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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sinclair Pha | LSE:SPH | London | Ordinary Share | GB0033856740 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 31.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSPH
RNS Number : 0939R
Sinclair Pharma PLC
19 September 2017
Sinclair Pharma plc
Interim Results
Strong underlying growth from key products, on track to meet full year guidance for EBITDA profit in 2017
Sinclair Pharma plc (SPH.L), ("Sinclair", or the "Group", or the "Company") the international aesthetics company, today announces its unaudited interim results for the six months ended 30 June 2017.
Highlights
- Group revenues increased 16% to GBP20.1 million (H1 2016: GBP17.3 million), 6% growth on a constant currency basis
o Growth of strategic brands (Silhouette Soft(R) and InstaLift(TM), Ellansé(R), Perfectha(R)) +17% on a constant currency basis
o Silhouette Soft(R) sales increased 20% to GBP7.3 million (H1 2016: GBP6.1 million)
o Silhouette InstaLift(TM) sales of GBP2.3 million (H1 2016: GBPnil)
o Ellansé(R) delivered revenues of GBP4.2 million (H1 2016: GBP4.2 million); flat on the same period last year due to distributor ordering patterns
o Perfectha(R) sales up 14% to GBP4.2 million (H1 2016: GBP3.7 million)
- Gross margin increased to 72.4% (H1 2016: 70.5%)
- Strong demand from doctor for training in the US for Silhouette InstaLift(TM) with over 700 doctors attending educational events to end of June; on track for 1,000 in 2017
- FDA approved commercially significant label change for InstaLift(TM) making the procedure simpler and cheaper to train doctors
- Successful acquisition of the Refine(TM) system, an FDA cleared suture-based product for multiple tissue lifting indications, notably breasts
- Net cash reduced to GBP0.1 million (31 December 2016: GBP16.8 million) as expected
- Cash outflow a result of adjusted EBITDA* loss (GBP1.7 million), working capital outflow (GBP2.1 million), payment of deferred consideration, settlement of warranty claim and other restructuring costs and capital expenditure totalling GBP12.7 million
- New GBP10.0 million debt facility in place to fund investment in future growth
Chris Spooner, CEO, commented: "I am pleased with the performance of the Group in the first half of 2017 which is in line with our expectations. We expect H2 sales to be considerably higher than H1 due to order phasing and seasonality. Brazil ended the first half strongly and this momentum has continued into the second half. Approval in Brazil for Ellansé(R) is expected in H1 2018. The US Silhouette Instalift(TM) label improvement is excellent news and will make training simpler and cheaper, while the acquisition of the Refine(TM) system positions our Silhouette suture franchise for extension into multiple body indications. We remain confident we will deliver strong sales growth in the second half and an adjusted EBITDA profit for the year ending 31 December 2017. With growth being derived from our key strategic brands, we expect the trend of sales and profitability momentum to continue for the medium term."
*Adjusted EBITDA defined as earnings before interest, tax, depreciation, amortisation, impairment, share-based payments, exceptional items and loss from discontinued operations.
A conference call for analysts will be held at 9.30am this morning. Please contact FTI Consulting for further details.
Ends
For further information please contact:
Hot Features
Premium
Sinclair Pharma plc Tel: +44 (0) 20 7467
6920
Chris Spooner
Alan Olby
Andy Crane
Peel Hunt LLP (NOMAD and Tel: +44 (0) 20 7418
Joint Broker) 8900
James Steel
Oliver Jackson
RBC Capital Markets (Joint Tel: +44 (0) 20 7653
Broker) 4000
Marcus Jackson
Laura White
Media enquiries
FTI Consulting Tel: +44 (0) 203 727
1000
Ben Atwell
Brett Pollard
Stephanie Cuthbert
About Sinclair Pharma plc - www.sinclairpharma.com
Sinclair Pharma plc is an international company operating in the fast growth, high gross margin, global aesthetics market. Sinclair has built a strong portfolio of differentiated, complementary aesthetics technologies, which are experiencing significant growth, targeting unmet clinical needs for effective, high quality, longer duration, natural looking and minimally-invasive treatments. Sinclair has an established sales and marketing presence in the leading EU markets and Brazil, and a network of international distributors including ThermiGen in the US.
"Safe Harbor" Statement under the US Private Securities Litigation Reform Act of 1995: Some or all of the statements in this document that relate to future plans, expectations, events, performances and the like are forward--looking statements, as defined in the US Private Securities Litigation Reform Act of 1995. Actual results of events could differ materially from those described in the forward--looking statements due to a variety of factors.
BUSINESS REVIEW
During the first half of 2017, the Group has continued to focus on driving growth and increasing efficiencies throughout its commercial operations. Marketing investment is now focused towards consumers with less emphasis on physician training following three years of intensive investment in this activity. Sinclair is now placing a heavier emphasis on digital and social media activity to complement its local field forces. Our ambition is to create an industry leading digital platform for lead sourcing, customer tracking and physician training.
In the US, our partner ThermiGen continues to see strong interest and demand for training by physicians for Silhouette InstaLift(TM). In June we expanded the brand with the addition of the FDA approved Refine(TM) Support System, which will address a new market for body aesthetic and reconstructive procedures, including breasts.
Sinclair's Brazilian affiliate, created in July 2016, is now the Group's largest direct operation in terms of sales. It has quickly established a strong presence for Silhouette Soft(R) in this important market, and is well placed to deliver a strong second half. Preparations for the launch of Ellansé(R) in Brazil are also well underway, ahead of an expected approval in H1 2018.
In Europe, the Spanish and German teams continue to deliver robust growth. The underperforming UK and French teams were restructured during the period and are expected to deliver a stronger second half of 2017.
While stocking patterns of certain distributors dampened reported sales, particularly for Ellansé(R) during the period, many distributors have continued to enjoy strong underlying growth, including those in the Middle East, LATAM and Asia.
Silhouette Soft(R)
Sales reached GBP7.3 million in the period, compared with GBP6.1 million in H1 2016, reported growth of 20%. Growth on a constant currency basis was 12%. Growth has been moderated by underperformance in the UK and France linked to local issues which have been largely resolved following the restructuring of these operations. Silhouette Soft(R) continued to deliver strong growth in multiple markets including Spain, South Korea and the Middle East. Brazil was particularly strong during Q2, and this trend has continued into Q3. With LATAM seasonality weighted to H2, an expected turnaround in Europe, and the roll-out of new digital marketing initiatives, management is confident of an acceleration of growth in the second half.
Silhouette InstaLift(TM)
Following the successful launch by our partner ThermiGen in the US in August 2016, revenue for the period reached GBP2.3 million. Doctor training continues its rapid roll-out, with over 700 physicians attending educational events in the six months to 30 June 2017. ThermiGen is on track to hit the target of training over 1000 doctors by the year end. Encouragingly, recent ThermiGen physician and patient survey data indicates high levels of satisfaction with the InstaLift(TM) procedure and clinical benefit. Encouragingly, physician reorder rates are continuing to trend upwards on a monthly basis.
In June, the FDA approved a commercially significant change to the Silhouette InstaLift(TM) label, with physicians no longer required to use a permanent anchoring suture. This now allows ThermiGen to promote, train and market the use of Silhouette InstaLift(TM) via the clinically desirable, self-anchoring procedure that is universally established for Silhouette Soft(R) across the rest of the world.
Ellansé(R)
Ellansé(R) revenues of GBP4.2 million were unchanged from the same period last year (decline of 10% on a constant currency basis), with reported sales impacted by distributor ordering patterns, particularly for South Korea which continues to be the single largest market for the product. Underlying in market demand for Ellansé(R) remains strong with annualised sales growth in excess of 40%. Growth remains broad based across Sinclair's direct European operations as well as distributor markets, notably in the Middle East (+54% at constant currency). The Board remains confident of a return to strong reported sales growth in the second half.
We expect Ellansé(R) to be launched earlier than anticipated in Brazil, now likely during H1 2018. Market research in Brazil is highly positive and pre-launch marketing activities are already underway. A new Brazilian advisory board has been formed and will meet for the first time in October.
Perfectha(R)
Reported revenues increased 13.5% to GBP4.2 million against GBP3.7 million in H1 2016 (growth of 3% at constant currency). Average in-market growth rates for the period are again ahead of the reported sales growth at 23%, pointing to strong demand for Perfectha(R) and providing confidence in the outlook for H2. The product performed well in Spain, South Korea, the Middle East and Mexico in particular.
Sculptra(R)
Sales declined to GBP2.0 million compared with GBP3.2 million in H1 2016, reflecting de-stocking by certain wholesalers. The Company expects to see a moderate increase in sales in the second half relative to the first half although full year sales are expected to be around GBP1.5-2.0 million below 2016 levels.
Refine(TM) acquisition
In June the Company announced the acquisition of the Refine(TM) Support System, a patented and FDA cleared, suture based product primarily for use in breast aesthetic and reconstructive procedures. Total consideration of up to $11.3 million includes regulatory and sales based milestones and royalties. The acquisition is in line with our strategy of expanding the Silhouette brand and targeting body applications.
The Group will now commence work to submit the product for regulatory review in Europe and Brazil, as well as other key aesthetic markets in Asia, Middle East and Latin America. Initial ex-US approvals for multiple body indications are expected in 2019.
Sinclair has amended the existing distribution agreement with ThermiGen LLC to include the Refine(TM) Support System, which will allow the product to be sold alongside Silhouette InstaLift(TM) by Thermi's existing sales force. Marketing efforts will be focus on ThermiGen's plastic surgeon client base.
Product Development
The expansion of the portfolio through continued product development and line extensions is an essential part of our growth strategy. In addition to the commercially important FDA approved US label changes for Silhouette InstaLift(TM) there have been a number of highlights in this area during the first half of the year.
Ellansé(R)
Sinclair's partner for China received formal approval from the China Food and Drug Administration (CFDA) to start Ellansé(R) clinical trials. Patient recruitment started in Q3 2017 and is expected to complete by the end of the year. The Company believes China represents a major medium term opportunity given that market's preference for a volumisation/sculpturing approach to aesthetics, favouring the use of more potent products. In the US, pre IDE work is ongoing, and the Ellansé(R) pivotal study is expected to start in 2018.
During the period, we also initiated and completed patient recruitment for an EU based clinical trial to study the supplementary benefits to patients' skin quality and tone, following treatment with Ellansé(R). The Company believes this is an area in which the unique benefits of Ellansé(R) can be distinguished over HA fillers.
The Group has commenced a project to transfer Ellansé(R) manufacturing to an FDA approved contract manufacturer. This will also result in a significant increase in production capacity over the next two years.
Perfectha(R)
Perfectha(R) Lidocaine will be the next brand line extension with regulatory filings scheduled for early 2018. The Company has other active development projects underway, targeting specific indications including lips.
Silhouette Soft(R) CE Mark
As mentioned at the time of our full year results in March 2017, the de-designation of a number of European Notified Bodies has affected the registrations of numerous medical devices across the industry including Silhouette Soft(R). The dossier for Silhouette Soft(R) has now been fully reviewed and relevant audits completed by the Group's new chosen Notified Body. The Board is confident that Silhouette Soft(R) will receive a new European CE mark in Q4 2017.
Board expansion
As previously announced, the Board is undertaking a search for additional independent non-executive directors and expects to make at least one appointment before the end of 2017.
FINANCIAL REVIEW
Revenue for the six month period to 30 June 2016 reached GBP20.1 million, 16% growth over the same period last year (6% growth on a constant currency basis). As highlighted above, in aggregate the key strategic growth products Silhouette, Ellansé(R) and Perfectha(R) grew strongly (total sales +29% to GBP18.1 million, +17% on a constant currency basis), while non-promoted and lower margin Sculptra saw significant reduction in sales in the period (-38% to GBP2.0 million) as a result of wholesaler de-stocking.
Gross profit increased 19% to GBP14.5 million (2016: GBP12.2 million) and the gross margin of 72.4% represents a strong improvement from 70.5% in H1 2016. The improvement in gross margin is driven by a continued improvement in the sales mix, with higher margin Silhouette Soft and InstaLift contributing a greater proportion of sales compared with the prior period (48% vs 36%), helped by selling directly in Brazil and the launch of InstaLift in the US, and with lower margin Sculptra's decline in sales representing just 10% of total revenue in the period (2016: 19%).
Selling, marketing and distribution costs increased 20% to GBP11.1 million (2016: GBP9.2 million) as a result of establishing a direct operation in Brazil, InstaLift marketing contributions made to ThermiGen, FX impacts and net of savings realised from restructuring commercial operations in 2016 and early 2017. Centralisation of the Group's marketing activities over the last year has led to a strong improvement in marketing support for our affiliates and partners. During the period, investment in the digital strategy has paved the way for a step up in digital activities in H2 2017.
Administrative expenses before exceptional items of GBP8.4 million for the period are 1% higher than the same period last year, largely as a result of the FX impact of weaker Sterling on expenses incurred in Euros and US Dollars.
Adjusted EBITDA* loss for the period was GBP1.7 million (2016: loss of GBP1.9 million). With overheads split relatively evenly between the first half and second half and the anticipated strong weighting of revenues to H2, the Board continues to expect to report an adjusted EBITDA profit for the year as a whole.
Exceptional items of income and expense included within administrative expenses in the period amounted to a net debit of GBP0.6 million (2016: net credit of GBP5.2 million). Charges in this period represent non-cash accounting adjustments for deferred consideration liabilities relating to the acquisitions of Silhouette and Perfectha and treated as business combinations arising from changes to the forecast timing of future milestone payments. As these adjustments have occurred more than twelve months post acquisition the adjustments are made through the income statement as required by IFRS.
Finance costs of GBP2.3 million in the period are reduced from GBP3.3 million in H1 2016. Finance costs primarily represent a non-cash discount unwind charge on deferred and contingent considerations due, net of interest income on cash balances. The discount charge of GBP2.3 million is reduced from GBP3.3 million in the same period in 2016 as a result of the settlement of various items of deferred consideration over the last year. There is only a nominal charge for amortisation of arrangement costs on the new debt facility as the initial drawing under the facility occurred at the end of the period.
There is a small tax credit of GBP0.7 million arising in the period (2016: GBP0.6 million). This credit arises from the amortisation of deferred tax liabilities linked to acquired intangible assets.
*Adjusted EBITDA defined as earnings before interest, tax, depreciation, amortisation, impairment, share-based payments, exceptional items and loss from discontinued operations.
Discontinued operations
Profit for the period from discontinued operations of GBP0.1 million (2016: GBP1.5 million) reflects a tax refund received in the period relating to the disposed business. The prior period credit reflected the reversal of a GBP1.5 million tax charge booked on the disposal of the non-aesthetics business in December 2015, net of GBP0.1 million of admin expenses incurred post completion.
Overall loss for the six months to 30 June 2017 was GBP7.0 million, increased from GBP1.2 million in 2016, largely as a result of the GBP5.8 million swing in exceptional items. This resulted in an overall loss per share of 1.4p for the period, 2016: 0.2p.
Cash flow
Net cash used in operating activities was GBP10.3 million in the six months to 30 June 2017, compared with GBP8.8 million in the same period last year. This consisted of cash used in continuing operations of GBP4.8 million (H1 2016: GBP5.2 million), cash outflow from discontinued operations of GBP5.4 million (H1 2016: GBP3.1 million) and interest and tax payments of GBP0.1 million (H1 2016: GBP0.4 million). Cash outflow on discontinued operations included GBP4.0 million in respect of the warranty claim settlement with Alliance Pharma plc.
Cash used in investing activities in the six months to 30 June 2017 was GBP6.2 million. This included the payment of Silhouette US royalties and a $5.0 million sales milestone for Silhouette InstaLift on reaching $3.0 million of net sales as well as initial consideration for the Refine support system and capitalised development costs.
New debt facility
In March 2017, the Group announced the signing of a new GBP10.0 million debt facility with Silicon Valley Bank to fund investment in future growth. The facility consists of a GBP5.0 million term loan maturing in September 2020 and a two year GBP5.0 million working capital facility. As expected, an initial drawing of GBP3.0 million was made on the term loan in June 2017.
The overall net cash outflow in the six months to 30 June 2017 of GBP13.5 million resulted in a cash position of GBP3.2 million at 30 June 2017. Net cash was GBP0.2 million when drawings under the debt facility are included.
Balance sheet
Non-current assets decreased to GBP147.0 million (31 December 2016: GBP150.7 million) due to amortisation of intangibles and the impact of foreign exchange movements which have reduced the value of Euro and US Dollar denominated assets, offset by the addition of the Refine system assets and capitalised development costs.
Current assets have reduced to GBP19.0 million (31 December 2016: GBP33.9 million) largely as a result of the reduction in cash balances as set out above.
Current liabilities also fell to GBP16.8 million (31 December 2016: GBP26.9 million), mainly as a result of the payment of deferred considerations and settlement of the Alliance warranty claim and other exceptional restructuring costs incurred in 2016.
Deferred considerations due after one year primarily consist of $49 million in sales based milestones and royalties linked to the performance of Silhouette Instalift(TM) in the US, which are expected to be payable over the period 2018-2021 based on the model of selling via distributor ThermiGen, with no more than $6.4 million forecast to be payable by the end of 2018. In addition, a EUR2.5 million milestone linked to the approval of a CE Mark for Perfectha Lidocaine and royalties totalling EUR6.8 million linked to overall Perfectha sales and other Perfectha line extensions expected to be paid over the period 2018-2022.
Outlook
Much has been achieved during the first half of 2017 and the Group continues to see strong demand for its portfolio of differentiated, high growth aesthetics products. Sinclair is well placed to deliver strong second half sales, particularly in leading markets Brazil, South Korea and the US, and underpinned more generally by a buoyant global aesthetics market. Trading in the current quarter is in line with the Board's expectations. We remain confident of delivering strong sales growth for the full year and are on track to deliver an adjusted EBITDA profit for the year ending 31 December 2017. With strong in-market sales trends and high marginal profitability, the Company expects this momentum to carry into the medium term.
Unaudited Consolidated Income Statement
For the six months ended 30 June 2017
Unaudited Unaudited
Six months ended Six months ended
30 June 2017 30 June 2016
Exceptional Exceptional
items items
Pre-exceptional (note Pre-exceptional (note
Notes items 3) Total items 3) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------ ---------------- ------------ --------- ---------------- ------------ --------
Continuing
operations
Revenue 2 20,052 - 20,052 17,250 - 17,250
Cost of sales (5,526) - (5,526) (5,089) - (5,089)
-------------------- ------ ---------------- ------------ --------- ---------------- ------------ --------
Gross profit 14,526 - 14,526 12,161 - 12,161
Selling, marketing
and distribution
costs (11,100) - (11,100) (9,199) - (9,199)
Administrative
expenses (8,359) (593) (8,952) (8,287) 5,221 (3,066)
-------------------- ------ ---------------- ------------ --------- ---------------- ------------ --------
Operating loss (4,933) (593) (5,526) (5,325) 5,221 (104)
Finance costs 5 (2,258) - (2,258) (3,290) - (3,290)
-------------------- ------ ---------------- ------------ --------- ---------------- ------------ --------
Loss before
taxation (7,191) (593) (7,784) (8,615) 5,221 (3,394)
Taxation 6 650 - 650 631 - 631
-------------------- ------ ---------------- ------------ --------- ---------------- ------------ --------
Loss for the period
from continuing
operations (6,541) (593) (7,134) (7,984) 5,221 (2,763)
---------------------------- ---------------- ------------ --------- ---------------- ------------ --------
Discontinued
operations 4
Profit for the period
from discontinued operations 148 1,541
---------------------------------------------- ------------ --------- ---------------- ------------ --------
Loss for the period
attributable to the
owners of the parent (6,986) (1,222)
============================================== ============ ========= ================ ============ ========
Loss per share 7
From continuing
operations (1.4)p (0.5)p
From discontinued
operations 0.0p 0.3p
-------------------- ------ ---------------- ------------ --------- ---------------- ------------ --------
Loss per share
for the period (1.4)p (0.2)p
---------------------------- ---------------- ------------ --------- ---------------- ------------ --------
Unaudited Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
Unaudited Unaudited
Six months Six months
Ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
----------- -----------
Loss for the period (6,986) (1,222)
Other comprehensive (expense)/income (Items that may be reclassified subsequently to
profit
and loss)
Currency translation differences (1,348) 6,036
Total comprehensive (expense)/income attributable to the owners of the parent (8,334) 4,814
====================================================================================== =========== ===========
Total comprehensive (expense)/income arises from:
Discontinued operations 148 1,541
Continuing operations (8,482) 3,273
-------------------------------------------------------------------------------------- ----------- -----------
(8,334) 4,814
====================================================================================== =========== ===========
The notes on pages 13 to 21 form an integral part of this condensed consolidated interim financial information.
Unaudited Consolidated Balance Sheet
As at 30 June 2017
Unaudited Audited
30 June 31 December
2017 2016
Notes GBP'000 GBP'000
Non-current assets
Goodwill 8 63,777 65,230
Intangible assets 9 81,407 83,650
Property, plant and equipment 1,712 1,679
Other financial assets 105 102
147,001 150,661
--------- -----------
Current assets
Inventories 4,708 3,840
Trade and other receivables 10 11,094 13,329
Cash and cash equivalents 3,156 16,769
18,958 33,938
--------- -----------
Total assets 165,959 184,599
--------- -----------
Current liabilities
Borrowings 12 - -
Trade and other payables 11 (11,358) (19,582)
Other financial liabilities 13 (4,068) (5,421)
Current tax liabilities (967) (1,122)
Provisions (360) (758)
(16,753) (26,883)
--------- -----------
Non-current liabilities
Borrowings 12 (2,412) -
Trade and other payables (905) (1,000)
Other financial liabilities 13 (30,067) (32,325)
Deferred tax liabilities (22,944) (24,071)
(56,328) (57,396)
--------- -----------
Total liabilities (73,081) (84,279)
--------- -----------
Net assets 92,878 100,320
========= ===========
Equity
Share capital 14 5,038 5,022
Share premium account 86,626 86,128
Merger reserve 97,141 97,141
Other reserves 13,974 15,322
Accumulated losses (109,901) (103,293)
--------- -----------
Total shareholders' equity 92,878 100,320
========= ===========
The notes on pages 13 to 21 form an integral part of this condensed consolidated interim financial information.
Unaudited Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2017
Share capital Share premium Merger reserve Other Accumulated losses Total
Reserves equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January
2016 (unaudited) 4,974 86,128 97,141 5,482 (89,108) 104,617
Exchange differences
arising on
translation of
overseas
subsidiaries - - - 6,036 - 6,036
Loss for the period - - - - (1,222) (1,222)
--------------- --------------- ---------------- ---------- ------------------- --------
Total comprehensive
income/(expense) for
the period - - - 6,036 (1,222) 4,814
Share based payments - - - - 795 795
Total transactions
with owners
recognised directly
in equity - - - - 795 795
Balance at 30 June
2016 (unaudited) 4,974 86,128 97,141 11,518 (89,535) 110,226
Exchange differences
arising on
translation of
overseas
subsidiaries - - - 3,804 - 3,804
Loss for the period - - - - (14,259) (14,259)
--------------- --------------- ---------------- ---------- ------------------- --------
Total comprehensive
income/(expense) for
the period - - - 3,804 (14,259) (10,455)
Share based payments - - - - 501 501
Issue of shares 48 - - - - 48
--------------- --------------- ---------------- ---------- ------------------- --------
Total transactions
with owners
recognised directly
in equity 48 - - - 501 549
--------------- --------------- ---------------- ---------- ------------------- --------
Balance at 31
December 2016
(audited) 5,022 86,128 97,141 15,322 (103,293) 100,320
--------------- --------------- ---------------- ---------- ------------------- --------
Exchange differences
arising on
translation of
overseas
subsidiaries - - - (1,348) - (1,348)
Loss for the period - - - - (6,986) (6,986)
--------------- --------------- ---------------- ---------- ------------------- --------
Total comprehensive
expense for the
period - - - (1,348) (6,986) (8,334)
Share based
payments - - - - 378 378
Issue of shares (note
14) 16 498 - - - 514
--------------- --------------- ---------------- ---------- ------------------- --------
Total transactions
with owners
recognised directly
in equity 16 498 - - 378 892
--------------- --------------- ---------------- ---------- ------------------- --------
Balance at 30 June
2017 (unaudited) 5,038 86,626 97,141 13,974 (109,901) 92,878
=============== =============== ================ ========== =================== ========
The notes on pages 13 to 21 form an integral part of this condensed consolidated interim financial information.
Unaudited Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
Notes 2017 2016
GBP'000 GBP'000
Net cash outflow from operating
activities including discontinued
operations 15 (10,267) (8,370)
Interest paid (226) -
Taxation received/(paid) 146 (426)
----------- -----------
Net cash used in operating
activities (10,347) (8,796)
----------- -----------
Investing activities
Purchase of property, plant
and equipment (213) (292)
Purchase of intangible
assets (1,003) (320)
Proceeds on settlement
of financial instrument - 19
Net cash inflow from disposal
of subsidiaries - 3,569
Payment of deferred consideration (5,004) (40,077)
Acquisition of subsidiary
undertakings, net of cash
acquired - (5,456)
Interest Received 26 43
Net cash used in investing
activities (6,194) (42,514)
----------- -----------
Financing activities
Receipt of borrowings 3,000 -
Net cash generated from
financing activities 3,000 -
----------- -----------
Net decrease in cash and
cash equivalents (13,541) (51,310)
----------- -----------
Cash and cash equivalents
at 1 January 16,769 75,377
Exchange (loss)/gain on
cash and cash equivalents (72) 298
----------- -----------
Cash and equivalents at
end of period 3,156 24,365
----------- -----------
The notes on pages 13 to 21 form an integral part of this condensed consolidated interim financial information.
Notes to the unaudited condensed consolidated half-yearly financial information
1. General Information, basis of preparation and accounting policies
Sinclair Pharma plc (the 'Company') is an international speciality pharmaceutical company focused on Aesthetics. The Group has a direct sales and marketing presence in the top four European markets and Brazil and a rapidly growing international division concentrated on key emerging markets through long-term multi-product and multi-country sales, marketing and distribution deals with key strategic partners.
The principal activities of the Group are the manufacture, commercialisation and sale of aesthetic products. The Group is also engaged in research and development and owns various product rights and licenses in different territories.
The Company is a public limited company which is listed on the AIM market of the London Stock Exchange, and is incorporated and domiciled in the United Kingdom. The address of its registered office is Whitfield Court, 30-32 Whitfield Street, London, W1T 2RQ.
This condensed consolidated interim financial information for the six months ended 30 June 2017 is prepared in accordance with the Group's accounting policies which are based on the recognition and measurement principles of International Financial Reporting Standards ("IFRS") as adopted by the EU and effective, or expected to be adopted at 31 December 2017.
The interim condensed consolidated financial report should be read in conjunction with the annual financial statements for the 18 month period ended 31 December 2016, which have been prepared in accordance with IFRSs as adopted by the European Union. Statutory accounts for the 18 month period ended 31 December 2016 were approved by the board of Directors on 29 March 2017 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Sections 498 (2) or (3) of the Companies Act 2006.
This condensed consolidated interim financial information for the six months ended 30 June 2017 has not been audited or reviewed and does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006. The unaudited interim financial statements were approved for issue by the Board of Directors on 19 September 2017.
Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the 18 month period ended 31 December 2016, as described in those annual financial statements. These are available on the Company's website at www.sinclairpharma.com.
There are no new IFRSs or IFRICs that are effective for the first time for this interim period that would be expected to have a material impact on the Group.
Estimates
The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported values of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed interim financial statements, the significant judgements made by management in applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the period ended 31 December 2016.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss, ignoring other timing differences which may occur between now and the year end.
2. Segment information
The chief operating decision maker has been identified as the executive management team. This team reviews the Group's internal reporting in order to assess performance and allocate resources. Based on this, management has determined that, following the disposal of the non-aesthetics business, the continuing business consists of one reportable segment, which is Aesthetics.
The executive management team assesses the performance of the reportable segment based on a measure of adjusted earnings before interest, tax, depreciation, amortisation, exceptional items and share based payments (Adjusted EBITDA).
Unaudited Unaudited
Six months Six
ended months
ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Revenue 20,052 17,250
Cost of
goods sold (5,526) (5,089)
------------ ----------
Gross Profit 14,526 12,161
------------ ----------
Adjusted
EBITDA (1,653) (1,894)
============ ==========
The executive management team also monitors business performance based on geographic destination of sales. Revenues on a geographic basis were as follows:
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
European direct 6,207 7,879
Asia Pacific (APAC) 3,694 4,295
United States of America 2,410 120
Intercontinental 7,741 4,956
Total Revenue 20,052 17,250
=========== ===========
A reconciliation of total adjusted EBITDA to operating loss is provided as follows:
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Adjusted EBITDA (1,653) (1,894)
Depreciation (201) (255)
Amortisation (2,466) (2,182)
Exceptional administrative expenses
(note 3) (593) 5,221
Share based and long term incentive
payments (613) (994)
----------- -----------
Operating loss (5,526) (104)
=========== ===========
3. Exceptional items
Exceptional items represent significant items of income and expense which due to their nature, size or the expected infrequency of the events giving rise to them, are presented separately on the face of the income statement to give a better understanding to shareholders of the elements of financial performance in the current period, so as to facilitate comparison with prior periods and to better assess trends in financial performance.
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Adjustments to contingent consideration (593) 9,220
Restructuring - (2,423)
Inventory provision - (1,378)
Acquisition and business development
costs - (198)
----------- -----------
(593) 5,221
=========== ===========
2017
Adjustments to contingent consideration in the six months to 30 June 2017 include a debit of GBP593,000 (2016: credit GBP682,000) following changes to the profile of deferred consideration payments for the acquisition of Obvieline SAS, and changes to the forecast timing of payments for certain milestones payable following the acquisition of Silhouette Lift SL. These adjustments have been debited (2016: credited) to the income statement as the changes were triggered more than twelve months after the original acquisition completion date. There is no tax impact of these adjustments.
2016
Adjustments to contingent consideration in the six months to 30 June 2016 also include a credit of GBP8,539,000 following early settlement of all remaining milestones relating to the acquisition of Aqtis Medical BV resulting in a reduction to the total purchase consideration.
Following the disposal of the non-aesthetic products to create a focussed aesthetics business, the Group undertook an internal restructuring in the period to 30 June 2016, resulting in GBP2,423,000 of one-off severance and redundancy costs being incurred.
In the first half of 2016, the Group withdrew inventory with a limited shelf life from commercial sale in order to provide partners and doctors product with as long a shelf life as possible. This resulted in an exceptional provision for short life inventory of GBP1,378,000.
Acquisition and business development costs in the six month period to 30 June 2016, were GBP198,000 relating to the acquisition and establishment of Sinclair Pharma Brasil Ltda
4. Discontinued operations
On 26 November 2015, the group entered into a sale agreement to dispose of all of the non-aesthetics business of the Group to Alliance Pharma Plc ('Alliance') in order to create a fast growing pure-play aesthetics business. The disposal completed on 17 December 2015, on which date control of the non-aesthetics business passed to Alliance. The disposal included the Group's interest in Sinclair Pharma France SAS, Advanced Bio-Technologies Inc, Sinclair Pharma srl, and Maelor Laboratories Limited, as well as certain IP assets.
Results of discontinued operations, which have been included in the consolidated income statement were as follows:
Unaudited Unaudited
Six Six months
months ended
ended 30 June
30 June 2016
2017
GBP'000 GBP'000
Revenue - -
Cost of - -
sales
----------- ------------
Gross profit - -
------------- ------------
Administrative
expenses - (9)
----------- ------------
Operating (loss)/profit
and (loss)/profit
before taxation - (9)
Taxation 148 -
----------- ------------
(Loss)/profit for the period
from discontinued operations 148 (9)
----------- ------------
Pre tax gain on disposal
of non-aesthetic business
(note 16) - 91
Attributable taxation charge - 1,459
----------- ------------
Profit for the period from
discontinued operations
(attributable to owners
of the Company) 148 1,541
=========== ============
Cash flows from discontinued operations
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Net cash outflows from operating
activities (note 15) (5,435) (3,140)
Net cash inflows from
investing activities - 3,569
Net cash (outflows)/inflows
from discontinued operations (5,435) 429
============ ============
5. Finance costs
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Amortisation of deferred arrangement
costs (25) -
Discount unwind on deferred and contingent
consideration (2,250) (3,327)
Other finance charges (9) (6)
Interest income 26 43
Total finance costs - net (2,258) (3,290)
=========== ===========
6. Taxation
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Current tax
Overseas tax 40 (275)
Deferred tax
Reversal of temporary differences 610 906
Tax credit on loss before taxation 650 631
=========== ===========
7. Loss per share
The basic loss per share has been calculated by dividing the loss for the period by the weighted average number of shares in existence for the period. The loss and weighted average number of shares for the purpose of calculating the diluted loss per share are the same as those used for the basic loss per share, as a loss is not dilutive.
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2017 2016
Basic and diluted EPS
Loss attributable to equity shareholders
(GBP'000) (6,986) (1,222)
Basic and diluted weighted average
number of shares 502,953,328 496,983,706
----------- -----------
Basic and diluted loss per share
(pence) (1.4)p (0.2)p
=========== ===========
From continuing activities
Loss from continuing activities (GBP'000) (7,134) (2,763)
Basic and diluted loss per share
(pence) from continuing activities (1.4)p (0.5)p
=========== ===========
From discontinued activities
Profit from discontinued activities
(GBP'000) 148 1,541
Basic and diluted earnings per share
(pence) from discontinued activities 0.0p 0.3p
=========== ===========
8. Goodwill
GBP'000
Cost and net book value
At 1 January 2017 (audited) 65,230
Exchange adjustments (1,453)
-------
At 30 June 2017 (unaudited) 63,777
=======
Exchange adjustments arise as a result of the impact of the difference in the Sterling: Euro exchange rate and the Sterling: US Dollar exchange rate during the period.
9. Intangible assets
GBP'000
Cost
At 1 January 2017 (audited) 99,983
Additions 1,857
Exchange adjustments (1,854)
-------
At 30 June 2017 (unaudited) 99,986
-------
Amortisation and impairment
At 1 January 2017 (audited) 16,333
Charge for the period 2,466
Exchange adjustments (220)
-------
At 30 June 2017 (unaudited) 18,579
-------
Net book value at 30 June 2017 (unaudited) 81,407
=======
Additions in the period include the Refine Support System, a patented and FDA cleared, suture based product, acquired by the Group on 19 June 2017. Consideration consists of an initial payment of GBP462,000, and a further $600,000 is payable in December 2017 and recognised in other payables (note 11).
10. Trade and other receivables
Unaudited Audited
30 June 31 December
2017 2016
GBP'000 GBP'000
Trade receivables 10,302 11,883
Less provision for impairment
of trade receivables (666) (700)
--------- -----------
Trade receivables-net 9,636 11,183
Other receivables 664 1,343
Prepayments and accrued income 794 803
--------- -----------
11,094 13,329
========= ===========
11. Trade and other payables
Amounts due in less than one year Unaudited Audited
30 June 31 December
2017 2016
GBP'000 GBP'000
Trade payables 4,365 4,880
Other taxes and social security
costs 9 853
Other payables 864 780
Accruals and deferred income 6,120 13,069
--------- ------------
11,358 19,582
Amounts due in more than one year
Accruals and deferred income 905 1,000
--------- ------------
12,263 20,582
========= ============
12. Borrowings
Movements in borrowings are analysed as follows:
GBP'000
At 1 January 2017 (audited) -
Term loan drawings 3,000
Direct issue costs incurred (613)
Amortisation of prepaid arrangement fees 25
At 30 June 2017 (unaudited) 2,412
=======
Unaudited Audited
30 June 31 December
2017 2016
GBP'000 GBP'000
Loans 3,000 -
Deferred arrangement costs (588) -
---------- ------------
Non-current borrowings 2,412 -
Borrowings included above are
repayable as follows:
On demand or within one year - -
Over one and under two years 1,200 -
Over two and under five years 1,800 -
Total borrowings 3,000 -
========== ============
In March 2017, the Group entered into a new GBP10 million debt facility with Silicon Valley Bank to fund investment in future growth. The facility consists of a GBP5.0 million term loan maturing in September 2020 and a GBP5.0 million two year working capital facility. An initial GBP3,000,000 of the term loan was drawn down in June 2017, and direct issue costs of GBP588,000 have been offset against the gross liability and are being amortised over the life of the facility.
Interest on the term loan is charged at LIBOR + 5.75% and payable monthly in arrears. The capital is to be repaid in 30 equal monthly instalments commencing July 2018.
13. Other financial liabilities
Other financial liabilities include deferred and contingent purchase consideration for business combinations and significant intangible products which falls due as follows:
Unaudited Audited
30 June 31 December
2017 2016
GBP'000 GBP'000
Obvieline SAS 1,540 -
Silhouette Lift SL 2,300 4,400
Medicalio SL 228 1,021
----------- -------------
Total Current 4,068 5,421
Obvieline SAS 6,647 7,146
Silhouette Lift SL 35,695 39,649
Medicalio SL 342 446
----------- -------------
Total non-current 42,684 47,241
Discount (12,617) (14,916)
----------- -------------
34,135 37,746
=========== =============
Items of deferred and contingent consideration represent the Director's estimate of the fair value of the assumed contractual minimum liabilities discounted to their present value.
Deferred and contingent consideration Unaudited Audited
is payable as follows: 30 June 31 December
2017 2016
GBP'000 GBP'000
On demand or within one year 4,068 5,421
Over one and under two years 7,831 10,564
Over two and under five years 33,469 22,945
Over five years 1,384 13,732
Discount (12,617) (14,916)
Total other financial liabilities 34,135 37,746
========== =============
14. Share capital and share premium
On 5 April 2017, the Company issued 1,570,510 new Ordinary shares of 1p each, with a par value of GBP15,705, and immediately allotted them to Christophe Foucher, former COO, in settlement of the remainder of his severance package. The excess of the fair value of these shares, amounting to GBP498,000, was credited to share premium.
15. Cash flow from operating activities
Unaudited Unaudited
Six months ended Six months ended
30 June 30 June
2017 2016
GBP'000 GBP'000
Continuing Operations
Loss before taxation (7,784) (3,394)
Exceptional items 593 (5,221)
------------------ ------------------
Loss before taxation and exceptional items (7,191) (8,615)
Adjustments for:
Finance costs 2,258 3,290
Share based payments 613 994
Depreciation 201 255
Amortisation of intangible assets 2,466 2,182
Profit on disposal of intangible assets - 24
5,538 6,745
Changes in working capital
(Increase)/decrease in inventories (832) 2,852
Decrease/(increase) in receivables 2,108 (1,457)
Decrease in payables (3,126) (2,921)
Decrease in provisions (264) -
Net cash outflow from continuing operations before exceptional items (3,767) (3,396)
------------------ ------------------
Exceptional costs paid (1,065) (1,834)
Net cash outflow from continuing operations (4,832) (5,230)
Discontinued operations
Profit before tax - 82
Adjustments for:
Profit on disposal - (91)
Changes in working capital
Decrease in receivables - 3,214
Decrease in payables (5,297) (6,124)
Decrease in provisions (138) (221)
------------------ ------------------
Net cash outflow from discontinued operations (5,435) (3,140)
------------------ ------------------
Net cash outflow from operations including discontinued operations (10,267) (8,370)
================== ==================
16. Related party transactions
On 19 June 2017, the Group acquired the Refine Support System, a patented and FDA cleared, suture based product primarily used in breast cosmetic and reconstructive procedures, from Refine LLC (note 9). Jeff Thompson, non-executive Director of Sinclair, has a beneficial interest of 52% in Refine LLC.
At 30 June 2017, the total value of the Refine asset is GBP924,000 of which GBP462,000 has been paid, and the remaining GBP462,000 has been recognised in other payables and will be paid in December 2017. The acquisition agreement includes conditions for future payments which are contingent on achieving certain regulatory and sales based milestones and royalties. These have a maximum gross value of GBP7,775,000, but due to uncertainty in timings and amounts, have not been recognised in the financial statements at 30 June 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFETAVITLID
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September 19, 2017 02:00 ET (06:00 GMT)
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