Evolva — Updating estimates

Evolva (SW: EVE)

Last close As at 28/03/2024

0.10

0.00 (0.00%)

Market capitalisation

113m

More on this equity

Research: Consumer

Evolva — Updating estimates

On 30 November, Evolva announced a private placement whereby Veraison SICAV would purchase 63.75m shares at CHF0.118 per share, or a 7% discount to the lowest daily volume weighted average price during the six trading days preceding the announcement. It raised gross proceeds of CHF7.5m, which will be used to finance ongoing activities. The settlement occurred on 6 December and Veraison now has a c 6% shareholding. We update our estimates to reflect the capital increase. Our underlying operational estimates remain unchanged.

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Consumer

Evolva

Updating estimates

Capital increase

Food & beverages

7 December 2021

Price

CHF0.156

Market cap

CHF161m

Net cash (CHFm) at 30 June 2021

13.1

Shares in issue

1,031m

Free float

100%

Code

EVE

Primary exchange

SIX Swiss Exchange

Secondary exchange

OTC US

Share price performance

%

1m

3m

12m

Abs

13.1

(7.8)

(25.8)

Rel (local)

12.6

(6.6)

(36.8)

52-week high/low

CHF0.257

CHF0.126

Business description

Evolva is a Swiss biotech company focused on the research, development and commercialisation of ingredients based on nature. The company has leading businesses in flavours and fragrances, health ingredients and health protection.

Next events

FY results

March 2022

Analysts

Sara Welford

+44 (0)20 3077 5700

Russell Pointon

+44 (0)20 3077 5700

EvolvaEvolva is a research client of Edison Investment Research Limited

On 30 November, Evolva announced a private placement whereby Veraison SICAV would purchase 63.75m shares at CHF0.118 per share, or a 7% discount to the lowest daily volume weighted average price during the six trading days preceding the announcement. It raised gross proceeds of CHF7.5m, which will be used to finance ongoing activities. The settlement occurred on 6 December and Veraison now has a c 6% shareholding. We update our estimates to reflect the capital increase. Our underlying operational estimates remain unchanged.

Year end

Revenue (CHFm)

PBT*
(CHFm)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/19

11.6

(15.6)

(2.0)

0.0

N/A

N/A

12/20

7.5

(23.4)

(2.9)

0.0

N/A

N/A

12/21e

14.2

(18.6)

(2.0)

0.0

N/A

N/A

12/22e

27.5

(3.8)

(0.4)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Now expect net cash at end FY21

Evolva has transformed itself from an R&D-driven enterprise to a commercial company with a product-based revenue model. As it nears profit and cash breakeven, it has focused on optimising its manufacturing capabilities and ensuring they are both stable and scalable. Current guidance, which remains unchanged, is for gross profits to become positive by Q421, with a view to reaching cash breakeven by FY23. We have adjusted our forecasts and now expect net cash of CHF2.0m at end FY21, following the private placement, as we assume net proceeds of CHF6.5m.

Adjusting EPS to reflect the dilution

We have updated our estimates to reflect the capital increase. For FY22 and beyond, the number of shares has increased by 6.6%, leading to a corresponding reduction in EPS.

Valuation: Fair value of CHF0.29/share

We continue to value Evolva on a discounted cash flow basis with a 25-year model, assuming cash breakeven in FY23, in line with management guidance. Our fair value was CHF0.30/share before the private placement and therefore moves to CHF0.29. As a reminder, nootkatone contributes c 50% of our fair value for Evolva, with most of this coming from its use in pest control.

Exhibit 1: Financial summary

CHF'000s

2018

2019

2020

2021e

2022e

2023e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

8,933

11,596

7,541

14,163

27,468

53,750

Cost of Sales

(6,816)

(6,305)

(9,783)

(16,403)

(15,001)

(27,771)

Gross Profit

2,117

5,292

(2,242)

(2,239)

12,467

25,979

EBITDA

 

 

(23,350)

(12,280)

(16,733)

(17,332)

(2,455)

11,185

Operating Profit (before GW and except.)

(24,827)

(14,067)

(18,397)

(18,714)

(3,816)

9,832

Intangible Amortisation

(5,909)

(6,060)

(6,508)

(6,508)

(6,508)

(6,508)

Exceptionals

0

0

0

0

0

0

Operating Profit

(30,736)

(20,128)

(24,905)

(25,222)

(10,323)

3,325

Net Interest

(622)

(1,486)

(4,978)

79

8

(48)

Other financial income

40

0

0

0

0

0

Profit Before Tax (norm)

 

 

(25,409)

(15,553)

(23,375)

(18,636)

(3,808)

9,784

Profit Before Tax (FRS 3)

 

 

(31,318)

(21,614)

(29,882)

(25,143)

(10,315)

3,277

Tax

2,104

(25)

18

0

0

0

Profit After Tax (norm)

(23,305)

(15,578)

(23,357)

(18,636)

(3,808)

9,784

Profit After Tax (FRS 3)

(29,214)

(21,639)

(29,864)

(25,143)

(10,315)

3,277

Average Number of Shares Outstanding (m)

770.6

770.4

809.3

926.3

1,030.7

1,030.7

EPS - normalised (c)

 

 

(3.0)

(2.0)

(2.9)

(2.0)

(0.4)

0.9

EPS - FRS 3 (c)

 

 

(3.8)

(2.8)

(3.7)

(2.7)

(1.0)

0.3

Dividend per share (c)

0.0

0.0

0.0

0.0

0.0

0.0

Gross Margin (%)

23.7

45.6

-29.7

-15.8

45.4

48.3

EBITDA Margin (%)

N/A

N/A

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

145,825

143,333

133,316

126,564

120,019

113,533

Intangible Assets

138,838

133,939

123,894

117,387

110,879

104,372

Tangible Assets

4,769

7,211

6,914

6,803

6,765

6,787

Other fixed assets

2,218

2,184

2,508

2,375

2,375

2,375

Current Assets

 

 

67,192

48,745

33,577

20,847

30,452

38,985

Stocks

4,040

5,392

9,125

15,580

23,348

29,562

Debtors

1,941

1,480

2,347

2,833

4,670

6,987

Cash

60,380

39,920

19,669

0

0

0

Other current assets

830

1,954

2,435

2,435

2,435

2,435

Current Liabilities

 

 

(14,705)

(12,295)

(15,139)

(16,579)

(16,274)

(19,052)

Creditors

(743)

(2,912)

(2,128)

(3,569)

(3,264)

(6,042)

Short term borrowings

0

0

0

0

0

0

Finance lease obligations

(782)

(1,289)

(1,059)

(1,059)

(1,059)

(1,059)

Other current liabilities

(13,180)

(8,095)

(11,952)

(11,952)

(11,952)

(11,952)

Long Term Liabilities

 

 

(4,150)

(7,221)

(6,662)

(3,530)

(16,355)

(11,494)

Long term borrowings

0

0

0

1,954

(11,917)

(8,102)

Finance lease obligations

(2,394)

(4,840)

(4,179)

(3,133)

(2,087)

(1,042)

Other long term liabilities

(1,756)

(2,381)

(2,484)

(2,351)

(2,351)

(2,351)

Net Assets

 

 

194,162

172,562

145,092

127,303

117,841

121,972

CASH FLOW

Operating Cash Flow

 

 

(23,247)

(13,577)

(22,317)

(21,977)

(11,511)

6,284

Net Interest

(360)

(583)

(1,046)

79

8

(48)

Capex

(364)

(193)

(1,223)

(1,272)

(1,322)

(1,375)

Acquisitions/disposals

0

0

0

0

0

0

Financing

(209)

164

0

6,500

0

0

Dividends

0

0

0

0

0

0

Other cash flow

(12,595)

(6,224)

4,479

(1,046)

(1,046)

(1,046)

Net Cash Flow

(36,775)

(20,413)

(20,106)

(17,716)

(13,871)

3,816

Opening net debt/(cash)

 

 

(97,184)

(60,381)

(39,920)

(19,670)

(1,954)

11,917

HP finance leases initiated

0

0

0

0

0

0

Other

(29)

(47)

(144)

0

0

(0)

Closing net debt/(cash)

 

 

(60,381)

(39,920)

(19,670)

(1,954)

11,917

8,102

Source: Edison Investment Research, company data


General disclaimer and copyright

This report has been commissioned by Evolva and prepared and issued by Edison, in consideration of a fee payable by Evolva. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

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The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Evolva and prepared and issued by Edison, in consideration of a fee payable by Evolva. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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