Evolva — Bolstering the balance sheet

Evolva (SW: EVE)

Last close As at 28/03/2024

0.10

0.00 (0.00%)

Market capitalisation

113m

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Research: Consumer

Evolva — Bolstering the balance sheet

Evolva has announced a private placement whereby Veraison SICAV will purchase 63.75m shares in a private placement at CHF0.118 per share, or a 7% discount to the lowest daily volume weighted average price during the six trading days before the announcement. This will raise gross proceeds of CHF7.5m, which will be used to finance ongoing activities. Settlement is expected on 6 December. Veraison is a long-term, Switzerland-based investor and the proceeds provide much-needed headroom until Evolva reaches its goal of cash breakeven, which is slated for FY23.

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Consumer

Evolva

Bolstering the balance sheet

Private placement

Food & beverages

2 December 2021

Price

CHF0.156

Market cap

CHF151m

Net cash (CHFm) at 30 June 2021

13.1

Shares in issue

967m

Free float

100%

Code

EVE

Primary exchange

SIX Swiss Exchange

Secondary exchange

OTC US

Share price performance

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.

Analysts

Sara Welford

+44 (0)20 3077 5700

Russell Pointon

+44 (0)20 3077 5700

Evolva is a research client of Edison Investment Research Limited

Evolva has announced a private placement whereby Veraison SICAV will purchase 63.75m shares in a private placement at CHF0.118 per share, or a 7% discount to the lowest daily volume weighted average price during the six trading days before the announcement. This will raise gross proceeds of CHF7.5m, which will be used to finance ongoing activities. Settlement is expected on 6 December. Veraison is a long-term, Switzerland-based investor and the proceeds provide much-needed headroom until Evolva reaches its goal of cash breakeven, which is slated for FY23.

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)

(2.1)

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.

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. This should ensure gross profits are positive by Q421, with a view to reaching cash breakeven by FY23 and should stand the business in good stead for growth. We forecast net debt of CHF4.5m at end FY21, hence the proceeds of the private placement should move this figure into net cash at the year end.

Separately, Evolva has announced the resignation of its CFO, Carsten Däweritz, who will leave the company in May 2022. This follows the departure of André Pennartz in March 2021. The search for a successor is underway, although we note the company has six months to find a replacement. In the past CEO Oliver Walker was previously CFO and has taken on the additional CFO role on an interim basis.

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 ahead of the private placement. As a reminder, nootkatone contributes c 50% of our fair value for Evolva, with most of this coming from its use in pest control.

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