TIDMQP.
RNS Number : 5711L
Quantum Pharma PLC
04 October 2016
Press Release 4 October 2016
This announcement contains inside information
Quantum Pharma Plc
('Quantum', the 'Group' or the 'Company')
Half year results for the six months to 31 July 2016
Quantum Pharma Plc (AIM: QP.), the service-led niche
pharmaceutical developer, manufacturer and supplier to the health
and care sectors, has today published its half year results for the
six months to 31 July 2016 ('H1-FY17' or the 'period'). Comparative
data relates to the six months to 31 July 2015 ('H1-FY16') unless
indicated otherwise.
Financial Highlights
(GBP in millions except H1-FY17 H1-FY16
where stated)
---------- ----------
Revenue 42.8 34.3
Gross profit 13.3 13.1
Adjusted EBITDA(1) 4.2 5.5
Operating profit 1.2 3.2
Profit before tax 0.8 2.8
Adjusted profit before tax(1) 2.6 4.5
Basic EPS 0.8 pence 2.0 pence
Adjusted EPS(1) 2.2 pence 3.2 pence
Development expenditure 2.3 3.0
Net debt 23.8 24.2
(1) Excludes share based payments, one-off costs, acquisition
costs and deferred consideration (treated as remuneration) for
acquisitions.
-- Revenue grew across all three divisions; with the strongest
advance coming from Medication Adherence (GBP5.9 million increase),
which made a small contribution to gross profit.
-- On a like-for-like basis the Group is trading in line with
performance for H1-FY16, having increased the cost base of Colonis
by GBP1.2 million for market delivery related costs in the period
as recent launches enter the market. In addition Nupharm, acquired
in July 2015, has suffered losses of around GBP0.5 million and
utilised GBP0.7 million of provision for rectification works in the
period.
-- Development expenditure decreased as a result of the cost
benefit of Lamda's in-house development capability and a more
focused and cost controlled development programme.
-- Net debt position was well managed across H1-FY17.
-- Strong working capital management across the period has
enabled positive operational cash flows.
Business Highlights:
-- The core Specials division performed well during the period.
-- New five-year contract extension signed with AAH
Pharmaceuticals Limited ("AAH"), the UK's leading pharmaceutical
wholesaler, which also benefits from the supply to an additional
281 Sainsbury's in-store pharmacies acquired by Lloyds
Pharmacy.
-- Niche Pharmaceuticals division launched five products,
including expansion of the Vitamin D range with colecalciferol and
ergocalciferol capsules, and two further products in the Mucodis(R)
range of medical devices.
-- Launch timings largely in line with management expectations
and products are now moving into the market access and sales
delivery phase.
-- Appointment of Chris Rigg as CFO in March 2016.
Post Period End Highlights:
-- Launch of Glycopyrronium Bromide Oral Solution 1mg/5ml for
the treatment of peptic ulcers, an important unlicensed-to-licensed
product for the Group.
-- Appointment of Chris Rigg as acting CEO in August 2016.
Business Review
-- Following his appointment as acting CEO, Chris Rigg initiated
a review of key areas of the business.
-- This review has now been concluded, and its findings are as
follows:
o The core specials business remains strong and cash
generative.
o Market data continues to support the value of the Group's
unlicensed to licensed pipeline.
o A simplified business, primarily focused on specials and the
Group's unlicensed to licensed growth platform, offers the best
opportunity for value creation.
o Generic, generic plus and medical device products are proving
more challenging to take to market and more conservative sales
assumptions are required for those products.
o Decision taken to commence consultation on closure of the
underperforming and loss making NuPharm business.
o Further opportunities exist to reduce the Group's cost
base.
o A lower level of net debt would help to support the further
growth of the refocused business.
Chris Rigg, Chief Financial Officer and Acting Chief Executive
Officer of Quantum Pharma, commented:
"The core specials business is performing well and launches from
the Niche Pharmaceuticals pipeline are being brought to market
largely in line with plan. The early indications are that sales of
Glycopyrronium Bromide Oral Solution delivered under the core
strategy of unlicensed to licensed and 'cease and desist'
notifications are encouraging.
Following my appointment as Acting CEO in early August, we
instigated and completed a review of a number of key areas of the
business.
We found that the core specials business remains strong and cash
generative and the potential still exists to deliver significant
growth from our strong Niche Pharmaceuticals pipeline, including an
exciting pipeline of unlicensed to licensed products where market
data continues to support its potential sales value. We believe
that a simplified business, primarily focused on specials and the
Group's unlicensed to licensed growth platform offers the best
opportunity for value creation.
Initial data from recent product launches indicates that
generic, generic plus and medical device products are proving more
challenging to take to market, leading us to conclude that more
conservative sales assumptions are required for those types of
products. We have also taken a decision to commence consultation on
the closure of our underperforming and loss making NuPharm
business.
Although we continue to expect to deliver strong growth in the
second half of the year and beyond, given the recent performance of
products other than unlicensed to licensed products and the
conclusions of the business review, the Board now expects
performance will be materially below market expectations. The Board
is confident in the growth potential of the business from this
revised base with its renewed focus on our key strategic
objectives."
For further information:
Quantum Pharma Plc
John Clarke, Chairman Tel: +44 (0) 1207 279
Chris Rigg, CFO and Acting CEO 404
Craig Swinhoe, Group Corporate Affairs www.quantumpharmaplc.com
Director and Company Secretary
Zeus Capital Limited Tel: +44 (0) 20 3829
(Nominated Adviser & Joint Broker) 5000
Andrew Jones / Nick Cowles / Jamie Peel www.zeuscapital.co.uk
Dominic Wilson / Adam Pollock / John
Goold
N+1 Singer
(Joint Broker) Tel: +44 (0) 20 7496
Aubrey Powell / James White / Sandy 3000
Ritchie www.n1singer.com
Nick Owen / Brough Ransom
Media enquiries:
Buchanan
Henry Harrison-Topham / Sophie Cowles Tel: +44 (0) 20 7466
/ Steph Watson 5000
quantumpharma@buchanan.uk.com www.buchanan.uk.com
Notes to Editors
Quantum Pharma Plc is a service-led, niche pharmaceutical
developer, manufacturer and supplier to the retail pharmacy,
pharmaceutical wholesaler, hospital, homecare and care home
markets. Quantum Pharma operates through three divisions, offering
a portfolio of innovative and complementary products and
services.
Specials comprises four business units (Quantum Pharmaceutical,
UL Medicines, NuPharm and Quantum Aseptics Services), which
manufacture, procure and supply unlicensed medicines (specials) and
special obtains. In response to a request from a prescriber for a
bespoke medicine or special product to optimise patient treatment,
the division manufactures, procures and supplies bespoke specials;
batch-made specials; aseptically prepared sterile intravenous
medicines; imported medicines and special obtain products. With an
expansive portfolio of products, Quantum is a trusted partner to
the majority of large retail pharmacy chains in the UK, as well as
pharmaceutical wholesalers, hospitals, independent pharmacies and
dispensing doctors. The division offers an unrivalled and
constantly expanding range of products. It has a customer-focused,
service-driven business model, which aims to provide shorter lead
times than any of its competitors.
Niche Pharmaceuticals comprises three business units (Colonis,
Lamda and PERN Consumer Products) which develop and commercialise
niche pharmaceuticals. This division is a product development and
commercialisation business focusing on taking niche drugs through
the regulatory pathway to achieve regulated status (licensed
product or medical device). The division uses the excellent
visibility of trends in the UK pharmacy and hospital markets gained
through our Specials division, to supplement market data, allow
early identification of the market opportunity to take products
from unlicensed (special) status to licensed status. The division
has a growing portfolio and pipeline of products that fit this
unlicensed to licensed pathway, as well as complementary generic,
generic plus or medical devices intended to meet unmet patient
needs across a number of therapeutic areas.
Medication Adherence comprises two business units (Biodose(R)
and Biodose Services(R)) which provide products and services to
enhance the likelihood of a patient adhering to a medication
regime, patient-focused homecare services and services to
pharmaceutical companies. It owns Biodose(R), the only medication
delivery system on the market that accommodates both liquid and
solid doses. Biodose Connect(TM) takes patient safety and adherence
to the next level by enabling remote monitoring of adherence to
medication regimes. The division also operates a range of
specialist patient-focused homecare services to the NHS, private
clinics and pharmaceutical companies across the UK and provides the
Group with exposure to the homecare and supported living sectors of
the care pathway complementing the focus of the remainder of the
Group.
For further information, please visit
www.quantumpharmaplc.com.
Overview
As a whole, the Group performed in accordance with management
expectations during the period.
During the period revenue rose by 25% across the Group to
GBP42.8 million (H1-FY16: GBP34.3 million), largely due to growth
in homecare contracts in the Medication Adherence division, which
is a lower margin business. Gross profit increased by 2% to GBP13.3
million (H1-FY16: GBP13.1 million) and adjusted EBITDA decreased by
24% to GBP4.2 million (H1-FY16: GBP5.5 million), mainly as a result
of the Group incurring approximately GBP1.2 million for market
delivery infrastructure related costs at Colonis, now that business
unit has moved into its product delivery phase. In addition,
NuPharm continued to suffer losses during the period. The Group has
managed its debt position well across the period by intensive
working capital management. The Group has available facilities of a
term loan of GBP22.8 million and a revolving credit facility of
GBP10 million.
The Group continued to strengthen its Specials division, which
performed well, with the exception of NuPharm. The division
continues to provide a stable and profitable platform for the
growth of our Niche Pharmaceuticals pipeline and other areas of the
Group.
During the period, the Group has completely reshaped the
infrastructure and capability within the Niche Pharmaceuticals
division and as a consequence is now broadly meeting our product
launch timelines. During the period Quantum launched five products
and post period end, a further two products were launched. Timing
of these product launches is largely in line with management
expectations. The Group is now moving into the market access and
sales delivery phase in relation to those products.
The Niche Pharmaceuticals division has a growing portfolio of
launched products and a strong pipeline of unlicensed to licensed
products in development. The pipeline also includes a number of
generic and generic plus products inherited through the acquisition
of Lamda. The Board believes that the Group will be more successful
focusing efforts on the products and sale of core unlicensed to
licensed development and supplementing those with a smaller number
of complimentary or niche products as appropriate.
Board Changes
During the period, Quantum announced Chris Rigg's promotion to
the role of Chief Financial Officer, and to Quantum's Board. His
appointment followed the resignation of Martin Such on 7 March
2016. Chris Rigg joined Quantum as the Group's Strategic Director
in November 2015.
Quantum also announced that Andrew Scaife, the Chief Executive
Officer, tendered his resignation on 12 July 2016. Post period end,
following an orderly handover of responsibilities, Andrew Scaife
resigned from the Board on 1 August 2016 and the Board then
appointed Chris Rigg to Acting Chief Executive Officer.
A formal search process for a permanent CEO is at an advanced
stage and the Company anticipates making an announcement on the
appointment of a permanent CEO in the near future. In the interim,
the Board is confident and fully supportive of Chris Rigg's ability
to lead the Group in his combined role.
Quantum is also engaged in a process to strengthen the Board.
The appointment of an additional non-executive director with
pharmaceutical industry experience is also at an advanced stage and
the Board anticipates making an announcement shortly. Following
this appointment, the Board will seek to appoint a further
non-executive director with relevant financial experience.
Business Review
Following the appointment of Chris Rigg as acting CEO and post
the period end, Chris led a business review of key areas of the
Group including:
Focus on specials and unlicensed to licensed
The Board believes that Quantum continues to have a strong core
in its market leading Specials division, and that the potential
exists to deliver significant growth from its Niche Pharmaceutical
pipeline.
The review confirmed that the available data continues to
support the potential sales value of the unlicensed to licensed
products, assuming first to market.
The review also identified that generic, generic plus and
medical device products are proving more challenging to take to
market than anticipated. Therefore the Board expects future revenue
from these activities to grow more slowly than previously
anticipated for those categories of products and has revised its
sales assumptions accordingly.
The review has also concluded that going forward the focus of
development should be on the core pipeline of unlicensed to
licensed products. As such, the pipeline has been rationalised with
development of some generic and generic plus products stopped.
Other generic or generic plus products that remain in the pipeline
will continue to be developed with the business opportunity
regularly assessed on a case by case basis.
The Board believes that a lower level of net debt would provide
greater operational freedom to grow the core specials business and
create further value in the Niche Pharmaceuticals pipeline, with a
focus on unlicensed to licensed development.
Closure plan for NuPharm
Despite continued investment and the dedication of management
time since its acquisition in July 2015, NuPharm has suffered
GBP0.5 million trading losses as well as utilising GBP0.7 million
provision for rectification works in the period. In addition,
NuPharm absorbed significant group management resources and remains
subject to MHRA manufacturing restrictions.
The Board has concluded that it would take unacceptable further
cash losses and management time to try to address the operational
issues and that NuPharm is not capable of becoming an earnings
enhancing business. Other alternatives were examined but were not
considered viable. The Board believes that the best available
course of action is to commence a closure plan in an orderly
fashion. Therefore, Quantum is commencing the consultation process
with staff regarding the proposed closure of the NuPharm business.
The proposed closure plan will also be communicated to customers,
suppliers and the MHRA today. Under that proposed plan, the Board
envisages that NuPharm will cease trading by the end of December
2016.
Current Trading and Outlook
As previously indicated, the Group's performance for the
financial year is second half weighted and will be dependent on the
level of sales achieved by recent product launches as well as the
timing and sales of further product launches due to be delivered in
the remainder of the year.
The Specials division continues to trade strongly with the
exception of NuPharm. Current trading for this division has
continued to be in line with management expectations and is
expected to remain in line with our expectations for the full
year.
The launch of Glycopyrronium Bromide Oral Solution 1mg/5ml under
the core strategy of unlicensed to licensed under 'cease and
desist' notices, has been very encouraging and in line with our
expectations at this early stage.
The early second half year indications on the other products are
not as promising and as a result of further sales and revenue data
gathered during September, in particular on Mucodis(R), our
in-licensed patented range of medical devices and our range of
Vitamin D products, the Board believes that the sales and revenue
assumptions for products other than unlicensed to licensed products
held until now are no longer deliverable. Accordingly more
conservative assumptions are required on those products which
reflect lower and / or slower market penetration, or greater price
competition and an overall lower sales build.
Although the Board still anticipates strong growth for the
second half of the current financial year and beyond, given the
recent performance of products other than the unlicensed to
licensed products and the conclusion of the business review, it
considers that performance will be materially below market
expectations. However, the Board is confident that the continuing
growth opportunities available to a focused business from this
revised base remain substantial.
Dividend
At the Annual General Meeting on 12 July 2016, shareholders
approved a final dividend for the financial year ended 31 January
2016 of 1 pence per ordinary share, to be paid on 7 November 2016
to shareholders on the register at the close of business on 21
October 2016. This brings the total dividend for the financial year
ended 31 January 2016 to 1.5 pence per ordinary share. The Board
has decided not to declare an interim dividend in respect of the
current financial year.
Divisional Review
Specials division
The Specials division continues to generate a core and stable
level of earnings and cash generation for other parts of the Group.
It also continues to provide valuable data and insight into
potential unlicensed to licensed developments for our Niche
Pharmaceuticals pipeline.
Revenue increased by 5% to GBP28.7 million (H1-FY16: GBP27.4
million) and gross profit decreased to GBP10.6 million (H1-FY16:
GBP11.5 million). This was in line with expectations and a solid
performance that saw growth in the number of specials orders. Such
performance is encouraging in the current climate as the retail
specials sector continues to come under pressure due to prescribing
volume, the drug tariff and product licensing. Adjusted EBITDA has
decreased for the division to GBP5.0 million (H1-FY16: GBP5.8
million), impacted by the losses in NuPharm. On an underlying
basis, the core specials business is growing.
The core specials business, which supplies retail pharmacies and
wholesalers, performed well during the period. Quantum continues to
deliver on its strategy of signing exclusive deals with its
customers and during the period the Group signed a new five-year
contract extension with AAH Pharmaceuticals Limited ('AAH') the
UK's leading pharmaceutical wholesaler, to exclusively supply
specials and special obtains. AAH, a long term partner of Quantum,
serves the growing number of Lloyds Pharmacy and other pharmacies
in the Celesio UK Group. Post period end on 1 September 2016 Lloyds
Pharmacy, which operates over 1,500 stores throughout the UK,
completed its acquisition of Sainsbury's 281 in-store pharmacies.
The Group's core specials business has seen an immediate increase
in orders following the acquisition.
Not only is this partnership with AAH important for Quantum
financially, such strategic relationships with our Specials
division also provide a further route to market for our Niche
Pharmaceutical division's licensed products. The core specials
business also has contracts with three of the four largest national
pharmacy chains, which helps strengthen this route to market.
The Group's business supplying the hospital sector saw some
volume pressure in the period, but this was offset by the
performance of the core business. However, it continues to be well
placed in the market having accounts with nearly all UK hospital
trusts.
The aseptics business continues to progress well, winning new
customers, driving growth and improving profitability. During the
period we entered into a contract with a large pharmaceutical
company to compound and distribute a cancer treatment; this was our
first business to business agreement in aseptics.
In July 2015, the Group acquired NuPharm for net consideration
of GBP8.8 million. Strategically it was thought that NuPharm would
complement the Group's activities by offering unique manufacturing
services to third parties in the UK, in addition to providing the
opportunity for the for the Group to increase efficiencies and
drive operational growth in the medium term. At the time of
acquisition, NuPharm was under MHRA manufacturing restrictions.
Following the acquisition, the Group identified further operational
issues to address. This resulted in a further investment in NuPharm
since acquisition including work to significantly upgrade the
facility, overhaul NuPharm's systems and new equipment and
resources. During the period, NuPharm has suffered losses of GBP0.5
million as well as utilising GBP0.7 million provision for
rectification works, bringing the operational investment in the
period to approx. GBP1.2 million. Previously the expectation was
that NuPharm would make a positive contribution to the Group's
profitability in the second half of the current financial year.
Despite the additional investment, the operational issues have
not been capable of adequate remedy and further issues continue to
be identified. NuPharm remains subject to MHRA manufacturing
restrictions, continues to generate significant cash losses each
month and causes significant management distraction. Following a
review of the options open to the Group, the Board has not been
able to develop a positive business case for NuPharm.
Therefore, regrettably a decision has been taken to consult with
staff regarding the proposed closure of NuPharm, in order to
eliminate further losses and investment and to allow management to
focus on the core profitable specials business which produces the
platform for Niche Pharmaceuticals product growth.
Overall, Quantum's specials business, excluding NuPharm,
continues to be well placed in the market and management believes
that it continues to outperform its competition.
Niche Pharmaceuticals division
Revenue in the period grew 87% to GBP2.8 million (H1-FY16:
GBP1.5 million) through the launch of new products and third party
development projects. Adjusted EBITDA decreased to break even
(H1-FY16: GBP0.4 million), due to the GBP1.2 million cost base
increase for market delivery infrastructure related costs, in
advance of sales, during this period.
The Niche Pharmaceuticals division has now launched 15 products
and has received marketing authorisations for a further seven
generic or generic plus products, which have not yet launched.
Following the business review and consequent pipeline
rationalisation of some generic and generic plus products in
development, it has a pipeline of 47 regulated products, with 15 of
these currently in assessment with the MHRA and other authorities.
Of the pipeline, 27 products are unlicensed to licensed
developments, of which four are currently in assessment with the
MHRA.
During the period, the Group has completely reshaped the
infrastructure and capability within the Niche Pharmaceuticals
division and is confident of its ability to meet product launch
timelines. The Group launched a number of products, particularly in
the second quarter, with the timing of product launches largely in
line with management expectations. The Group is now moving into the
market access and sales delivery phase in relation to those
products.
The Vitamin D product portfolio was extended by launching
colecalciferol 800 IU capsules and 1000 IU capsules in both branded
(Aviticol(R)) and generic versions, as well as ergocalciferol 50
000 IU capsules. The 1000 IU and 50 000 IU capsules represented the
first unlicensed to licensed development of their kind to be made
available in the UK. The Vitamin D market is highly competitive and
includes nutritionals as well as licensed products. During the
period the Group has seen some uptake as a result of engagements
with Clinical Commissioning Groups ('CCGs'), which we believe we
will see increased take up as a result of us now offering a broader
product range.
The Group launched a further two products, Mucodis(R) Dermal
Spray and Mucodis(R) Rectal Gel, in its branded range of
in-licensed patented medical devices during the period and post
period end completed the initial range by launching Mucodis(R)
Vaginal Cream. These join the Mucodis(R) Oromucosal Spray and
Mucodis(R) Mouthwash launched during Q4-FY16. The range of five
products provides the NHS with prescribable products to address a
number of the side effects associated with cancer treatments. These
are new products and the Group is still in the market access phase.
Although the initial response from nursing teams at hospitals has
been encouraging in relation to our Mucodis(R) branded range and
product use has provided favourable patient feedback, this has not
yet translated into material sales. This has been, in part, due to
a low willingness to treat Mucositis due to a lack of recognition
of Mucositis as a serious condition and in part due to lengthy
product listing processes. The listing by NHS Supply Chain
procurement, which would allow the products to be ordered and
stored on wards in hospitals, is taking longer than expected. The
two oral and highest potential products in the range were added to
the Drug Tariff on 1 September 2016 following which the Group
expected pull through from wholesalers to begin with immediate
effect, which the Group has not seen. The early evidence suggests
that sales will take longer to materialise for the range and will
likely be materially lower than anticipated.
Post the period end, the Group successfully launched its
licensed Glycopyrronium Bromide Oral Solution 1mg/5ml. The solution
is licensed in adults as an add-on therapy in the treatment of
peptic ulcers. This was the first unlicensed to licensed liquid
formulation of this product in the UK and was launched by way of
'cease and desist' notices, which means that the equivalent
unlicensed medicinal products ('specials'), which are used for a
number of chronic conditions, cannot now be supplied by any party.
Glycopyrronium Bromide Oral Solution is one of the most important
launches of the current financial year for Quantum's Niche
Pharmaceuticals division. Early signs from the launch mirror the
Group's sales assumptions and reinforce the core strategy of
unlicensed to licensed development and 'cease and desist'.
The Board believes that the Group will be more successful
focusing efforts on the development and sale of unlicensed to
licensed products and supplementing those with a smaller number of
complementary or niche products as appropriate. The Board also
believes that more conservative sales assumptions are required for
products other than unlicensed to licensed products, to assume
greater price competition and/or significantly lower market
penetration than previously envisaged.
The Niche Pharmaceuticals division will continue to seek market
authorisations on certain generic or generic plus products and a
decision will be made on a case-by-case basis whether to launch the
product or seek an out-licensing partner to maximise the value of
the marketing authorisation to the Group. In this respect, during
the period and post period, the Group received marketing
authorisations for Memantine Soluble tablets 10mg, 20mg and a
titration pack (5mg, 10mg, 15mg, 20mg), Donepezil Oral Solution
10mg/5ml (both in the field of Alzheimer's) and Metformin Oral
Solution 500mg/5ml, 850mg/5ml and 1,000mg/5ml (in the area of type
2 diabetes). The Group anticipates that the Metformin range will be
launched during H2-FY17, whilst the Group is seeking out-licensing
partners for the Memantine range and Donepezil. The granting of
these seven marketing authorisations, received in close succession,
demonstrates the ability of the division to deliver licensed
products through the development process.
Opportunities to populate the product pipeline are continually
being identified by the Group product development team, utilising
market knowledge and intelligence from the Specials division.
During the period, the Group concluded a number of small
out-licensing deals in Europe and continues to actively pursue
out-licensing opportunities for products in its
portfolio/pipeline.
Lamda, the division's fully outsourced research and development
service to companies looking to license medicinal products,
performed well and was earnings enhancing during the period, as
expected. Lamda, which has development experience of successfully
completing over 100 projects for third parties, has significantly
contributed to the improvement in the delivery of the Niche
Pharmaceuticals pipeline and reduced product development costs for
the Group. This has seen the Group extract cost savings during the
period as the outsourcing of third party development projects has
reduced.
Medication Adherence division
Revenue for the half year increased by 109% to GBP11.3 million
(H1-FY16: GBP5.4 million) as a result of growth in the Group's
specialist homecare offering and adjusted EBITDA loss in the period
reduced to (GBP0.2) million (H1-FY16: (GBP0.3) million).
During the period, the Group's innovative telemedicine
technology, branded Biodose Connect(TM) by Vaica, successfully
completed formal validation testing and now has Class I medical
device status. It is very early in the commercialisation of Biodose
Connect(TM) and, as with any new innovative product or service,
there is work to do to convert interest to sales. A key part of
this will be developing and securing strategic partnerships over
time to help access the relevant target markets.
The Group believes that Biodose Connect(TM) is a product that
could provide a significant benefit to the NHS, social care
providers and pharmaceutical companies, not only by reducing the
burden created by medication non-adherence, but also in allowing
patients to be treated at home. With the appropriate
commercialisation strategy and strategic partners to help access
markets, the Group believes it could provide high margin income for
the Group in the medium term, although some further investment will
be required to exploit its full potential.
The homecare business has performed well to reduce its losses.
During the period, the Group commenced supplies under the contract
with Yorkshire and Humber NHS Pharmaceutical Purchasing Consortium
to supply nearly 3,000 patients taking antiretrovirals,
anti-tuberculosis medication, medicines for cystic fibrosis, and
oral chemotherapy medication. At full capacity this will require
9,500 deliveries per annum. The business also commenced supply to
two pharmaceutical company funded homecare services for patients
who are self-injecting biologic medication.
Stork Fertility Services continues to grow with new service
level agreements signed with fertility clinics in the UK and in
Europe. The Group estimates that Stork Fertility Services now
provides 50% of the fertility homecare deliveries in the UK.
Condensed Consolidated Income Statement
for period ended 31 July 2016
Note (Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year ended
31
31 July 2016 31 July 2015 January 2016
GBP000 GBP000 GBP000
Revenue 2 42,807 34,268 69,990
Cost of sales (29,541) (21,172) (43,754)
--------------- --------------- -------------
Gross profit 13,266 13,096 26,236
Other operating income 31 16 204
Distribution expenses (1,329) (1,276) (2,594)
Administrative expenses (10,765) (8,685) (16,882)
Operating profit 1,203 3,151 6,964
Financial expenses (500) (415) (905)
--------------- --------------- -------------
Net financing expense (500) (415) (905)
Share of profit of equity-accounted
investees, net of tax 79 44 106
--------------- --------------- -------------
Profit before tax 2 782 2,780 6,165
Taxation 180 (284) (569)
--------------- --------------- -------------
Profit for the period 962 2,496 5,596
=============== =============== =============
Attributable to:
Equity holders of the parent 962 2,496 5,596
Profit for the period 962 2,496 5,596
=============== =============== =============
Basic and diluted earnings per share
attributed to equity shareholders
of the Company
Basic (p): 3 0.8 2.0 4.5
Diluted (p): 3 0.8 2.0 4.3
=============== =============== =============
All activities relate to continuing
operations.
Condensed Consolidated Statement of Comprehensive Income
for period ended 31 July 2016
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year ended
ended 31 ended 31 July 31 January
July
2016 2015 2016
GBP000 GBP000 GBP000
Profit for the period 962 2,496 5,596
Other comprehensive income
Items that are or may be recycled subsequently
into profit or loss
Foreign exchange translation differences 41 3 (3)
----------- -------------- -----------
Other comprehensive income for the period,
net of income tax 41 3 (3)
----------- -------------- -----------
Total comprehensive income for the period 1,003 2,499 5,593
=========== ============== ===========
Attributable to:
Equity holders of the parent 1,003 2,499 5,593
Condensed Consolidated Balance Sheet
as at 31 July 2016
Note (Unaudited) (Unaudited) (Audited)
31 July 31 July 2015 31 January
2016 2016
GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 6,066 5,471 5,967
Intangible assets 5 80,331 74,852 78,432
Investments 105 - 105
----------- ------------- -----------
86,502 80,323 84,504
----------- ------------- -----------
Current assets
Inventories 3,972 5,128 4,887
Tax receivable 476 - 307
Trade and other receivables 13,009 12,559 13,410
Cash and cash equivalents 6 5,560 5,779 4,240
----------- ------------- -----------
23,017 23,466 22,844
----------- ------------- -----------
Total assets 109,519 103,789 107,348
=========== ============= ===========
Current liabilities
Other interest-bearing loans
and borrowings 6 (9,880) (7,555) (7,880)
Trade and other payables (20,896) (16,403) (18,943)
Tax Payable - (256) -
Provisions (1,022) - (1,355)
----------- ------------- -----------
(31,798) (24,214) (28,178)
----------- ------------- -----------
Non-current liabilities
Other interest-bearing loans
and borrowings 6 (19,519) (22,399) (20,959)
Other payables (21) (2,018) (19)
Provisions - (234) (439)
Deferred tax liabilities (2,546) (1,558) (2,244)
----------- ------------- -----------
(22,086) (26,209) (23,661)
Total liabilities (53,884) (50,423) (51,839)
=========== ============= ===========
Net assets 55,635 53,366 55,509
=========== ============= ===========
Equity attributable to equity
holders of the parent
Share capital 12,500 12,500 12,500
Share premium 64,940 64,940 64,940
Consolidation reserve (9,752) (9,752) (9,752)
Translation reserve 83 48 42
Other reserve (21,726) (21,726) (21,726)
ESOP own share reserve (484) (484) (484)
Merger reserve 8,742 8,742 8,742
Retained earnings 1,332 (902) 1,247
----------- ------------- -----------
Total equity 55,635 53,366 55,509
=========== ============= ===========
Condensed Consolidated Statement of Changes in Equity
ESOP Total
Share Share Consolidation Translation Other own share Merger Retained parent
capital premium reserve reserve reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
February
2016 12,500 64,940 (9,752) 42 (21,726) (484) 8,742 1,247 55,509
-------- -------- -------------- ----------- -------- ---------- -------- --------- ---------
Total
comprehensive
income
for the period
Profit or loss - - - - - - - 962 962
Other
comprehensive
income - - - 41 - - - - 41
-------- -------- -------------- ----------- -------- ---------- -------- --------- ---------
Total
comprehensive
income
for the period - - - 41 - - - 962 1,003
-------- -------- -------------- ----------- -------- ---------- -------- --------- ---------
Transactions
with owners,
recorded
directly in
equity
Equity-settled
share based
transactions - - - - - - - 373 373
Dividend
payable - - - - - - - (1,250) (1,250)
-------- -------- -------------- ----------- -------- ---------- -------- --------- ---------
Total
contributions
by
and
distributions
to owners - - - - - - - (877) (877)
-------- -------- -------------- ----------- -------- ---------- -------- --------- ---------
Balance at 31
July 2016 12,500 64,940 (9,752) 83 (21,726) (484) 8,742 1,332 55,635
======== ======== ============== =========== ======== ========== ======== ========= =========
Condensed Consolidated Statement of Changes in Equity
ESOP
own Total
Share Share Consolidation Translation Other share Merger Retained parent
capital premium reserve reserve reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 February
2015 12,500 64,940 (9,752) 45 (21,726) (484) 8,742 (3,545) 50,720
------- ------- -------------- ----------- -------- ------- ------- -------- ----------
Total comprehensive
income
for the period
Profit or loss - - - - - - - 2,496 2,496
Other comprehensive
income - - - 3 - - - - 3
------- ------- -------------- ----------- -------- ------- ------- -------- ----------
Total comprehensive
income
for the period - - - 3 - - - 2,496 2,499
------- ------- -------------- ----------- -------- ------- ------- -------- ----------
Transactions with owners,
recorded directly in
equity
Equity-settled share
based
payment transactions - - - - - - - 459 459
Dividend payable - - - - - - - (312) (312)
------- ------- -------------- ----------- -------- ------- ------- -------- ----------
Total contributions by
and distributions to
owners - - - - - - - 147 147
------- ------- -------------- ----------- -------- ------- ------- -------- ----------
Balance at 31 July 2015 12,500 64,940 (9,752) 48 (21,726) (484) 8,742 (902) 53,366
======= ======= ============== =========== ======== ======= ======= ======== ==========
Condensed Consolidated Cash Flow Statements
for period ended 31 July 2016
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2016 2015 2016
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit for the period 962 2,496 5,596
Adjustments for:
Depreciation, amortisation and impairment 1,127 663 1,852
Financial expense 500 415 905
Share of profit of equity-accounted
investees (79) (44) (106)
Loss on sale of property, plant and
equipment (2) - -
Equity settled share-based payment
expenses 373 459 133
Taxation (180) 284 569
----------- ----------- -----------
2,701 4,273 8,949
Decrease/(increase) in trade and
other receivables 400 269 (767)
Decrease/(increase) in inventories 915 (886) (655)
Increase/(decrease) in trade and
other payables 785 (1,732) 1,003
Decrease in provisions (708) (14) (916)
----------- ----------- -----------
4,093 1,910 7,614
Interest paid (442) (250) (720)
Tax received 314 186 83
----------- ----------- -----------
Net cash from operating activities 3,965 1,846 6,977
----------- ----------- -----------
Cash flows from investing activities
Acquisition of subsidiaries net of
cash acquired - (12,613) (12,115)
Acquisition of investment - - (105)
Acquisition of property, plant and
equipment (735) (679) (2,090)
Capitalised development expenditure (2,318) (3,023) (6,355)
Acquisition of other intangible assets (92) (78) (287)
----------- ----------- -----------
Net cash from investing activities (3,145) (16,393) (20,952)
----------- ----------- -----------
Cash flows from financing activities
Proceeds from new loan 2,000 29,520 29,520
Repayment of borrowings (1,500) (15,067) (16,241)
Dividends paid - - (937)
----------- ----------- -----------
Net cash from financing activities 500 14,453 12,342
----------- ----------- -----------
Net increase/(decrease) in cash and
cash equivalents 1,320 (94) (1,633)
Cash and cash equivalents at start
of period 4,240 5,873 5,873
----------- ----------- -----------
Cash and cash equivalents at period
end 5,560 5,779 4,240
=========== =========== ===========
Notes to the condensed consolidated financial statements
(forming part of the financial statements)
1 Accounting Policies
1.1 Basis of preparation
The interim financial information set out in this statement for
the six months ended 31 July 2016 and the comparative figures for
the six months ended 31 July 2015 are unaudited. This financial
information does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006. It does not comply with IAS
34 'Interim Financial Reporting' as is permissible under the rules
of the AIM market ("AIM").
This interim statement, which is neither audited nor reviewed,
has been prepared in accordance with the measurement and
recognition criteria of Adopted IFRS's. This statement does not
include all the information required for the full annual financial
statements and should be read in conjunction with the financial
statements of the Group as at and for the year ended 31 January
2016.
The half year results were approved by the Board of Directors on
3 October 2016.
1.2 Accounting policies
The accounting policies applied in preparing these interim
financial statements are the same as those applied in the
preparation of the annual financial statements for the year ended
31 January 2016, as described in those financial statements.
1.3 Status of financial information
The comparative figures for the financial year ended 31 January
2016 are not the company's statutory financial statements for that
financial year. Those accounts have been reported on by the
company's auditor and delivered to the Registrar of Companies. The
report of the auditor was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report, and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
1.4 Principal risks and uncertainties
The principal risks and uncertainties associated with the
Group's business can be divided into the following main areas:
-- Key competitors
-- Key customers
-- Regulatory clearance
-- Marketing Authorisations (licences for new products)
-- Facilities
-- Reputation
-- Changes in legislation
-- Drug tariff and prescription pricing practice
-- Loss of key employees
-- Cash flow in high value contracts
Information on these risks and how they are managed is given on
page 22 in the Annual Report. In the view of the Board these
principal risks and uncertainties are as applicable to the
remaining six months of the financial year as they were to the six
months under review.
2 Segmental reporting
The following analysis by segment is presented in accordance
with IFRS 8 on the basis of those segments whose operating results
are regularly reviewed by the Board of Directors (the Chief
Operating Decision Maker as defined by IFRS 8) to assess
performance and make strategic decisions about allocation of
resources.
The sectors distinguished as operating segments are Specials,
Niche Pharmaceuticals and Medication Adherence. A short description
of these sectors is as follows:
-- Specials - Manufacture, source and supply specials to
pharmacies, pharmaceutical wholesalers, hospitals (NHS and private)
and other specials suppliers throughout the UK and overseas.
-- Niche Pharmaceuticals (Niche) - develop and supply nice
pharmaceuticals, provide development and regulatory services and
out-license products and dossiers to third parties across
Europe.
-- Medication adherence (MA) - provide products and services
designed to enhance adherence to medication regimes.
These segments have separate management teams and offer
different products and services. These operating segments are
reportable segments. The segment results, as reported to the Board
of Directors, are calculated under the principles of IFRS.
Performance is measured on the basis of Adjusted EBITDA which
comprises the segment result before non-cash items (amortisation,
depreciation and share based payments) and other items that are
excluded when the Board assess performance. This includes 'One-off'
costs, as termed in the tables below, which include restructuring
and professional fees. A reconciliation between Adjusted EBITDA and
Profit before tax is included in the tables below:
31 July 2016 (Unaudited)
Specials Niche MA Total
GBP000 GBP000 GBP000 GBP000
Result and reconciliation
to profit before tax
Total revenue 31,092 4,474 11,386 46,952
Intersegmental (2,415) (1,690) (40) (4,145)
-------- -------- -------- --------
Revenue 28,677 2,784 11,346 42,807
======== ======== ======== ========
Segment Adjusted EBITDA 5,013 (3) (208) 4,802
Group cost centres (641)
--------
Group Adjusted EBITDA 4,161
Intangible amortisation (511)
Depreciation (616)
One off costs (393)
Deal costs (103)
Deferred consideration
treated as remuneration
(Lamda) (962)
Share based payments (373)
--------
Operating result 1,203
Net finance costs (500)
Share of profit of jointly
controlled entities 79
--------
Profit before taxation 782
========
NET ASSETS
Segment assets 90,631 22,915 9,551 123,097
Segment liabilities (55,704) (21,310) (22,437) (99,451)
-------- -------- -------- --------
Segment net assets/(liabilities) 34,927 1,605 (12,886) 23,646
Unallocated net assets 31,989
Total net assets 55,635
========
Depreciation and amortisation 703 148 276 1,127
Capital expenditure 373 351 11 735
Capitalised development,
patent and software
costs 55 2,125 230 2,410
========
Segmental reporting continued
Unallocated net assets include goodwill and intangibles (GBP23.9
million), trade and other payables (GBP2.9 million), bank term
loans (GBP29.4 million) and net inter-group loan receivables
(GBP40.3 million).
31 July 2015 (Unaudited)
Specials Niche MA Total
GBP000 GBP000 GBP000 GBP000
Result and reconciliation
to profit before tax
Total revenue 29,104 1,880 5,470 36,454
Intersegmental (1,748) (370) (68) (2,186)
------------- ----------- ----------- ---------
Revenue 27,356 1,510 5,402 34,268
============= =========== =========== =========
Segment Adjusted EBITDA 5,821 394 (286) 5,929
Group cost centres (419)
---------
Group Adjusted EBITDA 5,510
Intangible amortisation (249)
Depreciation (414)
One off costs (37)
Deal costs (754)
Deferred consideration
treated as remuneration
(Lamda) (446)
Share based payments (459)
---------
Operating result 3,151
Net finance costs (415)
Share of profit of jointly
controlled entities 44
---------
Profit before taxation 2,780
=========
NET ASSETS
Segment assets 82,189 14,565 5,750 102,504
Segment liabilities (52,558) (12,513) (17,591) (82,662)
--------- ----------- ----------- ---------
Segment net assets/(liabilities) 29,631 2,052 (11,841) 19,842
Unallocated net liabilities 33,524
Total net liabilities 53,366
=========
Depreciation and amortisation 485 23 155 663
Capital expenditure 613 26 40 679
Capitalised development,
patent and software costs - 2,547 554 3,101
=========
Unallocated net assets include goodwill and intangibles (GBP23.8
million), cash and cash equivalents (GBP3.0 million), trade and
other payables (GBP2.7 million), bank term loans (GBP29.9 million)
and net inter-group loan receivables (GBP39.3 million).
3 Earnings per share
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year ended
ended 31 ended 31 31 January
July July
2016 2015 2016
Profit attributable to equity shareholders
of the parent (GBP000) 962 2,496 5,596
=========== =========== ===========
Basic weighted average number of
shares ('000) 125,000 125,000 125,000
Dilutive potential ordinary shares
('000) - 1,532 6,117
----------- ----------- -----------
Diluted weighted average number
of shares ('000) 125,000 126,532 131,117
=========== =========== ===========
Pence Pence Pence
Basic earnings per share 0.8 2.0 4.5
Diluted earnings per share 0.8 2.0 4.3
Basic weighted average number of shares includes those shares in
the EBT to which the beneficiaries are unconditionally entitled.
The dilutive potential shares relate to the share options. There
were no potentially dilutive shares or other instrument that have
been excluded from Diluted EPS because they are antidilutive.
The adjusted EPS, based on the following earnings figure for the
year and number of shares in issue of 125,000,000 (31 July 2015:
125,000,000) is 2.2 pence (31 July 2015: 3.2 pence).
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year
ended ended ended
31 July 31 July 31 January
2016 2015 2016
GBP000 GBP000 GBP000
Profit after tax 962 2,496 5,596
Add back:
One off costs 393 37 451
Share based payments 373 459 133
Deal costs 103 754 997
Divestment of Care Home
Operation - - 796
Exceptional write off of capitalised
debt issue costs - 143 143
Deferred consideration treated as remuneration
(Lamda) 962 446 1,461
Less tax associated with adjustments (99) (368) (325)
----------- ----------- -----------
Adjusted earnings 2,694 3,967 9,252
=========== =========== ===========
The adjusted diluted earnings per share based on the weighted
average number of shares of 125,000,000 (31 July 2015: 126,532,000)
is 2.2 pence (31 July 2015: 3.1 pence).
4 Dividends
A final dividend in relation to the year ended 31 January 2016
of 1 pence per ordinary share was approved at the Annual General
meeting on 12 July 2016. The dividend totalling GBP1,250,000 is
payable on 7 November 2016.
5 Intangible assets
Patents
Software Development and Customer
development costs trade-marks relationship Goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
Balance at 1 February
2015 42 5,363 252 1,728 60,319 67,704
Acquired through
business combinations - - - 2,787 11,689 14,476
Other acquisitions
- internally developed - 3,023 - - - 3,023
Other acquisitions
- externally purchased 49 - 29 - - 78
------------- ----------- ------------ -------------- -------- --------
Balance at 31 July
2015 91 8,386 281 4,515 72,008 85,281
============= =========== ============ ============== ======== ========
Balance at 1 August
2015 91 8,386 281 4,515 72,008 85,281
Acquired through
business combinations - - - - 651 651
Other acquisitions
- internally developed - 3,332 - - - 3,332
Other acquisitions
- externally purchased 191 - 18 - - 209
------------- ----------- ------------ -------------- -------- --------
Balance at
31 January 2016 282 11,718 299 4,515 72,659 89,473
============= =========== ============ ============== ======== ========
Balance at 1 February
2016 282 11,718 299 4,515 72,659 89,473
Other acquisitions
- internally developed - 2,318 - - - 2,318
Other acquisitions
- externally purchased 92 - - - - 92
------------- ----------- ------------ -------------- -------- --------
Balance at 31 July
2016 374 14,036 299 4,515 72,659 91,883
============= =========== ============ ============== ======== ========
5 Intangible assets (continued)
Patents
Software Development and Customer
development costs trade-marks relationship Goodwill Total
Amortisation and GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
impairment
Balance at
1 February 2015 - 128 74 519 9,459 10,180
Amortisation for
the period - 149 13 87 - 249
------------- ----------- ------------ -------------- -------- --------
Balance at 31 July
2015 - 277 87 606 9,459 10,429
============= =========== ============ ============== ======== ========
Balance at 1 August
2015 - 277 87 606 9,459 10,429
Amortisation for
the period 2 372 13 225 - 612
------------- ----------- ------------ -------------- -------- --------
Balance at
31 January 2016 2 649 100 831 9,459 11,041
============= =========== ============ ============== ======== ========
Balance at
1 February 2016 2 649 100 831 9,459 11,041
Amortisation for
the period - 270 15 226 - 511
------------- ----------- ------------ -------------- -------- --------
Balance at 31 July
2016 2 919 115 1,057 9,459 11,552
============= =========== ============ ============== ======== ========
Software Patents Customer
development Development and relationship
costs trade-marks Goodwill Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Net book value
At 31 July 2015 91 8,109 194 3,909 62,549 74,852
At 31 January 2016 280 11,069 199 3,684 63,200 78,432
At 31 July 2016 372 13,117 184 3,458 63,200 80,331
=========== ============ ============ ============= ======== ======
6 Net Debt
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year ended
31 July 2016 31 January
31 July 2015 2016
GBP000 GBP000 GBP000
Cash & Cash equivalents 5,560 5,779 4,240
Other interest bearing loans
and borrowings (29,399) (29,954) (28,839)
--------------- --------------- -----------
Net debt (23,839) (24,175) (24,599)
=============== =============== ===========
The Group's banking facilities comprise a GBP25 million term
loan and a GBP10 million revolving credit facility, of which GBP7
million was drawn at 31 July 2016. The term loan is repayable by
quarterly instalments.
7 Subsequent Events
The Group has commenced the consultation process with staff
regarding the proposed closure of its subsidiaries, NuPharm
Laboratories Limited and NuPharm Group Limited. The proposed
closure plan envisages that the business will cease trading by 31
December 2016 and will be disclosed as a discontinued operation in
the 31 January 2017 financial statements.
8 Forward Looking Statements
This announcement and the half year results contain certain
projections and other forward--looking statements with respect to
the financial condition, results of operations, businesses and
prospects of Quantum Pharma plc ("Quantum"). Whilst these
statements are made in good faith based on the current expectation
and beliefs of the Directors of Quantum, they 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. Quantum 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. Nothing in this announcement
or half year forecasts should be construed as a profit
forecast.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FXLLBQBFZFBF
(END) Dow Jones Newswires
October 04, 2016 02:00 ET (06:00 GMT)
Quantum Phar. (LSE:QP.)
Historical Stock Chart
From Apr 2024 to May 2024
Quantum Phar. (LSE:QP.)
Historical Stock Chart
From May 2023 to May 2024