Evolva boasts “record revenues” in H1, faces potential sanctions for “significant errors” in previous reports

25 Aug 2022 --- Swiss-based Biotech company, Evolva, released its half-year report for 2022, presenting a total revenue from customer contracts of CHF8.1 million (US$8.4 million). The report was released a few days after an investigation of their previous annual reports, awaiting potential sanctions from the SIX Exchange Regulation (SER).

“Our results were in line with expectations as we achieved a record half-yearly revenue level in the first half. It confirms that we are on track to achieve revenue growth above 50% to reach our full-year guidance of CHF15 million (US$15.5 million) in sales. We expect the positive business momentum to be ongoing,” Doris Rudischhauser, head of investor relations and corporate communications, Evolva, tells NutritionInsight.

Product-related revenue amounted to CHF7.8 million (US$8.1 million), an increase of 30%. The gross contribution margin was 10.9%, achieved through a “significantly strengthened production network and better value capturing on the product side,” the report notes. 

Adjusted EBIT resulted in a loss of CHF11.9 million (US$12.3 million), which still accounts for an improvement from H1 in the previous year from CFH-16.4 million (US$-17 million). The same goes for adjusted EBITDA, where H1 for 2022 reports CHF-7.5 million (US$-7.8 million), compared to CFH-12 million (US$-12.5 million) in 2021.

“Together with the targeted revenue growth, this will be the main driver to reach EBITDA and cash break-even in 2025,” says Beat In-Albon, chairman at Evolva.

Potential sanction on previous reportsThe SER investigation concluded significant errors in the presentation of Evolva’s prior annual reports.
The company is facing a potential sanction from the SER – the monitor of the Swiss stock exchange – as a completed investigation revealed that Evolva has made “significant errors in the presentation of the financial years of 2019 and 2020 in the annual accounts.”

The concerns by SER regard the impairment tests of the value of Evolva’s “goodwill,” suggesting it does not live up to the International Financial Reporting Standards (IFRS).

The company responded to the investigation by SER, saying that “alleged deficiencies concern the goodwill impairment tests in the financial reporting 2019 and 2020 and related disclosures. Evolva is convinced that key allegations do not uphold and that potential deficiencies do not have a material impact.”

“While the primary focus of the new leadership team is on leveraging the ongoing positive business momentum and boosting commercial performance, we are also committed to transparency and closing with the past. Thus, we fully collaborate with SER and continuously strengthen our internal processes and rules,” says the recently appointed CEO at Evolva, Christian Wichert.

Goodwill of previous years
The net book value of goodwill for 2020 was CHF40 million (US$41.5 million), and the previous year reported goodwill of CHF42.2 million (US$43.8 million). The annual report for 2021 reports goodwill at CHF40.8 million (US$42.4 million).

The SER stresses not being able to release any information on the case to the public.  

“The sanction commission will define the fine. Therefore we cannot say how high it will be, or if there will be a fine, alternatively an agreement with Evolva. This is information we cannot yet provide,” Hrvoje Tkalcec, head of communications and media relations at SER, tells NutritionInsight.

Uncertain economic environment
Even though inflation, the supply chain crisis and the Ukraine war have impacted many companies across the globe, Rudischhauser says Evolva tackled external challenges.

“We benefited from good market momentum during H1 and expected this to continue. We have secured our supply chain with a broadened network and have enough inventory for the next six to12 months, but we monitor the external situation closely. Inflation impact on production cost and COGS has thus been limited so far,” she underscores.

“We do not expect supply chain interruptions and plan to pass future cost increases on to our customers. The impacts of possibly reduced consumer spending due to inflation and a possible recession are difficult to predict. Still, we are in the sweet spot of health, wellness and sustainability where spending might be less affected,” she adds.

Up to 308% growthThe fragrance and flavor segment was reported at 308% sequential growth.
Géraldine Blanc, head of marketing at Evolva, previously highlighted the increased consumer interest in the linkage between beauty and overall health, which drives the beauty market from within. 

“Today, ‘beauty’ is a holistic body concept that goes far beyond the superficial aspect of the skin epidermis and hypodermis and is now more and more considered as a result of balanced and ‘better-for-you’ dietary habits.”

Flavors and fragrances are referred to as a business highlight in the report. Compared to H1 2022, Evolva reports a 247% sales growth, amounting to CHF5.5 million (US$5.7 million) and sequential growth of 308%. The company says the high growth was driven mainly by boosting commercial performance. 

For health ingredients, 28% sequential growth was reported, and according to the company, it did not reach satisfactory levels as it amounted to CHF2.3 million (US$2.4 million), which compared to H1 for 2021 resulted in a CHF2.1 million (US$2.2 million) decrease. This was explained by high inventory build-ups in the previous year’s first half.  

By Beatrice Wihlander

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