TIDMAGY
RNS Number : 6863M
Allergy Therapeutics PLC
23 September 2021
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 GBP40.3m 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 GBP84.3m (2020: GBP78.2m)
-- 19% increase in pre-R&D operating profit to GBP16.9m
(2020: GBP14.2m) as a result of sales growth and lower overhead
cost growth
-- Strong cash balance of GBP40.3m at 30 June 2021 (2020: GBP37.0m)
-- Net profit of GBP2.9m for the year (2020: Net profit of
GBP7.1m including cash settlement of GBP3.2m)
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.
-S -
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 845 820
Manuel Llobet, Chief Executive Officer
Nick Wykeman, Chief Financial Officer
Panmure Gordon
+44 (0) 20 7886 2500
Freddy Crossley, Emma Earl, Corporate Finance
Rupert Dearden, Corporate Broking
Consilium Strategic Communications
+44 20 3709 5700
Mary-Jane Elliott / David Daley / Carina Jurs
allergytherapeutics@consilium-comms.com
Stern Investor Relations, Inc.
+1 212 362 1200
Christina Tartaglia
christina@sternir.com
Notes for editors:
About Allergy Therapeutics
Allergy Therapeutics is an international commercial
biotechnology company focussed on the treatment and diagnosis of
allergic disorders, including aluminium free immunotherapy vaccines
that have the potential to cure disease. The Group sells
proprietary and third-party products from its subsidiaries in nine
major European countries and via distribution agreements in an
additional ten countries. Its broad pipeline of products in
clinical development 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 11,000m(2) 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
Performance
This 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 changes
Steve 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 auditor
As 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.
Outlook
Allergy 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 Performance
The business continued to grow well, despite challenging market
conditions, with revenue up 8% in actual terms at GBP84.3m (2020:
GBP78.2m) 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 GBP45.9m
(2020:GBP44.5m) 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 GBP1.3m (2020: GBP0.4m loss).
Operating profit pre-R&D increased by 19% to GBP16.9m
(2020:GBP14.2m), 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 GBP12.9m, up from the
GBP9.0m 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 GBP2.9m (2020:GBP7.1m).
Cash at the end of June 2021 stood at GBP40.3m 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 development
The 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.
Pipeline
Beyond 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 segment
ImmunoBON, 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.
Outlook
As 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 GBP4m 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
Overview
The Group has continued to grow profitably, achieving an
operating profit excluding R&D(1) of GBP16.9m (2020: GBP14.2m)
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 GBP12.9m (2020: GBP5.8m after
offsetting receipt from settlement of legal claims totalling
GBP3.2m), the Group reported an operating profit of GBP4.0m (2020:
GBP8.3m).The net profit after tax for the period was GBP2.9m (2020:
GBP7.1m).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 GBP1.9m (2020: GBP1.9m) and the operating profit
by GBP0.2m (2020: GBP0.3m).
Revenue
Reported revenue increased by 8% to GBP84.3m (2020: GBP78.2m).
The weighted average Euro exchange rate in the year was EUR1.12 to
GBP1 compared to EUR1.14 in 2020. Revenue at constant currency (2)
was 6% higher as shown in the table below:
2021 2020
-------------------------- ------------------------
Germany Other Total Germany Other Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------------------------------------- -------- ------- ------- -------- ------ ------
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 currency(2) 52.8 30.0 82.8 48.0 30.2 78.2
1. 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 GBP16.9m
(2020: GBP14.2m).
2. Constant currency uses prior year weighted average exchange
rates to translate current year foreign currency denominated
revenue to give a year-on-year comparison excluding the effects of
foreign exchange movements.
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 GBP4.0m for the year ended 30 June 2021 (2020:
GBP3.5m). Revenue in Germany grew well in the year with revenue at
constant currency(2) 2 increasing to GBP52.8m (2020: GBP48.0m), an
increase of 10%.
All the main European markets (except for Italy and Switzerland)
exhibited good sales growth at constant currency(2) 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 profit
Cost of sales increased to GBP22.1m (2020: GBP20.2m ) reflecti
ng additional Brexit costs. The gross margin was 74% (2020: 74%),
leading to a gross profit of GBP62.2m (2020: GBP58.0m).
Operating expenses
Total overheads were GBP5.3m higher than prior year at GBP58.8m
(2020: GBP53.5m ). This included R&D expenditure that rose by
GBP3.9m to GBP12.9m (2020: GBP9.0m 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 GBP45.9m increased by GBP1.4m
(2020: GBP44.5m) due to further investment in compliance, new
products and rising labour costs while some expenses were
deferred.
Sales, marketing and distribution costs increased by GBP0.3m to
GBP25.2m (2020: GBP24.9m) mainly as a result of investment in new
products (especially ImmunoBON). Other administration expenses
increased by GBP1.1m to GBP20.7m (2020: GBP19.6m) as a result of
additional investment in compliance and support functions.
Other income in the year of GBP0.6m (2020: GBP0.6m) was due to R&D tax credits in the UK.
Tax
The current and prior year tax charges are predominantly made up
of provisions for tax in the Italian and German subsidiaries.
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 GBP0.8m (2020: GBP1.0m). The
charge was also affected by the change in UK legislation in respect
of use of losses.
Balance sheet
Property, plant and equipment (including IFRS 16) reduced by
GBP0.7m to GBP19.7m (2020: GBP20.4m ) reflecting higher
depreciation (due to IFRS16) than investment in upgrading of plant
in the UK factory and equipment for R&D.
Goodwill reduced by GBP0.2m to GBP3.3m (2020: GBP3.5m) due to
exchange rate fluctuations, whilst other intangible assets
increased by GBP0.1m to GBP1.4m (2020: GBP1.3m).
Total current assets, excluding cash, reduced to GBP17.6m (2020:
GBP18.2m). Inventory increased further by GBP0.7m due to early
production of stock to fill the extended Brexit supply chain .
Trade and other receivables have reduced by GBP1.9m mainly due to
improved collection of trade debtors. Cash and cash at hand
increased to GBP40.3m from GBP37.0m in 2020 mainly as a result of a
continued strong trading result. The Group had a net cash inflow of
GBP3.7m in the year (2020: GBP9.5m cash inflow including legal
settlement of GBP3.2m) primarily due to good trading.
The fair value of derivative financial instruments changed from
a liability to an asset of GBP0.5m in 2021 (2020: GBP0.8m
liability) due to exchange rate fluctuations.
Retirement benefit obligations, which relate solely to the
German pension scheme, decreased to GBP11.3m (2020: GBP13.5m). 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).
Currency
The Group uses forward exchange contracts to mitigate exposure
to the effects of exchange rates. The current policy of the Group
is to cover, on average, about 70% of the net Euro exposure for a
year on a declining basis.
Financing
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 GBP3.4m (2020: GBP3.8m) at 30 June
2021. The overdraft facility of GBP7m 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 .
Legal
On 23 February 2015, the Company received notification that the
Federal Office for Economics and Export ("BAFA") had made a
decision to reverse their preliminary exemption to the increased
manufacturers rebate in Germany for the period July to December
2012. The Company was granted a preliminary exemption to the
increased rebate for this period by BAFA in 2013. The Company
recognised revenue of EUR1.4m (GBP1.1m at that time, GBP1.2m 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 EUR1.4m (GBP1.2m). This position will be
kept under review.
Consolidated income statement
for the year ended 30 June 2021
Year to Year to Year to Year to
30 June 30 June 30 June 30 June
2021 2021 2020 2020
Note GBP'000 GBP'000 GBP'000 GBP'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 income
for the year ended 30 June 2021
Year to Year to
30 June 30 June
2021 2020
Note GBP'000 GBP'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 sheet
as at 30 June 2021
30 June 30 June
2021 2020
Note GBP'000 GBP'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 Llobet
Chief Executive Officer
Nicolas Wykeman
Chief Financial Officer
Registered number: 05141592
Consolidated statement of changes in equity
for the year ended 30 June 2021
Merger
reserve Reserve Foreign
- -
Issued Share shares share-based Revaluation exchange Retained Total
issued
capital premium by subsidiary payment reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 statement
for the year ended 30 June 2021
Year to Year to
30 June 30 June
2021 2020
Note GBP'000 GBP'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 statements
for the year ended 30 June 2021
1. Basis of preparation
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006.
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 adopted
There are no IFRS or IAS interpretations that are effective for
the first time in this financial period that have had a material
impact on the Group.
Standards, amendments and interpretations to existing standards
that are not yet effective and have not been adopted early by the
Group
At the date of authorisation of these financial statements,
several new, but not yet effective, standards and amendments to
existing standards and interpretations have been published by the
IASB. None of these standards or amendments to existing standards
have been adopted early by the Group.
Management anticipates that all relevant pronouncements will be
adopted for the first period beginning on or after the effective
date of the pronouncement. New standards, amendments and
interpretations not adopted in the current year have not been
disclosed as they are not expected to have a material impact on the
Group's financial statements.
Going concern
Operating profit in the period was GBP4.0m (2020: GBP8.3m
profit); net cash inflow from operations was GBP8.4m (2020:
GBP12.5m net cash inflow). The inflow was due to good trading.
Excluding the R&D expenditure, the Group would have reported an
operating profit of GBP16.9m (2020: GBP14.2m).
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 GBP40.3m
as at 30 June 2021 and the GBP7m 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 policies
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all years presented unless otherwise
stated.
Consolidation
The Group's financial statements consolidate those of the parent
company and all of its subsidiaries drawn up to 30 June 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.
Goodwill
Goodwill arising from business combinations is the difference
between the fair value of the consideration paid and the fair value
of the assets and liabilities and contingent liabilities acquired.
It is initially recognised as an intangible asset at cost and is
subject to impairment testing on an annual basis or more frequently
if circumstances indicate that the asset may have been impaired.
Details of impairment testing are described in the accounting
policies.
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where they
satisfy the definition of an asset and can be identifiable. The
cost of such intangible assets is their fair value at the
acquisition date.
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses. Intangible assets
are amortised over their useful economic life as follows:
Trade names 15 years
Customer relationships 5 years
Know-how and patents 10 years
Distribution agreements 15 years/period
of contract
Externally acquired intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and
any accumulated impairment losses.
Intangible assets are amortised over their useful economic life
as below and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The
amortisation period and the amortisation method for intangible
assets is reviewed at least at each financial year end:
Computer software 7 years
Other intangibles 15 years
Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are
accounted for by changing the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates.
The amortisation expense on intangible assets is recognised in the
Consolidated Income Statement in the expense category consistent
with the function of the intangible asset in either administration
costs or marketing and distribution costs.
Internally generated intangible assets
An internally generated intangible asset arising from
development (or the development phase) of an internal project is
recognised if, and only if, all of the following have been
demonstrated:
-- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
-- the intention to complete the intangible asset and use or sell it;
-- the ability to use or sell the intangible asset;
-- how the intangible asset will generate probable future economic benefits;
-- the availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset; and
-- the ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally generated
intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria
listed above. Where no internally generated intangible asset can be
recognised, R&D expenditure is charged to the Consolidated
Income Statement in the period in which it is incurred.
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 reporting
The Group's operating segments are market based and are reported
in a manner consistent with the internal reporting provided to the
Group's Chief Operating Decision Maker ("CODM") which has been
identified as the Executive Directors. The CODM is responsible for
allocating resources and assessing the performance of the operating
segments.
In identifying its operating segments, management follow the
Group's revenue lines which represent the main geographical markets
within which the Group operates. These operating segments are
managed separately as each requires different local expertise,
regulatory knowledge and a specialised marketing approach. Each
market--based operating segment is engaged in production, marketing
and selling within a particular economic environment that is
different from that in segments operating in other economic
environments. All inter-segment transfers are carried out at arm's
length prices.
Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the functional
currency). The Group's presentational currency is Sterling, which
is also the functional currency of the Group's parent.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation, at
reporting period end exchange rates, of monetary assets and
liabilities denominated in foreign currencies, are recognised in
the Consolidated Income Statement. Non-monetary items are carried
at historical cost or translated using the exchange rate at the
date of the transaction or a weighted average rate as an
approximation where this is not materially different.
Foreign operations
In the Group's financial statements, all assets, liabilities and
transactions of Group entities with a functional currency other
than Sterling are translated into Sterling upon consolidation. The
functional currency of the entities in the Group has remained
unchanged during the reporting period.
On consolidation, assets and liabilities have been translated
into Sterling at the closing rate at the reporting date. Goodwill
and fair value adjustments arising on the acquisition of a foreign
entity have been treated as assets and liabilities of the foreign
entity and translated into Sterling at the closing rate. Income and
expenses have been translated into Sterling at the weighted average
rate over the reporting period which approximates to actual rates.
Exchange differences are charged or credited to Other Comprehensive
Income ("OCI") and recognised in the currency translation reserve
in equity. OCI includes those items which would be reclassified to
profit or loss and those items which would not be reclassified to
profit or loss.
Revenue recognition
The Group's revenue recognition policy is as follows:
Revenue generated from a contract for the sale of goods is
recognised on delivery when all conditions have been fulfilled to
the customer, such as the supply of vaccines.
The Group recognises revenue in accordance with the requirements
of IFRS 15 and in the five--step model set out within the standard
as follows:
STEP 1 Identifying the contract with the customer
The Group accounts for contracts with customers within the scope
of IFRS 15 only when all of the following criteria are met:
a. the Group and the customer have approved the contract (in
writing, orally or in accordance with other customary business
practices) and are committed to perform their respective
obligations;
b. the Group can identify each party's rights regarding the services to be transferred;
c. the Group can identify the payment terms for services to be transferred;
d. the contract has commercial substance (i.e. the risk, timing
or amount of the Group's future cash flows is expected to change as
a result of the contract); and
e. it is probable that the Group will collect the consideration
to which it will be entitled in exchange for the services that will
be transferred to the customer. In evaluating whether
collectability of an amount of consideration is probable, the Group
considers only the customer's ability and intention to pay that
amount of consideration when it is due.
Significant new contracts with distributors are reviewed by
senior management to ensure the relevant terms are identified and
agreed.
Substantially all sales are via purchase orders received from
the customer which specifies the product to be delivered.
STEP 2 Identifying the performance obligations
At contract inception, the Group assesses the goods or services
promised within the contract and identifies as a performance
obligation, each promise to transfer to the customer either:
a. a good or service that is distinct; or
b. a series of distinct services that are substantially the same
and that have the same pattern of transfer to the customer.
With the exception of trivial amounts, the only identifiable
performance obligation is the delivery of products.
STEP 3 Determining the transaction price
For the majority of supplies, the goods are sold at an agreed
list price (or a variation of the list price as agreed between the
parties). In these cases there is no variable consideration.
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 obligations
There is only one performance obligation and accordingly the
transaction price is allocated to the delivery of the product.
STEP 5 Recognising revenue when performance obligations are
satisfied
The performance obligation is satisfied at the point in time
when the product is delivered to the customer. Each transaction is
recognised as a separate chargeable event. There are no further
obligations.
Agent vs principal considerations
Upon inception of a contract with a customer, the Group
considers whether it is acting as agent or as principal in
accordance with IFRS 15. The Group considers that it is acting as a
principal if it controls the specified good or service before that
good or service is transferred to a customer. In doing so the Group
has determined that it has acted as a principal and not as an agent
as part of all of its contracts with customers. In reaching this
conclusion the Directors considered the following arrangements:
Arrangements for sales through distributors
For all distributor arrangements, the distributor is invoiced at
the time of delivery and title to the product passes upon full and
final settlement of the invoice to which the delivery relates. The
distributor has full discretion over the setting of the final
selling price to the end customer and is responsible for all
customer returns of product.
Arrangements for sales through agents
For all agreements with agents, the agent places orders with the
Group and goods are then shipped to them. The Group, however, holds
title to these products until they are sold on to a third party.
The selling price to the end user is set by the relevant government
body and the agent receives a fixed percentage of this selling
price. The agent notifies the Group monthly on stock levels and
this is reconciled to a statement which generates an invoice for
payment by the agent. The Group is responsible for any customer
returns of product. Revenue is recognised by the Group when the
products are sold by the agent.
Statutory rebates
In Germany, pharmaceutical companies are required to pay a
manufacturer's rebate to the government as a contribution to the
cost of medicines paid for by the State and private health funds.
The rebates are not considered to meet the definition of variable
consideration as set out in IFRS 15.50-53. This is because at the
point of entering into a contract with a customer on which a rebate
is likely to apply (for example the supply of an allergy vaccine to
a patient in Germany), there is no variability relating to the
consideration to be received by the Group in exchange for the
supply of the goods - the sales price and associated rebate is
crystallised at the point of the supply. The calculation of the
rebate to be repaid by the Group is carried out and invoiced in
arrears by the various health insurer rebate centres in Germany.
Accordingly, the rebate is considered to be a reduction in the
selling price and is therefore deducted from the transaction
price.
Presentation of material items
In preparing the financial statements the Directors consider
whether there have been any material or unusual items. These items
are disclosed separately on the face of the primary financial
statements.
Expenditure recognition
Operating expenses are recognised in the Consolidated Income
Statement upon utilisation of the service or at the date of their
origin.
Inventories
Inventory is carried at the lower of cost or net realisable
value. The costs of raw materials, consumables, work in progress
and finished goods are measured by means of weighted average cost
using standard costing techniques. The cost of finished goods and
work in progress comprises direct production costs such as raw
materials, consumables, utilities and labour, and production
overheads such as employee costs, depreciation on equipment used in
production, maintenance and indirect factory costs. Standard costs
are reviewed regularly 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 judgements
Many of the amounts included in the financial statements involve
the use of judgement and/or estimation. These judgements and
estimates are based on management's best knowledge of the relevant
facts and circumstances, having regard to prior experience, but
actual results may differ from the amounts included in the
financial statements. Information about such judgements and
estimation is contained in the accounting policies and/or the notes
to the financial statements and the key areas are summarised
below:
Judgements in applying accounting policies
a) Capitalisation of development costs requires analysis of the
technical feasibility and commercial viability of the project
concerned. Capitalisation of the costs will be made only where
there is evidence that an economic benefit will accrue to the
Group. To date no development costs have been capitalised and all
costs have been expensed in the income statement as R&D costs.
Costs expensed in the year amounted to GBP12.9m (2020: GBP9.0m
which together with a credit relating to a legal claim for
reimbursement of GBP3.2m resulted in total net R&D expenditure
of GBP5.8m).
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 GBP1.2m (equivalent of EUR1.4m)
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 EUR1.4m
(GBP1.2m 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 GBP10.7m cumulative revenue recognised (2020:
GBP7.4m) may be reversed due to a retrospective change in the level
of rebate being applied (2021: GBP3.3m recognised and periods up to
2020: GBP7.4m recognised). Details of this have been noted in Note
13, Contingent liabilities.
Sources of estimation uncertainty
a) Determining whether goodwill is impaired requires an
estimation of the value in use of the CGU to which the goodwill has
been allocated. This value-in-use calculation requires an
estimation of the future cash flows expected to arise from the CGU
and a suitable discount rate 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 GBP20m 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 GBP0.75m with
neither of these scenarios indicating an impairment.
b) The Group operates equity-settled share-based compensation
plans for remuneration of its employees comprising LTIP schemes.
Employee services received in exchange for the grant of any
share-based compensation are measured at their fair values and
expensed over the vesting period. The fair value of this
compensation is dependent on whether the provisional share awards
will ultimately vest, which in turn is dependent on future events
which are uncertain. The Directors use their judgement and
experience of previous awards to estimate the probability that the
awards will vest, which impacts the fair valuation of the
compensation.
The key variables to be estimated are the number of awards that
will lapse before the vesting date due to leavers, and the number
of awards that will vest in relation to the non-market condition
performance tests.
c) The Group operates a partly funded non-contributory defined
benefit pension scheme for certain employees in Germany. The
defined assets and liabilities of this scheme are estimated using
actuarial methods by an independent expert.
3. Revenue
An analysis of revenue by category is set out in the table
below:
2021 2020
GBP'000 GBP'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 reporting
The Group's operating segments are reported based on the
financial information provided to the Executive Directors, who are
defined as the CODM, to enable them to allocate resources and make
strategic decisions.
The CODM reviews information based on geographical market
sectors and assesses performance at an EBITDA (operating profit
before interest, tax, depreciation and amortisation) and operating
profit level. Management have identified that the reportable
segments are Central Europe (which includes the following operating
segments: Germany, Austria, Switzerland and the Netherlands),
Southern Europe (Italy, Spain and Other), the UK and Rest of
World.
For all material regions that have been aggregated, management
consider that they share similar economic characteristics. They are
also similar in respect of the products sold, types of customer,
distribution channels and regulatory environments.
Revenue by segment
Revenue Inter- Total Revenue Inter- Total
from from
external segment segment external segment segment
customers revenue revenue customers revenue revenue
2021 2021 2021 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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 GBP2.6m (2020: GBP2.6m) relating to goodwill and within
Southern Europe assets to the value of GBP3.8m (2020:GBP4.3m)
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 GBP2.0m and comprised plant & machinery
GBP1.2m, fixtures and fittings GBP0.2m, computer equipment GBP0.3m
and computer software GBP0.3m (2020: GBP1.6m).
Total liabilities by segment
2021 2020
GBP'000 GBP'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
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Net monetary value of above the line R&D tax credit 567 634
6. Finance expense
2021 2020
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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 GBP949,000 (2020: GBP336,000). The movement in the value
of inventories measured at fair value less cost to sell during the
year gave rise to a charge of GBP613,000 which was included within
the cost of goods sold in the Consolidated Income Statement.
10. Trade and other receivables
2021 2020
GBP'000 GBP'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, GBP81,000 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
GBP'000 GBP'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 rate amount credit
loss loss
% GBP'000 GBP'000 % GBP'000 GBP'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
GBP'000 GBP'000
--------------------------- -------- --------
Due within one year
Bank loans 963 829
--------------------------- -------- --------
963 829
--------------------------- -------- --------
2021 2020
GBP'000 GBP'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 GBP7m. 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 GBP40.3m as at 30 June 2021 and the GBP7m overdraft
facility was unused at 30 June 2021 (2020: GBPnil). 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 GBP'000 GBP'000 GBP'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 EUR0.6m (included above) to further expand the Group's
manufacturing and quality control facilities. Warranties in respect
of this EUR0.6m loan were provided by Allergy Therapeutics plc.
12. Issued share capital
2021 2020
---------------------- ----------------------
Shares GBP'000 Shares GBP'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 GBP4,000 (2020: GBP1,000).
13. Contingent liabilities
During the year, Allergy Therapeutics Iberica S.L. took out a
loan for EUR0.6m 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 GBP10.7m cumulative revenue recognised (2020:
GBP7.4m) may be reversed due to a retrospective change in the level
of rebate being applied (2021: GBP3.3m recognised and periods up to
2020: GBP7.4m 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 EUR1.4m (GBP1.1m at that time, now GBP1.2m)
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 control
There is no overall ultimate controlling party.
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