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Research: Healthcare
Deinove
Written by
Deinove |
Finance secure until end 2017 |
FY15 results |
Alternative energy |
30 March 2016 |
Share price performance
Business description
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Deinove is a research client of Edison Investment Research Limited |
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Deinove made significant scientific and technical advances in 2015, signed important commercial agreements and improved the financial positioning of the company. The first commercial revenues are expected in 2018 and the company believes it has sufficient financial resources, without further equity drawdowns (€10m unused facility), to last it until the end of 2017.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/14 |
0.2 |
(6.6) |
(98.6) |
0.0 |
N/A |
N/A |
12/15 |
0.5 |
(7.3) |
(81.5) |
0.0 |
N/A |
N/A |
12/16e |
0.4 |
(8.3) |
(82.4) |
0.0 |
N/A |
N/A |
12/17e |
0.5 |
(8.5) |
(84.7) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
FY15 results in line with expectations
The net loss for the year of €6.4m (-2% vs FY14) was in line with our forecasts (Edison estimate -€6.4m). Better than expected revenue of €492k (Edison estimate €220k) and marginally lower costs than forecast were offset by a slightly less favourable financial result than anticipated and a lower income tax credit than we had expected (€1.6m vs Edison €1.78m). The net cash position of €12.4m at end December 2015, bolstered by grants, milestone payments, tax credits, the recent equity issue (€10.0m net) and the drawdown of the Kepler Cheuvreux facility (€4.6m) was also ahead of our forecasts(€12.1m). The €12.4m is said to be sufficient to last until the end of 2017 without further equity drawdowns.
Scientific and commercial progress
FY15 also witnessed a number of significant business developments. Both the Deinol project (third payment – €1.2m from Bpifrance) and the Deinochem project passed important research milestones triggering payments (first payment – €1m from ADEME). Towards the end of 2015 the Deinol project also achieved the production of ethanol at 300L scale and Deinove reached the first milestone of the animal nutrition project with Avril. Investment made by Deinove allowed it to automate the genetic and metabolic engineering platform, install new fermenters and establish a new R&D platform for the production of muconic acid. Alongside scientific progress, Deinove signed new partnerships agreements with Flint Hills (animal nutrition) and Tyton and Arbiom (biomass) and issued 12 new patents.
Outlook and valuation
Deinove will seek to advance towards commercial deployment across all its major research platforms in 2016, but with a major focus on carotenoids. It will also continue to attempt to broaden the ultimate commercial application of its technology through signing additional partnership agreements. We have updated our forecasts and expect the first commercial revenues in 2018. A DCF valuation based on our cash flow assumptions suggests that, using an 11% discount rate and no terminal value, Deinove could be worth €10/share.
Exhibit 1: Financial summary
€'000s |
2014 |
2015 |
2016e |
2017e |
||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
156 |
492 |
400 |
469 |
Cost of sales |
0 |
0 |
0 |
0 |
||
Gross profit |
156 |
492 |
400 |
469 |
||
EBITDA |
|
|
(6,515) |
(7,309) |
(7,456) |
(7,468) |
Operating profit (before amort. and except.) |
(6,520) |
(7,331) |
(8,275) |
(8,424) |
||
Intangible Amortisation |
540 |
634 |
37 |
37 |
||
Exceptionals |
(735) |
(10) |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Operating profit |
(6,715) |
(6,707) |
(8,238) |
(8,387) |
||
Net Interest |
(37) |
(14) |
(31) |
(102) |
||
Profit before tax (norm) |
|
|
(6,557) |
(7,345) |
(8,306) |
(8,526) |
Profit before tax (FRS 3) |
|
|
(7,832) |
(7,989) |
(8,343) |
(8,563) |
Tax |
1,374 |
1,633 |
1,254 |
1,279 |
||
Profit after tax (norm.) |
(5,183) |
(5,712) |
(7,052) |
(7,247) |
||
Profit after tax (FRS 3) |
(6,458) |
(6,356) |
(7,089) |
(7,284) |
||
Average number of shares outstanding (m) |
5.3 |
7.0 |
8.6 |
8.6 |
||
EPS - normalised (c) |
|
|
(98.6) |
(81.5) |
(82.4) |
(84.7) |
EPS - (IFRS) (c) |
|
|
(102.3) |
(72.6) |
(82.0) |
(84.3) |
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross margin (%) |
100.0 |
N/A |
N/A |
N/A |
||
EBITDA margin (%) |
N/A |
N/A |
N/A |
N/A |
||
Operating margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
||
BALANCE SHEET |
||||||
Fixed assets |
|
|
2,303 |
1,968 |
1,612 |
1,220 |
Intangible assets |
99 |
117 |
80 |
43 |
||
Tangible assets |
1,407 |
1,055 |
736 |
380 |
||
Investments |
797 |
796 |
796 |
797 |
||
Current assets |
|
|
4,650 |
15,359 |
9,751 |
4,003 |
Stocks |
0 |
0 |
0 |
0 |
||
Debtors |
2,110 |
2,393 |
1,971 |
2,082 |
||
Cash |
966 |
11,932 |
6,746 |
887 |
||
Other |
1,574 |
1,034 |
1,034 |
1,034 |
||
Current liabilities |
|
|
(2,203) |
(2,719) |
(1,591) |
(1,606) |
Creditors |
(1,441) |
(2,602) |
(1,474) |
(1,489) |
||
Short-term borrowings |
(762) |
(117) |
(117) |
(117) |
||
Long-term liabilities |
|
|
(4,555) |
(6,512) |
(8,765) |
(9,894) |
Long-term borrowings |
(4,550) |
(6,497) |
(8,750) |
(9,879) |
||
Other long-term liabilities |
(5) |
(15) |
(15) |
(15) |
||
Net Assets |
|
|
195 |
8,096 |
1,007 |
(6,277) |
CASH FLOW |
||||||
Operating cash flow |
|
|
(8,453) |
(6,679) |
(7,947) |
(7,579) |
Net Interest |
(37) |
(14) |
(31) |
(102) |
||
Tax |
1,374 |
1,633 |
1,039 |
1,293 |
||
Capex |
(1,338) |
(289) |
(500) |
(601) |
||
Acquisitions/disposals |
1,307 |
756 |
0 |
0 |
||
Financing |
4,051 |
14,257 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Net cash flow |
(3,096) |
9,664 |
(7,439) |
(6,988) |
||
Opening net debt/(cash) |
|
|
1,250 |
4,346 |
(5,318) |
2,121 |
HP finance leases initiated |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
4,346 |
(5,318) |
2,121 |
9,109 |
|
Source: Company accounts, Edison Investment Research |
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