2021 ANNUAL REPORT OF
RECORDATI S.p.A.
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RECORDATI INDUSTRIA CHIMICA E FARMACEUTICA S.p.A.
Company subject to management and co‐ordination by Rossini Luxembourg S.àr.l.
Registered Office: 1, Via Matteo Civitali, Milan
Fully paid up share capital: € 26,140,644.50
Tax identification number and Milan Company Registration No. 00748210150
The Company prepares the consolidated financial statements for the Recordati Group
BOARD OF DIRECTORS1
ANDREA RECORDATI2 Chairman
GUIDO GUIDI Vice Chairman
ROBERT KOREMANS3 Chief Executive OfficerSILVIA CANDINI MICHAELA CASTELLI GIORGIO DE PALMA JOANNA LE COUILLIARD GIAMPIERO MAZZA PIERGIORGIO PELUSO CATHRIN PETTY
Independent
Lead Independent Director
Independent
Independent
KIM STRATTON4
FRITZ SQUINDO
Group General Manager
BOARD OF STATUTORY AUDITORS5
ANTONIO SANTI
Chairman
EZIO SIMONELLI
LIVIA AMIDANI ALIBERTI Statutory Auditors
PATRIZIA PALEOLOGO ORIUNDI ANDREA BALELLI
Alternate Auditors
INDEPENDENT AUDITORS
EY S.p.A. Engaged by a Shareholders' Meeting of 29th April 2020 for the financial years 2020‐2028
1 In office as at 31st December 2021 (unchanged at the date of approval of this Annual Report) until the date of the Shareholders Meeting held to approve the financial statements as at and for the year ended 31st December 2021.
2 Appointed Chairman on 1st December 2021, following the resignation of dott. Alfredo Altavilla - from the positions of Chairman and Director - and his resignation from the position of Chief Executive Officer.
3 Appointed Chief Executive Officer by co‐option on 1st December 2021, following the resignation of dott. Andrea Recordati from his position as Chief Executive Officer.
4 Appointed as a Director by co‐option on 16th December 2021, to replace dott. Francesco Balestrieri who resigned with effect from 15th October 2021.
5 Board of Statutory Auditors in office until the Shareholders' Meeting convened to approve the financial statements as at and for the year ended 31st December 2022.
Review of operations
To our Shareholders,
The annual report of the Company for the year ended 31st December 2021, which we submit to you for your approval, reports net income of € 219,109 thousand.
The review of operations in the consolidated annual report may be consulted for further information on operations and growth strategies.
The items in the reclassified income statement which shows costs by function are given below with the relative percentage of revenue(1) and the change compared with the previous year:
€ (thousands) | 2021 | % of | 2020 | % of | Changes | |
revenue | revenue | 2021/2020 | % | |||
Net revenue (1) | 464,719 | 100.0 | 449,421 | 100.0 | 15,298 | 3.4 |
Cost of sales | (182,444) | (39.3) | (178,807) | (39.8) | (3,637) | 2.0 |
Gross profit | 282,275 | 60.7 | 270,614 | 60.2 | 11,661 | 4.3 |
Selling expenses | (67,146) | (14.4) | (45,944) | (10.2) | (21,202) | 46.1 |
R&D expenses | (43,148) | (9.3) | (38,824) | (8.6) | (4,324) | 11.1 |
G&A expenses | (41,126) | (8.8) | (29,590) | (6.6) | (11,536) | 39,0 |
Other income (expense), net | (7,014) | (1.5) | (3,655) | (0.8) | (3,359) | 91,9 |
Operating income | 123,841 | 26.7 | 152,601 | 34.0 | (28,760) | (18.8) |
Dividends | 123,854 | 26.6 | 132,785 | 29.5 | (8,931) | (6.7) |
Write‐down of investments | 0 | (0.0) | (2,539) | (0.5) | 2,539 | n.s. |
Financial income (expense), net | (16,514) | (3.6) | (13,308) | (3.0) | (3,206) | 24.1 |
Pre‐tax income | 231,181 | 49.7 | 269,539 | 60.0 | (38,358) | (14.2) |
Income taxes | (12,072) | (2.6) | (34,875) | (7.8) | 22,803 | (65.4) |
Net income | 219,109 | 47.1 | 234,664 | 52.2 | (15,555) | (6.6) |
(1) The net revenue in the reclassified income statement includes other income of € 68 thousand (€ 45 thousand in 2020), relating in particular to training grants and rents, which in the statutory balance sheet are classified under Note 4 as Other revenue and income.
Net revenue came to € 464.7 million, up € 15.3 million compared with the previous year, thanks to the sales of Eligard© (leuprelin acetate) in January, following the licensing agreement with Tolmar International Ltd, which more than offset the reduction in sales of other products, partly due to the distorting effects on the market in the first half of 2020, coinciding with the start of the pandemic and the significant demand for medicines by the Company's customers, as well as to the subsequent policy of reducing the level of the stock carried out by the distribution channel. Marketing of Isocef® was suspended at the beginning of 2021 due to the temporary unavailability of the product on the market, with a negative impact of € 4.0 million compared with the previous year. We also report the reduction of € 4.4 million in sales of Urorec® due to the loss of exclusivity. Good performance was recorded by the self‐medication products Alovex®, Proctolyn®, Eumill® and Transact‐Lat®.
Net revenue from pharmaceutical chemicals, consisting on sales of the active ingredients produced at the Campoverde di Aprilia plant, amounted to € 48.5 million, down 0.9% compared with 2020.
Gross profit, which came to € 282.3 million, was up € 11.7 million compared with 2020, amounting to 60.7%, of net revenue, an improvement compared with 60.2% of sales in the previous year, due to the favourable sales mix.
Selling expenses increased by € 21.2 million (46.1%) due to both royalties payable to Tolmar International Ltd. on the new Eligard® product and to distribution expenses due to Astellas prior to the transfer of the Eligard® marketing authorisation to Recordati. In addition, expenses for advertising and "external operating efforts" increased compared with the previous year when greater restrictions caused by the Covid‐19 epidemic were in force and the Company benefited from subsidies during the most acute phase of the pandemic, with a consequent increase as a percentage of revenue.
R&D expenses came to € 43.1 million accounting for 9.3% of net revenue, up 11.1% compared with the previous year, mainly due to the costs incurred while waiting for the transfer of marketing authorisations for Eligard® in various countries and due to an increase in amortisation for the rights on that same product acquired under licence from Tolmar International in January 2021.
General and administrative expenses increased by 39.0% due to improvements to the general co‐ordination of operations designed to manage an increasingly complex portfolio and in particular to support the management of new corporate products. The increase is mainly attributable to personnel costs which, with higher average staff numbers, increased compared with 2020 when spending on incentive schemes was lower due to the reduction in activities caused by the COVID‐19 pandemic. Costs were also incurred for the selection of new managers.
We also report costs charged by subsidiaries for adjustments to product transfer prices for compliance with the arm's length principle.
Other income and expenses, net amounted to € 7.0 million and included the following: € 4.0 million incurred for the project to acquire EUSA Pharma (UK) Ltd (a global specialty pharmaceutical company focused on niche rare and oncological diseases); € 2.4 million for voluntary redundancy agreements; € 1.5 million of costs incurred for the COVID‐19 health emergency to improve workplace safety and for the purchase of personal protective equipment and for donations to associations that care for the less well‐off.
Operating income amounted to € 123.8 million, accounting for 26.7% of net revenue, down notwithstanding the improvement in gross profit compared with 34.0% in the previous year, due to the increase in operating expenses described above.
Dividends from subsidiaries came to € 123.9 million, down € 8.9 million compared with 2020.
The write‐down of investments recognised in the previous year, amounting to € 2.5 million, related to the UK subsidiary Recordati Pharmaceuticals Ltd.
Financial expenses amounted to € 16.5 million. The increase of € 3.2 million compared with the previous year was due primarily to the recognition in 2020 of the positive effects of the repayment of two intragroup loans and close down of the relative cross‐currency swap contracts.
The reduction in taxes of € 22.8 million compared with the previous year was mainly due to the ACE (Aid to Economic Growth) tax benefit resulting from the merger of the Company's parent companies into it, for which the company inherited a tax benefit of € 12.9 million from Rossini Investimenti S.p.A. It was also due to the impact of the reduction in pre‐tax income.
Net income amounted to € 219.1 million.
A brief summary is given below of the net financial position, while further details are given in item 43 of the notes to the financial statements.
€ (thousands)
31.12.2021
31.12.2020
Change 2021/2020
Cash and cash equivalents and other short term receivables
Current debt (1)
188,521 (723,404)
160,526
27,995
(651,056) (72,348)
(534,883)
(490,530) (44,353)
Net current financial position
Loans and receivables ‐ due after one year Borrowings - due after one year(2)
131,711
150,693 (18,982)
(709,364)
(707,078) (2,286)
Net financial position
(1,112,536)
(1,046,915) (65,621)
(1) Current debt includes borrowings due within one year, amounts due to banks and other short‐term liabilities.
(2) Inclusive of the fair value of derivatives to hedge foreign exchange rate risk (cash flow hedges), classified within asset item 23 and liability item 35 with an overall net positive impact of € 443 thousand as at 31st December 2021.
The net financial position as at 31st December 2021 was debt of € 1,112.5 million compared with debt of € 1,046.9 million as at 31st December 2020. During the year € 35.0 million was paid to Tolmar International Ltd. for the license agreement for Eligard®. Furthermore, treasury stock totalling € 59.3 million was purchased, net of sales due to the exercise of stock options, and dividends totalling € 216.6 million were paid.
The change in the financial position gross of the impacts mentioned above, confirms the Company's solid generation of cash flows which stood at approximately € 245.3 million.
Expenditure on property, plant and equipment came to € 17.4 million and related to investments made at the Milan headquarters (€ 6.9 million), which included investments in the plant and in pharmaceutical research, as well as in the Campoverde plant (€ 10.5 million).
R&D
The arrival of new pharmaceuticals both through in‐house research programmes and through opportunities to carry out research in collaboration with research companies and institutions outside the Group again represented an important factor in 2021 for enriching the pipeline and ensuring future growth for the Group. At the same time huge efforts were made on the regulatory front aimed at obtaining important authorisations to sell Recordati pharmaceuticals on markets in new geographical areas.
During the year, the Group's R&D activities were mainly concentrated in the field of rare diseases. New acquisitions and licences have enriched the product portfolio in the rare disease and specialty care areas.
The product pipeline was enhanced by Eligard® in the Specialty & Primary Care field. Maintenance activities to support pharmaceuticals already on the market continued, as did pre‐trial work on new pharmaceuticals.
PRODUCTS UNDER DEVELOPMENT
Name | Origin | Indication | Development stage |
REAGILA® | Gedeon Richter | Schizophrenia | Post‐authorisation paediatric plan |
ELIGARD® | Tolmar | Hormone‐dependent prostate cancer | Post‐authorisation activities for the development of a new device |
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Recordati S.p.A. published this content on 01 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2022 11:13:47 UTC.