FERMENTALG : 2017 Annual Results and commercial developments

Libourne – 5 March 2018 – Fermentalg (Euronext – FALG), a French leader in microalgae for nutrition and health has published its 2017 annual results. Fermentalg's Board of Directors, chaired by Philippe Lavielle, approved the financial statements for the year ending 31 December 2017. The consolidated financial statements have been audited. The audit certification report is currently being prepared.

Philippe Lavielle, Fermentalg Chairman and CEO, made the following comments: “2017 was above all a year of consolidation. From a financial standpoint, the successful fund-raising carried out enabled us to end the year with cash assets of €21.8m. From a business standpoint, the market launch of our first algal oil, naturally rich in Omega-3, and the signing of an initial distribution agreement with European company IMCD, marks the beginning of a new chapter for our company. Finally, a strategic agreement signed with DIC Corporation, a Japanese leader in the global chemicals industry, enables us to step up the development of two new innovative products intended for the health and nutrition market. Fermentalg also maintained a high level of operating expenses in 2017, both in terms of technology and industrial investments,
in order to strengthen its product pipeline over the short and medium term. All of these factors enable us to tackle 2018 with increased confidence in the company's business potential."

Cash assets of €21.8 million at 2017 year-end

2017 was marked by the success of two financial operations, a €12.6 million capital increase largely subscribed by current shareholders and new investors, and a €5 million convertible bond issue subscribed by DIC Corporation as part of the strategic partnership entered into by the two Groups.

These operations significantly bolstered the company's cash position, enabling it to roll out its industrial and commercial strategy. Cash used by operations[1] remained stable in 2017 at €7.3 million. The industrial ramp-up and ongoing investment in R&D were offset by a decrease in fees and other non-recurring expenses. The change in working capital was negative in 2017 at €1.9 million, compared to a €2.0 million positive change in 2016, while capital expenditures (excluding R&D) significantly decreased to €1.1 million in 2017, compared with €6.8 million in 2016

Cash assets amounted to €21.8 million at 31 December 2017, up from €15.7 million at 31 December 2016, and shareholders' equity of €41.2 million. Borrowings of €8.0 million comprise repayable advances on innovation programs and the convertible bond issue.

A pipeline bolstered by the addition of new products

Two new programs have been added to our three algal product ranges already being developed for the health and nutrition market (Omega-3, phycocyanin and protein), in close cooperation with our Japanese partner DIC Corporation. All of these innovative products reflect the major fundamental trends changing the agri-food sector: the growing demand for natural products (fewer synthetics in our foods), the increasingly close link between nutrition and health (maintaining health through food) and the growing concern for the environment (no GMOs or overly-intensive practices).

In accordance with its business plan, Fermentalg launched its first product in 2017, a DHA-rich algal oil (DHA ORIGINS 350® with a minimum oil concentration of 350 mg/g). In just a few months, Fermentalg reached all of its technological and regulatory milestones, produced the first industrial work packages and signed a European distribution agreement with IMCD Group, a leader in the sale, marketing and distribution of speciality chemical products and nutritional ingredients.

These key milestones, combined with the numerous sales contacts made, give Fermentalg the best chance for a successful launch in 2018 of its second product DHA ORIGINS 550®, the most naturally concentrated algal Omega-3 on the market (minimum oil concentration of 550 mg/g). This product, which is already attracting a certain amount of interest, will be unveiled at the 2018 VITAFOODS EUROPE event in May.

In addition, Fermentalg's road map includes the launch of an algal protein in 2019 and an initial algal colourant in 2020. This pipeline is bolstered by the strategic partnership with DIC Corporation, whose operational focus is the joint development of two new products, including an innovative phycocyanin.

Finally, major advancements were made in the development of an urban and industrial "carbon sink", designed to purify the atmosphere by capturing CO₂and other pollutants, in partnership with the SUEZ Group. In 2017, the partners launched two test programs: one for the capture of incinerator fumes, and the other in the heart of Paris dedicated to exhaust gases.

About Fermentalg:

Fermentalg is a leader in France in the microalgae sector. Based in Libourne (Nouvelle Aquitaine), the company produces oils, pigments and proteins derived from the bio-industrial use of microalgae. Its primary markets are the food, feed and health markets. Fermentalg shares are listed on Euronext in Paris (FR0011271600 - FALG). For more information, visit: www.fermentalg.com

Press Relations :
Investor Relations :

ACTUS finance & communication

Alexandra PRISA

Tel. : +33 (0)1 53 67 36 90

[email protected]
ACTUS finance & communication

Jérôme FABREGUETTES-LEIB

Tel. : +33 (0)1 53 67 36 78

[email protected]

Comprehensive income statement

(€ thousands)
31/12/2017
31/12/2016

Revenue
170
137

Other income from operations
1,103
568

Production costs
-1,115
-133

Research and Development expenses
-4,522
-2,566

Administrative and sales expenses
-2,873
-4,250

Operating income before share-based payments and non current elements
-7,237
-6,244

Payroll expenses linked to share-based payments
-35
138

Other non-recurring operating income and expenses
30
-1,594

Operating income after share-based payments and non current elements
-7,242
-7,700

Income from cash and cash equivalents
43
328

Cost of gross borrowings
-72
-70

Cost of net borrowings
-29
258

Other financial income and expenses
0
-61

Net tax expense
0
-67

Consolidated net income
-7,271
-7,570

Minority interests
2
11

GLOBAL CONSOLIDATED NET INCOME (GROUP SHARE)
-7,269
-7,559

Consolidated net earnings per share (in euros)
-0.56
-0.63

Consolidated diluted net earnings per share (in euros)
-0.56
-0.62

Balance sheet

(€ thousands)
31/12/2017
31/12/2016

ASSETS

Intangible assets
8,069
6,020

Tangible assets
16,511
17,613

Non-recurring financial assets
171
140

Deferred tax assets
3,236
3,236

TOTAL NON-RECURRING ASSETS
27,987
27,009

Inventories
840
558

Client receivables
113
7

Other receivables
3,313
2,814

Cash and cash equivalents
21,752
15,707

TOTAL CURRENT ASSETS
26,018
19,086

TOTAL ASSETS
54,005
46,095

EQUITY & LIABILITIES

Capital
686
484

Additional paid-in capital
52,036
50,289

Reserves and retained earnings
-4,261
-6,582

Global net income
-7,269
-7,559

Shareholders' equity (Group share)
41,192
36,632

Minority interests
0
-43

TOTAL SHAREHOLDERS' EQUITY
41,192
36,589

Borrowings
7,958
3,348

Retirement commitments
70
64

TOTAL NON-RECURRING LIABILITIES
8,028
3,412

Provisions for current risks
305
590

Trade payables
1,830
3,175

Other current liabilities
2,650
2,329

TOTAL CURRENT LIABILITIES
4,785
6,094

TOTAL EQUITY AND LIABILITIES
54,005
46,095

Cash flow statement

(€ thousands)
31/12/2017
31/12/2016

Global net income
-7,271
-7,570

Depreciation, amortization and provisions (excluding provisions against current assets)
1,914
1,840

Expenses on shared-based payments
35
-138

Change in deferred tax
0
66

Gains and losses on disposals of fixed assets
0
235

Cash flow
-5,323
-5,567

Cost of gross borrowings
62
70

Cash flow before cost of borrowings,

net of tax
-5,261
-5,497

Tax
0
15

Change in inventories
-282
-373

Change in trade receivables
-106
509

Change in trade payables
-1,194
1,165

Change in other current assets and liabilities (a)
-321
712

Change in working capital related to operations
-1,903
2,028

NET CASH FLOW FROM OPERATIONS
-7,164
-3,469

Production of fixed assets (capitalised R&D)
-2,481
-2,460

Share of subsidies and research tax credit linked to development projects underway
430
595

Acquisitions of other tangible and intangible assets
-1,091
-6,848

Change in fixed asset liabilities
-3
-304

Disposal of financial assets
-31
211

NET CASH FLOW FROM INVESTMENTS
-3,176
-8,806

Capital increase linked to parent company
11,688
0

Acquisitions and disposals of own shares
3
-7

New loans and other borrowings
4,694
332

Change in current accounts
0
51

Interest paid on loans and borrowings
0
0

NET CASH FLOW FROM FINANCING
16,385
376

Change in cash and cash equivalents
6,045
-11,899

Opening cash and cash equivalents(1)
15,708
27,607

Closing cash and cash equivalents(1)
21,752
15,708

(a): including change in Research tax credit:
-1,153
1,312