Earnings Release • May 13, 2022
Earnings Release
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The Board of Directors of Fine Foods & Pharmaceuticals N.T.M. S.p.A today approved the Group's Interim Financial Report as of 31 March 2022 and the start of the share buyback programme.
Verdellino, 13 May 2022
The Board of Directors of Fine Foods & Pharmaceuticals N.T.M. S.p.A., a company listed on Euronext STAR Milan, an Italian independent CDMO (Contract Development & Manufacturing Organisation) that develops and manufactures contract products for the pharmaceutical, nutraceutical, cosmetics, biocides and medical devices industries today approved the Group's Interim Financial Report as of 31 March 2022 and the start of the treasury share buyback programme.
| ADJ summary results | ||
|---|---|---|
| -- | --------------------- | -- |
| Thousands of Euro | 31/03/2022 | 31/03/2021 | Difference | Difference in % | |
|---|---|---|---|---|---|
| Revenues | 50,755 | 51,331 | (576) | (1%) | |
| EBITDA | 3,963 | 6,764 | (2,801) | (41%) | |
| EBITDA Margin | 8 % | 13% | |||
| Profit/(loss) for the period | * | (2,482) | 3,133 | (5,615) | |
| Thousands of Euro | 31/03/2022 | 31/12/2021 | Difference | ||
| Shareholders' equity | 144,667 | 147,218 | (2,551) | ||
| Net Financial Position | 33,000 | 15,674 | 17,326 |
* Q1 2021 does not include non-recurring financial charges totalling €1.8 million (€1.3 million net of the tax effect) related to the change in the fair value of warrants fully settled as of 30 June 2021.
(1) Operating profit before amortisation and depreciation of intangible and tangible fixed assets and write-downs (2) Ratio between EBITDA and revenues
(3) Liquid and financial assets net of payables to banks and medium/long-term loans
The Chief Executive Officer, Giorgio Ferraris, commented:
"The first quarter of 2022 ended with an improved EBITDA margin over the last quarter of 2021, a result that would objectively lead us to believe that the worst of the crisis has passed, even if it might persist for most of 2022.
Under current circumstances, we can expect a positive outlook for the Pharma and Cosmetic Business Units, the former due to a strong recovery from the COVID crisis, the latter due to the integration of the newly acquired companies, while we expect an improvement of the Business Unit Food over the first quarter 2022, despite the Ukraine conflict.
We positively record that neither the Pharma BU nor the Cosmetic BU are impacted by the geopolitical situation.
Policies for targeted stock increases have been successfully implemented to cope with the uncertainties of the raw and packaging material supply chain.
Rising energy costs are having a substantial impact on the Group's income statement. These issues have been tackled with the installation of two new photovoltaic systems (one in Trenzano and one in Brembate) providing 550 kW, which will flank the two one-megawatt co-generators and the 310-kW photovoltaic system already installed. The new systems, which will become operational in the second quarter of 2022, should improve energy costs, regardless of energy prices. In addition, during fiscal year 2022 Fine Foods will benefit from White Certificates deriving from the installation of the co-generators. Transfers of materials and energy price increases to customers have positively affected margins.
Although we are aware that uncertainty might continue for the rest of 2022, we are satisfied with how we have dealt with the external turbulence and with the implementation of risk mitigation actions that started showing an effect in the first quarter of 2022. Fine Foods Management is ready to introduce further actions, should the international and domestic economic landscape require it."
The Interim Financial Report as of 31 March 2022 is prepared under IAS/IFRS, Accounting Standards issued by the IASB (International Accounting Standards Board) and is not subject to audit. Income statement and balance sheet figures as of 31 March 2022, and the balance sheet figures as of 31 December 2021, refer to the consolidation of the Fine Foods Group, which includes the parent company Fine Foods and the subsidiaries Pharmatek and Euro Cosmetic. The comparative income statement as of 31 March 2021 includes the values of the parent Company Fine Foods and the subsidiary Pharmatek but not the values of the subsidiary Euro Cosmetic, which was consolidated as of 1 October 2021.
The manager responsible for preparing the company's financial reports - Pietro Bassani - declared, under Article 154-bis paragraph 5, of Legislative Decree no. 58 of 24 February 1998, that the accounting information contained in the press release corresponds to the documented results, books and accounting records.
| Thousands of Euro | 31/03/2022 | 31/03/2021 | |
|---|---|---|---|
| Revenues | 50,755 | 51,331 | |
| EBITDA | 3,963 | 6,764 | |
| EBIT | 410 | 3,662 | |
| Income before taxes | * | (2,268) | 4,893 |
| Profit/(loss) for the period | * | (2,482) | 3,133 |
* Q1 2021 does not include non-recurring financial charges totalling €1.8 million (€1.3 million net of the tax effect) related to the change in the fair value of warrants fully settled as of 30 June 2021.
(2) Operating profit equal to the difference between production value and costs (1) Operating profit before amortisation and depreciation of intangible and tangible fixed assets and write-downs
Revenues in the first quarter of 2022 were € 50.8 million, slightly down from the first quarter of 2021 but recovering compared to the fourth quarter of 2021 (€ 50 million). The contribution of the new Cosmetics Business Unit in the first quarter of 2022 was € 9.4 million, of which Pharmatek € 3.2 million and Euro Cosmetic € 6.2 million. The revenues of this BU in the first quarter of 2021 were generated only by Pharmatek for € 3 million.
The Food Business Unit showed a decrease (-23%) compared to the same period of the previous year. Despite the reduction in revenues between Q1 2022 and Q1 2021 for the Food BU, the result is in line
with the average historical trend of recent years: Q1 2021 recorded extraordinary revenue generated by the pandemic.
Pharma BU, which had contracted during the pandemic, in the last quarter, returned to average pre-COVID 19 levels with a growth of 19% compared to the same period last year.
The decline in the Food Business Unit is almost entirely offset by increases in turnover in the Pharma and Cosmetics BUs.
EBITDA in the first quarter was € 4 million, down from € 6.8 million of the first quarter of the previous financial year. The EBITDA margin decreased from 13% to 8%, due to the current economic situation that generated, as in Q4 2021, inefficiencies in the production chain and a significant increase in energy costs (which impacted more than 2% of the reduction in EBITDA margin), transport and logistics.
EBITDA Margin in Q1 2022 compared to Adjusted EBITDA Margin in Q4 2021 showed a significant increase from 4.7% to 7.8%.
This improvement is due to the actions implemented by the Group including the transfer of increased raw and packaging material costs to customers and the reduction of production downtime, due to stock management policies.
EBIT was approximately €0.4 million - a decrease compared to the first quarter of the previous financial year, mainly reflecting the reduction in EBITDA and a slight increase in depreciation and amortisation for the period.
Income Before Tax* of the first quarter of 2022 was negatively impacted by the parent Company's equity securities business (a negative change in fair value as of 31 March 2022 of € 2.4 million against a positive change in fair value as of 31 March 2021 of € 1.4 million). The first quarter of 2022 closed with a Loss for the period of €2.5 million.
| Thousands of Euro | 31/03/2022 | 31/12/2021 |
|---|---|---|
| Fixed assets | 128,326 | 127,541 |
| Net Trade Working Capital | 47,373 | 31,952 |
| Other receivables and payables | 4,851 | 6,410 |
| Employee benefits | (2,883) | (3,011) |
| Net Invested Capital | 177,667 | 162,892 |
| Shareholders' equity | 144,667 | 147,218 |
| Net Financial Position | 33,000 | 15,674 |
Fixed Assets increased by about €0.8 million compared to 31 December 2021, due to investments in fixed assets, plant and machinery.
Net trade working capital as of 31 March 2022 was € 47.4 million compared to € 31.8 million at the end of the previous financial year, due to an increase in inventories, which was preparatory to the supply chain crisis management, and an increase in trade receivables due to a higher percentage of customers with longer payment terms.
The Other Receivables and Payables item shows a credit balance of approximately € 4.9 million as of 31 March 2022 (credit balance of about € 6.4 million as of 31 December 2021); the change is mainly due to a reduction in the VAT credit and an increase in payables to employees for thirteenth and fourteenth month's pay.
Shareholders' Equity as of 31 March 2022 was down compared to the end of 31 December 2021 due to the negative result for the period.
The Net Financial Position was approximately €33 million, down from 31/12/21 due to the increase in Net trade working capital and CAPEX made during the period.
No significant events occurred after the end of the period.
Despite the continuation of difficulties in 2022 reported at the end of 2021, including increasing energy costs, material shortages, and the problems arising from the geo-political situation, the Management believes that the Group can face the current year's challenges due to the actions it has taken. It expects to return to historical growth trends by the end of this year or as soon as these critical issues are resolved.
In addition to the policies on the transfer of raw and packaging materials to its customers and management of inventories, the Group has installed two photovoltaic systems at the Trenzano (BS) and Brembate (BG) plants. Benefits of these initiatives are expected in Q2 2022. The parent Company applied to the relevant authorities for the "White Certificates" deriving from the activation of the cogenerators.
Development and integration activities of the companies acquired in 2021 continue to generate future business opportunities in the cosmetics sector due to synergies with the parent company.
Today, the Company's Board of Directors resolved to launch the treasury share buyback programme (the "Programme"), to implement and comply with the authorisation to buyback and dispose of treasury shares approved by the 10 May 2022 Shareholders' Meeting (the "2022 Resolution").
The Programme has the following objectives (i) stabilisation, liquidity support and market efficiency, (ii) to obtain a securities portfolio ("securities stock") to be used for any extraordinary transactions, including exchanges of equity investments with other parties, including any bonds convertible into Company shares or bonds with warrants, and dividends in shares. The Board of Directors may add additional objectives or modify those existing in the Programme, under the 2022 Resolution and current legislation, in which case the market will be promptly notified.
Purchases in the 18-month period from 10 May 2022, even if carried out in several tranches, may involve a maximum number of revolving ordinary shares (meaning the maximum number of treasury shares held in the portfolio each time) of 2,000,000 ordinary shares (currently equal to 9.1% of the ordinary shares issued by the Company and 7.8% of today's Company share capital) without a nominal value. This is within the legal limits and the authorisation under the 2022 Resolution. The maximum value of the Company's ordinary shares that may be purchased under this Programme has been set at Euro 26,000,000.
The Programme will last 18 months after the 10 May 2022 resolution date unless there is an early interruption which will be legally reported to the Market. This is without prejudice to the disposal of treasury shares in one or more tranches on Euronext STAR Milan of Borsa Italiana S.p.A. or outside this system is without time limits.
Purchases under the Programme will be made on the market where the Company's shares are listed at a price not higher than the highest price between the last independent transaction and the price of the highest current independent offer on that market or a different price under Art. 3 of MAR. The unit price, as provided for in the 2022 Resolution, may not be more than 15 per cent lower or higher than the official stock exchange price of the shares recorded by Borsa Italiana S.p.A. in the session before each transaction. Following the 2022 Resolution, no volume exceeding 25 per cent of the average daily volume of shares traded on the relevant market each trading day may be purchased during the 20 trading days before each purchase date or at a different volume under Art. 3 of Delegated Regulation (EU) 2016/1052 which supplements MAR.
Buyback of treasury shares will be made by an appointed intermediary, under the procedures established by applicable regulations and Art. 132 of Legislative Decree no. 58/1998 – particularly the principle of equal treatment of shareholders - and related implementing provisions outlined in the Regulation adopted by Consob resolution no. 11971/1999.
The buyback programme will be coordinated by an authorised intermediary that will carry out the buyback independently and in compliance with the constraints deriving from applicable regulations and within the limits of the resolutions passed by the corporate bodies
As of 13 May 2022, the Company held 1,392,195 ordinary treasury shares and its subsidiaries did not hold any.
Any subsequent amendments to the buyback programme will be promptly reported by the Company to the public, according to legal methods and time limits. The transactions carried out will be reported to the market under the terms and conditions set out in legislation and regulations.
In any country, this press release does not constitute an offer of financial instruments or solicitation to invest.
***
It should be noted that under Article 154-ter, paragraph 5, of Legislative Decree no. 58 of 24 February 1998, the Interim Financial Report as of 31 March 2022, approved by the Board of Directors on today's date, will be made available today to shareholders and the public at the registered office, on the Company's website at www.finefoods.it, Investor Relations/Financial Reports section, and the authorised storage system - .
This press release is available on the Fine Foods website www.finefoods.it, in the Investor Relations/Press Releases section.
***
***
Fine Foods & Pharmaceuticals N.T.M. S.p.A., listed on Euronext STAR Milan, is an Italian independent Contract Development & Manufacturing Organisation (CDMO). It develops and manufactures contract products for the pharmaceutical and nutraceutical industries. Fine Foods is also active in the cosmetics, biocides and medical devices industries with its acquisition of Pharmatek-PMC and the most recent Euro Cosmetic acquisition. Founded in 1984, from a pharmaceutical and nutraceutical synergy, its main objective is to research and develop quality and innovation on behalf of its customers. With € 193 million revenue in 2021 and an 11 per cent CAGR over the last decade, it is a growing and future-oriented company. The sustainability of the business model and the holistic approach to ESG, together with product innovation, are drivers that will allow the company to fully develop its intrinsic potential.
***
For information: Fine Foods & Pharmaceuticals N.T.M. S.p.A. Investor Relations Tel. +39 035 4821382 [email protected]
CDR Communication Media Relations Marianna Tremolada [email protected]
| 31/03/2022 | 31/03/2021 | |
|---|---|---|
| Revenues and income | ||
| Revenues from contracts with customers | 50,754,911 | 51,330,701 |
| Other revenues and income | 159,075 | 118,882 |
| Total revenues | 50,913,987 | 51,449,583 |
| Operating costs | ||
| Costs for consumption of raw materials, change in inventories of finished goods and work in progress. |
30,918,254 | 31,114,768 |
| Personnel costs | 9,391,616 | 8,930,995 |
| Costs for services | 6,254,710 | 4,254,931 |
| Other operating costs | 386,242 | 385,057 |
| Amortisation, depreciation, and impairment losses | 3,552,684 | 3,102,178 |
| Total operating costs | 50,503,506 | 47,787,930 |
| Changes in fair value of financial assets and liabilities | (2,357,415) | (400,109) |
| Financial income | 3,725 | 22,477 |
| Financial charges | (324,536) | (164,742) |
| Income before taxes | (2,267,745) | 3,119,279 |
| Income taxes | 214,306 | 1,334,397 |
| Profit/(loss) for the financial year | (2,482,051) | 1,784,882 |
| 31/03/2022 | 31/03/2021 | |
|---|---|---|
| Profit /(loss) for the financial year (A) | (2,482,051) | 1,784,882 |
| Components that will not be subsequently reclassified to profit/(loss) for the financial year Revaluation of net employee benefit liabilities/assets Tax effect |
- - |
- - |
| Other comprehensive income (B) components | - | - |
| Comprehensive profit/(loss) (A+B) | (2,482,051) | 1,784,882 |
| As of 31 March | As of 31 December | |||
|---|---|---|---|---|
| (amounts in € units) | 2022 | 2021 | ||
| Assets | ||||
| Non-current assets | ||||
| Property, plant and machinery | 103,759,204 | 102,886,510 | ||
| Goodwill | 15,907,954 | 15,907,954 | ||
| Other intangible fixed assets | 2,674,222 | 2,767,176 | ||
| Rights of use | 5,984,602 | 5,978,887 | ||
| Other non-current assets | 237,333 | 237,333 | ||
| Deferred tax assets | 3,266,883 | 3,482,100 | ||
| Total non-current assets | 131,830,198 | 131,259,960 | ||
| Current assets | ||||
| Inventories | 37,382,553 | 35,050,484 | ||
| Trade receivables | 42,391,220 | 29,433,391 | ||
| Tax receivables | 2,421,853 | 2,421,853 | ||
| Other current assets | 9,150,014 | 9,554,455 | ||
| Current financial assets | 75,525,619 | 77,971,110 | ||
| Cash and other liquid assets | 29,733,762 | 17,118,957 | ||
| Total current assets | 196,605,021 | 171,550,251 | ||
| Total assets | 328,435,219 | 302,810,211 | ||
| Shareholders' equity | ||||
| Share Capital | 22,770,445 | 22,770,445 | ||
| Other reserves | 132,499,930 | 132,615,098 | ||
| Employee benefit reserve | (71,012) | (71,012) | ||
| FTA reserve | (6,669,789) | (6,669,789) | ||
| Profits carried forward | (1,380,070) | - | ||
| Profit/(loss) for the financial year | (2,482,051) | (1,426,751) | ||
| Total Shareholders' Equity | 144,667,453 | 147,217,991 | ||
| Non-current liabilities | ||||
| Bonds | 3,326,070 | 3,322,876 | ||
| Non-current bank borrowings | 94,112,575 | 35,298,177 | ||
| Employee benefits | 2,882,751 | 3,010,691 | ||
| Provision for risks and charges | 35,489 | 35,489 | ||
| Provision for deferred taxes | 1,073,432 | 1,081,159 | ||
| Non-current lease payables | 3,014,750 | 3,137,292 | ||
| Total non-current liabilities | 104,445,065 | 45,885,684 | ||
| Current liabilities | ||||
| Bonds | 3,313,249 | 3,310,176 | ||
| Current bank borrowings | 33,714,404 | 64,920,523 | ||
| Trade payables | 32,401,071 | 32,532,117 | ||
| Taxes payable | 35,506 | 5,536 | ||
| Current lease payables | 777,853 | 774,991 | ||
| Other current financial liabilities | - | - | ||
| Other current liabilities | 9,080,617 | 8,163,193 | ||
| Total current liabilities | 79,322,700 | 109,706,536 | ||
| Total Shareholders' equity and Liabilities | 328,435,218 | 302,810,211 |
| 31/03/2022 | 31/03/2021 | |
|---|---|---|
| PROFIT/(LOSS) FOR THE FINANCIAL YEAR | (2,482,051) | 1,784,882 |
| Adjustments to reconcile profit after tax with net cash flows: | ||
| Depreciation and impairment of property, plant and machinery | 3,113,071 | 2,783,753 |
| Amortisation and impairment of intangible fixed assets | 206,442 | 217,406 |
| Amortisation of rights of use | 233,172 | 101,019 |
| Financial income | (3,725) | (22,477) |
| Financial charges | 308,376 | 160,270 |
| Changes in fair value of financial assets and liabilities | 2,357,415 | 400,109 |
| Financial charges on financial liabilities for leases | 16,160 | 4,472 |
| Income taxes | 6,816 | 1,217,959 |
| Personnel costs for stock grants | - | 253,331 |
| Gains on the disposal of property, plant and machinery | (25,693) | (68,403) |
| Current assets write-downs | 431,196 | 420,360 |
| Net change in severance indemnity and pension funds | (131,071) | 17,327 |
| Net change in deferred tax assets and liabilities | 207,490 | 116,438 |
| Interest paid | (317,681) | (142,264) |
| Income taxes paid | - | - |
| Changes in net working capital: | ||
| (Increase)/decrease in inventories | (2,611,262) | (4,282,062) |
| (Increase)/decrease in trade receivables | (13,108,309) | (12,502,683) |
| (Increase)/decrease in other non-financial assets and liabilities | 1,345,019 | (3,723,699) |
| Disposal of assets held for sale | - | 200,000 |
| Increase/(decrease) in trade payables | (132,568) | 3,476,861 |
| NET CASH FLOWS FROM OPERATING ACTIVITIES | (10,587,204) | (9,587,401) |
| Investments: | ||
| Investments in tangible fixed assets | (4,000,246) | (1,921,620) |
| Disposal of tangible fixed assets | 40,174 | 76,533 |
| Investments in intangible fixed assets | (113,488) | (123,897) |
| Net (investments)/disposals in financial assets | 88,076 | 9,144 |
| Acquisition of Subsidiaries | - | (9,645,232) |
| NET CASH FLOWS FROM INVESTMENTS | (3,985,483) | (11,605,072) |
| Financing: | ||
| New financing | 71,970,006 | 27,086,444 |
| Funding repayment | (44,355,461) | (316,133) |
| Principal payments - lease liabilities | (358,566) | (99,487) |
| Share capital increase | - | 26 |
| Sale/(purchase) of treasury shares | (68,486) | (800,652) |
| CASH FLOWS FROM FINANCING | 27,187,492 | 25,870,199 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 12,614,805 | 4,677,725 |
| Share Capital |
Legal reserve |
Negative reserve for treasury shares in the portfolio |
Merger surplus reserve |
Share premium reserve |
Extraordinary reserve |
Other reserves |
FTA reserve | Employee benefit reserve |
Profits/losses carried forward |
Profit/loss for the financial year |
Total Shareholders' equity |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance as of 31 December 2021 |
22,770,445 | 5,000,000 | (15,939,707) | 29,741,389 | 86,743,750 | 19,556,720 | 7,512,947 | (6,669,789) | (71,011) | - | (1,426,751) | 147,217,991 |
| Profit/(loss) for the financial year |
(2,482,051) | (2,482,051) | ||||||||||
| Other income statement components |
||||||||||||
| Comprehensive profit/(loss) | - | - | - | - | - | - | - | - | - | - | (2,482,051) | (2,482,051) |
| Dividends | - | |||||||||||
| Stock Grant | - | |||||||||||
| Purchase of treasury shares | (68,486) | (68,486) | ||||||||||
| Warrant exercise | - | |||||||||||
| Consolidation difference of | - | |||||||||||
| Euro Cosmetic minority shares | ||||||||||||
| 2021 profit allocation | (46,682) | (1,380,070) | 1,426,751 | - | ||||||||
| Balance as of 31 March 2022 | 22,770,445 | 5,000,000 | (16,008,194) | 29,741,389 | 86,743,750 | 19,510,039 | 7,512,947 | (6,669,789) | (71,011) | (1,380,070) | (2,482,051) | 144,667,454 |
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