TIDMNIOX
RNS Number : 5791N
Niox Group PLC
26 September 2023
NIOX GROUP PLC
("NIOX" or the "Company"
and, together with its subsidiaries, the Group ")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2023
Oxford, UK - 26 September 2023: NIOX Group plc (AIM: NIOX), a
company engaged in the design, development, and commercialisation
of medical devices for asthma diagnosis and management, today
announces its unaudited interim results for the six months ended 30
June 2023 ("H1 2023").
Financial highlights
-- Revenue growth of 21% to GBP18.8 million (H1 2022: GBP15.5 million).
-- Clinical business revenue growth of 28% to GBP16.7 million
(H1 2022: GBP13.0 million). 90% of clinical revenue from recurring
test kit sales.
-- Adjusted EBITDA(2) of GBP6.2 million (H1 2022: GBP3.2
million), reflecting higher sales, improved margins as a result of
a higher proportion of test kit sales and a slight reduction in the
cost base.
-- Strong balance sheet with no bank debt and cash of GBP23.8
million as of 30 June 2023 (30 June 2022: GBP13.8 million, 31
December 2022: GBP19.4 million).
-- Operating cash flow of GBP5.0 million (H1 2022: GBP1.0 million).
Financial progress
H1 2023 H1 2022
GBPm GBPm
Revenue 18.8 15.5
------------------- -------------------
Gross margin 73% 71%
------------------- -------------------
Total expenditure(1) (7.5) (7.8)
------------------- -------------------
Adjusted EBITDA(2) 6.2 3.2
------------------- -------------------
Operating profit 2.9 0.6
------------------- -------------------
Beyond Air settlement consideration(3) - 8.1
------------------- -------------------
Profit before tax from continuing operations 2.9 8.9
------------------- -------------------
Profit for the financial period from discontinued
operations 0.5 0.3
------------------- -------------------
Profit for the financial period 3.4 9.2
------------------- -------------------
Cash(4) at period end 23.8 13.8
------------------- -------------------
(1) Excludes depreciation, amortisation, impairment and share
option charge. See note 13 for reconciliation.
(2) Earnings before interest, tax, depreciation, amortisation,
impairment and share option charge. See note 13 for
reconciliation.
(3) Full amount of Beyond Air settlement recognised in H1
2022.
(4) Includes cash and cash equivalents.
Operational highlights
-- Ongoing transition to distributor-led business model with new
arrangements in Europe, the USA and China expected to drive
scalable revenue growth.
-- Commenced development of NIOX Pro, the next generation of clinical use device.
Post period end
-- Second payment of $3.5 million received from Beyond Air on 25 August 2023.
-- Net cash at 31 August 2023 increased to GBP27.3 million.
-- A special dividend of 2.5p per share (equating to a return of
cash of GBP10.5 million) was paid on 15 September 2023 to
shareholders on the register as at the close of business on Friday
18 August 2023.
Ian Johnson, NIOX's Executive Chairman, said: "The Group has
performed well in the first half of the year with good growth in
revenue and profits. Cash generation remained strong with net cash
at the half year of GBP23.8 million, up from GBP19.4 million at the
end of 2022. Our strong cash generation permitted the payment of a
special dividend of 2.5p per share earlier this month and we expect
to propose a final dividend for the 2023 year at the time of our
full year results next March.
The Group is now in a strong financial position to deploy its
cash resources to invest in creating further demand for its
products and in developing next generation devices, including a
home-use device.
Trading in July and August has been in line with management
expectations. While the value of reported sales is subject to
fluctuation as a result of exchange rate movements, the impact of
this on EBITDA is not expected to be significant and the Board
remains confident of achieving management expectations for the full
year, which were significantly upgraded in July, and in prospects
for 2024 and beyond."
Contacts
NIOX
Ian Johnson, Executive Chairman Tel: +44 (0) 1865 405 560
Michael Roller, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker)
Aubrey Powell/ Jen Boorer Tel: +44 (0) 20 7496 3000
About NIOX
Our mission is to improve asthma diagnosis and management by
greater patient access to FeNO testing. Asthma is one of the
biggest healthcare issues globally with 340 million sufferers, many
of whom are undiagnosed or are misdiagnosed. The Group is engaged
in the design, development, and commercialisation of medical
devices for the measurement of FeNO, a precise biomarker for
asthma. Our market leading device, NIOX VERO (R) , is increasingly
recognised by healthcare professionals as an important tool to
improve the diagnosis and management of asthma. NIOX VERO (R) is
also the device of choice by leading clinical research
organisations for respiratory studies.
NIOX provides products and services via its direct sales
organisation and extensive distributor network in 50
countries. For more information, please visit www.niox.com
The Group's interim results report is available online at
www.investors.niox.com/investors/financial-reports/
Forward-looking statements
This press release contains certain projections and other
forward-looking statements with respect to the financial condition,
results of operations, businesses and prospects of NIOX. The use of
terms such as "may", "will", "should", "expect", "anticipate",
"project", "estimate", "intend", "continue", "target" or "believe"
and similar expressions (or the negatives thereof) are generally
intended to identify forward-looking statements. These statements
are based on current expectations and involve risk and uncertainty
because they relate to events and depend upon circumstances that
may or may not occur in the future. There are a number of factors
that 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. Nothing contained in this press release
should be construed as a profit forecast or profit estimate.
Investors or other recipients are cautioned not to place undue
reliance on any forward-looking statements contained herein. NIOX
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.
OPERATING REVIEW
Introduction
The Group performed well in the first half of 2023 with revenues
up 21% to GBP18.8 million (H1 2022: GBP15.5 million). The business
made a profit at an adjusted EBITDA level of GBP6.2 million (H1
2022: GBP3.2 million).
Business review
NIOX is the market leader in point of care FeNO testing for the
diagnosis and management of asthma. The NIOX VERO(R) device is
approved and reimbursed in most major markets.
Clinical sales (to physicians and hospitals for use in clinical
practice, and to the Company's distributors) grew by 28% to GBP16.7
million (H1 2022: GBP13.0 million). Recurring revenues from test
kit sales provide good visibility of earnings and are typically 90%
of clinical sales.
In constant currency terms, sales in the APAC region were 70% up
on the prior half year mainly as a result of higher testing volumes
in Japan and China, whilst EMEA sales were up 32%. Given the recent
changes in distribution, we are yet to generate the level of growth
in the Americas that we are seeing elsewhere, with sales up 8%.
Research sales for the period (generated from pharmaceutical
companies and contract research organisations (CROs) for use in
clinical studies) were GBP2.1 million (H1 2022: GBP2.5 million).
Period comparisons are difficult given the timing and number of
clinical trials involving FeNO testing.
Discontinued operations
The discontinued COPD business generated a small profit of
GBP0.5 million in the first half of the year (H1 2022: GBP0.3
million) as a result of a reduction in the rebate accrual based on
information received during the period.
The Group retains an accrual of GBP1.2 million (31 December
2022: GBP3.3 million) in respect of potential future rebate
payments. No claims for rebates have been received since 31
December 2022.
The accrual for returns was reduced to nil as at 30 June 2023
(31 December 2022: GBP2.2 million) as returns claims totalling
GBP2.2 million were received. GBP1.1 million of this amount was
settled in the period, with the remainder settled after the period
end in August 2023. No material future product returns are
expected.
Beyond Air
As a result of Beyond Air, Inc. ("Beyond Air") receiving
approval from the U.S. Food and Drug Administration (FDA) for its
LungFit(R) PH device, the Group is entitled to receive payments of
$10.5 million in total, in three instalments as follows:
-- $2.5 million within 60 days of the approval of LungFit(R) by
the FDA ("FDA approval") - received on 24 August 2022
-- $3.5 million within 60 days of the first anniversary of FDA
approval - received on 25 August 2023
-- $4.5 million within 60 days of the second anniversary of FDA approval
In addition, the Group is entitled to a royalty of 5% of net
sales of the device, commencing on the second anniversary of FDA
approval and capped at a maximum of $6 million.
Energy prices and inflation
The Group does not manufacture its own products and accordingly
energy costs are a very small component of total costs. The effect
of inflationary pressures on purchase prices from its two main
suppliers is mitigated both by the group's high gross margins and
its ability to implement price increases in the majority of its
markets.
Investments
The Group has commenced development of its new NIOX Pro device;
development costs this year will approximate GBP0.2 million and are
likely to be capitalised in accordance with the requirements of
accounting standards. The aggregate development costs of the NIOX
Pro, including tooling, should not exceed GBP2.0 million, with the
bulk of these costs being incurred in 2024.
Outlook
Management is continuing to implement a growth strategy that
will raise the awareness of the benefits of FeNO testing and
significantly improve the availability of NIOX(R) worldwide by
expanding distribution, optimising reimbursement and improving
patient access. Exploring use in the home and availability in
pharmacies and the workplace will further improve patient access as
greater emphasis is placed on managing patients in non-hospital
locations.
Trading in July and August has been in line with management
expectations. While the value of reported sales is subject to
fluctuation as a result of exchange rate movements, the impact of
this on EBITDA is not expected to be significant and the Board
remains confident of achieving management expectations for the full
year, which were significantly upgraded in July, and in prospects
for 2024 and beyond.
FINANCIAL REVIEW
The first half of 2023 has been a period of continued growth for
NIOX. The level of FeNO testing carried out by our customers
continues to grow, resulting in the Group increasing both revenues
and adjusted EBITDA.
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
GBPm GBPm GBPm
====================================== =========== =========== ==============
Revenue 18.8 15.5 31.3
Cost of sales (5.1) (4.5) (9.1)
Gross profit 13.7 11.0 22.2
Gross margin 73% 71% 71%
Research and development costs (1.2) (1.9) (3.2)
Sales and marketing costs (5.6) (4.6) (9.7)
Administrative expenses (3.9) (3.9) (7.5)
Adjusted EBITDA(1) 6.2 3.2 7.3
Operating profit 3.0 0.6 1.8
Other (losses) and gains - net (0.5) 0.3 0.4
Other income 0.1 8.3 8.3
Net finance income/ (costs) 0.3 (0.3) -
Profit before tax 2.9 8.9 10.5
Taxation - - 3.6
Profit for the financial period
from continuing operations 2.9 8.9 14.1
Profit for the financial period from
discontinued operations 0.5 0.3 2.0
Profit for the financial period 3.4 9.2 16.1
-------------------------------------- ----------- ----------- --------------
Cash and cash equivalents 23.8 13.8 19.4
-------------------------------------- ----------- ----------- --------------
(1) Earnings before interest, tax, depreciation, amortisation,
impairment and share option charge. See note 13 for
reconciliation.
Revenue
NIOX(R) revenues for the period were GBP18.8 million (H1 2022:
GBP15.5 million) which include clinical sales of GBP16.7 million
(H1 2022: GBP13.0 million) and research sales of GBP2.1 million (H1
2022: GBP2.5 million). NIOX(R) c linical revenue represents sales
to physicians and hospitals for use in clinical practice and to the
Company's distributors, while research revenue is from
pharmaceutical companies and contract research organisations (CROs)
for use in clinical studies.
A significant part of the increase in NIOX(R) revenue was
attributable to a recovery in testing volumes in Japan and China
following the Covid-19 pandemic, but there was also good growth in
various European markets including the UK and Germany.
Gross profit
Gross profit on NIOX(R) sales was GBP13.7 million (H1 2022:
GBP11.0 million), with a gross margin of 73% (H1 2022: 71%). Gross
margin was higher than the prior period due to a greater proportion
of higher margin test kit sales and a lower proportion of lower
margin, device heavy research sales.
Research and development
Research and development costs reduced to GBP1.2 million (H1
2022: GBP1.9 million) mainly attributable to lower headcount.
Sales and marketing
Sales and marketing costs increased to GBP5.6 million (H1 2022:
GBP4.6 million) as sales and marketing activities are returning to
normal levels following the Covid-19 pandemic.
Other income
Other income has decreased to GBP0.1 million (H1 2022: GBP8.3
million). GBP0.1 million (H1 2022: GBP0.2 million) relates to
sub-lease rental income in respect of the Chicago property. The
prior period figure includes GBP8.1 million relating to the one-off
recognition of the settlement consideration due from Beyond
Air.
Earnings per share
Basic profit per share for the period was 0.81p (H1 2022: 2.20p)
and diluted profit per share for the period was 0.76p (H1 2022:
2.07p) reflecting a profit for the period of GBP3.4 million (H1
2022: GBP9.2 million). Basic profit per share from continuing
operations was 0.69p (H1 2022: 2.13p) and diluted profit per share
from continuing operations was 0.64p (H1 2022: 2.00p) reflecting a
profit from continuing operations for the financial period of
GBP2.9 million (H1 2022: GBP8.9 million).
The decrease in reported profit per share is largely due to the
recognition of the full consideration due from Beyond Air in the
prior period. Excluding the impact of the Beyond Air consideration
and amortisation, basic profit per share for the period was 1.26p
(H1 2022: 0.74p) reflecting an adjusted profit for the period of
GBP5.3 million (H1 2022: GBP3.1 million). See note 6.
Other comprehensive income
Other comprehensive income of GBP5.4 million (H1 2022: GBP1.5
million) relates to exchange differences on the translation of the
balance sheets of foreign operations into British pound
sterling.
The income consists of a GBP4.3 million gain (H1 2022: GBP0.5
million) on the translation of overseas subsidiaries' net assets, a
GBP2.8 million gain (H1 2022: GBP0.5 million) on the translation of
intangible assets and a GBP0.4 million gain (H1 2022: GBP0.1
million) on the translation of goodwill, offset by a GBP2.1 million
loss (H1 2022: GBP0.4 million gain) on the retranslation of
intercompany balances which are determined to be long-term
investments in nature, and therefore the effect of foreign exchange
is recognised through other comprehensive income.
Statement of financial position
Net assets at 30 June 2023 were GBP80.9 million (31 December
2022: GBP81.9 million).
Current liabilities at 30 June 2023 were GBP7.1 million (31
December 2022: GBP9.2 million). The decrease is mainly due to lower
trade payables, in particular lower accruals relating to
discontinued operations, as a GBP1.1 million invoice from
AstraZeneca was settled in the period, reflecting returns of
out-of-date pharmaceutical products relating to the discontinued
COPD business. A further GBP1.1 million was settled in August and
no material additional returns are expected.
During the period, a Capital Reduction Scheme was concluded by
filing an order of the High Court with the Registrar of Companies.
This resulted in the share premium of the Company being
cancelled.
Cash flow
The Group's cash position (including cash and cash equivalents)
increased from GBP19.4 million at 31 December 2022 to GBP23.8
million at 30 June 2023. The Group has no bank borrowings.
Cash generated from operations during the period aggregated
GBP5.1 million (H1 2022: GBP1.2 million), of which GBP1.1 million
(H1 2022: GBP0.1 million) was used in discontinued operations. The
significant increase in cash generation is due to the increased
profitability of the Group.
Exchange differences on cash and cash equivalents arose as a
result of translation of foreign currency balances at the beginning
and end of the relevant period. The exchange loss for the period
was GBP0.4 million (H1 2022: GBP0.4 million gain).
Michael Roller
Chief Financial Officer
26 September 2023
PRINCIPAL RISKS AND UNCERTAINTIES
NIOX has considered the principal risks and uncertainties facing
the Group for the first six months of 2023 and does not consider
them to have changed materially from those set out on pages 32 to
35 of the 2022 annual report and accounts, which is available on
the Group's website. A summary of these risks and uncertainties is
as follows:
Cyber security
If the Group fails to sufficiently detect, monitor, or respond
to cyber-attacks against its systems this may result in disruption
of service, compromise of sensitive data, financial loss and
reputational damage.
Supply Chain
The Group relies on third parties for the supply of key
materials, finished products and services, including shipping. Some
materials may only be available from one source, and regulatory
requirements may make substitution costly and time-consuming.
Covid-19 pandemic
There is a risk that the Covid-19 pandemic may impact the Group,
in particular with regard to the level of FeNO testing. Whilst
operations are generally back at normal levels, there is still
uncertainty in terms of any potential new variants, the timing,
extent and length of national or regional lockdowns and their
potential impact on our operations, colleagues and customers.
Commercial success
The Group's competitors, some of whom have considerably greater
financial and human resources, may develop more effective products,
launch products at a lower price or be able to compete more
effectively in the markets targeted by the Group.
The Group may face issues selling its products if there is no
payer coverage or inclusion of these products by health insurance
schemes, or if large payers that currently cover FeNO testing shift
to a negative coverage policy.
Compliance with healthcare regulations
The Group must comply with complex regulations in relation to
the marketing of its devices. These regulations are strictly
enforced. Failure by the Group (or its commercial partners) to
comply with relevant legislation and regulations in the countries
in which it operates may result in criminal and civil proceedings
against the Group.
Foreign exchange fluctuations
Foreign exchange fluctuations may adversely affect the Group's
results and financial condition. The Group records its transactions
and prepares its financial statements in British pound sterling,
but a significant proportion of its income and expenditure is in
United States dollar, Swedish krona, Euro and Chinese yuan.
Staff retention
Failure to attract, retain and develop people could lead to a
lack of critical skills, knowledge and experience, which could
hinder both daily operations and growth potential.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 30 JUNE 2023
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
Continuing operations
Revenue from contracts with customers 3 18.8 15.5 31.3
Cost of sales (5.1) (4.5) (9.1)
--------------------------------------------- ------ ------------ ------------ --------------
Gross profit 13.7 11.0 22.2
Research and development costs (1.2) (1.9) (3.2)
Sales and marketing costs (5.6) (4.6) (9.7)
Administrative expenses (3.9) (3.9) (7.5)
Operating profit 3 3.0 0.6 1.8
Other (losses) and gains - net (0.5) 0.3 0.4
Other income 4 0.1 8.3 8.3
Finance costs (0.1) (0.3) (0.3)
Finance income 0.4 - 0.3
Profit before tax 2.9 8.9 10.5
Taxation - - 3.6
--------------------------------------------- ------ ------------ ------------ --------------
Profit from continuing operations 2.9 8.9 14.1
--------------------------------------------- ------ ------------ ------------ --------------
Profit from discontinued operations
(attributable to equity holders of
NIOX Group plc) 5 0.5 0.3 2.0
Profit for the period 3.4 9.2 16.1
--------------------------------------------- ------ ------------ ------------ --------------
Other comprehensive income / (expense)
Items that may be subsequently reclassified
to profit or loss
Exchange differences on translation
of foreign operations 5.4 1.5 (1.9)
Other comprehensive income / (expense)
for the period, net of tax 5.4 1.5 (1.9)
--------------------------------------------- ------ ------------ ------------ --------------
Total comprehensive income for the
period 8.8 10.7 14.2
--------------------------------------------- ------ ------------ ------------ --------------
Earnings per share attributable to owners of the parent during the
period (expressed in pence per share)
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Basic earnings per share Pence Pence Pence
--------------------------------------------- ------ ------------ ------------ --------------
Basic earnings per share for profit
from continuing operations 6 0.69 2.13 3.36
Basic earnings per share for profit
for the period 6 0.81 2.20 3.84
--------------------------------------------- ------ ------------ ------------ --------------
Diluted earnings per share Pence Pence Pence
--------------------------------------------- ------ ------------ ------------ --------------
Diluted earnings per share for profit
from continuing operations 6 0.64 2.00 3.19
Diluted earnings per share for profit
for the period 6 0.76 2.07 3.63
--------------------------------------------- ------ ------------ ------------ --------------
The notes below are an integral part of these condensed interim
consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2023
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
--------------------------------- ------ ---------- ---------- ------------
Assets
Non-current assets
Property, plant and equipment 0.3 0.2 0.2
Right-of-use assets 1.3 1.5 0.9
Goodwill 4.3 4.7 4.7
Intangible assets 27.7 32.6 32.4
Trade and other receivables 7 3.4 6.1 3.5
Deferred tax assets 8 23.9 23.1 25.4
60.9 68.2 67.1
--------------------------------- ------ ---------- ---------- ------------
Current assets
Inventories 3.6 3.6 4.1
Trade and other receivables 7 7.5 6.6 7.9
Cash and cash equivalents 23.8 13.8 19.4
--------------------------------- ------ ---------- ---------- ------------
34.9 24.0 31.4
--------------------------------- ------ ---------- ---------- ------------
Total assets 95.8 92.2 98.5
--------------------------------- ------ ---------- ---------- ------------
Equity and liabilities
Share capital 0.3 0.3 0.3
Share premium 10 - 640.3 640.3
Other reserves 12.2 13.9 15.7
Retained earnings/ (accumulated
losses) 68.4 (581.3) (574.4)
--------------------------------- ------ ---------- ---------- ------------
Total equity 80.9 73.2 81.9
Liabilities
Non-current liabilities
Lease liabilities 0.8 0.9 0.4
Deferred tax liabilities 8 7.0 7.9 7.0
7.8 8.8 7.4
--------------------------------- ------ ---------- ---------- ------------
Current liabilities
Trade and other payables 9 6.5 9.6 8.6
Lease liabilities 0.6 0.6 0.6
7.1 10.2 9.2
Total liabilities 14.9 19.0 16.6
--------------------------------- ------ ---------- ---------- ------------
Total equity and liabilities 95.8 92.2 98.5
--------------------------------- ------ ---------- ---------- ------------
The notes below are an integral part of these condensed interim
consolidated financial statements.
Ian Johnson Michael Roller
Executive Chairman Chief Financial Officer
NIOX Group plc NIOX Group plc
Registered number: 05822706
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2023
Six months ended Six months ended Twelve months ended
30 June 2023 30 June 2022 31 December 2022
Unaudited Unaudited Audited
Notes GBPm GBPm GBPm
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash flows from operating activities
Cash generated from operations 11 5.1 1.2 6.9
Interest paid (0.1) (0.2) (0.2)
Net cash generated from operating activities 5.0 1.0 6.7
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash flows from investing activities
Payments for property, plant and equipment (0.1) - (0.1)
Net cash used in investing activities (0.1) - (0.1)
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash flows from financing activities
Proceeds from issue of shares - 0.1 -
Interest received 0.2 - 0.1
Principal elements of lease payments (0.3) (0.3) (0.6)
Net cash used in financing activities (0.1) (0.2) (0.5)
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Net increase in cash and cash equivalents 4.8 0.8 6.1
Cash and cash equivalents at 1 January 19.4 12.6 12.6
Effects of exchange rate changes on cash and cash
equivalents (0.4) 0.4 0.7
-------------------------------------------------- ------ ----------------- ----------------- --------------------
Cash and cash equivalents at end of period 23.8 13.8 19.4
-------------------------------------------------- ------ ----------------- ----------------- --------------------
The notes below are an integral part of these condensed interim
consolidated financial statements.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
1. General information
NIOX Group plc is a public company limited by shares which is
listed on the Alternative Investment Market (AIM) and incorporated
and domiciled in the United Kingdom. The Company is resident in
England and the
registered office is Hayakawa Building, Edmund Halley Road,
Oxford Science Park, Oxford, OX4 4GB.
The condensed consolidated interim financial statements were
approved for issue on 26 September 2023.
The condensed consolidated interim financial statements have not
been audited or reviewed. The condensed consolidated interim
financial statements do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory
accounts for NIOX Group plc for the year ended 31 December 2022
were approved by the Board of Directors on 22 March 2023 and
delivered to the Registrar of Companies. The report of the auditors
on those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
Basis of preparation
This condensed consolidated interim financial report for the
period ended 30 June 2023 has been prepared in accordance with
Accounting Standard IAS 34 Interim Financial Reporting, except
for:
-- A statement of changes in equity has not been presented; and
-- The deferred tax asset has not been revalued.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report and
accounts for the year ended 31 December 2022 and any public
announcements made by NIOX Group plc during the interim reporting
period.
Going concern
In assessing the appropriateness of the going concern
assumption, the Board has considered the availability of funding
alongside the possible cash requirements of the Group and Company.
After due consideration, the directors have concluded that there is
a reasonable expectation that the Group has adequate resources to
continue in operational existence for at least 12 months from the
date of this report.
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting
period.
Use of estimates and assumptions
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts 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 annual financial
statements for the year ended 31 December 2022.
Financial instruments
The Group's financial instruments comprise cash and cash
equivalents, receivables and payables arising directly from
operations, and derivatives. The directors consider that the fair
values of the Group's financial instruments do not differ
significantly from their carrying values.
2. Financial and capital risk management
The condensed interim financial statements do not include all
financial and capital risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Group's annual report and accounts for the
year ended 31 December 2022.
The majority of operating costs are denominated in British pound
sterling, United States dollar, Swedish krona, euro and Chinese
yuan. Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities. The directors
expect foreign exchange volatility to continue to affect the
Group's results and the resulting impact will be assessed in the
annual report.
3. Operating segments
The chief operating decision-maker, the Executive Chairman,
examines the Group's performance from a product perspective, and
has identified one reportable segment in the continuing
business:
- NIOX(R) relates to the portfolio of products used to improve
asthma diagnosis and management by measuring fractional exhaled
nitric oxide (FeNO).
The COPD business has been classified as a discontinued
operation. Information about this discontinued segment is provided
in note 5.
The table below presents operating loss information regarding
the Group's operating segments for the periods ended 30 June 2023
and 2022, and the year ended 31 December 2022. Only the results for
the Group's continuing activities are included to aid
comparison.
NIOX(R) Head office Total
GBPm GBPm GBPm
--------------------------------- -------- ------------ ------
Six months ended 30 June
2023
Revenue 18.8 - 18.8
Operating profit / (loss)
from continuing operations 4.9 (1.9) 3.0
--------------------------------- -------- ------------ ------
Six months ended 30 June
2022
Revenue 15.5 - 15.5
Operating profit / (loss)
from continuing operations 1.9 (1.3) 0.6
--------------------------------- -------- ------------ ------
Twelve months ended 31 December
2022
Revenue 31.3 - 31.3
Operating profit / (loss)
from continuing operations 4.8 (3.0) 1.8
--------------------------------- -------- ------------ ------
There were no sales between the segments in either reporting
period.
4. Other income
Six months ended 30 June Six months ended 30 June Twelve months ended 31
2023 2022 December 2022
GBPm GBPm GBPm
---------------------------- --------------------------- --------------------------- ---------------------------
Sub-lease rental income 0.1 0.2 0.2
Beyond Air settlement
consideration - 8.1 8.1
----------------------------- --------------------------- --------------------------- ---------------------------
Total other income 0.1 8.3 8.3
----------------------------- --------------------------- --------------------------- ---------------------------
Beyond Air were granted FDA approval of the LungFit(R) PH
product on 28 June 2022, and therefore in the prior period, other
income and a corresponding receivable was recognised for the total
consideration of $10.5 million, discounted to its present
value.
5. Discontinued operations
On 9 April 2020, an agreement was signed to hand back the
Tudorza(R) and Duaklir(R) licences to AstraZeneca and as such, the
results of the COPD operating segment are reported as a
discontinued operation. There were no assets or liabilities
classified as held for sale in relation to the discontinued
operation.
Financial information relating to the discontinued operation is
set out below:
Profit for the period
Six months ended 30 Six months ended 30 Twelve months ended 31
June 2023 June 2022 December 2022
GBPm GBPm GBPm
------------------------- --------------- ----------------------- ------------------------ -----------------------
Revenue 0.5 0.3 2.0
Profit from discontinued operations 0.5 0.3 2.0
------------------------------------------ ----------------------- ------------------------ -----------------------
Cashflow
Net cash outflow from operating
activities (1.1) (0.1) -
Net cash used in discontinued
operations (1.1) (0.1) -
------------------------------------ ---- ----------------------- ------------------------ -----------------------
The revenue relates to a reduction in the rebate accrual based
on information received during the period.
6. Earnings per share
Six months Six months Twelve months
Basic earnings per share ended 30 ended 30 ended 31
June 2023 June 2022 December
2022
Pence Pence
Pence
--------------------------------------------- ----------- ----------- --------------
From continuing operations 0.69 2.13 3.36
From discontinued operations 0.12 0.07 0.48
--------------------------------------------- ----------- ----------- --------------
Total basic earnings per share attributable
to the ordinary equity holders of
the Company 0.81 2.20 3.84
--------------------------------------------- ----------- ----------- --------------
Diluted earnings per share
Pence Pence Pence
-------------------------------------- -------- -------- --------
From continuing operations 0.64 2.00 3.19
From discontinued operations 0.12 0.07 0.44
-------------------------------------- -------- -------- --------
Total diluted earnings per share
attributable to the ordinary equity
holders of the Company 0.76 2.07 3.63
-------------------------------------- -------- -------- --------
Adjusted basic earnings per share
Pence Pence Pence
------------------------------------- -------- -------- --------
From continuing operations 1.14 0.67 2.36
From discontinued operations 0.12 0.07 0.48
------------------------------------- -------- -------- --------
Total adjusted basic earnings per
share attributable to the ordinary
equity holders of the Company 1.26 0.74 2.84
------------------------------------- -------- -------- --------
Adjusted basic earnings per share eliminates the impact of the
Beyond Air settlement consideration and amortisation.
Six months Six months Twelve months
ended 30 ended 30 ended 31
June 2023 June 2022 December
Reconciliation of earnings used 2022
in calculating earnings per share GBPm GBPm
GBPm
--------------------------------------------- ----------- ----------- --------------
Basic and diluted earnings per share
Profit attributable to the ordinary
equity holders of the Company used
in calculating basic and dilutive
earnings per share:
From continuing operations 2.9 8.9 14.1
From discontinued operations 0.5 0.3 2.0
--------------------------------------------- ----------- ----------- --------------
Profit used as the basis of calculating
basic and diluted earnings per share 3.4 9.2 16.1
--------------------------------------------- ----------- ----------- --------------
Reconciliation of earnings used
in calculating adjusted earnings
per share GBPm GBPm GBPm
-------------------------------------------------- ----- ------ ------
Basic and diluted earnings per share
Profit attributable to the ordinary
equity holders of the Company used
in calculating basic and dilutive
earnings per share:
From continuing operations 2.9 8.9 14.1
From discontinued operations 0.5 0.3 2.0
Add back Beyond Air consideration - (8.1) (8.1)
Add back amortisation 1.9 2.0 3.9
-------------------------------------------------- ----- ------ ------
Adjusted profit used as the basis
of calculating adjusted basic earnings
per share 5.3 3.1 11.9
-------------------------------------------------- ----- ------ ------
The earnings used in calculating basic and diluted earnings per
share are the same.
Weighted average number of shares Six months Six months Twelve months
ended 30 ended 30 ended 31
June 2023 June 2022 December
2022
----------------------------------------- ------------ ------------ ------------------------
Weighted average number of ordinary
shares used as the denominator in
calculating basic earnings per share 419,577,589 418,866,323 419,199,013
Adjustments for calculation of diluted
earnings per share:
Share options 29,153,971 24,899,745 23,799,062
Deferred shares 631,968 - -
Weighted average number of ordinary
shares and potential ordinary shares
used as the denominator in calculating
diluted earnings per share 449,363,528 443,766,068 442,998,075
----------------------------------------- ------------ ------------ ------------------------
7. Trade and other receivables
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
----------------------------------------------- ------------- ------------- -----------------
Receivable within one year
Trade receivables 4.3 4.0 3.7
Prepayments and accrued income 0.5 0.6 0.7
Other receivables 2.7 2.0 3.5
Total current trade and other receivables 7.5 6.6 7.9
----------------------------------------------- ------------- ------------- -----------------
Receivable after one year
Other receivables 3.4 6.1 3.5
----------------------------------------------- ------------- ------------- -----------------
Total non-current trade and other receivables 3.4 6.1 3.5
----------------------------------------------- ------------- ------------- -----------------
Non-current other receivables relate to the consideration due
from Beyond Air. An additional GBP2.7 million (H1 2022: GBP2.0
million) of consideration is included in current other receivables
and was received on 25 August 2023.
8. Deferred taxation
Intangibles Tax losses Net deferred tax asset
GBPm GBPm GBPm
--------------------- ------------ ----------- -----------------------
At 30 June 2022 (7.9) 23.1 15.2
--------------------- ------------ ----------- -----------------------
At 31 December 2022 (7.0) 25.4 18.4
--------------------- ------------ ----------- -----------------------
At 30 June 2023 (7.0) 23.9 16.9
--------------------- ------------ ----------- -----------------------
30 June 2023 30 June 2022 31 December 2022
GBPm
GBPm GBPm
-------------------------- ------------- ------------- -----------------
Deferred tax liabilities (7.0) (7.9) (7.0)
Deferred tax assets 23.9 23.1 25.4
Total deferred tax asset 16.9 15.2 18.4
-------------------------- ------------- ------------- -----------------
The Group does not review the assumptions relating to deferred
tax assets at the half year end. The movement in the deferred tax
asset in the period is due to foreign exchange fluctuations as the
asset is denominated in Swedish krona.
The Group has the following unrecognised potential deferred tax
assets as at:
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
--------------------------------------- ------------- ------------- -----------------
Losses 76.0 80.0 76.0
Total unrecognised deferred tax asset 76.0 80.0 76.0
--------------------------------------- ------------- ------------- -----------------
9. Trade and other payables
30 June 2023 30 June 2022 31 December 2022
GBPm
GBPm GBPm
--------------------------------- ------------- ------------- -----------------
Trade payables 2.3 0.4 0.5
Social security and other taxes 0.3 0.4 0.8
Accruals 3.6 8.2 6.8
Other payables 0.3 0.6 0.5
Total trade and other payables 6.5 9.6 8.6
--------------------------------- ------------- ------------- -----------------
10. Share premium
30 June 2023 30 June 2022 31 December 2022
GBPm GBPm GBPm
-------------------------- ------------- ------------- -----------------
As at 1 January 640.3 640.3 640.3
Capital reduction scheme (640.3) - -
As at period end - 640.3 640.3
-------------------------- ------------- ------------- -----------------
On 8 February 2023, a Capital Reduction Scheme was concluded by
filing an order of the High Court with the Registrar of Companies.
This resulted in the share premium of the Company being cancelled
with a corresponding increase in distributable retained
earnings.
11. Cash generated from operations
Reconciliation of profit before tax to net cash generated from
operations
Six months ended 30 June Six months ended 30 June Twelve months ended 31
2023 2022 December 2022
GBPm GBPm GBPm
---------------------------- ---------------------------- ---------------------------- ----------------------------
Profit from continuing
operations before tax 2.9 8.9 10.5
Profit from discontinued
operations before tax 0.5 0.3 2.0
---------------------------- ---------------------------- ---------------------------- ----------------------------
Profit before tax 3.4 9.2 12.5
Adjustment for:
Finance income (0.4) - (0.3)
Finance costs 0.1 0.3 0.3
Depreciation charge of
property, plant and
equipment - - 0.1
Depreciation charge of
right-of-use assets 0.3 0.3 0.6
Amortisation charge of
intangible assets 1.9 2.0 3.9
Share based payment charge 1.0 0.3 0.9
Foreign exchange on
non-operating cash flows - (0.8) (0.4)
Changes in working capital:
Increase in trade and other
receivables (0.2) (8.8) (6.7)
Decrease/ (increase) in
inventories 0.2 (0.9) (1.4)
Decrease in trade and other
payables (1.2) (0.4) (2.6)
Cash generated from
operations 5.1 1.2 6.9
---------------------------- ---------------------------- ---------------------------- ----------------------------
12. Related party transactions
There have been no new IAS 24 related-party transactions in the
first six months of the current financial year.
13. Reconciliation of alternative performance measures
Total expenditure
Total expenditure excludes depreciation, amortisation,
impairment and share option charge.
Total expenditure is an alternative performance measure, and
reconciles to the consolidated statement of comprehensive income as
below:
Six months Six months Twelve months
ended 30 ended 30 ended 31
June 2023 June 2022 December
2022
GBPm GBPm
GBPm
------------------------------------------- ---------------------- ---------------------- -------------------------
Research and development costs (1.2) (1.9) (3.2)
Sales and marketing costs (5.6) (4.6) (9.7)
Administrative expenses (3.9) (3.9) (7.5)
Add back:
Depreciation 0.3 0.3 0.7
Amortisation 1.9 2.0 3.9
Share option
charge 1.0 0.3 0.9
------------------------------------------- ---------------------- ---------------------- -------------------------
Total expenditure (7.5) (7.8) (14.9)
------------------------------------------- ---------------------- ---------------------- -------------------------
Adjusted EBITDA
Adjusted EBITDA excludes items of income and expenditure which
might have an impact on the quality of earnings, such as share
option charge.
Adjusted EBITDA reconciles to operating profit as below:
Six months ended 30 June 2023 Six months ended 30 June 2022 Twelve months ended 31
December 2022
GBPm GBPm
GBPm
--------------------- ------------------------------ ------------------------------ -------------------------------
Adjusted EBITDA 6.2 3.2 7.3
Depreciation (0.3) (0.3) (0.7)
Amortisation (1.9) (2.0) (3.9)
Share option charge (1.0) (0.3) (0.9)
Operating profit 3.0 0.6 1.8
--------------------- ------------------------------ ------------------------------ -------------------------------
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', and that the
interim management report includes a fair review of the information
required, namely:
- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report.
The directors are responsible for the maintenance and integrity
of the Group's website www.investors.niox.com .
The directors of NIOX Group plc are listed on pages 38 to 41 of
the 2022 annual report and accounts.
Legislation in the UK governing the preparation and
dissemination of interim financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board
Ian Johnson Michael Roller
Executive Chairman Chief Financial Officer
26 September 2023
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END
IR UVRNROOUKUAR
(END) Dow Jones Newswires
September 26, 2023 02:00 ET (06:00 GMT)
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