Pharming Group reports financial results for the first half of 2020

Pharming Group reports financial results for the first half of 2020

PR Newswire

LEIDEN, Netherlands, July 30, 2020

Delivered 14% increase in revenue, 31% increase in operating profit and 33% increase in net profit year-on-year

LEIDEN, Netherlands, July 30, 2020 /PRNewswire/ -- Pharming Group N.V. ("Pharming" or "the Company") (Euronext Amsterdam: PHARM) presents its (unaudited) financial report for the six months ended 30 June 2020.

The Company will hold a conference call at 13:00 CEST / 07:00 EST today. Dial-in details can be found on page 6 of this report.

Financial summary

Six months to 30 June 2020

 

Amounts in €m except per share data

H1 2020

H1 2019

% Change

Income Statement

Revenues

Gross profit

Operating result

Net result

 

88.6

78.7

32.3

18.1

 

77.9

67.0

24.6

13.6

 

14%

17%

31%

33%

Balance Sheet

Cash & marketable securities

 

155.1

 

65.3

 

138%

Share Information

Earnings per share (€):  

-  Undiluted

-  Fully diluted

 

 

0.029

0.025

 

 

0.022

0.020

 

 

32%

25%

Financial highlights

Operational highlights

COVID-19 update

Pharming continues to comply with international guidance and requirements across its operations to prioritise the health and safety of its employees during the COVID-19 pandemic.

An update on the impact of COVID-19 on the operations of the business is summarised below.

Sijmen de Vries, Chief Executive Officer, commented:

"We are delighted to announce strong results for the first half of the year, demonstrating consistent progress in a challenging period that included the restriction of all face-to-face sales and marketing activities. Thanks to the dedication, creativity and tenacity of our employees, we have been able to continue our growth trajectory, both in terms of production capacity and sales expansion, to deliver record results. We also continued to increase net profitability, supported by our successful convertible bond refinancing, which significantly lowered our financing costs, and the re-acquisition of RUCONEST®'s commercialisation rights for the remaining EU territories.

"In addition, we have continued to demonstrate operational success, receiving EMA and FDA approval for a new production facility of RUCONEST® starting material, receiving approval for an expansion of the EU Marketing Authorisation for RUCONEST® to include children aged 2-13, and reporting encouraging results from a compassionate use study in the treatment of severe pneumonia related to COVID-19 with RUCONEST®, a further investigation into which is due to begin shortly. We are also encouraged that recruitment in the pivotal study for leniolisib has started again and we continue to expect the potential launch of the product in mid-2022. We remain confident we are well positioned to continue to deliver significant value to all our stakeholders in the second half of the year and beyond."

Outlook

For the remainder of 2020, the Company expects:

No further financial guidance for 2020 is provided.

About Pharming Group N.V.

Pharming is a specialty pharmaceutical company developing innovative products for the safe, effective treatment of rare diseases and unmet medical needs. Pharming's lead product, RUCONEST® (conestat alfa) is a recombinant human C1 esterase inhibitor approved for the treatment of acute Hereditary Angioedema ("HAE") attacks in patients in Europe, the US, Israel and South Korea. The product is available on a named-patient basis in other territories where it has not yet obtained marketing authorisation.

RUCONEST® is commercialised by Pharming in the US and in Europe, and the Company holds all other commercialisation rights in other countries not specified below. In some of these other countries distribution is made in association with the HAEi Global Access Program (GAP). RUCONEST® is distributed in Argentina, Colombia, Costa Rica, the Dominican Republic, Panama, and Venezuela by Cytobioteck, in South Korea by HyupJin Corporation and in Israel by Kamada.

RUCONEST® is also being evaluated for various additional indications. Pharming's technology platform includes a unique production process that has proven capable of producing industrial quantities of pure high quality recombinant human proteins in a more economical and less immunogenic way compared with current cell-line based methods.

Leads for enzyme replacement therapy ("ERT") for Pompe and Fabry's diseases are also being produced and optimised respectively at present.

Pharming has recently in-licensed leniolisib from Novartis, a small molecule and selective PI3Kδ inhibitor, which is in a registrational study for activated PI3K-delta syndrome (APDS), a rare form of Primary Immunodeficiency.

Pharming has a long term partnership with the China State Institute of Pharmaceutical Industry ("CSIPI"), a Sinopharm company, for joint global development of new products, starting with recombinant human Factor VIII for the treatment of Haemophilia A. Preclinical development and manufacturing will take place to global standards at CSIPI and its affiliates and are funded by CSIPI. Clinical development will be shared between the partners with each partner taking the costs for their territories under the partnership.

Additional information is available on the Pharming website: www.pharming.com

Forward-looking Statements

This press release of Pharming Group N.V. and its subsidiaries ("Pharming", the "Company" or the "Group") may contain forward-looking statements including without limitation those regarding Pharming's financial projections, market expectations, developments, partnerships, plans, strategies and capital expenditures.

The Company cautions that such forward-looking statements may involve certain risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive, political and economic factors, legal claims, the Company's ability to protect intellectual property, fluctuations in exchange and interest rates, changes in taxation laws or rates, changes in legislation or accountancy practices and the Company's ability to identify, develop and successfully commercialize new products, markets or technologies.

As a result, the Company's actual performance, position and financial results and statements may differ materially from the plans, goals and expectations set forth in such forward-looking statements. The Company assumes no obligation to update any forward-looking statements or information, which should be taken as of their respective dates of issue, unless required by laws or regulations.

For further public information, contact:
Pharming Group N.V.
Sijmen de Vries, CEO, Tel: +31 71 524 7400
Susanne Embleton, Investor Relations Manager: +31 71 524 7400

FTI Consulting, London, UK:
Victoria Foster Mitchell, Tel: +44 203 727 1136

LifeSpring Life Sciences Communication, Amsterdam, The Netherlands:
Leon Melens, Tel: +31 6 53 81 64 27

Conference call information

 

From the Netherlands:

+31 207095189

Toll-Free: 08004050000

From the UK:  

+44 3333000804

Toll-Free: 08003589473

From Belgium:

+32 24035814 

Toll-Free: 080029913

From France:  

+33 170750711

Toll-Free: 0800946608

From Switzerland:

+41 225809034

Toll-Free: 0800721298

From the US:  

+1 6319131422

Toll-Free: +1 855 85 70686

For other numbers, please see:

https://events-ftp.arkadin.com/ev/docs/NE_W2_TF_Events_International_Access_List.pdf 

Presentation link:

https://arkadin-event.webex.com/arkadin-event/onstage/g.php?MTID=e46000d81240a97b2024e3fa98526bd10 

Presentation Password/PIN: 31591389#


Pharming Group N.V.

Condensed Consolidated Interim Financial Statements (unaudited)

For the period ended 30 June 2020

Notes to the condensed consolidated interim financial statements

Appendix: Main Condensed Consolidated Interim Financial Statements reported in US dollars

(This appendix is not part of the Condensed Consolidated Interim Financial Statements)

Condensed Consolidated Statement of Profit or Loss                                     
For the period ended 30 June

Amounts in € '000

notes

HY 2020

HY 2019





Revenues

7

88.593

77.935

Costs of sales

8

(9.858)

(10.956)

Gross profit


78.735

66.979

Other income


475

148

Research and development


(15.991)

(14.877)

General and administrative


(8.917)

(6.842)

Marketing and sales


(21.991)

(20.776)

Costs

8

(46.899)

(42.495)

Operating result


32.311

24.632

Fair value gain (loss) on revaluation derivatives


84

(8)

Other financial income

9

1.121

506

Other financial expenses

9

(7.741)

(6.767)

Financial income and expenses


(6.536)

(6.269)

Share of net profits in associates using the equity method

10

121

299

Result before income tax


25.896

18.662

Income tax credit (expense)


(7.753)

(5.068)

Net result for the year


18.143

13.594

Attributable to:




Owners of the parent


18.143

13.594

Total net result


18.143

13.594

Basic earnings per share (€)

15

0,029

0,022

Fully-diluted earnings per share (€)

15

0,025

0,020

The notes are an integral part of these interim financial statements

Condensed Consolidated Statement of Comprehensive Income 
For the period ended 30 June

Amounts in € '000

HY 2020

HY 2019

Net result for the year

18.143

13.594

Currency translation differences

35

(200)

Items that may be subsequently reclassified to profit or loss

35

(200)

Other comprehensive income (loss), net of tax

35

(200)

Total comprehensive income (loss) for the year

18.178

13.394

Attributable to:



Owners of the parent

18.178

13.394

The notes are an integral part of these interim financial statements

Condensed Consolidated Balance Sheet
As at date shown

Amounts in € '000

notes

30 June
2020

31 December
2019





Intangible assets

16

77.219

70.809

Property, plant and equipment


8.748

8.553

Right-of-use assets


5.284

5.979

Deferred tax assets

17

22.582

28.590

Investments accounted for using the equity method

10

5.616

5.508

Restricted cash


2.272

2.268

Non-current assets


121.721

121.707





Inventories

11

16.223

14.467

Trade and other receivables


26.386

25.737

Cash and cash equivalents


152.782

66.299

Current assets


195.391

106.503





Total assets


317.112

228.210





Share capital


6.377

6.313

Share premium


396.033

392.266

Legal reserves


3.809

3.718

Accumulated deficit


(278.650)

(297.618)

Shareholders' equity

12

127.569

104.679





Convertible bonds

13

123.222

-

Lease liabilities

14

4.133

4.363

Other financial liabilities


18.298

17.282

Non-current liabilities


145.653

21.645





Loans and borrowings

13

-

45.590

Derivative financial liabilities


185

268

Trade and other payables


42.158

36.247

Lease liabilities


1.547

1.946

Other financial liabilities


-

17.835

Current liabilities


43.890

101.886





Total equity and liabilities


317.112

228.210

The notes are an integral part of these interim financial statements


Condensed Consolidated Statement of Changes in Equity
For the period ended 30 June
Attributable to owners of the parent

Amounts in € '000

notes

Number of shares
(in '000)

Share capital

Share premium






Balance at 1 January 2019 as reported in HY report


621.501

6.215

387.525

Result for the year


-

-

-

Other comprehensive income (loss) for the half-year


-

-

-

Total comprehensive income (loss) for the half-year


-

-

-

Legal reserves development expenses


-

-

-

Share-based compensation


-

-

-

Bonuses settled in shares


3

-

3

Shares issued for cash


1.635

16

228

Warrants exercised/ issued


180

1

158

Options exercised


2.564

25

1.396

Total transactions with owners, recognised directly in equity


4.382

42

1.785

Balance at 30 June 2019


625.883

6.257

389.310






Balance at 1 January 2020


631.323

6.313

392.266

Result for the half-year


-

-

-

Other comprehensive income (loss) for the half-year


-

-

-

Total comprehensive income (loss) for the half-year


-

-

-

Legal reserves development expenses


-

-

-

Share-based compensation


-

-

-

Bonuses settled in shares

12

-

-

-

Value of conversion rights on convertible bonds

14

-

-

-

Shares issued for cash

12

2.061

21

1.389

Warrants exercised/ issued

12

-

-

-

Options exercised

12

4.319

43

2.378

Total transactions with owners, recognised directly in equity


6.380

64

3.767

Balance at 30 June 2020


637.703

6.377

396.033

The notes are an integral part of these interim financial statements

Attributable to owners of the parent

Amounts in € '000

notes

Legal reserves

Accumulated deficit

Total equity



Capitalized development cost

Translation reserve



Balance at 1 January 2019 as reported in HY report


2.237

(590)

(333.636)

61.751

Result for the year


-

-

13.594

13.594

Other comprehensive income (loss) for the half-year


-

(200)

-

(200)

Total comprehensive income (loss) for the half-year


-

(200)

13.594

13.394

Legal reserves development expenses


310

-

(310)

-

Share-based compensation


-

-

1.350

1.350

Bonuses settled in shares


-

-

-

3

Shares issued for cash


-

-

(244)

-

Warrants exercised/ issued


-

-

-

159

Options exercised


-

-

(588)

833

Total transactions with owners, recognised directly in
equity


310

-

208

2.345

Balance at 30 June 2019


2.547

(790)

(319.834)

77.490







Balance at 1 January 2020


4.347

(629)

(297.618)

104.679

Result for the half-year


-

-

18.143

18.143

Other comprehensive income (loss) for the half-year


-

35

-

35

Total comprehensive income (loss) for the half-year


-

35

18.143

18.178

Legal reserves development expenses


56

-

(56)

-

Share-based compensation


-

-

1.391

1.391

Bonuses settled in shares

12

-

-

-

-

Value of conversion rights on convertible bonds

14

-

-

1.405

1.405

Shares issued for cash

12

-

-

(1.410)

-

Warrants exercised/ issued

12

-

-

-

-

Options exercised

12

-

-

(505)

1.916

Total transactions with owners, recognised directly in equity


56

-

825

4.712

Balance at 30 June 2020


4.403

(594)

(278.650)

127.569

                                      The notes are an integral part of these interim financial statements

Condensed Consolidated Statement of Cash Flow
For the period ended 30 June

Amounts in €'000

HY 2020

HY 2019



Operating result

32.311

24.632






Non-cash adjustments:




Depreciation, amortisation, impairment

3.122

2.794


Accrued employee benefits

1.391

1.350


Release contract liabilities

-

(400)


Operating cash flows before changes in working capital

36.824

28.376






Changes in working capital:




Inventories

(1.756)

4.610


Trade and other receivables

(649)

(7.379)


Payables and other current liabilities

5.828

170


Total changes in working capital

3.423

(2.599)






Changes in non-current assets, liabilities and equity

(33)

(605)






Cash generated from (used in) operations before interest and taxes

40.214

25.172






Income taxes paid

(50)

(625)






Net cash flows generated from (used in) operating activities

40.164

24.547






Capital expenditure for property, plant and equipment

(1.035)

(1.216)


Investment intangible assets

(230)

(521)


Investment in associates

(13)

(2.503)


Acquisition of license

(7.939)

-






Net cash flows used in investing activities

(9.217)

(4.240)






Repayment on loans and borrowings

(49.914)

(15.533)


Proceeds of issued convertible bonds

122.682

-


Payment on contingent consideration

(18.135)

(17.635)


Interests on loans and leases

(720)

(4.830)


Payment of lease liabilities

(1.402)

(619)


Interest received

479

475


Proceeds of equity and warrants

1.916

992






Net cash flows generated from (used in) financing activities

54.906

(37.150)






Increase (decrease) of cash

85.853

(16.843)


Exchange rate effects

634

593


Cash and cash equivalents at 1 January

68.567

81.515






Total cash and cash equivalents at 30 June

155.054

65.265


The notes are an integral part of these interim financial statements

Notes to the Condensed Consolidated Interim Financial Statements
For the period ended 30 June

1.  Company information

Pharming Group N.V. is a limited liability public company which is listed on Euronext Amsterdam (PHARM), with its headquarters and registered office located at:

Darwinweg 24
2333 CR Leiden
The Netherlands

2.  Basis of preparation

The consolidated interim financial statements for the six-month ended 30 June 2020 have been prepared in accordance with Accounting Standard IAS 34, Interim financial reporting. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations applicable to companies reporting under IFRS as endorsed by the European Union and valid as of the balance sheet date.

3.  Accounting policies

Accounting policies are consistent with those of the financial statements for the year ended 31 December 2019.

4.  Estimates and judgements

The preparation of interim financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. In preparing these condensed interim financial statements, the significant judgements made by management in applying the Company's accounting policies were the same as those applied to the consolidated financial statements for the year ended 31 December 2019.

5.  Going concern

In preparing and finishing the interim financial statements the Board of Management of Pharming has assessed the Company's ability to fund its operations for a period of at least eighteen months after the date the interim financial statements are issued. Based upon the assessment on a going concern basis, the Company has concluded that funding of its operations for a period of eighteen months, after the date the interim financial statements are issued, is realistic and achievable. Overall, based on the outcome of this assessment, the interim financial statements have been prepared on a going concern basis.


6.  Seasonality of operations

Seasonality has no material impact on Company's interim financial statements.

7.  Segment information

The Board of Management is the chief operating decision-maker. The Board of Management considers the business from both a geographic and product perspective. From a product perspective, the Company's business is almost exclusively related to the recombinant human C1 esterase inhibitor business. From a geographic perspective, the Company is operating in the areas: the US, Europe and Rest of the World (RoW). The Board of Management primarily measures revenues to assess the performance of the operating areas. Costs and assets are not allocated to the geographic areas.

Total revenues and gross profit per geographic segment for the period ended 30 June:

Amounts in € '000

HY 2020

HY 2019

Revenues:



US

84.982

75.018

Europe

3.158

2.105

RoW

453

812

Total revenues

88.593

77.935

Gross profit:



US

77.068

66.194

Europe

1.282

202

RoW

385

583

Total gross profit

78.735

66.979

8.  Expenses by nature

Cost of sales in the first half year of 2020 amounted to €9.9 million (HY 2019: €11.0 million). Inventory impairments amounted to a release of € (0.3) million in the first half of 2020 (2019: addition of €0.5 million). The impairment stems from the valuation of the inventories against lower net realisable value, related to reallocation of inventories to the different markets with different prices, based on sales forecasts by management and commercial partners, and clinical programmes.

Operating costs increased to €46.9 million from €42.5 million in the first half year of 2019. The increase is a result of the increased sales activities in the US, increased development costs for both our current product as the new pipeline, and increased cost for strengthening of supporting departments.

Employee benefits

Employee benefits are charged to research and development costs, general and administrative costs or marketing and sales costs based on the nature of the services provided.

Depreciation and amortisation charges

Amounts in € '000

HY 2020

HY 2019

Property, plant and equipment

(840)

(679)

Right-of-use assets

(784)

(674)

Intangible assets

(1.759)

(1.440)

Total

(3.383)

(2.793)

The depreciation on right-of-use assets relates to leased buildings and cars.

The amortisation of the intangible assets mainly relates to the re-acquired US commercialisation rights and are allocated to marketing and sales costs in the statement of income.

9.  Financial expenses 

Amounts in € '000

HY 2020

HY 2019

Foreign currency results

634

-

Interest income

487

475

Contingent consideration

-

31

Other financial income

1.121

506

Foreign currency results

-

(208)

Interest loans and borrowings

(449)

(6.229)

Exit fees and expenses

(3.672)

-

Interest on convertible bonds

(1.944)

-

Other interest expenses

(382)

(330)

Contingent consideration

(1.216)

-

Other financial expenses

(78)

-

Other financial expenses

(7.741)

(6.767)




Total other financial income and expenses

(6.620)

(6.261)

The exit fees and expenses relate to the repayment in full of the loan from Orbimed Royalty Opportunities II, LP.

10.  Share of net profits in associates using the equity method

On April 7th, 2019 Pharming Group, through its 100% subsidiary Pharming Technologies B.V., has taken a 43,85% stake in BioConnection B.V. through conversion of EUR 2.6 million of existing credits ("prepayments") and EUR 2.5 million of cash payment for a total of EUR 5.1 million.

In the Board of Management's judgement, the investment in BioConnection constitutes an investment in an unconsolidated structured entity, as Pharming has significant influence but does not have control of BioConnection and is embargoed by a shareholders agreement between the shareholders of BioConnection from influencing any activity between the two parties which is in any significant way different from the relationship which existed between the two prior to the investment.  In addition to its carrying value for the investment, Pharming's risk is limited to the provision of a €3 million corporate guarantee in favour of ABN AMRO Bank in the unlikely event that BioConnection were to default on all its debts and its assets did not meet the outstanding liabilities owing to ABN AMRO Bank. In the opinion of the Board of Management, the fact that BioConnection is a growing profitable company which has met all its obligations as they became due since inception makes the likelihood of this guarantee ever being used very small.  The guarantee is accounted for under IFRS 9 and appears as financial guarantee liabilities in Other financial liabilities.

The carrying amount of this investment has changed as follows:

Amounts in € '000

30 June
2020

31 December
2019

Balance at 1 January

5.508

-

Carrying value initial recognition

-

5.078

Recognition of financial guarantee

-

221

Amortization of financial guarantee

(13)

(20)

Profit (loss) for the period

121

229

Balance at end of period

5.616

5.508

11.  Inventories

Inventories include batches of RUCONEST® drug substance and product and skimmed milk available for production of RUCONEST®.

The inventory valuation at 30 June 2020 of €16.2 million (31 December 2019: €14.5 million) is stated net of a provision for impairment of €0.4 million (31 December 2019: €0.4 million) and net of a provision for obsolescence of €0 million (31 December 2019: €0.4 million).

Amounts in € '000

30 June
2020

31 December
2019

Finished goods

8.436

10.320

Work in progress

5.037

1.843

Raw materials

2.750

2.304

Balance at end of period

16.223

14.467

Changes in the adjustment to net realisable value:

Amounts in € '000

Period to
30 June
2020

Period to
31 December
2019

Balance at 1 January

(830)

(927)

Addition to provision

(536)

(1.010)

Release of provision

797

328

Usage of provision

164

779

Balance at end of period

(405)

(830)

The main portion of inventories at 30 June 2020 has expiration dates starting beyond 2021 and is expected to be sold or used before expiration.

12.  Equity

The Company's authorised share capital increased by 10% to €8.8 million and is divided into 880,000,000 ordinary shares with a nominal value of €0.01 each. All 637.703.008 shares outstanding at 30 June 2020 have been fully paid-up. Other reserves include those reserves related to currency translation, share-based compensation expenses and other equity-settled transactions. In the first half year of 2020 a total of 6.379.541 new shares have been issued resulting from conversion of warrants, the issuance of LTIP shares, and the exercise of options.

Please refer to the condensed consolidated statement of changes in equity.


13.  Loans and borrowings 

In 2017, the Company entered into a debt facility with Orbimed Royalty Opportunities II, LP to raise US$100 million (€91.3 million at 2017 exchange rate).

Under the terms and conditions of this debt facility, the lenders provided an amount of US$100 million secured senior debt funding against 48 months promissory notes with interest of the sum of (i) the Applicable Margin of 11% plus (ii) the greater of (x) One-Month LIBOR and (y) 1.00%. Quarterly repayment of the loan has been started in September 2018. The Company has the option to prepay the loan before its maturity date. As further consideration for the facility, the lenders received a 4% warrant coverage (9,174,372 warrants) with a strike price of €0.455 representing the closing price of Pharming shares immediately prior to the closing date, plus a 2.5% commitment fee of the principal sum and an assignment fee on the maturity date of US$3.7 million. The warrants have been separated from the loan and recognised in equity. On repayment of the loan on January 25, 2020 the Company had to pay an exit fee of 5%.

Movements of the loan were as follows:

Amounts in € '000

Period to
30 June
2020

Period to
31 December
2019

Carrying value at 1 January

45.590

72.502

Amortised costs (financial income and expenses)

449

11.255

Interest paid (cash flow)

(346)

(8.419)

Repayment and exit fee

(46.140)

(31.406)

Revaluation loan

447

1.658

Carrying value at end of period

-

45.590

- Current portion

-

45.590

- Non-current portion

-

-

14.  Convertible bonds

In January 2020, the Company offered €125 million of 5-year convertible bonds. The net proceeds of the issue of the bonds were used to redeem the balance of approximately US$ 51 million of the loan with Orbimed Advisors in full, and the remaining balance of the net proceeds will also be used to support capital expenditure in relation to the expansion of the commercialisation and manufacturing infrastructure of the Company and also serve as funding for the launch of Pharming's recently acquired leniolisib product, as well as for additional acquisitions/in-licensing opportunities.

The bonds were issued at par and carry a coupon of 3.00% per annum payable semi-annually in arrears in equal instalments. Unless previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed at par on 21 January 2025. The Bonds will be convertible into ordinary shares of the Company with an initial conversion price of €2.0028, which represented a premium of 40% above the volume weighted average price (VWAP) of an ordinary Pharming share on Euronext Amsterdam between opening of trading on the launch date and the pricing of the Bonds (which was €1.4306). This initial conversion price may be subject to customary adjustment provisions as set out in the terms and conditions of the Bonds. The number of ordinary shares initially underlying the Bonds is 62,412,622, representing 9.9% of the Company's current issued share capital.

These bonds are listed on the Frankfurt Exchange (Börse Frankfurt: PHARMING GRP 20/25 CV).

The convertible bonds comprise of two components. The first component is a financial liability, which represents Pharming's contractual obligation to deliver cash or another financial asset for payment of interest and principal, if not converted. The second component is an equity instrument as it represents a written call option granting the holder the right, for a specified period of time, to convert it into a fixed number of Pharming Group N.V. 's ordinary shares.

The fair value of the consideration in respect of the liability components is measured at the fair value of a similar liability that does not have any associated equity conversion option (IFRS 9 paragraph 5.1.1). This is the liability component's carrying amount at initial  recognition.

The equity component will be measured at the residual  difference between the nominal value and the fair value of a similar liability that does not have any asoociated equity conversion option ( IAS 32 paragraph 31).

Movements of the convertible bonds were as follows:

Amounts in € '000

Period to
30 June
2020

Balance at 1 January

-

Carrying value initial recognition

121.277

Interest paid (cash flow)

-

Amortization transaction cost

301

Accrued interest

1.644

Carrying value at end of period

123.222

15.  Fully-diluted shares

The total number of outstanding shares at 30 June 2020 was 637.703.008. The weighted average shares outstanding over the first half year were 634.155.889. The basic earnings per share, based on the weighted average, was € 0.029 for the first half year 2020.

For the first six month of 2020 and 2019, the basic and fully diluted profit per share were:

Amounts in € '000

HY 2020

HY 2019

Net profit (loss) attributable to equity owners of the parent (in €'000)

18.143

13.594

Weighted average shares outstanding (in '000)

634.156

623.157

Basic profit (loss) per share (in €)

0,029

0,022

Weighted average fully-diluted shares outstanding (in '000)

738.277

666.094

Fully-diluted profit per share (in €)

0,025

0,020

Since the reporting date, the company has issued 40.000 shares through the exercise of employee options.  The number of issued shares as at 30 July 2020 is 637.743.008.

The composition of the number of shares and share rights outstanding as well as authorised share capital as at 30 June 2020 is provided in the following table:


31 December
2019

Shares issued

Shares reserved

30 June 2020

Issued shares

       631.323.467

         6.379.541

-

     637.703.008

Warrants

208.944

-

-

208.944

Options

         40.327.537

      (3.840.107)

-

      36.487.430

Convertible bonds

-

-

       62.412.622

       62.412.622

LTIP

           7.644.971

      (3.513.263)

-

         4.131.708

Fully-diluted shares

       679.504.919

(973.829)

       62.412.622

    740.943.712

Available for issue

       120.495.081

 80.973.829

 (62.412.622)

139.056.288

Authorised share capital

       800.000.000

 80.000.000

-

    880.000.000












30 June 2020

Shares issued

Shares reserved

30 July 2020

Issued shares

       637.703.008

40.000

-

     637.743.008

Warrants

208.944

-

-

208.944

Options

         36.487.430

(40.000)

(131)

       36.447.299

Convertible bonds

         62.412.622

-

-

       62.412.622

LTIP

           4.131.708

-

-

         4.131.708

Fully-diluted shares

       740.943.712

-

(131)

    740.943.581

Available for issue

139.056.288

-

131

139.056.419

Authorised share capital

       880.000.000

-

-

    880.000.000

16.  Intangible Assets

In 2020 intangible assets increased mainly as result of the payment of €7.5 million, related to the reacquisition of the EU commercial rights, formerly owned by SOBI.

17.  Deferred tax assets

The changes in the deferred tax asset can be summarised as the result of the payment of the contingent consideration of €16.5 million, leading to a tax effect of €4.1 million, and in addition taxable profits realised during H1 2020.

18. Events since the end of the reporting period

There have been no significant changes or material events since the reporting date.

Appendix: Main Condensed Consolidated Interim Financial Statements reported in US dollars

Condensed Consolidated Statement of Income in US Dollars                                     
For the period ended 30 June

Amounts in $ '000

HY 2020

HY 2019




Revenues

97.827

88.152

Costs of sales

(10.885)

(12.392)

Gross profit

86.942

75.760

Other income

525

167

Research and development

(17.658)

(16.827)

General and administrative

(9.846)

(7.739)

Marketing and sales

(24.283)

(23.500)

Costs

(51.787)

(48.066)

Operating result

35.680

27.861

Fair value gain (loss) on revaluation derivatives

93

(9)

Other financial income

1.237

572

Other financial expenses

(8.252)

(7.654)

Financial income and expenses

(6.922)

(7.091)

Share of net profits in associates using the equity method

134

338

Result before income tax

28.892

21.108

Income tax credit (expense)

(8.561)

(5.732)

Net result for the year

20.331

15.376

Attributable to:



Owners of the parent

20.331

15.376

Total net result

20.331

15.376

Basic earnings per share ($)

0,032

0,025

Fully-diluted earnings per share ($)

0,028

0,023

Condensed consolidated Balance Sheet in US Dollars
As at date shown

Amounts in $ '000

30 June
2020

31 December
2019




Intangible assets

86.532

79.405

Property, plant and equipment

9.803

9.591

Right-of-use assets

5.921

6.705

Deferred tax assets

25.305

32.061

Investments accounted for using the equity method

6.293

6.177

Restricted cash

2.547

2.543

Non-current assets

136.401

136.482




Inventories

18.180

16.223

Trade and other receivables

29.568

28.861

Cash and cash equivalents

171.208

74.348

Current assets

218.956

119.432




Total assets

355.357

255.915




Share capital

7.146

7.079

Share premium

443.794

439.887

Legal reserves

4.268

4.169

Accumulated deficit

(312.255)

(333.749)

Shareholders' equity

142.954

117.387




Convertible bonds

138.082

-

Lease liabilities

4.632

4.893

Other financial liabilities

20.505

36.643

Non-current liabilities

163.219

24.273




Loans and borrowings

-

51.125

Derivative financial liabilities

207

301

Trade and other payables

47.244

40.647

Lease liabilities

1.733

2.182

Other financial liabilities

-

20.000

Current liabilities

49.184

94.484




Total equity and liabilities

355.357

255.915

          

Condensed consolidated Statement of Cash Flows  in US Dollars
For the period ended 30 June

Amounts in $'000

HY 2020

HY 2019



Operating result

35.680

27.861






Non-cash adjustments:




Depreciation, amortisation, impairment

3.447

3.160


Accrued employee benefits

1.536

1.527


Release contract liabilities

-

(452)


Operating cash flows before changes in working capital

40.663

32.096






Changes in working capital:




Inventories

(1.939)

5.214


Trade and other receivables

(717)

(8.346)


Payables and other current liabilities

6.435

192


Total changes in working capital

3.779

(2.940)






Changes in non-current assets, liabilities and equity

(36)

(684)






Cash generated from (used in) operations before interest and taxes

44.406

28.472






Income taxes paid

(55)

(707)






Net cash flows generated from (used in) operating activities

44.351

27.765






Capital expenditure for property, plant and equipment

(1.143)

(1.375)


Investment intangible assets

(254)

(589)


Investment in associates

(14)

(2.832)


Acquisition of license

(8.767)

-






Net cash flows used in investing activities

(10.178)

(4.796)






Repayment on loans and borrowings

(55.117)

(17.569)


Proceeds of issued convertible bonds

135.470

-


Payment on contingent consideration

(20.025)

(19.947)


Interests on loans and leases

(795)

(5.463)


Payment of lease liabilities

(1.548)

(700)


Interest received

529

538


Proceeds of equity and warrants

2.116

1.122






Net cash flows generated from (used in) financing activities

60.630

(42.020)






Increase (decrease) of cash

94.803

(19.051)


Exchange rate effects

2.061

123


Cash and cash equivalents at 1 January

76.891

93.245






Total cash and cash equivalents at 30 June

173.755

74.317


 

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