TIDMCLIN
RNS Number : 4908C
Clinigen Group plc
23 February 2022
23(rd) February 2022
Half year results for the period ended 31 December 2021
Clinigen Group plc (AIM: CLIN, 'Clinigen' or 'the Group'), the
global pharmaceuticals and services group, has today published its
half year results for the six months ended 31 December 2021.
FINANCIAL SUMMARY
Six months ended 31 December Growth
2021 2020(1)
GBPm GBPm Reported Organic(5)
------------------------------- ------ -------- --------- -----------
Adjusted measures(2)
------------------------------- ------ -------- --------- -----------
Net revenue(3) 238.1 215.7 10% 14%
------------------------------- ------ -------- --------- -----------
EBITDA(4) 57.4 54.4 6% 8 %
------------------------------- ------ -------- --------- -----------
EBITDA(4) as % of net revenue 24.1% 25.2%
------------------------------- ------ -------- --------- -----------
Basic earnings per share 22.6p 26.4p (14)%
------------------------------- ------ -------- --------- -----------
Operating cash flow(6) 72.5 58.2 25%
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Statutory measures
------------------------------- ------ -------- --------- -----------
Revenue 283.9 241.9 17% 21%
------------------------------- ------ -------- --------- -----------
Gross profit 100.4 96.2 4% 7%
------------------------------- ------ -------- --------- -----------
Profit before tax 10.1 23.5 (57)%
------------------------------- ------ -------- --------- -----------
Basic earnings per share 5.4p 14.0p (61)%
------------------------------- ------ -------- --------- -----------
Interim dividend per share - 2.15p
------------------------------- ------ -------- --------- -----------
Net debt 295.6 351.5 (16)%
------------------------------- ------ -------- --------- -----------
FINANCIAL HIGHLIGHTS
-- Net revenue from continuing operations up 10% (14% on an
organic(5) basis) to GBP238.1m (H1 2021: GBP215.7m).
-- Adjusted EBITDA from continuing operations increased by 6%
(8% on an organic(5) basis) to GBP57.4m (H1 2021: GBP54.4m)
reflecting strong growth in Services and Partnered products
alongside good cost control. Adjusted EPS from continuing
operations down 14% to 22.6p (H1 2021: 26.4p).
-- Very strong cash conversion with adjusted operating cash flow
from continuing operations up 25% to GBP72.5m (H1 2021:
GBP58.2m).
-- Net debt as at 31 December 2021 of GBP274.7m, (GBP295.6m
incl. IFRS 16 liabilities(7) ) representing net debt leverage of
2.5x, significantly below the Group's temporary banking covenant of
3.5x.
TRITON OFFER
On 8 December 2021, Clinigen announced an agreement on the terms
of a recommended all-cash offer by Triley Bidco Limited (a company
indirectly owned by Triton Investment Management Limited) for the
entire issued and to be issued share capital of Clinigen. Under the
terms of the original offer Clinigen shareholders would have been
entitled to receive 883 pence for each Clinigen share, to be
effected by means of a Scheme of Arrangement.
On 17 January 2022 the terms of an increased and final
recommended all-cash offer were announced at an increased value of
925 pence for each Clinigen share. On 8 February 2022 at the Court
Meeting and General Meeting, shareholders voted to approve the
resolutions in connection to the increased and final all-cash
acquisition of Clinigen by Triley Bidco Limited.
Completion of the Acquisition remains subject to the
satisfaction or, where applicable, waiver of the remaining
Conditions set out in the Scheme Document, the sanction of the
Scheme by the Court at the Scheme Court Hearing and the delivery of
a copy of the Court Order to the Registrar of Companies. It is
anticipated the deal will close in accordance with the updated
timetable published on 16 February 2022 with the effective date of
the Scheme expected to be 4 April 2022.
OPERATIONAL HIGHLIGHTS
-- Strong net revenue growth of 61% in the Partnered section of
Products Division despite Erwinase not being granted a licence in
the US. Growth driven in part by revenue ahead of expectations for
Erwinase and Hunterase in ex-US and Japan respectively.
-- The Developed portfolio of Products continues to perform
ahead of forecast with strong net revenue growth against H1 2021,
minimising the impact of continued depressed on-label Proleukin
sales in the US.
-- Execution of a high number of new Services business wins from
FY2021 led to 39% EBITDA growth across the division with continued
high win rates across Clinical and Managed Access.
-- Strong performance in Africa region partly driven by supply
of COVID-19 related products including antigen testing kits.
-- Continued recovery in On-Demand business with a strong
pipeline through key supply shortage opportunities.
-- Second release of Clinigen Direct successfully completed with
orders received from 52 countries.
-- Continued integration of iQone business into European
operations to support commercial roll-out of key partnered products
such as Erwinase and Copiktra in Europe.
Shaun Chilton, Group Chief Executive Officer of Clinigen,
said:
" We have seen good delivery across all areas of the business
during the first half of the year . Our EBITDA and net revenue
growth despite the ongoing market challenges presented by COVID-19
demonstrates the benefits of our diverse and global lifecycle
platform.
"Shareholders have voted to approve the increased all-cash
acquisition of Clinigen by Triley Bidco Limited, which the Board
has recommended, and we are excited about the next chapter of
Clinigen's growth as a private company. We will continue to focus
on those areas of the business where we have sustainable
competitive advantage and build out the platform to deliver more
value for our pharmaceutical clients and healthcare professional
customers globally."
Notes
1. Group results presented within this report are from
continuing operations and the comparative results have been
restated accordingly. Further information on discontinued
operations is provided in note 14 of the condensed financial
statements.
2. Group results on an adjusted basis exclude amortisation of
acquired intangibles and products, and other non-underlying items
(see note 3 and 4 of the condensed financial statements). Adjusted
measures are presented as they allow a more effective year-on-year
comparison and identification of core business trends by removing
the impact of items occurring either outside the normal course of
operations or as a result of intermittent activities such as
business combinations and restructuring. The principles to identify
adjusting items have been applied to the current and prior year
comparative numbers on a consistent basis.
3. Adjusted net revenue excludes Managed Access pass through
revenue which varies each period dependent on the mix of
programs.
4. Adjusted EBITDA includes the Group's share of EBITDA from its joint venture.
5. Organic growth is a measure of growth on a constant currency
basis, excluding the impact of business and product acquisitions
and disposals. There were no acquisitions during the period or
prior period and one disposal in the prior period relating to the
UK Compounding Business. Constant currency is derived by applying
the prior year's actual exchange rate to this year's result.
Organic growth is presented to aid the reader's understanding of
the underlying performance of the business.
6. Operating cash flow is net cash flow from operating
activities before income taxes and interest. Adjusted operating
cash flow excludes the element of CSM acquisition consideration
recognised in operating cash flow in the prior period. Cash
conversion is calculated by dividing adjusted operating cash flow
by adjusted EBITDA.
7. IFRS 16 'Leases' was adopted by the Group on 1 July 2019 with
the recognition of lease liabilities for leases previously
classified as operating leases. This adjustment to liabilities is
excluded from borrowings for the purpose of leverage calculations
under the banking facility covenant.
8. Bank covenant leverage is calculated by dividing adjusted
EBITDA of the Group for the last 12 months, excluding the impact of
IFRS 16, by net debt at the period end. Adjusted EBITDA excludes
the EBITDA from the businesses disposed during the last 12
months.
- Ends -
As a result of the Triley Bidco Limited offer, an analyst
briefing will not be held to discuss the results in person or
virtually.
Contact details
Clinigen Group plc +44 (0) 1283 495010
Shaun Chilton, Chief Executive Officer Investors@clinigengroup.com
Richard Paling, Interim Chief Financial Officer
Rob Fox, VP Investor Relations and Corporate
Development
Numis Securities Limited - Nominated Adviser Tel: +44 (0) 20 7260
& Joint Broker 1000
James Black / Garry Levin / Freddie Barnfield Clinigen@numis.com
RBC Capital Markets - Joint Broker Tel: +44 (0) 20 7653
4000
Marcus Jackson / Elliot Thomas
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Mary-Jane Elliott / Matthew Cole / Jessica
Hodgson Clinigen@consilium-comms.com
Notes to Editors
About Clinigen Group
Clinigen Group plc (AIM: CLIN) is a global, specialist
pharmaceutical services and products platform focused on providing
ethical access to medicines. Its mission is to deliver the right
medicine to the right patient at the right time. The Group operates
from sites in North America, Europe, Africa and the Asia
Pacific.
Clinigen has more than 1,000 employees across five continents in
14 countries, with supply and distribution hubs and operational
centres of excellence in key long-term growth regions. The Group
works with 34 of the top 50 pharmaceutical companies; interacting
with over 5,000 hospitals across more than 115 countries.
For more information on Clinigen, please visit
www.clinigen.com
Cautionary statement
This announcement contains certain projections and other
forward-looking statements with respect to the financial condition,
results of operations, businesses and prospects of Clinigen Group
plc. These statements are based on current expectations and involve
risk and uncertainty because they relate to events and depend upon
circumstances that may or may not occur in the future. There are a
number of factors which could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements. Any of the assumptions underlying these
forward-looking statements could prove inaccurate or incorrect and
therefore any results contemplated in the forward-looking
statements may not actually be achieved. Recipients are cautioned
not to place undue reliance on any forward-looking statements
contained herein. Except as required by law, Clinigen undertakes no
obligation to update or revise (publicly or otherwise) any
forward-looking statement, whether as a result of new information,
future events or other circumstances.
GROUP OVERVIEW
Clinigen is dedicated to providing healthcare professionals
(HCPs) and their patients around the world with quicker and broader
access to critical medicines, and in the process increasing the
value of a pharmaceutical product by extending and expanding its
lifecycle. Clinigen's lifecycle platform consists of two business
divisions: Services and Products.
Within Services, Clinigen provides a unique set of niche, high
value services to pharma and biotech clients prior to product
launch. This combined offering helps to accelerate drug development
plans and enable compliant early access for patients with unmet
needs.
Within Products, Clinigen enables access to critical medicines
at a country, regional, and global level. This area of the business
provides a quality assured, ethical service to hospital physicians
and pharmacists seeking access to these medicines.
SERVICES
The Services division comprises two service lines:
-- Clinical: Provision of innovative logistics, packaging,
distribution and biorepository solutions alongside global sourcing
and supply of comparator medicines, ancillaries, and devices for
use in clinical studies to both industry and investigator led
researchers.
-- Managed Access: Design and implementation of global Managed
Access Programs (MAPs - otherwise known as Compassionate Use, Named
Patient, Early Access, or Expanded Access) to enable pre-approval
access to innovative new medicines for the treatment of unmet
medical needs.
The Services division has seen 39% EBITDA growth increasing to
GBP18.9m (H1 2021: GBP13.6m) driven by strong execution of new
business signed in FY2021. Net revenue also increased by 9% to
GBP111.7m (H1 2021: GBP102.6m). Both Clinical and Managed Access
have maintained the high win rates seen in FY2021 and the pipeline
remains healthy.
Six months ended 31 December 2021 2020 Growth
-------------------
Net revenue GBPm GBPm Reported Organic
------------------------------ ------ ------ --------- --------
Clinical 95.6 89.9 6%
------------------------------ ------ ------ --------- --------
Managed Access 16.1 12.7 27%
------------------------------ ------ ------ --------- --------
Divisional Total 111.7 102.6 9% 12%
------------------------------ ------ ------ --------- --------
Divisional EBITDA 18.9 13.6 39% 35%
------------------------------ ------ ------ --------- --------
Note: Net revenue excludes Managed Access pass through revenue
which varies each period dependent on the mix of programs.
Clinical: Net revenue grew 6% to GBP95.6m (H1 2021 : GBP89.9m),
driven mainly by growth in the non-sourcing, clinical packaging and
distribution business where there was further growth in both the
number and value of work orders signed against H1 2021.
Revenue associated with clinical sourcing activities remain
largely flat with a nominal increase compared to H1 2021, however,
a large Investigator Initiated Trial ('IIT') involving sourcing,
packaging and labelling on behalf of a top 20 pharma company has
been signed that is expected to deliver significant gross profit
contribution in the second half.
The pipeline across Clinical remains strong with more than 400
open opportunities across both packaging, labelling and sourcing
offerings.
Managed Access: Net revenue grew by 27% to GBP16.1m (H1 2021 :
GBP12.7m) driven by the high number of MAP wins in FY2021 that have
been implemented and are now live. During the first half of the
year there were more than 20 further MAP wins with most of these
contributing to the second half of the year.
As at 31 December 2021, there was a net increase of 6 MAPs
taking the total to 167 individual product MAPs (June 2021: 161).
Collectively, the top 10 MAPs contributed 29% of the Managed Access
gross profit (June 2021: 32%). The pipeline continues to remain
healthy, despite the high number of business wins, with 49
opportunities at proposal or contracting stage (June 2021: 44).
PRODUCTS
The Products portfolio comprises three distinct sections:
-- Owned: Medicines that have been acquired or developed by
Clinigen. Clinigen acquires products with the goal of maintaining
access to those that rely on them and growing access into new
markets and disease areas through a targeted product revitalisation
strategy. Products developed in-house were previously supplied in
an 'on-demand' form, the Unlicensed to Licensed (UL2L)
strategy.
-- Partnered: Partner of choice for pharma and biotech to
provide access to their medicines in both licensed and unlicensed
markets at a country, regional or global level through an exclusive
access or licensing arrangement.
-- On-Demand: Sourcing and supply of unlicensed and short supply
medicines in response to demand for access from healthcare
professionals.
Net revenue for H1 increased by 12% to GBP129.0m (H1 2021:
GBP114.8m). Whilst headwinds remain on some of the Owned products,
there has been a solid performance in On-Demand which has shown
signs of recovery as well as strong growth across the Partnered
section. Divisional EBITDA has fallen slightly to GBP43.1m (H1
2021: GBP44.1m) partly down to lower Proleukin sales in the US
which are unlikely to recover to pre-pandemic levels without
rejuvenation through new treatment regimens or disease areas. There
has been strong performance across the regions with growth in the
AAA region (Australasia, Asia, Africa) ahead of expectations.
Six months ended 31 December 2021 2020 Growth
-------------------
Net revenue GBPm GBPm Reported Organic
------------------------------ ------ ------ --------- --------
Owned 48.1 54.4 (12)%
------------------------------ ------ ------ --------- --------
Partnered 56.5 35.0 61%
------------------------------ ------ ------ --------- --------
On-Demand 24.4 25.4 (4)%
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Divisional Total 129.0 114.8 12% 16%
------------------------------ ------ ------ --------- --------
Divisional EBITDA 43.1 44.1 (2)% 2%
------------------------------ ------ ------ --------- --------
Note: Comparative figures have been re-stated to exclude
discontinued operations
Owned Products: Clinigen has a portfolio of 19 owned products (6
acquired and 13 developed). Net revenue for H1 decreased by 12% to
GBP48.1m (H1 2021 : GBP54.4m) reflecting the continued headwinds on
some of the acquired products.
Weekly sales for Proleukin in the US have remained volatile with
the overall trend being flat since Q4 FY2021. We await news from
Iovance regarding the potential BLA filing for their Lifileucel
product, expected in the first half of calendar year 2022 which
could be a key catalyst in the rejuvenation of Proleukin. Sales of
Proleukin into ex-US markets have remained steady across 16
unlicensed and licensed markets.
Foscavir H1 2022 net revenues have declined against H1 2021 but
at a slower rate than anticipated and are ahead of the Group's
expectations for the first six months. There are now generics
available for Foscavir in both the US and Europe and we anticipate
further generic pressure in H2 2022 which has been built into our
guidance.
Glycopyrronium Bromide and Melatonin are both ahead of H1 2021
and are also outperforming the Group's forecast. There have been
generic entrants for Glycopyrronium Bromide and Melatonin Oral
Solution, both of which are likely to impact in the second half of
the year and whilst this has been factored into forecasts their
impact will be monitored closely. During H1, Glycopyrronium Bromide
was licensed in additional European countries with commercial
launches expected in H2 2022.
The development pipeline remains healthy with 10 assets and a
combined estimated unweighted gross profit value of more than
GBP50m. It is expected there will be one additional product launch
in H2 2022.
Partnered: Net revenue increased 61% to GBP56.5m (H1 2021 :
GBP35.0m) driven primarily by Erwinase in ex-US markets being ahead
of expectations and key business wins from FY2021 being
onboarded.
As announced on 1 December 2021, the FDA issued a Complete
Response Letter (CRL) regarding Porton Biopharma's US Biologics
License Application (BLA) for Erwinase resulting in Clinigen being
unable to sell Erwinase in the US until the matters identified have
been resolved by Porton Biopharma. Erwinase continues to be
supplied into more than 30 ex-US licensed and unlicensed countries
and a second wave of negotiations related to the mutual recognition
countries are underway with further launches in Canada, Australasia
and Europe in the pipeline.
The AAA region is showing continued growth with Hunterase in
Japan trading ahead of expectations, demonstrating the market is
open to the product and that the deployed engagement strategy is
working well. In Africa, strong performance in the period has been
driven partly through the supply of COVID-19 related products, such
as antigen testing products, as well as high demand for malaria
medication.
During the first half there were 22 new business wins across the
Partnered segment a number of which represent commercial
opportunities into the European region, a key growth focus for
Clinigen. An example is the agreement announced in September 2021
with Secura Bio to market and supply Copiktra into 39 countries
across Europe for patients with a rare oncology indication.
The total Partnered portfolio being supplied into unlicensed and
licensed markets now stands at 191 products (June 2021: 185) with a
further 27 opportunities in the pipeline.
On-Demand: Net revenue fell by 4% to GBP24.4m (H1 2021:
GBP25.4m) primarily due to the H1/H2 phasing with a more even
spread of activities expected for FY2022. The AAA region has
secured key supply shortage orders that will contribute
significantly during the second half of the year. One such deal is
for an immunology medicine and will be supported via sourcing
capabilities in Europe, Africa and Asia demonstrating our ability
to ensure critical medicines can continue to be accessed by
patients in need.
There have been further enhancements to Clinigen Direct (see
below) which is a key part of the strategy to drive more uptake for
On-Demand products where the current portfolio stands at over 1,500
active products.
DIGITAL AND TECHNOLOGY
The second release of Clinigen Direct was recently completed
which brings all Managed Access Programs into the online platform.
As part of the release all Cliniport customers have been onboarded
into Clinigen Direct meaning healthcare professionals anywhere in
the world can register for an account, login, browse a product
catalogue containing each of the product types we provide (MAPs,
Partner Products, On Demand), add them to a basket and place their
order.
This is a key strategic milestone and opens up a number of
opportunities to help more HCPs in more countries, and to grow our
business. Since the release, orders from more than 50 countries
have been received through the platform. In FY2022, we will also
begin localising the platform to support our regional businesses,
make more products available for full self-service and help HCPs
for whom English may not be their first language.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Clinigen is dedicated to solving an increasingly global
healthcare problem - ensuring patients around the world have access
to the critical medicines they need. Our mission to deliver the
Right Medicine, to the Right Patient, at the Right Time is at the
heart of everything we do. This mission gives Clinigen a clear
purpose - to ultimately improve health outcomes and improve the
lives of patients accessing our medicines whilst also delivering
greater value and sustainability for our stakeholders. We continue
to report our progress on our website against 17 key ESG
commitments under the four pillars of Environment, Products and
Services, Our People and Responsible Business.
The Board has considered the impact of climate change and
concluded that the risk is currently low and there is immaterial
impact to the financial statements.
BOARD AND MANAGEMENT
As previously announced, Elmar Schnee assumed the role of
Chairman on 1 September 2021, and Ian Johnson was appointed Senior
Independent Director on 3 August 2021.
SUMMARY AND OUTLOOK
Clinigen has continued to achieve good delivery across all areas
of its business during the first half of the year. The Group
reiterates the financial guidance as stated in the Scheme Document
sent to shareholders on 20 December 2021; namely that the Group
expects FY2022 EBITDA growth of between 5% and 10%, in line with
prior guidance.
Shaun Chilton
Chief Executive Officer
FINANCIAL REVIEW
The first six months of the financial year saw good growth in
the business driven by the Services division and Partnered products
which are now bearing the fruit of the significant number of
contract wins seen during FY2021 and which have continued into this
year. We remain well placed to meet the growth guidance for the
full year in spite of the headwinds presented by reduced demand for
Proleukin and the inability to sell Erwinase in the US.
Overall, net revenue increased by 10% (14% on an organic basis)
to GBP238.1m (H1 2021: GBP215.7m) and gross profit increased by 4%
(7% on an organic basis) to GBP100.4m (H1 2021: GBP96.2m). As a
result of the continued strong operational leverage, adjusted
EBITDA grew by 6% (8% on an organic basis) to GBP57.4m (H1 2021:
GBP54.4m).
Excellent cash conversion in the period of 126% follows on from
a strong H2 in FY2021, demonstrating the Group's ability to
consistently generate cash returns from its operating profits. As a
result of the strong cash flow in the period, net debt fell to
GBP274.7m (excluding IFRS 16 liabilities) which represents a net
debt to EBITDA leverage ratio of 2.5x significantly below the
temporary covenant limit of 3.5x.
Summary adjusted income statement
Six months ended 31 December Growth
2021 2020
Adjusted results(1) GBPm GBPm Reported Organic(3)
------------------------------- ------- ------- ----------- -----------
Reported revenue 283.9 241.9 17% 21 %
------------------------------- ------- ------- ----------- -----------
Net revenue(2) 238.1 215.7 10% 14 %
------------------------------- ------- ------- ----------- -----------
Gross profit 100.4 96.2 4% 7%
------------------------------- ------- ------- ----------- -----------
Administrative expenses (43.1) (41.9) 3% 5 %
------------------------------- ------- ------- ----------- -----------
EBITDA from joint venture 0.1 0.1 0%
------------------------------- ------- ------- ----------- -----------
EBITDA (3) 57.4 54.4 6% 8%
------------------------------- ------- ------- ----------- -----------
EBITDA as % of net revenue 24.1% 25.2%
------------------------------- ------- ------- ----------- -----------
Depreciation and amortisation (10.4) (7.1) 46%
------------------------------- ------- ------- ----------- -----------
EBIT 47.0 47.3
------------------------------- ------- ------- ----------- -----------
Finance expense (7.4) (2.6) 185%
------------------------------- ------- ------- ----------- -----------
Profit before tax 39.6 44.7
----------- -----------
Basic earnings per share 22.6p 26.4p (14)%
------------------------------- ------- ------- ----------- -----------
Dividend per share - 2.15p
------------------------------- ------- ------- ----------- -----------
1. The summary adjusted income statement presents Group results
from continuing operations on an adjusted basis excluding
amortisation of acquired intangibles and products, and other
non-underlying items (see notes 3 and 4 of the condensed financial
statements). Adjusted measures are presented as they allow a more
effective year-on-year comparison and identification of core
business trends by removing the impact of items occurring either
outside the normal course of operations or as a result of
intermittent activities such as business combinations and
restructuring. The principles to identify adjusting items have been
applied to the current and prior year comparative numbers on a
consistent basis.
2. Adjusted net revenue excludes Managed Access pass through
revenue which varies each period dependent on the mix of
programs.
3. Adjusted EBITDA includes the Group's share of EBITDA from its joint venture.
4. Organic growth is a measure of growth on a constant currency
basis, excluding the impact of business and product acquisitions
and disposals. There were no acquisitions within the last 12 months
of the reporting date and one disposal relating to the UK
Compounding Business . Constant currency is derived by applying the
prior year's actual exchange rate to this year's result. Organic
growth is presented to aid the reader's understanding of the
underlying performance of the business.
A number of adjusted measures are used by the Board in
reporting, planning and decision making. Adjusted results reflect
the Group's trading performance and exclude amortisation of
acquired intangibles and products, and non-underlying costs
relating to acquisitions and disposals, one off restructuring costs
and impairment charges which are explained in note 4 of the
condensed financial statements.
Profitability
Adjusted EBITDA from continuing operations increased by 6% (8%
on an organic basis) to GBP57.4m (H1 2021: GBP54.4m) primarily due
to strong growth in Services and Partnered Products capitalising on
contract wins made in H2 of FY2021.
Six months ended 31 December 2021 2020 Growth
Adjusted EBITDA by business GBPm GBPm Reported Organic
------------------------------ ------ ------ --------- --------
Products 43.1 44.1 (2%) 2%
------------------------------ ------ ------ --------- --------
Services 18.9 13.6 39% 35 %
------------------------------ ------ ------ --------- --------
Central unallocated costs (4.6) (3.3) 39% 33%
------------------------------ ------ ------ --------- --------
Adjusted EBITDA 57.4 54.4 6% 8%
------------------------------ ------ ------ --------- --------
Reconciliation of adjusted profit before tax to reported profit
before tax
Six months ended 31 December
------ ------
2021 2020
GBPm GBPm
------------------------------------------------------------------ ------ ------
Adjusted profit before tax 39.6 44.7
------------------------------------------------------------------ ------ ------
Amortisation of acquired intangibles and products (20.0) (19.8)
------------------------------------------------------------------ ------ ------
Acquisition costs - (0.1)
------------------------------------------------------------------ ------ ------
Restructuring costs (1.6) (1.8)
------------------------------------------------------------------ ------ ------
Costs related to the proposed acquisition by Triley Bidco Limited (7.8) -
------------------------------------------------------------------ ------ ------
Foreign exchange on revaluation on contingent consideration - 1.3
------------------------------------------------------------------ ------ ------
Unwind of discount on contingent consideration - (0.7)
------------------------------------------------------------------ ------ ------
Tax on joint venture in South Africa (0.1) (0.1)
------------------------------------------------------------------ ------ ------
Total adjustments (29.5) (21.2)
------------------------------------------------------------------ ------ ------
Reported profit before tax 10.1 23.5
------------------------------------------------------------------ ------ ------
The adjustments to profit before tax comprise costs relating to
amortisation, restructuring, offer costs and the Group's share of
the tax charge on the joint venture earnings of GBP0.1m (H1 2021:
GBP0.1m).
Total amortisation was GBP26.5m (H1 2021: GBP23.8m), of which
GBP10.9m (H1 2021: GBP12.7m) related to acquired intangibles,
GBP9.1m (H1 2021: GBP7.1m) related to acquired product licences,
GBP5.3m (H1 2021: GBP3.7m) related to software and GBP1.2m (H1
2021: GBP0.3m) related to internally developed product
licences.
Restructuring costs were GBP1.6m (H1 2021: GBP1.8m), in respect
of restructuring including redundancies.
Costs related to the proposed acquisition by Triley Bidco
Limited include legal and professional fees of GBP1.4m and
additional charges for employee share schemes of GBP6.4m which have
been expensed. The accelerated share-based payment charge is
contingent on the vesting of share options on completion of the
acquisition.
In the prior year there was a GBP1.3m credit arising from
revaluation of the contingent consideration on CSM and iQone
acquisitions which were denominated in foreign currency.
Reported profit before tax fell by 57% due to the costs
associated with the proposed acquisition as well as increased
depreciation, amortisation and finance costs.
Finance costs
Finance costs were GBP7.4m (H1 2021: GBP2.6m from continuing
operations) with the increase predominantly due to revaluation of
the Group's borrowings with a foreign exchange charge of GBP1.3m in
the period (H1 2021: GBP2.7m credit). The average interest charge
on gross debt was 2.5% (H1 2021: 2.2%).
Taxation
Taxation was GBP2.9m (H1 2021: GBP4.8m from continuing
operations), based primarily on the prevailing UK and overseas tax
rates. This charge is calculated as GBP9.5m based on the adjusted
profit before tax of GBP39.6m, offset by a credit of GBP6.6m in
respect of the adjusted items.
The Group's adjusted effective tax rate (ETR) increased to 24.0%
(H1 2021: 21.5%) due to a higher proportion of earnings in higher
tax jurisdictions.
Earnings per share
Adjusted basic EPS, calculated excluding amortisation of
acquired intangibles and products, and other non-underlying items,
decreased by 14% to 22.6p (H1 2021: 26.4p from continuing
operations). The decrease reflects the Group's increased
depreciation and amortisation following the significant investment
in digital infrastructure and development of products as well as
higher finance costs due to foreign exchange movements.
Reported basic EPS was 5.4p (H1 2021: 14.0p from continuing
operations) with the difference to adjusted EPS relating to the
adjustments noted on the previous page.
Dividend
As a result of shareholder approval for the acquisition of the
Group by Triley Bidco Limited, the directors do not propose an
interim dividend is paid.
Cash flow and net debt
Adjusted operating cash flow for the period was GBP72.5m (H1
2021: GBP58.2m from continuing operations), representing a very
strong cash conversion of 126% as a result of the strong working
capital management.
Capital expenditure was GBP13.0m (H1 2021: GBP12.1m), which
includes GBP8.6m related to warehouse, IT and other infrastructure
investments, GBP2.3m related to ongoing investment in the Group's
digital infrastructure, and GBP2.1m on product development.
The other main cash outflows were tax payments of GBP7.5m (H1
2021: GBP8.7m) and interest payments of GBP5.7m (H1 2021:
GBP5.0m).
Net debt at the period end decreased to GBP274.7m, (GBP295.6m
including IFRS 16 liabilities) representing leverage of 2.5x,
significantly below the Group's temporary banking covenant of
3.5x.
Treasury management
The Group's operations are financed by retained earnings and
bank borrowings, and on occasion, the issue of shares to finance
acquisitions.
At the period end, there were two covenants that applied to the
bank facility: interest cover of not less than 4.0x and net
debt/adjusted EBITDA cover of not more than 3.0x, which was
extended to 3.5x for the December 2021 covenant testing date as a
precautionary measure. As at 31 December 2021, interest cover was
10.8x and the net debt/adjusted EBITDA leverage was 2.5x.
Borrowings are denominated in a mixture of sterling, euros and
US dollars, and are managed by the Group's treasury function, which
manages the Group's treasury risk in accordance with policies set
by the Board.
Clinigen reduces its exposure to currency fluctuations on
translation by typically managing currencies at Group level using
bank accounts denominated in foreign currencies. Where there is
sufficient visibility of currency requirements, forward contracts
are used to hedge exposure to foreign currency fluctuations.
The Group's treasury function does not engage in speculative
transactions and does not operate as a profit centre. The Group has
applied hedge accounting where permissible to match hedges to the
transactions to which they relate thereby reducing volatility in
the results which may arise from gains and losses on hedging
instruments.
Principal risks facing the business
Clinigen operates an embedded risk management framework, which
is monitored and reviewed by the Board. There are a number of
potential risks and uncertainties that could have a material impact
on the Group's financial performance and position. These include
risks relating to the political environment, competitive threat,
counterfeit products penetrating the supply chain, compliance,
reliance on technology, cyber risk, foreign exchange, people,
COVID-19 and the identification, strategic rationale and
integration of acquisitions. These risks and the Group's mitigating
actions are set out on pages 52 to 61 of the Annual Report
2021.
Richard Paling
Interim Chief Financial Officer
Condensed consolidated income statement
for the 6 months ended 31 December 2021
Six months ended 31 December
Six months ended 31 December 2020
2021 Re-presented (Note 14)
----------------------------------- -------------------------------------
Non-underlying Non-underlying
(Note (Note
(In GBPm) Note Underlying 4) Total Underlying 4) Total
---------------------------- ---- ---------- -------------- ------- ------------ -------------- -------
Revenue 3 283.9 - 283.9 241.9 - 241.9
Cost of sales (183.5) - (183.5) (145.7) - (145.7)
---------------------------- ---- ---------- -------------- ------- ------------ -------------- -------
Gross profit 3 100.4 - 100.4 96.2 - 96.2
Administrative expenses (53.5) (29.4) (82.9) (49.0) (20.3) (69.3)
Profit from operations 46.9 (29.4) 17.5 47.2 (20.3) 26.9
Finance costs 5 (7.4) - (7.4) (2.6) (0.8) (3.4)
Profit before income
tax 39.5 (29.4) 10.1 44.6 (21.1) 23.5
Income tax expense 6 (9.4) 6.5 (2.9) (9.5) 4.7 (4.8)
---------------------------- ---- ---------- -------------- ------- ------------ -------------- -------
Profit for the period
from continuing operations 30.1 (22.9) 7.2 35.1 (16.4) 18.7
---------------------------- ---- ---------- -------------- ------- ------------ -------------- -------
Loss for the period
from discontinued
operations 14 - - - (0.2) (0.5) (0.7)
---------------------------- ---- ---------- -------------- ------- ------------ -------------- -------
Profit for the period
attributable to owners
of the Company 30.1 (22.9) 7.2 34.9 (16.9) 18.0
---------------------------- ---- ---------- -------------- ------- ------------ -------------- -------
Earnings per share
(pence)
Basic 7 5.4p 13.5p
Diluted 7 5.3p 13.3p
Earnings per share
from continuing operations
(pence)
Basic 7 5.4p 14.0p
Diluted 7 5.3p 13.8p
---------------------------- ---- ---------- -------------- ------- ------------ -------------- -------
Condensed consolidated statement of comprehensive income
for the 6 months ended 31 December 2021
Six months ended 31 December
Six months ended 31 December 2020
2021 Re-presented (Note 14)
--------------------------------- ------------------------------------
Non-underlying Non-underlying
(Note (Note
(In GBPm) Underlying 4) Total Underlying 4) Total
------------------------------------- ---------- -------------- ----- ---------- -------------- ------
Profit for the period
attributable to owners
of the Company 30.1 (22.9) 7.2 34.9 (16.9) 18.0
Other comprehensive income
items that may be reclassified
to profit or loss
Cash flow hedges - - - 0.6 - 0.6
Currency translation differences (0.3) - (0.3) (21.6) - (21.6)
Net investment hedge 1.7 - 1.7 1.1 - 1.1
Income tax relating to
components of other comprehensive
income (0.3) - (0.3) - - -
------------------------------------- ---------- -------------- ----- ---------- -------------- ------
Total other comprehensive
income/(expense) for the
period 1.1 - 1.1 (19.9) - (19.9)
------------------------------------- ---------- -------------- ----- ---------- -------------- ------
Total comprehensive income/(expense)
for the period 31.2 (22.9) 8.3 15.0 (16.9) (1.9)
------------------------------------- ---------- -------------- ----- ---------- -------------- ------
Total comprehensive income/(expense)
attributable to owners
of the company:
------------------------------------- ---------- -------------- ----- ---------- -------------- ------
Continuing operations 31.2 (22.9) 8.3 15.2 (16.4) (1.2)
------------------------------------- ---------- -------------- ----- ---------- -------------- ------
Discontinued operations - - - (0.2) (0.5) (0.7)
------------------------------------- ---------- -------------- ----- ---------- -------------- ------
Condensed consolidated statement of financial position
as at 31 December 2021
31 December 30 June
-----------
(In GBPm) Note 2021 2020 2021
--------------------------------- ---- ----------- ------- -------
Assets
Non-current assets
Intangible assets 9 699.4 750.9 718.3
Property, plant and equipment 19.0 13.7 13.6
Right-of-use assets 20.6 18.5 19.1
Other financial assets 1.2 - 1.1
Deferred tax assets 13.0 3.0 10.8
---------------------------------- ---- ----------- ------- -------
Total non-current assets 753.2 786.1 762.9
Current assets
Inventories 63.1 55.0 56.6
Trade and other receivables 114.8 116.0 163.2
Derivative financial instruments - 0.8 -
Corporation tax receivables - 0.9 -
Cash and cash equivalents 117.5 62.9 82.9
---------------------------------- ---- ----------- ------- -------
Total current assets 295.4 235.6 302.7
---------------------------------- ---- ----------- ------- -------
Total assets 1,048.6 1,021.7 1,065.6
---------------------------------- ---- ----------- ------- -------
Liabilities
Non-current liabilities
Trade and other payables 0.7 7.4 1.7
Borrowings and lease liabilities 10 408.8 410.0 413.9
Deferred tax liabilities 27.5 30.2 30.2
---------------------------------- ---- ----------- ------- -------
Total non-current liabilities 437.0 447.6 445.8
Current liabilities
Trade and other payables 145.9 131.8 162.0
Corporation tax liabilities 6.3 - 6.0
Borrowings and lease liabilities 10 4.3 4.4 4.8
Total current liabilities 156.5 136.2 172.8
---------------------------------- ---- ----------- ------- -------
Total liabilities 593.5 583.8 618.6
---------------------------------- ---- ----------- ------- -------
Net assets 455.1 437.9 447.0
---------------------------------- ---- ----------- ------- -------
Equity attributable to owners
of the Company
Share capital 12 0.1 0.1 0.1
Share premium account 240.2 240.2 240.2
Merger reserve 88.2 88.2 88.2
Hedging reserve - 0.5 -
Foreign exchange reserve (3.6) (2.8) (4.7)
Retained earnings 130.2 111.7 123.2
---------------------------------- ---- ----------- ------- -------
Total equity 455.1 437.9 447.0
---------------------------------- ---- ----------- ------- -------
The notes below form an integral part of these condensed
consolidated financial statements.
Condensed consolidated statement of cash flows
for the 6 months ended 31 December 2021
Six months to 31
December
---------------------
2020 Year to
Re-presented 30 June
(In GBPm) Note 2021 (Note 14) 2021
-------------------------------------------- ---- ------ ------------- --------
Operating activities
Profit before income tax 10.1 23.5 51.8
Finance costs 5 7.4 3.4 9.7
-------------------------------------------- ---- ------ ------------- --------
Profit from operations 17.5 26.9 61.5
Adjustments for:
Amortisation of intangible fixed assets 9 26.5 23.8 51.1
Impairment of intangible fixed assets - - 2.6
Depreciation of property, plant and
equipment 3.9 3.1 6.5
Movement in fair value of derivative
financial instruments - (0.3) -
Decrease in fair value of contingent
consideration - - (5.9)
Payment of increased fair value of
contingent consideration 13 - (33.2) (33.2)
Currency revaluation on contingent
consideration 4 - (1.3) (1.6)
Equity-settled share-based payment
expense 7.0 1.6 3.7
-------------------------------------------- ---- ------ ------------- --------
54.9 20.6 84.7
Increase in inventories (7.1) (10.6) (15.2)
Decrease/(increase) in trade and other
receivables 48.1 10.2 (47.9)
(Decrease)/increase in trade and other
payables (23.4) 4.8 45.1
-------------------------------------------- ---- ------ ------------- --------
Cash generated from operations 72.5 25.0 66.7
Income taxes paid (7.5) (8.7) (15.6)
Interest paid (5.7) (5.0) (10.6)
-------------------------------------------- ---- ------ ------------- --------
Net cash flows from operating activities
- continuing operations 59.3 11.3 40.5
Net cash flows from operating activities
- discontinued operations - 2.4 4.7
-------------------------------------------- ---- ------ ------------- --------
Net cash flows from operating activities 59.3 13.7 45.2
-------------------------------------------- ---- ------ ------------- --------
Investing activities
Purchase of intangible fixed assets
(excluding products) 9 (6.1) (10.0) (23.2)
Purchase of property, plant and equipment (6.9) (2.1) (5.1)
Payment of deferred consideration
on purchase of subsidiaries 13 (1.0) (34.7) (34.7)
Proceeds from sale of business, net
of cash disposed - - 3.1
Net cash flows used in investing activities
- continuing operations (14.0) (46.8) (59.9)
Net cash flows used in investing activities
- discontinued operations - (0.2) (0.6)
Net cash flows used in investing activities (14.0) (47.0) (60.5)
Financing activities
Proceeds from increase in loan - - 7.6
Loan repayments 10 (7.3) (30.8) (30.9)
Principal element of lease repayments (2.4) (1.5) (3.4)
Step acquisition of Clinigen Ireland 13 - (1.8) (1.8)
Dividends paid 8 - (7.2) (10.1)
-------------------------------------------- ---- ------ ------------- --------
Net cash flows used in financing activities
- continuing operations (9.7) (41.3) (38.6)
-------------------------------------------- ---- ------ ------------- --------
Net cash flows used in financing activities
- discontinued operations - (0.2) (0.3)
-------------------------------------------- ---- ------ ------------- --------
Net cash flows used in financing activities (9.7) (41.5) (38.9)
-------------------------------------------- ---- ------ ------------- --------
Net increase/(decrease) in cash and
cash equivalents 35.6 (74.8) (54.2)
Cash and cash equivalents at the beginning
of the period 82.9 143.1 143.1
Exchange losses (1.0) (5.4) (6.0)
-------------------------------------------- ---- ------ ------------- --------
Cash and cash equivalents at the end
of the period 117.5 62.9 82.9
-------------------------------------------- ---- ------ ------------- --------
Condensed consolidated statement of changes in equity
for the 6 months ended 31 December 2021
Share
capital Share Foreign
(note premium Merger Hedging exchange Retained Total
(In GBPm) 12) account reserve reserve reserve earnings equity
--------------------------------- -------- -------- -------- -------- --------- --------- -------
At 1 July 2021 0.1 240.2 88.2 - (4.7) 123.2 447.0
Profit for the period - - - - - 7.2 7.2
Currency translation differences - - - - (0.3) - (0.3)
Net investment hedge, net
of tax - - - - 1.4 - 1.4
Total comprehensive income - - - - 1.1 7.2 8.3
Employee share schemes - - - - - 7.0 7.0
Dividend declared and approved
(note 8) - - - - - (7.2) (7.2)
Total transactions with
owners of the Company,
recognised directly in
equity - - - - - (0.2) (0.2)
--------------------------------- -------- -------- -------- -------- --------- --------- -------
At 31 December 2021 0.1 240.2 88.2 - (3.6) 130.2 455.1
--------------------------------- -------- -------- -------- -------- --------- --------- -------
Share
capital Share Foreign
(note premium Merger Hedging exchange Retained Total
(In GBPm) 12) account reserve reserve reserve earnings equity
--------------------------------- -------- -------- -------- -------- --------- --------- -------
At 1 July 2020 0.1 240.2 88.2 (0.1) 17.7 99.5 445.6
Profit for the period - - - - - 18.0 18.0
Currency translation differences - - - - (21.6) - (21.6)
Net investment hedge, net
of tax - - - - 1.1 - 1.1
Cash flow hedges
- Effective portion of
fair value movements - - - 0.4 - - 0.4
- Transfers to income statement
(revenue) - - - 0.2 - - 0.2
--------------------------------- -------- -------- -------- -------- --------- --------- -------
Total comprehensive income - - - 0.6 (20.5) 18.0 (1.9)
Employee share schemes - - - - - 1.6 1.6
Step acquisition of Clinigen
Ireland - - - - - (0.2) (0.2)
Dividend paid (note 8) - - - - - (7.2) (7.2)
Total transactions with
owners of the Company,
recognised directly in
equity - - - - - (5.8) (5.8)
--------------------------------- -------- -------- -------- -------- --------- --------- -------
At 31 December 2020 0.1 240.2 88.2 0.5 (2.8) 111.7 437.9
--------------------------------- -------- -------- -------- -------- --------- --------- -------
Notes forming part of the condensed consolidated financial
statements
1. General information
Clinigen Group plc ('the Company') and its subsidiaries
(together, 'the Group') is a global pharmaceutical products and
services group headquartered in the UK, with offices in the US,
South Africa, Australia, New Zealand, Japan, Hong Kong, Singapore,
Malaysia, Greece, Belgium, Switzerland, France and Germany.
The company is a public limited company, which is listed on the
AIM market of the London Stock Exchange and incorporated and
domiciled in the UK. The address of its registered office is
Pitcairn House, Crown Square, First Avenue, Burton-on-Trent, DE14
2WW, United Kingdom.
These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 30 June
2021 were approved by the board of directors on 15 September 2021
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. These condensed
interim financial statements have been reviewed, not audited.
2. Basis of preparation
These condensed interim financial statements for the six months
ended 31 December 2021 have been prepared in accordance with
UK-adopted International Accounting Standard 34 'Interim financial
reporting' ('IAS 34'). The condensed interim financial statements
should be read in conjunction with the annual financial statements
for the year ended 30 June 2021, which have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006.
The Group meets its day-to-day working capital requirements
through its cash balances and bank facilities. Management's
forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should be able
to operate within the level of its current cash balances and
available facilities. Following the shareholder vote on 8 February
2022 to approve the Scheme of Arrangement for the all-cash
acquisition of Clinigen by Triley Bidco Limited as detailed in note
15, the Directors have considered the impact on their assessment of
going concern. The Directors unanimously recommended the offer to
shareholders and believe Clinigen is well positioned for future
continued success under Triton ownership. However, they also
recognise that unavoidable uncertainties exist regarding the future
plans and funding requirements for the business under the new
ownership and board of directors, given the timing of the
completion of the acquisition for the going concern assessment.
The existence of this scenario is considered to qualify as a
material uncertainty that may cast significant doubt upon the
Group's ability to continue as a going concern. However,
notwithstanding any uncertainty regarding post completion
activities, the Directors have a reasonable expectation that the
Group can continue in operation and meet its liabilities as they
fall due, for a period of no less than 12 months from the date of
approval of the interim financial statements, and are therefore
satisfied that the going concern basis remains appropriate for the
preparation of the financial statements. The interim financial
statements do not include the adjustments that would result if the
Group was no longer to be considered a going concern.
The accounting policies applied in preparation of the condensed
consolidated financial statements is on a consistent basis with
those applied in the annual financial statements for the year ended
30 June 2021.
The preparation of interim consolidated financial statements in
compliance with IAS 34 requires the use of certain critical
accounting estimates. It also requires Group management to exercise
judgment in applying the Group's accounting policies. The areas
where significant judgements and estimates have been made in
preparing the financial statements and their effect are disclosed
in the notes to the Group's statutory consolidated financial
statements for the year ended 30 June 2021 in note 2 on page
108.
There have been no accounting standards, amendments and
interpretations that are effective for the first time in respect of
the Group condensed interim financial statements for the six months
ended 31 December 2021.
3. Segment information
The Group's reportable segments are strategic operating business
units that provide different products and service offerings into
different market environments. They are managed separately because
each operational business requires different expertise to deliver
the different product or service offering they provide.
Operating segments are reported in a manner consistent with the
internal reporting provided to the Chief Operating Decision Maker
(CODM) during the reporting period. The Chief Operating Decision
Maker has been identified as the Chief Executive Officer. There
have been no changes to the reported segments during the period. In
the year ended 30 June 2021, the organisation structure of the
business changed to the two reported businesses of Products and
Services.
Net revenue and adjusted EBITDA are the segmental measures
reported to and used by the CODM to manage the business. Net
revenue eliminates the volatility in reported revenue which can
arise from the pass through revenue as the mix of charged and free
of charge Managed Access Programs changes. Segmental adjusted
EBITDA provides a measure of profitability with an approximation of
cash generation.
Six months ended
31 December 2020
Six months ended Re-presented (Note
31 December 2021 14)
-------------------------- ------------------------------- -------------------------------
Reported Net revenue Adjusted Reported Net revenue Adjusted
(In GBPm) revenue EBITDA revenue EBITDA
-------------------------- -------- ----------- -------- -------- ----------- --------
Products 129.0 129.0 43.1 114.8 114.8 44.1
Services 157.5 111.7 18.9 128.8 102.6 13.6
Central unallocated costs
& eliminations (2.6) (2.6) (4.6) (1.7) (1.7) (3.3)
-------------------------- -------- ----------- -------- -------- ----------- --------
283.9 238.1 57.4 241.9 215.7 54.4
-------------------------- -------- ----------- -------- -------- ----------- --------
Net revenue is presented after excluding pass through revenue of
GBP45.8m (2020 GBP26.2m) from the Managed Access business within
Services.
Six months ended
31 December 2020
Six months ended Re-presented (Note
31 December 2021 14)
----------------------------------- ----------------------------------- -------------------------- -------
(In GBPm) Underlying Non-underlying Total Underlying Non-underlying Total
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Revenue 283.9 - 283.9 241.9 - 241.9
Cost of sales (183.5) - (183.5) (145.7) - (145.7)
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Gross profit 100.4 - 100.4 96.2 - 96.2
Administrative expenses
excluding amortisation and
depreciation (43.1) (9.4) (52.5) (41.9) (0.5) (42.4)
EBITDA 57.3 (9.4) 47.9 54.3 (0.5) 53.8
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Analysed as:
Adjusted EBITDA including
share of joint venture 57.4 (9.4) 48.0 54.4 (0.5) 53.9
Joint venture EBITDA (0.1) - (0.1) (0.1) - (0.1)
EBITDA excluding share of
joint venture 57.3 (9.4) 47.9 54.3 (0.5) 53.8
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Amortisation and impairment (6.5) (20.0) (26.5) (4.0) (19.8) (23.8)
Depreciation (3.9) - (3.9) (3.1) - (3.1)
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit from operations 46.9 (29.4) 17.5 47.2 (20.3) 26.9
Finance costs (7.4) - (7.4) (2.6) (0.8) (3.4)
Share of joint venture profit - - - - - -
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit before income tax 39.5 (29.4) 10.1 44.6 (21.1) 23.5
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Analysed as:
Adjusted profit before tax
excluding share of joint
venture tax 39.6 (29.5) 10.1 44.7 (21.2) 23.5
Joint venture tax (0.1) 0.1 - (0.1) 0.1 -
Profit before tax including
share of joint venture tax 39.5 (29.4) 10.1 44.6 (21.1) 23.5
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Income tax (9.4) 6.5 (2.9) (9.5) 4.7 (4.8)
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit for the period from
continuing operations 30.1 (22.9) 7.2 35.1 (16.4) 18.7
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Loss for the period from
discontinued operations
(note 14) - - - (0.2) (0.5) (0.7)
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
Profit for the period attributable
to owners of the Company 30.1 (22.9) 7.2 34.9 (16.9) 18.0
----------------------------------- ---------- -------------- ------- ---------- -------------- -------
3. Segment information (continued)
Disaggregation of revenue
Six months ended
31 December
Six months ended 2020
31 December Re-presented
2021 (Note 14)
-------------------------------------- --------------------- ---------------------
Reported Net revenue Reported Net revenue
(In GBPm) revenue revenue
-------------------------------------- -------- ----------- -------- -----------
Products
Owned 48.1 48.1 54.4 54.4
Partnered 56.5 56.5 35.0 35.0
On-Demand 24.4 24.4 25.4 25.4
-------------------------------------- -------- ----------- -------- -----------
129.0 129.0 114.8 114.8
Services
Clinical 95.6 95.6 89.9 89.9
Managed Access 61.9 16.1 38.9 12.7
-------------------------------------- -------- ----------- -------- -----------
157.5 111.7 128.8 102.6
Inter-segment eliminations (2.6) (2.6) (1.7) (1.7)
-------------------------------------- -------- ----------- -------- -----------
Total revenue from external customers 283.9 238.1 241.9 215.7
-------------------------------------- -------- ----------- -------- -----------
4. Non-underlying items
Non-underlying items have been reported separately in order to
provide the reader of the financial statements with a better
understanding of the operating performance of the Group. These
items include significant one-off costs as well as the amortisation
of intangible assets acquired through business combinations and
acquired products. The associated tax impact is also reported as
non-underlying.
Six months to 31
December
--------------------
2020
Re-presented
(In GBPm) 2021 (Note 14)
--------------------------------------------------------------- ----- -------------
Administrative expenses
a) Restructuring costs 1.6 1.8
b) Costs related to the proposed acquisition by
Triley Bidco Limited 7.8 -
c) Foreign exchange revaluation on contingent consideration - (1.3)
d) Amortisation of intangible fixed assets acquired
through business combinations and acquired products 20.0 19.8
--------------------------------------------------------------- ----- -------------
29.4 20.3
Finance costs
e) Unwind of discount on non-underlying liabilities - 0.7
f) Acquisition costs - 0.1
--------------------------------------------------------------- ----- -------------
- 0.8
Taxation
g) Credit in respect of non-underlying items (6.5) (4.7)
--------------------------------------------------------------- ----- -------------
22.9 16.4
--------------------------------------------------------------- ----- -------------
a) Restructuring costs have been incurred during the period in
respect of the re-organisation of the business including certain
redundancy costs for senior management.
b) Costs in relation to the proposed acquisition of the Group by
Triley Bidco Limited include legal and professional fees of GBP1.4m
and additional employee share scheme expenses of GBP6.4m. The
accelerated share-based payment charge is contingent on the vesting
of share options on completion of the acquisition.
c) Contingent consideration on iQone (and CSM in the prior
period) is denominated in foreign currency. The revaluation is
treated as non-underlying as they relate to one-off items and do
not reflect underlying trading.
d) The amortisation of intangible assets acquired as part
business combinations (namely brand, trademarks and licences,
customer relationships, and contracts) and acquired products, is
included in non-underlying due to its significance and to provide
the reader with a consistent view of the underlying costs of the
operating Group.
e) The non-cash unwind of the discount applied to the contingent
consideration on the iQone acquisition.
g) The tax credit in respect of non-underlying items reflects
the tax benefit on the costs incurred.
5. Finance costs
Six months to
31 December
-------------------
2020
Re-presented
(In GBPm) 2021 (Note 14)
------------------------------------------------- ---- -------------
Bank interest expense 4.9 4.6
Borrowing costs 0.5 -
Amortisation of facility issue costs 0.4 0.4
Foreign exchange on borrowings 1.3 (2.7)
Unwind of discount on lease liabilities 0.3 0.3
Underlying finance costs 7.4 2.6
Unwind of discount on non-underlying liabilities - 0.7
Acquisitions finance costs - 0.1
Total finance costs 7.4 3.4
------------------------------------------------- ---- -------------
6. Income tax expense
The Group has recognised a tax charge in the income statement
based on the current projected full year adjusted tax rate of 24.0%
(2020: 21.5%) and adjusted for non-underlying items to give an
effective tax rate of 28.7% (2020: 20.4%).
7. Earnings per share
Six months to
31 December
--------------------
2020
Re-presented
(In GBPm) 2021 (Note 14)
------------------------------------------------------- ----- -------------
Profit after tax used in calculating reported EPS 7.2 18.0
------------------------------------------------------- ----- -------------
Profit after tax used in calculating reported EPS
- continuing 7.2 18.7
------------------------------------------------------- ----- -------------
Loss after tax used in calculating reported EPS
- discontinued - (0.7)
------------------------------------------------------- ----- -------------
Adjusted profit after tax used in calculating adjusted
EPS 30.1 35.1
------------------------------------------------------- ----- -------------
Number of shares (million)
Weighted average number of shares 133.1 133.0
Dilution effect of share options 3.3 1.9
------------------------------------------------------- ----- -------------
Weighted average number of shares used for diluted
EPS 136.4 134.9
------------------------------------------------------- ----- -------------
Reported EPS (pence)
Basic 5.4p 13.5p
Diluted 5.3p 13.3p
Basic - continuing 5.4p 14.0p
Diluted - continuing 5.3p 13.8p
Basic - discontinued - (0.5)p
Diluted - discontinued - (0.5)p
Adjusted EPS (pence)
Basic 22.6p 26.4p
Diluted 22.1p 26.0p
------------------------------------------------------- ----- -------------
8. Dividends
The FY2021 final dividend of 5.46p (GBP7.2m) was approved at the
AGM on 24(th) November 2021 and was paid post period end on 4(th)
January 2022. As the dividend was declared and approved during the
period it has been recognised in the statement of financial
position as a current liability. As a result of shareholder
approval for the acquisition of the Group by Triley Bidco Limited,
the directors do not propose an interim dividend is paid.
9. Intangible assets
Customer Trademarks Computer
(In GBPm) Brand Contracts relationships & licences software Goodwill Total
--------------------- ----- --------- -------------- ----------- --------- -------- ------
At 1 July 2021 39.7 4.9 54.4 216.4 32.2 370.7 718.3
Additions - - - 2.1 4.0 - 6.1
Amortisation charge (1.8) (0.5) (6.8) (12.1) (5.3) - (26.5)
Exchange differences - (0.1) 0.6 2.7 - (1.7) 1.5
--------------------- ----- --------- -------------- ----------- --------- -------- ------
At 31 December
2021 37.9 4.3 48.2 209.1 30.9 369.0 699.4
--------------------- ----- --------- -------------- ----------- --------- -------- ------
10. Net debt
31 December
--------------- -------
30 June
(In GBPm) 2021 2020 2021
-------------------------- ------- ------ -------
Revolving credit facility 213.0 215.8 220.9
Term loan 176.7 178.7 176.6
Lease liabilities 23.8 22.0 21.9
Financial guarantee 0.9 - 0.9
Unamortised issue costs (1.3) (2.1) (1.6)
Total borrowings 413.1 414.4 418.7
Cash (117.5) (62.9) (82.9)
-------------------------- ------- ------ -------
Net debt 295.6 351.5 335.8
-------------------------- ------- ------ -------
During the period the Group repaid GBP7.3m (2020: GBP30.8m) of
its RCF using free cash flow generated from operations.
At the period end, there were two covenants that applied to the
bank facility (calculated excluding the impact of IFRS 16):
interest cover of not less than 4.0x and net debt/adjusted EBITDA
cover of not more than 3.5x with the leverage covenant limit raised
from 3.0x as a matter of prudence. As at 31 December 2021, interest
cover was 10.8x and the net debt/adjusted EBITDA leverage was 2.5x.
There were no instances of default, including covenant terms, in
either the current or the preceding period.
11. Financial risk management and financial instruments
Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk, interest rate risk and
price risk), credit risk and liquidity risk. The condensed interim
financial statements do not include all financial risk management
information and disclosures required in the annual financial
statements; they should be read in conjunction with the Group's
annual financial statements for the year ended 30 June 2021. There
have been no changes in the risk management processes or in any
risk management policies since the year end.
Financial instruments
Designated
at fair Amortised Total carrying
At 31 December 2021 (In GBPm) value cost value Fair value
------------------------------ ---------- --------- -------------- ----------
Cash and cash equivalents - 117.5 117.5 117.5
Trade and other receivables - 93.2 93.2 93.2
Total financial assets - 210.7 210.7 210.7
------------------------------ ---------- --------- -------------- ----------
Trade and other payables - (140.9) (140.9) (140.9)
Contingent consideration (0.7) - (0.7) (0.7)
Borrowings - (414.4) (414.4) (414.4)
Total financial liabilities (0.7) (555.3) (556.0) (556.0)
------------------------------ ---------- --------- -------------- ----------
Designated
at fair Amortised Total carrying
At 31 December 2020 (In GBPm) value cost value Fair value
--------------------------------- ---------- --------- -------------- ----------
Cash and cash equivalents - 62.9 62.9 62.9
Trade and other receivables - 94.0 94.0 94.0
Derivative financial instruments 0.8 - 0.8 0.8
--------------------------------- ---------- --------- -------------- ----------
Total financial assets 0.8 156.9 157.7 157.7
--------------------------------- ---------- --------- -------------- ----------
Trade and other payables - (126.3) (126.3) (126.3)
Contingent consideration (7.4) - (7.4) (7.4)
Borrowings - (416.5) (416.5) (416.5)
Total financial liabilities (7.4) (542.8) (550.2) (550.2)
--------------------------------- ---------- --------- -------------- ----------
11. Financial risk management and financial instruments
(continued)
Financial instruments are classified as follows: Level 1
instruments are those valued using unadjusted quoted prices in
active markets for identical instruments; Level 2 instruments are
those valued using techniques based significantly on observable
market date; and Level 3 instruments are those valued using
information other than observable market data.
Derivative financial instruments at 31 December 2021 and 31
December 2020 comprise forward foreign exchange contracts. These
derivatives have been fair valued using forward exchange rates that
are quoted in an active market and fall within Level 2 of the fair
value hierarchy.
Contingent consideration on acquisitions has been valued using
management's latest forecast of the profit of the businesses during
the earn out period and falls within Level 3 of the fair value
hierarchy. Consideration of the sensitivities on the fair value
estimate of the contingent consideration liability is given in note
13.
There are no Level 1 financial instruments at 31 December 2021,
and there have been no transfers between valuation levels nor
changes in valuation techniques during the period.
12. Share capital
Number ('000s) Cost (GBPm)
Issued and fully paid (Ordinary shares of 0.1p
each)
------------------------------------------------- -------------- -----------
At 1 July 2020 132,899 0.1
Issue of new shares 130 -
------------------------------------------------- -------------- -----------
At 30 June 2021 133,029 0.1
Issue of new shares 338 -
------------------------------------------------- -------------- -----------
At 31 December 2021 133,367 0.1
------------------------------------------------- -------------- -----------
13. Business combinations
There were no business combinations in the six-month period
ended 31 December 2021 (2020: none).
During the period, the sale and purchase agreement with the
previous owners of the iQone business was re-negotiated and the
business restructured to better align with the European strategy of
the Group. On conclusion of this re-negotiation an immediate
payment of EUR1.2m (GBP1.0m) was paid to the former owners of the
business. Additionally, a new contingent consideration liability
was recognised, replacing the liability attached to the original
agreement, which is based on the EBITDA that will be generated by
the relevant activities in the 12 months to 31 December 2023, and
will be paid in January 2024.
The undiscounted fair value of the new contingent consideration
liability has been estimated at EUR1.0m (GBP0.9m) but could be in
the range of EURnil to EUR11.2m. This is in line with the estimate
recognised at 30 June 2021 after accounting for the EUR1.2m
(GBP1.0m) immediate payment and so no charge or credit has been
recognised in the financial statements for the period. The
liability has been discounted at a rate of 10%. A 100bps change in
the discount rate would not materially change the fair value, and a
10% change in the expected value of the EBITDA in the earn out
period would increase/decrease the fair value by GBP0.1m.
The contingent consideration liability outstanding at 31
December 2021 was GBP0.7m (Dec-20: GBP7.4m; Jun-21: GBP1.7m) and is
classified within non-current liabilities.
In the period ended 31 December 2020, the Group paid GBP67.9m
(US$89.5m) as a final settlement of the CSM earn out in September
2020. GBP33.2m (US$43.8m) of this payment related to the increase
in consideration from outperformance of the earn out over the
original amount estimated which is recognised within cash flow from
operations. The remaining GBP34.7m (US$45.7m) of this payment is
the original estimate of the earn out at the time of acquisition
and is recognised within cash used in investing activities.
Also in the period ended 31 December 2020, the Group paid
GBP1.8m in respect of the acquisition of the remaining 50% stake in
Clinigen Ireland Ltd (previously QM Specials Ltd) following the
exercise of its call option in June 2020. As this payment related
to a change in ownership but not a change in control it was
recognised within cash flows used in financing activities.
14. Discontinued operations
On 30 June 2021, the Group completed the divestment of its
non-core UK Specials Manufacturing and Aseptic Compounding
business, and the results and cash flows of this business in the
prior period are accordingly classified as discontinued. As a
result of this classification, the comparatives in the statement of
comprehensive income and statement of cash flows, as well as the
supporting notes, have been re-presented to separate the results
for discontinued operations in accordance with the requirements of
IFRS 5.
Results for discontinued operations
Six months
to
31 December
(In GBPm) 2020
------------------------------------------------- ------------
Revenue 16.2
-------------------------------------------------- ------------
Adjusted EBITDA 0.2
Restructuring costs (0.1)
Amortisation and depreciation (0.8)
Finance costs (0.1)
-------------------------------------------------- ------------
Loss before tax (0.8)
Income tax credit 0.1
-------------------------------------------------- ------------
Loss for the period from discontinued operations (0.7)
-------------------------------------------------- ------------
The amortisation and depreciation charge includes amortisation
of acquired intangibles of GBP0.5m.
Cash flows from discontinued operations
Six months
to
31 December
(In GBPm) 2020
------------------------------------------- ------------
Cash flows from operating activities 2.4
Cash flows used in investing activities (0.2)
Cash flows used in financing activities (0.2)
-------------------------------------------- ------------
Net cash flow from discontinued operations 2.0
-------------------------------------------- ------------
15. Events occurring after the balance sheet date
On 8 December 2021, Clinigen announced an agreement on the terms
of a recommended all-cash offer by Triley Bidco Limited (a company
indirectly owned by Triton Investment Management Limited) for the
entire issued and to be issued share capital of Clinigen. Under the
terms of the original offer Clinigen Shareholders would have been
entitled to receive 883 pence for each Clinigen share, to be
effected by means of a Scheme of Arrangement.
On 17 January 2022 the terms of an increased and final
recommended all-cash offer were announced at an increased value of
925 pence for each Clinigen share. On the 8 February 2022 at the
Court Meeting and General Meeting shareholders voted in favour to
approve the resolutions in connection to the increased and final
all-cash acquisition of Clinigen by Triley Bidco Limited.
Completion of the Acquisition remains subject to the
satisfaction or, where applicable, waiver of the remaining
Conditions set out in the Scheme Document, the sanction of the
Scheme by the Court at the Scheme Court Hearing and the delivery of
a copy of the Court Order to the Registrar of Companies. It is
anticipated the deal will close in accordance with the updated
timetable published on 16 February 2022 with the effective date of
the Scheme expected to be 4 April 2022 .
GBP7.8m of costs have been expensed in the period in relation to
the offer for Clinigen Group made by Triley Bidco Limited which
include legal and professional fees of GBP1.4m and additional
charges for employee share schemes of GBP6.4m. In addition,
contingent liabilities of GBP12.7m exist at 31 December 2021 in
respect of advisor costs which are subject to the successful
completion of the acquisition.
Independent review report to Clinigen Group plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Clinigen Group plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the Half Year Results for the six months of Clinigen Group plc
for the 6 month period ended 31 December 2021 (the "period").
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 AIM Rules for Companies.
Emphasis of matter
Without modifying our conclusion on the interim financial
statements, we have considered the adequacy of the disclosure made
in note 2 to the interim financial statements concerning the
Group's ability to continue as a going concern. On 8 February 2022
the shareholders approved the Scheme of Arrangement for the
all-cash acquisition of Clinigen Group plc by Triley Bidco Limited
("Triley", a company indirectly owned by Triton Investment
Management Limited). The Directors have not had detailed visibility
of Triley's detailed future plans and funding requirements for the
business post the acquisition. This condition indicates the
existence of a material uncertainty that may cast significant doubt
on the Group's ability to continue as a going concern. The interim
financial statements do not include the adjustments that would
result if the Group was no longer to be considered a going
concern.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at 31 December 2021;
-- the condensed consolidated income statement for the period then ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year
Results for the six months of Clinigen Group plc have been prepared
in accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the AIM Rules for Companies.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half Year Results for the six months, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the Half Year Results for the six months in accordance
with the AIM Rules for Companies which require that the financial
information must be presented and prepared in a form consistent
with that which will be adopted in the company's annual financial
statements.
Our responsibility is to express a conclusion on the interim
financial statements in the Half Year Results for the six months
based on our review. This report, including the conclusion, has
been prepared for and only for the company for the purpose of
complying with the AIM Rules for Companies 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.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. 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 Half Year
Results for the six months and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
East Midlands
22 February 2022
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