
sales from other products contributed £4.0m for the year ended 30
June 2021 (2020: £3.5m). Revenue in Germany grew well in the
year with revenue at constant currency22 increasing to £52.8m
(2020: £48.0m), an increase of 10%.
All the main European markets (except
for Italy and Switzerland) exhibited good sales growth at
constant currency2 with Spain showing 4%, the Netherlands 3%,
Austria 7% and Germany 10%. The Group continues to develop new
and existing markets to broaden its reach and reduce reliance
on any one market or product.
Gross profitCost of sales
increased to £22.1m (2020: £20.2m) reflecting additional Brexit
costs. The gross margin was 74% (2020: 74%), leading to a gross
profit of £62.2m (2020: £58.0m).
Operating expensesTotal overheads
were £5.3m higher than prior year at £58.8m (2020: £53.5m). This
included R&D expenditure that rose by £3.9m to £12.9m (2020:
£9.0m excluding the one-off receipt in respect of a legal
settlement) due to investment in 2021 reflecting work on VLP Peanut
and Grass MATA MPL.
Non-R&D operating costs of £45.9m increased by
£1.4m (2020: £44.5m) due to further investment in compliance, new
products and rising labour costs while some expenses were
deferred.
Sales, marketing and distribution costs increased
by £0.3m to £25.2m (2020: £24.9m) mainly as a result of investment
in new products (especially ImmunoBON). Other administration
expenses increased by £1.1m to £20.7m (2020: £19.6m) as a result of
additional investment in compliance and support functions.
Other income in the year of £0.6m
(2020: £0.6m) was due to R&D tax credits in the UK.
TaxThe current and prior year tax
charges are predominantly made up of provisions for tax in the
Italian and German subsidiaries.
Looking forward to the current financial year,
some R&D expenditure originally expected in 2021 will now be
incurred in 2022, due to the phasing of those costs.
IFRIC 23 continues to impact the tax provision
reflecting the charge in the income statement of £0.8m (2020:
£1.0m). The charge was also affected by the change in UK
legislation in respect of use of losses.
Balance sheetProperty, plant and
equipment (including IFRS 16) reduced by £0.7m to £19.7m
(2020: £20.4m) reflecting higher depreciation (due to IFRS16) than
investment in upgrading of plant in the UK factory and equipment
for R&D.
Goodwill reduced by £0.2m to £3.3m (2020: £3.5m)
due to exchange rate fluctuations, whilst other intangible assets
increased by £0.1m to £1.4m (2020: £1.3m).
Total current assets, excluding cash, reduced to
£17.6m (2020: £18.2m). Inventory increased further by £0.7m
due to early production of stock to fill the extended Brexit supply
chain. Trade and other receivables have reduced by £1.9m mainly due
to improved collection of trade debtors. Cash and cash at hand
increased to £40.3m from £37.0m in 2020 mainly as a result of a
continued strong trading result. The Group had a net cash inflow of
£3.7m in the year (2020: £9.5m cash inflow including legal
settlement of £3.2m) primarily due to good trading.
The fair value of derivative financial
instruments changed from a liability to an asset of £0.5m in
2021 (2020: £0.8m liability) due to exchange rate
fluctuations.
Retirement benefit obligations, which relate
solely to the German pension scheme, decreased to £11.3m (2020:
£13.5m). The decrease in the liability was mainly driven by
the increase in the discount rate from 0.8% to 1.15% (resulting
from German bond yields).
CurrencyThe 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 The Group’s bank debt on
its balance sheet consists mainly of bank loans arranged to fund
development of products in the Spanish market. Group borrowing
totalled £3.4m (2020: £3.8m) at 30 June 2021. The overdraft
facility of £7m was unused at 30 June 2021 and has since been
renewed.
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.
LegalOn 23 February 2015, the
Company received notification that the Federal Office for
Economics and Export (“BAFA”) had made a decision to reverse
their preliminary exemption to the increased manufacturers rebate
in Germany for the period July to December 2012. The Company was
granted a preliminary exemption to the increased rebate for this
period by BAFA in 2013. The Company recognised revenue of
€1.4m (£1.1m at that time, £1.2m now) against this exemption in the
year ended 30 June 2013. All other preliminary exemptions (granted
for periods up to 30 June 2012) have previously been ratified as
final by BAFA. After taking legal advice, the Company has lodged an
appeal against this decision and is confident that the exemption
will be reinstated. Therefore, as at 30 June 2021, no provision has
been recognised for the repayment of the rebate refund of €1.4m
(£1.2m). This position will be kept under review.
Consolidated income
statementfor the year ended 30 June
2021
|
|
|
Year to |
Year to |
Year to |
Year to |
|
|
|
30 June 2021 |
30 June 2021 |
30 June 2020 |
30 June 2020 |
|
|
Note |
£’000 |
£’000 |
£’000 |
£’000 |
Revenue |
|
3 |
|
84,331 |
|
78,204 |
Cost of sales |
|
|
|
(22,106) |
|
(20,201) |
Gross profit |
|
|
|
62,225 |
|
58,003 |
Sales, marketing and distribution costs |
|
|
|
(25,200) |
|
(24,853) |
Administration expenses – other |
|
|
(20,674) |
|
(19,627) |
|
Research and development costs– expenditure for the year |
|
|
(12,887) |
|
(9,000) |
|
– credit relating to legal settlement |
|
|
- |
|
3,152 |
|
– total research and development costs |
|
|
(12,887) |
|
(5,848) |
|
Total administrative expenses |
|
|
|
(33,561) |
|
(25,475) |
Other income |
|
5 |
|
567 |
|
634 |
Operating profit |
|
|
|
4,031 |
|
8,309 |
Finance income |
|
7 |
|
117 |
|
266 |
Finance expense |
|
6 |
|
(491) |
|
(504) |
Profit before tax |
|
|
|
3,657 |
|
8,071 |
Income tax |
|
|
|
(771) |
|
(1,013) |
Profit for the period |
|
|
|
2,886 |
|
7,058 |
Earnings per share |
|
|
|
|
|
|
Basic (pence per share) |
|
|
|
0.45p |
|
1.11p |
Diluted (pence per share) |
|
|
|
0.43p |
|
1.05p |
Consolidated statement of comprehensive
incomefor the year ended 30 June
2021
|
|
Year to |
Year to |
|
|
30 June 2021 |
30 June 2020 |
|
Note |
£’000 |
£’000 |
Profit for the period |
|
2,886 |
7,058 |
Items that will not be reclassified subsequently to profit
or loss: |
|
|
|
Remeasurement of retirement benefit obligations |
|
1,689 |
(1,287) |
Remeasurement of investments – retirement benefit assets |
|
(58) |
(23) |
Revaluation gains – freehold land and buildings |
|
94 |
364 |
Deferred tax movement – freehold land and buildings |
|
5 |
(146) |
Items that may be reclassified subsequently to profit or
loss: |
|
|
|
Exchange differences on translation of foreign operations |
|
(503) |
160 |
Total comprehensive income |
|
4,113 |
6,126 |
Consolidated balance
sheetas at 30
June 2021
|
|
30 June 2021 |
30 June 2020 |
|
Note |
£’000 |
£’000 |
Assets |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment |
|
19,717 |
20,417 |
Intangible assets – goodwill |
|
3,343 |
3,467 |
Intangible assets – other |
|
1,411 |
1,269 |
Investments – retirement benefit asset |
|
5,760 |
5,902 |
Total non-current assets |
|
30,231 |
31,055 |
Current assets |
|
|
|
Inventories |
9 |
10,838 |
10,132 |
Trade and other receivables |
10 |
6,222 |
8,076 |
Cash and cash equivalents |
|
40,273 |
36,962 |
Derivative financial instruments |
|
525 |
- |
Total current assets |
|
57,858 |
55,170 |
Total assets |
|
88,089 |
86,225 |
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
|
(16,475) |
(15,148) |
Current borrowings |
11 |
(963) |
(829) |
Lease liabilities |
|
(792) |
(1,435) |
Derivative financial instruments |
|
- |
(815) |
Total current liabilities |
|
(18,230) |
(18,227) |
Net current assets |
|
39,628 |
36,943 |
Non-current liabilities |
|
|
|
Retirement benefit obligations |
|
(11,291) |
(13,526) |
Deferred taxation liability |
|
(408) |
(470) |
Non-current provisions |
|
(208) |
(304) |
Lease liabilities |
|
(6,967) |
(6,988) |
Long-term borrowings |
11 |
(2,450) |
(2,927) |
Total non-current liabilities |
|
(21,324) |
(24,215) |
Total liabilities |
|
(39,554) |
(42,442) |
Net assets |
|
48,535 |
43,783 |
Equity |
|
|
|
Capital and reserves |
|
|
|
Issued share capital |
12 |
651 |
647 |
Share premium |
|
112,576 |
112,576 |
Merger reserve – shares issued by subsidiary |
|
40,128 |
40,128 |
Reserve – share-based payments |
|
2,693 |
3,104 |
Revaluation reserve |
|
1,073 |
974 |
Foreign exchange reserve |
|
(1,188) |
(685) |
Retained earnings |
|
(107,398) |
(112,961) |
Total equity |
|
48,535 |
43,783 |
These financial statements were approved by the
Board of Directors and authorised for issue on 22 September 2021
and signed on its behalf by:
Manuel LlobetChief Executive
Officer
Nicolas WykemanChief Financial
Officer
Registered number: 05141592
Consolidated statement of changes in
equityfor the year ended 30 June
2021
|
|
|
Merger |
|
|
|
|
|
|
|
|
reserve – |
Reserve – |
|
Foreign |
|
|
|
Issued |
Share |
shares issued |
share-based |
Revaluation |
exchange |
Retained |
Total |
|
capital |
premium |
by subsidiary |
payment |
reserve |
reserve |
earnings |
equity |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
At 30 June 2019 |
646 |
112,576 |
40,128 |
3,023 |
1,207 |
(845) |
(119,177) |
37,558 |
Exchange differences on translation of foreign operations |
— |
— |
— |
— |
— |
160 |
— |
160 |
Valuation gains taken to equity (land and buildings) – net of
deferred tax |
— |
— |
— |
— |
218 |
— |
— |
218 |
Remeasurement of net defined benefit liability |
— |
— |
— |
— |
— |
— |
(1,287) |
(1,287) |
Remeasurement of investments – retirement benefit assets |
— |
— |
— |
— |
— |
— |
(23) |
(23) |
|
|
|
|
|
|
|
|
|
Total other comprehensive loss |
— |
— |
— |
— |
218 |
160 |
(1,310) |
(932) |
Profit for the period after tax |
— |
— |
— |
— |
— |
— |
7,058 |
7,058 |
Total comprehensive income |
— |
— |
— |
— |
218 |
160 |
5,748 |
6,126 |
Transfer of depreciation on revalued property |
— |
— |
— |
— |
(451) |
— |
451 |
— |
IFRIC 23 tax provision |
— |
— |
— |
— |
— |
— |
(696) |
(696) |
Transactions with owners: |
|
|
|
|
|
|
|
|
Share-based payments |
— |
— |
— |
794 |
— |
— |
— |
794 |
Shares issued |
1 |
— |
— |
— |
— |
— |
— |
1 |
Transfer of lapsed options to retained earnings |
— |
— |
— |
(713) |
— |
— |
713 |
— |
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 |
Consolidated cash flow
statementfor the year ended 30 June
2021
|
|
Year to |
Year to |
|
|
30 June 2021 |
30 June 2020 |
|
Note |
£’000 |
£’000 |
Cash flows from operating activities |
|
|
|
Profit before tax |
|
3,657 |
8,071 |
Adjustments for: |
|
|
|
Finance income |
7 |
(117) |
(266) |
Finance expense |
6 |
491 |
504 |
Non-cash movements on defined benefit pension plan |
|
85 |
192 |
Depreciation and amortisation |
|
4,132 |
3,914 |
Net monetary value of above the line R&D tax credit |
5 |
(567) |
(634) |
Charge for share-based payments |
|
635 |
794 |
Movement in fair valuation of derivative financial instruments |
|
(1,340) |
386 |
|
|
|
|
Decrease in trade and other receivables |
|
2,141 |
3,694 |
(Increase) in inventories |
|
(1,117) |
(706) |
Increase/(decrease) in trade and other payables |
|
548 |
(2,399) |
Net cash generated by operations |
|
8,548 |
13,550 |
Bank loan and interest paid |
|
(190) |
(168) |
Income tax received/(paid) |
|
41 |
(897) |
Net cash generated by operating activities |
|
8,399 |
12,485 |
Cash flows from investing activities |
|
|
|
Interest received |
|
117 |
266 |
Payments for retirement benefit investments |
|
(194) |
(228) |
Payments for intangible assets |
|
- |
(283) |
Payments for property, plant and equipment |
|
(2,562) |
(2,264) |
Net cash used in investing activities |
|
(2,639) |
(2,509) |
Cash flows from financing activities |
|
|
|
Proceeds from issue of equity shares |
|
4 |
1 |
Repayment of bank loan borrowings |
|
(757) |
(654) |
Repayment of principal lease liabilities and interest |
|
(1,605) |
(1,343) |
Interest paid on lease liabilities |
|
(301) |
(321) |
Proceeds from borrowings |
|
625 |
1,886 |
Net cash used in financing activities |
|
(2,034) |
(431) |
Net increase in cash and cash equivalents |
|
3,726 |
9,545 |
Effects of exchange rates on cash and cash equivalents |
|
(415) |
(23) |
Cash and cash equivalents at the start of the period |
|
36,962 |
27,440 |
Cash and cash equivalents at the end of the
period |
|
40,273 |
36,962 |
Cash at bank and in hand |
|
40,273 |
36,962 |
Bank overdraft |
|
- |
- |
Cash and cash equivalents at the end of the
period |
|
40,273 |
36,962 |
Notes to the financial
statementsfor the year ended 30 June
2021
1. Basis of preparationThe
financial information set out in this preliminary announcement does
not constitute statutory accounts as defined in Section 435 of the
Companies Act 2006.
Whist the financial information included in this
announcement has been prepared in accordance with EU adopted IFRS,
this announcement itself does not contain sufficient information to
comply with EU adopted IFRS. Statutory accounts for the year ended
30 June 2020 have been delivered to the Registrar of Companies and
those for the year to 30 June 2021 will be delivered following the
Company’s annual general meeting. The auditors have reported on
those accounts. Their reports were unqualified and did not draw
attention to any matters by way of emphasis without qualifying
their report and did not contain statements under section 498(2) or
(3) Companies Act 2006 or equivalent preceding legislation.
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 2021 (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 22 September 2021.
New standards adoptedThere 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 concernOperating profit
in the period was £4.0m (2020: £8.3m profit); net cash inflow
from operations was £8.4m (2020: £12.5m net cash inflow). The
inflow was due to good trading. Excluding the R&D expenditure,
the Group would have reported an operating profit of £16.9m
(2020: £14.2m).
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 2022. These projections include assumptions on the
trading performance of the operating business and the continued
availability of the existing bank facilities. The Group had a cash
balance of £40.3m as at 30 June 2021 and the £7m overdraft
facility was renewed in August 2021. 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 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 a stress test which included reducing sales by 10% (3 times the
estimated COVID-19 impact) which the Directors consider to be no
more than a highly remote possibility. The stress test resulted in
a slightly positive cash balance at the end of the reviewed period.
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 policiesThe
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.
ConsolidationThe Group’s
financial statements consolidate those of the parent company and
all of its subsidiaries drawn up to 30 June 2021. 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.
GoodwillGoodwill 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 combinationIntangible 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
assetsIntangible 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
assetsAn 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.
Subsequent to 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 reportingThe 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
translationFunctional and presentational currencyItems
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 balancesForeign 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 operationsIn 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 recognitionThe 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
customerThe Group accounts for contracts with customers within the
scope of IFRS 15 only when all of the following criteria are
met:
- 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;
- the Group can identify each party’s
rights regarding the services to be transferred;
- the Group can identify the payment
terms for services to be transferred;
- 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
- 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 specifies the product to be
delivered.
STEP 2 Identifying the performance obligationsAt
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 good or service that is distinct;
or
- 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 priceFor 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.
One exception is in the Canadian market where
the Group sells to a distributor at an initially low margin and
there is further consideration receivable by the Group. This
deferred consideration forms part of the fair valuation of
consideration receivable by the Group for goods supplied and
therefore forms part of the transaction price. In these instances,
the deferred consideration is accrued at a discounted value
at the point of delivery. This further consideration is
calculated at a fixed percentage of the distributor’s sales revenue
in relation to these products less certain costs associated
with their sale. No element of this variable consideration is
constrained. The distributor revenue and selling costs are
estimated based on their selling price lists and accumulated
experience. Although this additional revenue is variable in nature,
it is not of a significant value.
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 obligationsThere 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 satisfiedThe 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 considerationsUpon 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 distributorsFor
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 agentsFor 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 rebatesIn 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.
Presentation of material
itemsIn 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
recognitionOperating expenses are recognised in the
Consolidated Income Statement upon utilisation of the service or at
the date of their origin.
InventoriesInventory 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 in order 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
judgementsMany 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
policiesa) 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 £12.9m (2020: £9.0m which together with a credit
relating to a legal claim for reimbursement of £3.2m resulted in
total net R&D expenditure of £5.8m).b) The
Group had been awarded a provisional exemption to the increased
statutory rebate charge in Germany for the period
July to December 2012 by BAFA. Revenue of £1.2m
(equivalent of €1.4m) was recognised in the year ended 30 June
2013 in relation to this exemption and the refund from the
German authorities was subsequently collected.
In February 2015, the
provisional exemption was withdrawn by BAFA. The Group has lodged
an appeal and, following legal advice, believe that the exemption
will be reinstated. While the Group is confident that the exemption
will be confirmed, there is a possibility that this will
not happen. If the exemption is not confirmed, then the Group
will ultimately have to repay €1.4m (£1.2m now) with a
corresponding impact on net income and net assets.
c) In respect of net revenue
relating to certain products there is a risk that up to £10.7m
cumulative revenue recognised (2020: £7.4m) may be reversed due to
a retrospective change in the level of rebate being applied (2021:
£3.3m recognised and periods up to 2020: £7.4m recognised). Details
of this have been noted in Note 13, Contingent liabilities.Sources
of estimation uncertaintya) 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 in order 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 850% 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. RevenueAn analysis of
revenue by category is set out in the table below:
|
2021 |
2020 |
|
£’000 |
£’000 |
Sale of goods at a point in time |
84,331 |
78,179 |
Rendering of services transferred over time |
- |
25 |
|
84,331 |
78,204 |
Rendering of services relates to the supply of
services to a new distributor to assist them in setting up
operations in their territory.
4. Segmental reportingThe
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 from |
Inter- |
Total |
Revenue from |
Inter- |
Total |
|
|
external |
segment |
segment |
external |
segment |
segment |
|
|
customers |
revenue |
revenue |
customers |
revenue |
revenue |
|
|
2021 |
2021 |
2021 |
2020 |
2020 |
2020 |
|
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
|
Central Europe |
|
|
|
|
|
|
|
Germany |
53,802 |
— |
53,802 |
47,977 |
— |
47,977 |
|
Austria |
5,604 |
— |
5,604 |
5,146 |
— |
5,146 |
|
Netherlands |
4,166 |
— |
4,166 |
3,965 |
— |
3,965 |
|
Switzerland |
3,137 |
- |
3,137 |
3,161 |
— |
3,161 |
|
|
66,709 |
— |
66,709 |
60,249 |
— |
60,249 |
|
Southern Europe |
|
|
|
|
|
|
|
Italy |
3,967 |
— |
3,967 |
4,493 |
— |
4,493 |
|
Spain |
8,422 |
— |
8,422 |
7,939 |
— |
7,939 |
|
Other |
532 |
— |
532 |
690 |
— |
690 |
|
|
12,921 |
— |
12,921 |
13,122 |
— |
13,122 |
|
Rest of World (including UK) |
4,701 |
53,981 |
58,682 |
4,833 |
35,262 |
40,095 |
|
|
84,331 |
53,981 |
138,312 |
78,204 |
35,262 |
113,466 |
|
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. These include rendering
of services revenues (Note 3). 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
|
2021 |
2020 |
|
£’000 |
£’000 |
Central Europe |
1,244 |
1,014 |
Southern Europe |
795 |
811 |
Rest of World (including UK) |
2,093 |
2,089 |
|
4,132 |
3,914 |
EBITDA by segment
|
2021 |
2020 |
|
£’000 |
£’000 |
Allocated EBITDA |
|
|
Central Europe |
2,803 |
3,042 |
Southern Europe |
1,080 |
886 |
Rest of World (including UK) |
4,280 |
8,295 |
Allocated EBITDA |
8,163 |
12,223 |
Depreciation and amortisation |
(4,132) |
(3,914) |
Operating profit |
4,031 |
8,309 |
Finance income |
117 |
266 |
Finance expense |
(491) |
(504) |
Profit before tax |
3,657 |
8,071 |
Total assets by segment
|
2021 |
2020 |
|
£’000 |
£’000 |
Central Europe |
23,820 |
23,492 |
Southern Europe |
12,052 |
12,269 |
Rest of World (including UK) |
89,779 |
87,755 |
|
125,651 |
123,516 |
Inter-segment assets |
(5,937) |
(6,934) |
Inter-segment investments |
(31,625) |
(30,357) |
Total assets per balance sheet |
88,089 |
86,225 |
Included within Central Europe are non-current
assets to the value of £2.6m (2020: £2.6m) relating to goodwill and
within Southern Europe assets to the value of £3.8m (2020:£4.3m)
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 £2.0m and comprised plant & machinery £1.2m,
fixtures and fittings £0.2m, computer equipment £0.3m and computer
software £0.3m (2020: £1.6m).
Total liabilities by
segment
|
2021 |
2020 |
|
£’000 |
£’000 |
Central Europe |
(22,266) |
(22,915) |
Southern Europe |
(11,301) |
(8,432) |
Rest of World (including UK) |
(11,924) |
(18,029) |
|
(45,491) |
(49,376) |
Inter-segment liabilities |
5,937 |
6,934 |
Total liabilities per balance sheet |
(39,554) |
(42,442) |
5.
Other income
|
2021 |
2020 |
|
£’000 |
£’000 |
Net monetary value of above the line R&D tax credit |
567 |
634 |
6. Finance
expense
|
2021 |
2020 |
|
£’000 |
£’000 |
Interest on borrowing facility |
85 |
18 |
Net interest expenses on defined benefit pension liability |
105 |
165 |
Interest on lease liabilities |
301 |
321 |
|
491 |
504 |
7. Finance
income
|
2021 |
2020 |
|
£’000 |
£’000 |
Bank interest |
39 |
216 |
Interest on investment assets |
68 |
45 |
Other finance income |
10 |
5 |
|
117 |
266 |
Other finance income relates to the unwinding of
the discount on accrued revenue.
8. Earnings per
share
|
2021 |
2020 |
|
£’000 |
£’000 |
Profit after tax attributable to equity shareholders |
2,886 |
7,058 |
|
Shares |
Shares |
|
’000 |
’000 |
Issued Ordinary Shares at start of the period |
637,286 |
636,169 |
Ordinary Shares issued in the period |
4,487 |
1,117 |
Issued Ordinary Shares at end of the period |
641,773 |
637,286 |
Weighted average number of Ordinary Shares for the period |
639,190 |
636,169 |
Potentially dilutive share options |
37,468 |
37,323 |
Weighted average number of Ordinary Shares for diluted earnings per
share |
676,658 |
673,492 |
Basic earnings per Ordinary Share (pence) |
0.45p |
1.11p |
Diluted earnings per Ordinary Share (pence) |
0.43p |
1.05p |
9.
Inventories
|
2021 |
2020 |
|
£’000 |
£’000 |
Raw materials and consumables |
2,969 |
2,874 |
Work in progress |
2,737 |
3,696 |
Finished goods |
5,132 |
3,562 |
|
10,838 |
10,132 |
The value of inventories measured at fair value
less cost to sell was £949,000 (2020: £336,000). The movement in
the value of inventories measured at fair value less cost to sell
during the year gave rise to a charge of £613,000 which was
included within the cost of goods sold in the Consolidated
Income Statement.
10. Trade and other
receivables
|
2021 |
2020 |
|
£’000 |
£’000 |
Trade receivables |
2,960 |
3,491 |
Other receivables |
1,219 |
1,622 |
VAT |
439 |
540 |
Prepayments and accrued revenue |
1,604 |
2,423 |
|
6,222 |
8,076 |
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,
£81,000 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 also 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 2021 and 30 June 2020
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.
Bad and doubtful debt
provision
|
2021 |
2020 |
|
£’000 |
£’000 |
Balance brought forward |
541 |
460 |
Foreign exchange adjustments |
(28) |
12 |
(Write back of previous credit losses)/ allowance for credit
losses |
(81) |
69 |
Utilised |
- |
- |
Balance carried forward |
432 |
541 |
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 2021 and 30 June 2020 was
determined as follows:
|
2021 |
2020 |
|
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 |
- |
2,514 |
- |
- |
2,301 |
- |
Not more than three months |
- |
240 |
- |
- |
863 |
- |
More than three months but not more than six months |
1% |
164 |
1 |
2% |
243 |
4 |
More than six months but not more than one year |
40% |
27 |
11 |
66% |
136 |
90 |
More than one year |
94% |
447 |
420 |
91% |
489 |
447 |
|
|
3,392 |
432 |
|
4,032 |
541 |
11.
Borrowings
|
2021 |
2020 |
|
£’000 |
£’000 |
Due within one year |
|
|
Bank loans |
963 |
829 |
|
963 |
829 |
|
|
|
|
2021 |
2020 |
|
£’000 |
£’000 |
Due in more than one year |
|
|
Bank loans |
2,450 |
2,927 |
|
2,450 |
2,927 |
There is an overdraft facility
provided by NatWest Bank plc which has a maximum limit during the
year of up to £7m. Interest on the overdraft is at the
bank’s base rate plus a fixed margin of 2.50%. The facility is
secured in favour of NatWest Bank plc by means of debentures
granted by Allergy Therapeutics plc, Allergy Therapeutics
(Holdings) Ltd and Allergy Therapeutics (UK) Ltd as security
against the banking facilities. The Group had a cash balance of
£40.3m as at 30 June 2021 and the £7m overdraft facility was
unused at 30 June 2021 (2020: £nil). The overdraft facility
was renewed in August 2021.
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% |
72 |
443 |
- |
Bank Inter |
1 month Euribor +5.0% |
30 |
149 |
43 |
Tecnoalcala |
Interest free |
25 |
25 |
- |
Santander (1) |
Fixed rate of 2.5% |
354 |
271 |
- |
CDTI (1) |
Interest free |
37 |
147 |
86 |
Santander (2) |
Fixed rate of 2.3% |
85 |
228 |
- |
CDTI (2) |
Fixed rate of 0.2% |
50 |
81 |
- |
Santander (3) |
Fixed rate of 2.3% |
310 |
977 |
- |
|
|
963 |
2,321 |
129 |
During the year, Allergy Therapeutics Iberica
S.L. took out a loan for €0.6m (included above) 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
|
2021 |
2020 |
|
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 |
637,285,804 |
637 |
636,168,616 |
636 |
Issued during the year: |
|
|
|
|
Share options exercised |
4,486,914 |
4 |
1,117,188 |
1 |
At 30 June |
641,772,718 |
641 |
637,285,804 |
637 |
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 |
651,621,051 |
651 |
647,134,137 |
647 |
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 £4,000 (2020:
£1,000).
13.
Contingent liabilities
During the 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 loan were provided by Allergy Therapeutics plc.
In respect of revenue relating to certain
products there is a risk that up to £10.7m cumulative revenue
recognised (2020: £7.4m) may be reversed due to a
retrospective change in the level of rebate being applied (2021:
£3.3m recognised and periods up to 2020: £7.4m recognised).
On 23 February 2015, the Company received
notification that BAFA had made a decision to reverse their
preliminary exemption to the increased manufacturer’s rebate in
Germany for the period July to December 2012. The Company was
granted a preliminary exemption to the increased rebate for
this period by BAFA in 2013. The Company recognised revenue of
€1.4m (£1.1m at that time, now £1.2m) against this exemption in the
year ended 30 June 2013. All other preliminary exemptions (granted
for periods up to 30 June 2012) have previously been ratified as
final by BAFA. After taking legal advice, the Company has lodged an
appeal against this decision and is confident that the exemption
will be reinstated. Therefore, as at 30 June 2021, no provision has
been recognised for the repayment of the rebate refund. This
position will be kept under review.
14.
Ultimate controlThere is no overall ultimate
controlling party.
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