Labiana Health suffers a setback after its return to the Stock Market. The manufacturer of animal health products suffers a collapse of 8%, to 2.76 euros, after the Spanish Stock Exchanges and Markets (BME) has lifted the suspension of its listing in the ‘Growth’ trading segment of BME MTF Equity . The lifting of the veto after two months has occurred after the company has presented the audited accounts for 2022.
In May, Labiana Health announced that it was unable to submit the complete audited annual financial information for the year 2022 within the period established by the regulations due to a delay in the audit work by its auditor, BDO. Finally, on June 29, it released its audited results, so the next day, June 30, BME decided to lift the suspension. Today, Labiana has made a statement making it clear that, throughout the audit process, it has maintained its “best predisposition” to facilitate the work of the auditors and manage to restore the contracting of its shares as soon as possible. .
It explains that the delay in the publication of the audited accounts is due to operational difficulties experienced by the external auditor as a result of a change of team and its own internal work procedures. Subsequently, with the sole purpose of restoring the trading of its shares in BME Growth, and agreeing to the indications of prudence criteria by the external auditor, the board of directors presented a new formulation of its individual and consolidated annual accounts, together with with their respective management reports, and the state of non-financial information.
This reformulation has led to “negative sign” adjustments with effect, both in the income statement and in its consolidated balance sheet, which, however, do not imply an impact on the company’s cash flow for the year 2022. In addition, given the nature of some of the accounting adjustments made, these are potentially reversible in future years, something for which the company will work.
Specifically, there has been an adjustment on assets of 6.8 million including an adjustment on the value of intangible assets (3.1 million), on deferred tax assets (1.3 million), on inventories (2, 1million); and on long-term financial investments (161,000 euros). The adjustment on the intangible fixed value is explained by the impairment of the goodwill for the holdings in the Serbian companies Zoleant and Zavod (1.1 million euros) and in which a “principle of prudence” has been applied, although Labiana I was confident in the potential of this business unit.
In this sense, he explains that they must negotiate with the Serbian government to sign framework contracts that would mean considerable income for the group. In the case of Zoleant, a restructuring of the human team has been carried out that the company believes will revitalize this business unit. In addition, work has begun to update the business plans of both subsidiaries and define new strategic objectives.
In addition, an impairment of the development value of R&D projects for two million euros is recognized. On the one hand, there are projects related to international markets. “Although the company has made and continues to make sales in these markets, and up to now (taking into account that the veterinary sector has a longer R&D investment recovery process due to different regulations and health aspects) these projects they have been amortized annually, finally, the most conservative accounting criteria of the principle of prudence suggested by the auditor have been adopted and their full impairment has been carried out in 2022”, explains the company.
In addition, R&D projects in the amortization process that will end during 2023 will be recognized, as well as the project subject to the Center for Technological Development and Innovation (CDTI). Labiana explains that it is an approved project that at the end of 2022 still did not have the notarial signature, which is why the suggested prudence criterion has been applied and has deteriorated. However, in the first half of 2023 the corresponding signature has been carried out and the entire bureaucratic period for its definitive concession has ended. The project has the approval of the CDTI as published on the website of the Ministry of Science and Innovation, which is why the company hopes to reverse this negative adjustment in the next fiscal year.
An adjustment is also included on deferred tax assets (1.3 million), on inventories (almost 2.2 million euros) and on long-term financial investments (161,000 euros). These adjustments are reflected in the Company’s profit and loss account, reducing the consolidated result for the year by those 6.9 million euros, so that the losses attributed to the parent company at a consolidated level in 2022 stood at 8.9 million euros, compared to the ‘red numbers’ of 1.7 million in 2021.
The company also cites the audit report’s comment regarding “material uncertainty related to going concern,” about which it sends a “reassurance message” to its investors based on its own business data, such as consolidated billing. , which in 2022 grew slightly by 1.57% to 57.9 million euros, “despite a complex economic context, dominated by the increase in production costs and the shortage of components.”
Likewise, during 2022, Labiana -which has subsidiaries in Spain, Serbia, Turkey, Mexico and production centers distributed between Spain and Serbia- continued manufacturing and marketing its own and third-party products in 150 markets, and also invested efforts in innovation, development and launch of new solutions in the area of animal health, such as Labimycin LA 300, Tilolab or Tolfelab. In addition, it claims to have a “solid” pipeline of new products in advanced faces for final approval. Thus, it ensures that this level of operational activity of the company will be maintained in 2023 and it will inform the market of it.
In the same way, he recalls that in his IPO last June 2022 he was unable to raise the 20 million he had planned, but that nevertheless he has continued working on his business plan and search for capital, and today he has a financing plan that is confirmed after the signing of the agreement of intent with Miralta Finance and Blantyre Capital for a loan of 20 million euros. The purpose of this credit is the refinancing of the debt and future investment needs in research and development.
