- Doubled sales of Omega-3s in a troubled international context and a growing economic slowdown in the agri-food sector;
- Completion of industrialization work and start of the pre-commercialization process for the natural blue colorant;
- Investment in CarbonWorks, alongside leading investors, to finance the development of CO2 capture and valorization;
- Results impacted by increases in cost of sales (energy and raw materials), as well as CarbonWorks' share of earnings;
- Robust cash position, supported by the exercise of warrants issued in 2020 (BSA-DE and BSA-EL).
Libourne - September 22, 2022 - Fermentalg (Euronext - FALG), the French microalgae expert, presents its results for the first half of 2022 after approval of the accounts by the Board of Directors on September 21, 2022.
On this occasion, Philippe Lavielle, CEO of Fermentalg, said: "The commercial results of the first half of the year as well as the renewed confidence of our strategic and financial partners in our programs underline the relevance of our solutions in the context of the ecological transition. We are closely monitoring signs of short-term economic slowdown and cyclical difficulties in the energy and raw materials, while remaining convinced of the financial and non-financial benefits of our innovations."
Strong sales growth in a context of rising operating costs
|(in K€)||S1 2021||S1 2022|
|Turnover||2 537||5 241|
|Operating income before share-based payments and non-current items||-4 004||-4 530|
|Cost of net financial debt||-377||-173|
|Net income||-4 756||-5 439|
The accounts for the first half of the year reflect the company's growing industrial and commercial strength, but also the effects of the exceptional inflation in energy and raw material prices.
Indeed, over the first 6 months of 2022, sales of DHA ORIGINS®, the first Fermentalg program to enter the commercialization phase, have strongly increased (107%) and represent a turnover of €5.2 million. The momentum reflects the progressive adoption of this more sustainable alternative to fish oil and enriched source of Omega-3s essential to a healthy and balanced diet.
On the industrial and production cost front, Fermentalg is continuing the work begun in 2021 to strengthen its supply chain. The aim is to improve the productivity of each operation in order to optimize the consumption of raw materials and energy and thus to lower production costs. These measures, carried out in collaboration with subcontractors, are incurring implementation costs in the first half of the year but are not yet having an impact on the cost of sales. This, combined with inflation, explains the slower growth in gross margin (€1.2 million versus €1 million) than in sales.
Operating expenses excluding R&D, which increased by approximately €0.5 million over the previous year, reflect investments in marketing and sales, as well as in staff training and CSR commitment.
The net R&D expense in the income statement remains stable due to the capitalization of costs of the Blue ORIGINS® program, which are higher in the industrial demonstration scale development phase. The amount activated amounts to € 2.3 million, which is almost as much as in 2022, and in line with the program schedule.
The operating result for the first half of the year was - €4.5 million compared to - €4.0 million a year earlier.
After integrating the cost of financial debt divided by two (€0.2 million compared to €0.4 million in the first half of 2021) and the share of the results of CarbonWorks, a subsidiary in an acceleration phase in the development of its business, net income was -€5.4 million, compared to -€4.8 million a year earlier.
Robust financial structure
|Shareholders' equity||47 002||45 521|
|Cash and cash equivalents||26 010||20 286|
|Gross financial debt||9 608||9 683|
As of June 30, 2022, Fermentalg had a gross cash position of €20.3 million, compared to €26.0 million at the beginning of the year. In addition to operating cash consumption (€4.1 million) and current investments (€2.5 million), the variation includes an investment of €2.9 million made in the first half of the year as part of the capital increase of CarbonWorks, the joint subsidiary with Suez, which saw the entry of BNP Paribas Principal Investments, Bpifrance, Demeter Investment Managers via its Agrinnovation fund, and Aquiti Gestion via NACO in association with the Nouvelle-Aquitaine region. This investment, of which 1 M€ will be paid back to the company at the end of the series A, will allow Fermentalg to hold a third of the capital of its subsidiary at the end of this first round of financing.
At the same time, the exercise of warrants by shareholders (BSA-DE and BSA-BLUE) and the use of the equity line (BSA-EL) have raised a total net amount of €3.9 million.
At the end of June 2022, the company had a positive net cash position of €10.6 million, after taking into account the financial debt (€9.7 million), essentially composed of repayable advances, and equity of €45.5 million.
Tensions in the supply of energy and raw materials, induced by the international geopolitical situation, continued in the second half of the year, after the brief respite seen in the second quarter. The high volatility of these costs and the early signs of macroeconomic deterioration in all geographic zones worldwide are slowing down the sales outlook for the second half of the year, as well as the effects of the industrial optimization work expected so far on the recovery of the gross margin rate. Thus, Fermentalg still anticipates a strong annual growth but less dynamic than previously expected with an annual turnover of approximately €8 million.
In parallel, Fermentalg has made major progress in the first half of the year towards the market launch of a natural blue food colorant in 2023 in partnership with DDW, a subsidiary of the Givaudan Group, with the achievement of a technical milestone and the payment in July of a €1 million repayable advance. Beyond this short-term marketing perspective of its natural colorant, Fermentalg is working on the full potential of its second platform and is studying opportunities for cross-development of broader applications in the food and nutraceutical field (antioxidants) and the valorization of co-products, such as algal protein for animal feed.
Fermentalg is thus pursuing its commitment to the development of sustainable and essential solutions for tomorrow's food, more responsible and more sovereign.
Next publication : Q3 2021 financial information
October 20, 2022 (after the close of trading)
Following the exercise of warrants issued under the equity line agreement (creation of 1,115,000 shares), of "BSA-DE" granted to shareholders in June 2020 (creation of 517,180 shares) and of "BSA-Blue" granted to shareholders in December 2021 (creation of 108,232 shares) - See Note 15 of the half-year financial report.
As an expert in research and bioindustrial exploitation of microalgae, Fermentalg's objective is to offer sustainable solutions and innovative products contributing to the development of healthy, natural and efficient products. Our business : the development, production and marketing of sustainable solutions and active ingredients from microalgae for nutrition, health and the environment. Nutritional lipids, alternative proteins, natural food colorings and innovative environmental solutions make up our company's current and future offer.
Fermentalg shares are listed on Euronext Paris (FR0011271600 - FALG) and are eligible for the PEA-PME and the "SRD long-only". Fermentalg is part of the Gaïa index, which is designed for Socially Responsible Investment (SRI), and which includes small and medium-sized companies with the best environmental, social and governance (ESG) performance ratings.
More information : www.fermentalg.com
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Statement of comprehensive income
|STATEMENT OF COMPREHENSIVE INCOME |
(in thousands of euros)
|Turnover||5 241||5 647||2 537|
|Other income from operations||440||1 149||677|
|Cost of goods sold||-4 046||-3 664||-1 564|
|Research and development expenses||-2 487||-4 650||-2 490|
|Operating expenses excluding R&D||-3 678||-6 906||-3 164|
|Other current operating income and expenses||0||0||0|
|Operating income before share-based payments and non-current items||-4 530||-8 424||-4 004|
|Employee benefits expense related to share-based payments||-36||-56||-27|
|Other non-current operating income and expenses||-225||2 624||-306|
|Operating income after share-based payments and non-current items||-4 792||-5 856||-4 338|
|Income from cash and cash equivalents||3||51||21|
|Gross cost of financial debt||-175||-691||-398|
|Net cost of financial debt||-173||-640||-377|
|Other financial income and expenses||-47||-33||-42|
|Net income tax expense||0||0||0|
|Share of net income of associates||-428||-321|
|Net income||-5 439||-6 850||-4 756|
|NET INCOME, GROUP SHARE||-5 439||-6 850||-4 756|
|Other comprehensive income (actuarial gains and losses on pension obligations, not recyclable in the income statement)||78||241||0|
|NET COMPREHENSIVE INCOME||-5 361||-6 609||-4 756|
|NET INCOME ATTRIBUTABLE TO THE GROUP||-5 361||-6 609||-4 756|
|Net earnings per share (in €)||-0,13||-0,19||-0,17|
|Diluted earnings per share (in €)||-0,13||-0,19||-0,17|
|BALANCE SHEET |
(in thousands of euros)
|Intangible assets||14 065||12 636||10 196|
|Tangible assets||12 934||12 814||13 138|
|Investments in associates||4 024||1 542||0|
|Financial and other non-current assets||95||173||136|
|Deferred tax assets||0||0||0|
|TOTAL NON-CURRENT ASSETS||31 118||27 165||23 470|
|Inventories||4 961||2 907||1 201|
|Trade receivables and other assets related to customer contracts||1 024||1 541||1 122|
|Other receivables||3 762||3 253||3 334|
|Cash and cash equivalents||20 286||26 010||22 698|
|TOTAL CURRENT ASSETS||30 033||33 711||28 355|
|TOTAL ASSETS||61 151||60 876||51 825|
|Capital||1 668||1 599||1 281|
|Share premium||43 399||44 819||26 908|
|Reserves and net income||5 815||7 193||7 572|
|Total net income||-5 361||-6 609||-4 756|
|Shareholders' equity, group share||45 521||47 002||31 005|
|TOTAL EQUITY||45 521||47 002||31 005|
|Non-current financial liabilities||8 551||9 002||11 292|
|Other non-current liabilities||212||218||0|
|TOTAL NON-CURRENT LIABILITIES||9 094||9 589||11 853|
|Current financial debts||1 132||605||5 372|
|Provisions for current risks||340||230||230|
|Trade payables||3 485||1 428||1 172|
|Income tax liabilities||0||0||0|
|Other current liabilities||1 579||2 023||2 192|
|TOTAL CURRENT LIABILITIES||6 536||4 286||8 966|
|TOTAL LIABILITIES||61 151||60 876||51 824|
Cash flow statement
|CASH FLOW |
(in thousands of euros)
|Total net income||-5 439||-6 850||-4 756|
|Depreciation and provisions (excluding current assets)||922||723||1 422|
|Share-based payment expense||36||49||24|
|Change in deferred taxes||0||0||0|
|Share of profit of associates||428||321||0|
|Capital gains and losses on disposals||-67||-694||-18|
|Share of grants in income||-6||-280||-274|
|Write-offs of receivables||0||0||0|
|Cash flow from operations||-4 127||-6 731||-3 602|
|Cost of gross financial debt||175||692||398|
|Income tax expense||0||0||0|
|Cash flow before cost of financial debt net or tax||-3 951||-6 039||-3 204|
|Income tax paid||0||0||0|
|Change in inventories||-2 054||-887||819|
|Change in trade receivables (trade receivables, other assets and liabilities related to customer contracts)||517||-298||121|
|Change in trade accounts payable||2 333||-304||-405|
|Change in other current assets and liabilities (a)||-931||134||260|
|Change in working capital requirements related to operations||-135||-1 355||796|
|NET CASH FLOW FROM OPERATING ACTIVITIES||-4 086||-7 393||-2 408|
|Production of fixed assets (capitalized R&D)||-2 284||-2 350||-1 085|
|Share of grants and CIR related to capitalized development projects||434||685||353|
|Acquisition of other tangible and intangible assets||-939||-1 804||-849|
|Acquisition of associated companies (MEQ)||-2 910||-500||0|
|Change in payables on fixed assets||-281||-563||-969|
|Change in other non-current assets and liabilities||78||-48||-11|
|Disposal of tangible and intangible assets||536||-168||0|
|Disposal of financial assets||0||0||0|
|NET CASH USED IN INVESTING ACTIVITIES||-5 366||-4 747||-2 561|
|Capital increase related to the parent company||3 924||30 193||15 429|
|Purchase and sale of treasury shares||-78||45||7|
|New loans and other financial liabilities||0||1 391||391|
|Repayment of loans and other financial liabilities||-100||-5 050||0|
|Change in current accounts||0||0||0|
|Interest paid on borrowings||-18||-268||-2|
|NET CASH FLOWS FROM FINANCING ACTIVITIES||3 728||26 311||15 825|
|Change in cash and cash equivalents||-5 724||14 170||10 855|
|Opening cash position||26 010||11 840||11 840|
|Closing cash and cash equivalents||20 286||26 010||22 696|
|(a): including change in research tax credit (CIR):||-800||-174||-972|
The Board of Directors of Fermentalg, meeting under the chairmanship of Philippe Lavielle, approved its IFRS half-yearly financial statements on Wednesday, September 21, 2022. The limited review procedures of the auditors on these accounts have been carried out. The audit report is currently being prepared and the half-year financial report will be published by September 30, 2022 at the latest.