http://www.rns-pdf.londonstockexchange.com/rns/0118E_1-2024-2-21.pdf
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February 22, 2024
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Strong Underlying Financial
Performance and Execution Against Strategic Priorities in
2023
• Achieved 21% net revenue (NR)
growth; expanded adjusted operating margin while investing for
future growth
• FY 2023 SUBLOCADE® NR of $630m at
top end of range and +54% versus FY 2022
• FY 2024 guidance introduced -
expect to deliver 18% NR growth and ~300 basis points of operating
margin expansion at the mid-points
• Initiating shareholder
consultations to potentially transition to a primary listing in the
U.S. in 2024 while maintaining a secondary listing in the
U.K.
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Comment by Mark Crossley, CEO of Indivior
PLC
"At our December 2022 Capital
Markets Day, we laid out Indivior's strategy and medium term
financial goals targeting double-digit top line growth, operating
margin expansion and strengthened cash flow. By executing against
our strategic priorities, we delivered strongly against these goals
in 2023. We grew SUBLOCADE and PERSERIS® net revenue by 54% and
50%, respectively, we acquired Opiant and launched OPVEE®, and we
expanded our pipeline of innovative potential treatments for
substance use disorders. Furthermore, we converted 21% net revenue
growth into adjusted operating profit growth of
27% (reported operating loss of $4m), despite significant
incremental operating costs from the acquisition of Opiant and
targeted investments in our U.S. commercial organization. Among
other highlights, we listed our shares on NASDAQ, continued to
de-risk legacy liabilities, and we initiated a third $100m share
repurchase program. 2023 was a year of considerable achievement and
I want to thank all Indivior employees for their
efforts."
"Our guidance for 2024 builds off
this momentum with expected double-digit net revenue growth and
meaningful operating margin expansion. We are also excited to
announce that we are initiating consultations with shareholders on
potentially transitioning to a primary listing in the U.S. in 2024
while maintaining a secondary listing in the U.K. I look forward to
reporting on our strong progress in 2024."
Period to December 31st (Unaudited)
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Q4
2023
$m
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Q4
2022
$m
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% Change
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FY
2023
$m
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FY
2022
$m
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% Change
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Net Revenue
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293
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241
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22%
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1,093
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901
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21%
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Operating
Profit/(Loss)1
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60
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(258)
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NM
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(4)
|
(85)
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-95%
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Net
Income/(Loss)1
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54
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(183)
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NM
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2
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(53)
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NM
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Diluted EPS/(LPS)1
($)
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$0.38
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$(1.34)
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NM
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$0.01
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$(0.38)
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NM
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Adjusted Basis
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|
|
|
|
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Adj. Operating
Profit2
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66
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40
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65%
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269
|
212
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27%
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Adj. Net
Income2
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61
|
39
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56%
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|
223
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169
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32%
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Adj. Diluted EPS2
($)
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$0.43
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$0.27
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59%
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$1.57
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$1.16
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35%
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1 Includes
the impact of exceptional provision increases of $240m for the FY
2023 and $290m for the FY 2022 and Q4 2022 periods, respectively,
related to certain antitrust multidistrict class claims ("Antitrust
MDL") and an intellectual property-related litigation matter.
See Note 11 and Note 13 for additional
details including the timing of final settlement.
2 Adjusted Basis excludes the impact
of exceptional items and other adjustments as referenced and
reconciled in the "Adjusted Results" appendix on page 25. Adjusted
results are not a substitute for, or superior to, reported results
presented in accordance with International Financial Reporting
Standards.
NM - Not meaningful
The "Company" refers to Indivior PLC and the "Group" refers to
the Company and its consolidated subsidiaries.
FY / Q4 2023 Financial
Highlights
•
FY 2023 total net revenue (NR) of
$1,093m increased 21% (FY 2022: $901m); Q4 2023 total NR of
$293m increased 22%
(Q4 2022: $241m).
• FY
2023 reported operating loss was $4m (FY 2022: $85m loss); Q4 2023
reported operating profit was $60m (Q4 2022: $258m loss). FY 2023
adjusted operating profit of $269m represented an increase of 27%
(Adjusted FY 2022: $212m). Q4 2023 adjusted operating profit of
$66m increased 65% (Adjusted Q4 2022: $40m).
• FY
2023 reported net income was $2m (FY 2022: $53m net loss); Q4 2023
reported net income was $54m (Q4 2022: $183m net loss). FY 2023
adjusted net income of $223m represented an increase of 32%
(Adjusted FY 2022: $169m). Q4 2023 adjusted net income of $61m
increased 56% (Adjusted Q4 2022: $39m).
• Cash
and investments totaled $451m at the end of 2023 (including $27m
restricted for self-insurance)
(FY 2022: $991m),
primarily reflecting the FY 2023 net cash
outflows related to litigation settlements of $610m and $124m for the Opiant
acquisition.
FY / Q4 2023 Product
Highlights
•
SUBLOCADE: FY 2023 NR of $630m (+54% vs. FY 2022); Q4 2023 NR of $176m
(+49% vs. Q4 2022
and +5%vs. Q3
2023). Continued strong growth primarily reflects further
organized health system (OHS) channel penetration in the U.S. and
increased new U.S. patient enrollments. FY 2023 units dispensed
were approx. 509,000 (+61% vs. FY 2022). Q4
2023 U.S. units dispensed were approx. 142,700 (+53% vs.
Q4 2022 and +7% vs. Q3
2023). Total U.S. patients on a 12-month rolling basis at
the end of Q4 2023 were approximately
136,900 (+66% vs. Q4 2022 and +13% vs.
Q3 2023).
•
PERSERIS®: FY 2023 NR
of $42m (+50% vs. FY
2022); Q4 2023 NR
of $12m (+50% vs. Q4 2022 and 9% vs. Q3
2023) reflects increasing awareness of the treatment across
the U.S. healthcare system.
•
SUBOXONE®
(buprenorphine/naloxone) Film: U.S.
share in Q4 2023 averaged 18% (Q4 2022: 19%).
FY 2024
Guidance
The Group is introducing the below
guidance for FY 2024 which reflects top line growth of 18% and
adjusted operating margin expansion of approximately 300 basis
points (at the midpoint) versus FY 2023.
Guidance assumes no material change
in exchange rates for key currencies compared with FY 2023 average
rates, notably USD/GBP and USD/EUR.
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FY 2024
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Net
Revenue (NR)1
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$1,240m
to $1,330m
(+18% at midpoint vs. FY 2023)
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SUBLOCADE NR
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$820m to
$880m
(+35% at midpoint vs. FY 2023)
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OPVEE® NR
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$15m to
$25m1
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PERSERIS NR
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$55m to
$65m
(+43% at midpoint vs. FY 2023)
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SUBOXONE Film Market Share
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Assumes
historic rate of share decline in FY 2024 of 1 to 2 percentage
points and the potential impact from a fourth
buprenorphine/naloxone sublingual film generic in the U.S.
market
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Adjusted Gross Margin
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Low to
mid-80s range
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Adjusted SG&A
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($575m)
to ($590m)
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R&D
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($120m)
to ($130m)
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Adjusted Operating Profit
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$330m to
$380m
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1 The OPVEE NR guidance for FY 2024
includes approximately $8m as part of a multi-year agreement with
the U.S. Biomedical Advancement Research and Development Authority
(BARDA).
Initiating the Process for a
Potential Primary Listing in the U.S. in the Summer of
2024
Indivior is initiating formal
shareholder consultations on potentially moving Indivior's primary
listing from the U.K. to the U.S. in the Summer of 2024. The Board
believes a primary U.S. listing could be beneficial to Indivior as
it would:
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Reflect the Group's current and future growth opportunities for its
proprietary treatments (SUBLOCADE, PERSERIS and OPVEE), which are
centered in the U.S.;
• Be
expected to attract more U.S. investors and analysts by further
elevating the Group's leadership profile in addiction treatment in
the U.S. capital markets;
•
Allow for inclusion in major U.S. indices over time,
and;
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Reflect the growing proportion of the Group's share capital owned
by U.S.-based investors, which is currently approaching
50%.
The Board is aware that this is an
important topic for shareholders and is mindful that a resolution
to move forward requires the support of 75% of shareholders present
and voting (in person or by proxy). If the consultations indicate a
strong level of support from shareholders, the Group intends to put
forward a formal resolution that would facilitate a primary U.S.
listing in the Summer of 2024. The Board intends to maintain
Indivior's U.K. listing as a secondary listing following any
transition to a primary U.S. listing.
Share Repurchase
Program
On November 17, 2023, Indivior
announced a third share repurchase program of up to $100m. Through
February 16, 2024, the Group repurchased
and cancelled 2,619,596 Indivior ordinary shares, equivalent to
approximately 2% of diluted shares outstanding, at a daily weighted
average purchase price of 1,265p. The cost was approximately $42m,
which includes directly attributable transaction
costs. Refer to Note 15 for further discussion.
U.S. OUD Market
Update
In FY 2023, U.S. buprenorphine
medication-assisted treatments (BMAT) grew in
mid-single digits. The Group continues to expect long-term
U.S. growth to be sustained in the mid- to high-single digit
percentage range due to increased overall public awareness of the
opioid epidemic and approved treatments, together with regulatory
and legislative actions, such as the late 2022 enactment of the
Mainstreaming Addiction Treatment Act, that have expanded OUD
treatment funding and treatment capacity. The Group believes these
regulatory and legislative actions will help to normalize the view
of addiction as a chronic disease and expand access to
evidence-based buprenorphine treatment in the U.S. and supports
these actions.
Financial Performance FY and
Q4 2023
Total net revenue in
FY 2023 increased 21% to $1,093m (FY 2022: $901m) at actual
exchange rates (+21% at constant exchange rates1). In
Q4 2023, total net revenue increased
22% at actual exchange rates (+21% at
constant exchange rates1) to $293m (Q4 2022: $241m).
U.S. net revenue increased
25% in FY 2023 to
$912m (FY 2022:
$731m) and by 26%
in Q4 2023 to $249m
(Q4 2022: $198m).
Strong year-over-year SUBLOCADE and PERSERIS volume growth, along
with underlying BMAT market growth were the principal drivers of
the net revenue increase in both periods.
Rest of World (ROW) net revenue increased 6% at actual exchange rates
in FY 2023 to $181m
(FY 2022: $170m)
(+6% at constant exchange rates1). In Q4 2023, ROW net revenue increased 2% at actual exchange rates to $44m (Q4 2022: $43m) (-2% at constant exchange rates1). In
both the period and quarter, positive contributions from new
products (SUBLOCADE / SUBUTEX® Prolonged
Release and SUBOXONE Film) were offset primarily by ongoing
competitive pressure on legacy tablet products. FY
2023 and Q4 2023 SUBLOCADE / SUBUTEX Prolonged Release net revenue
in ROW was $41m (FY
2022: $27m) and $11m (Q4 2022: $8m) at actual exchange rates,
respectively.
Gross margin as reported in
FY 2023 and Q4 2023
was 83% and 82%
(FY 2022 and Q4 2022: 82%), respectively. Excluding $8m and $3m, respectively, of
other adjustments for amortization of acquired intangible assets
within cost of sales, adjusted gross margin in FY
2023 and Q4 2023 was 84% and 83%, respectively.
There were no adjustments to FY 2022 or
Q4 2022 gross margin. The increase in the
adjusted gross margin in 2023 primarily
reflects an improved product mix from the continued growth of
SUBLOCADE. These benefits were partially offset by cost
inflation.
[1] Net
revenue at constant exchange rates is an alternative performance
measure used by management to evaluate underlying performance of
the business and is calculated by applying the prior year exchange
rate to net revenue in the currencies of the foreign
entities.
SG&A expenses as reported
in FY 2023 were $811m (FY 2022:
$763m) and $157m as reported in Q4
2023 (Q4 2022: $431m). FY 2023 included
$240m of exceptional costs for the increase in provisions related
to the Antitrust MDL and an intellectual property-related
matter and $28m of acquisition-related and
U.S. listing exceptional costs. Q4 2023
included $6m of exceptional acquisition costs
related to the acquisition of a business consisting of a
manufacturing facility, workforce, and supply contracts (refer to
Note 17). FY 2022 and Q4 2022
included $296m of exceptional legal costs,
respectively, and $6m and $2m of exceptional U.S. listing costs,
respectively.
Excluding exceptional items, FY 2023
SG&A expense increased 18% to $543m (Adjusted FY 2022: $461m);
adjusted Q4 2023 SG&A expense increased 14% to $151m (Adjusted
Q4 2022: $133m). The increase in FY 2023 primarily reflects higher expenses related to
increased SUBLOCADE commercial investments, the addition of the
Opiant business and subsequent launch expenses for OPVEE, legacy
legal defense costs and cost inflation. The increase in Q4 2023
primarily reflects the addition of the Opiant business and
subsequent launch expenses for OPVEE, SUBLOCADE commercial
investments, and cost inflation.
R&D expenses in FY 2023 and
Q4 2023 were $106m and $30m, respectively (FY 2022: $72m; Q4 2022:
$29m) and represented an increase of 47% and an increase of 3%,
respectively. The increases in both periods were primarily due to a
greater activity level related to post-marketing studies for
SUBLOCADE, process validation testing related to LAI (long-acting
injectable) capacity expansion and phasing of ongoing early-stage
pipeline activities.
Net
other operating income in FY 2023
and Q4 2023 was $6m and $6m, respectively, (FY 2022: $8m; Q4 2022:
$4m). FY 2023
included $3m of exceptional income
recognized in relation to a supply agreement and FY 2022 included $5m of
exceptional benefit related to a Directors' & Officers'
insurance claim settlement.
Operating loss as reported
was $4m in FY 2023
(FY 2022:
$85m loss). Exceptional costs and other adjustments of $273m and $297m in
FY 2023 and FY
2022, respectively, were primarily related
to the Antitrust MDL, which was settled in 2023. The change on a reported basis reflects the exceptional
charges related to legal matters.
FY 2023 adjusted operating profit
increased 27% to $269m (FY
2022: $212m). The
increases primarily reflected higher NR from the Group's LAI
products, partially offset by increased SG&A and R&D
expenses, as described above.
Q4 2023 operating profit as reported
was $60m (Q4 2022: $258m loss). Exceptional costs and other
adjustments of $6m are included in the current period and
exceptional costs of $298m were included in the year-ago period.
The change on a reported basis reflects the exceptional charges
related to legal matters. Q4 2023 adjusted operating profit
increased 65% to $66m (Adjusted Q4 2022: $40m). The increases on an adjusted basis primarily reflected higher
NR from the Group's LAI products, partially offset by increased
SG&A, as described above.
Net
finance income as reported was $5m
in FY 2023 (FY 2022: $10m expense). The
change in net finance income (expense) reflected higher interest
rates on the Group's investments. We expect investment income will
not offset interest expense in the near-term following the
litigation cash settlement payments.
Reported tax benefit was
$1m in FY 2023 and
the effective tax rate was -100%, which is not
meaningful as a percentage due to the profit before taxation being
close to nil (FY 2022 tax
benefit/rate: $42m, 44%). FY 2023 adjusted tax
expense was $51m, and the effective tax rate was
19% (FY 2022 tax expense/rate: $33m, 16%).
The adjusted results exclude $11m in
exceptional tax items and a $63m tax benefit on exceptional items
and other adjustments. Exceptional tax items are comprised
of a $5m write-off of deferred tax assets and tax expense due to
limitation on the deduction of executive compensation by U.S.
publicly traded companies, $3m change in estimate as to the tax
benefit of legal provisions booked in the prior year, and $3m
accrual for adjustments to Opiant predecessor period taxes.
Adjusted FY 2022 tax expense was
$33m, excluding the $75m tax benefit on exceptional items and other
adjustments, an effective tax rate of 16%.
The movement in the effective tax rate on adjusted
profits is impacted by an increase in the U.K. corporation tax rate
from 19% to 23.5% and a temporary reduction in U.K. innovation
incentives due to 2022 and 2023 losses.
The Q4 2023
reported tax expense was $7m, or a rate of
11% (Q4 2022:
$73m benefit, 29%).
The tax benefit on Q4 2023 adjusted profits
amounted to $6m, excluding the $1m tax expense on exceptional items and other
adjustments, which represented an effective tax rate of
9% (Q4 2022:
$3m expense, 7%).
Reported net income in
FY 2023 was $2m and
adjusted net income was $223m (FY 2022 reported net loss: $53m; FY 2022 adjusted net
income: $169m). The 32% increase in net income on an adjusted basis
primarily reflected higher NR partially offset by the increase in
operating expense. Q4 2023 net income on a
reported basis was $54m (Q4 2022 net loss: $183m), and
$61m adjusted net income excluding the net
after-tax impact from exceptional items and other adjustments
(Adjusted Q4 2022: $39m profit). Higher Q4 2023
adjusted net income was primarily due to strong NR
growth.
Diluted earnings per share were
$0.01 on a reported basis and $1.57 on an adjusted basis in FY
2023 (FY 2022: $(0.38) loss per share on a diluted basis and
$1.16 earnings per share adjusted diluted
basis). In Q4 2023, diluted earnings per
share were $0.38 and adjusted diluted
earnings per share were $0.43 (Q4 2022: $(1.34) loss per share
on a diluted basis and $0.27 earnings per
share on an adjusted diluted basis).
Balance Sheet & Cash
Flow
Cash and investments totaled
$451m at the end of Q4
2023, a decrease of $540m versus the
$991m position at the end of 2022. The
decrease was primarily due to litigation settlement related
outflows of $610m and the net cash outflow
of $124m for the Opiant acquisition,
including the transferred cash balance, partially offset by
beneficial timing of payments made on government rebates and trade
payables. The litigation settlement related outflows include the
Antitrust MDL settlement payment of $103m
with States (refer to Note 13), transfer of $415m into escrow accounts for
the settlement with the Antitrust MDL end payors and direct payors,
subject to final court approval (refer to Note 13), settlement
payments of $24m for intellectual property-related and other legal matters,
in addition to the Group's scheduled litigation settlement payments
totaling $68m for the Department of Justice
(DOJ), Reckitt Benckiser (RB) and Dr. Reddy's Laboratories (DRL)
matters. Gross borrowings before issuance costs were $244m at December 31, 2023 (ending FY 2022: $246m).
Net
working capital, defined by
management as inventory plus trade receivables, less trade and
other payables, was negative $347m on
December 31, 2023, versus negative
$283m at the end of FY
2022. The change in the period was primarily a result of
timing of payments made on government rebates and trade
payables.
Cash used in operations in
FY 2023 was $292m
(FY 2022 cash provided by operations:
$63m), primarily due to payments related to
the Antitrust MDL, DOJ Resolution, DRL settlement and RB
settlement, partially offset by timing of
payments made on government rebates and trade payables. Before
these settlement related items, cash generated from operations in
the current period was $318m. Net cash
outflow from operating activities was $315m
in FY 2023 (FY 2022
cash outflow: $4m) reflecting tax payments
and interest paid on the Group's term loan facility and settlement
payments, partially offset by interest received on
investments.
FY
2023 cash outflow from investing activities
was $98m (FY 2022 cash outflow: $223m)
reflecting $124m for the Opiant
acquisition, net of cash assumed. In the
prior year period, the outflow from investing activities primarily
reflected the net investment in a portfolio of investment-grade
debt securities (net) and ordinary shares of Aelis
Farma.
FY
2023 cash outflow from financing activities
was $46m (FY 2022 cash outflow: $100m)
reflecting shares repurchased and cancelled, the extinguishment of
debt assumed in the Opiant acquisition, principal portion of lease
payments and quarterly amortization of the Group's term loan
facility, partially offset by proceeds received from the issuance
of shares for employee compensation agreements. In the prior year
period, the outflow from financing activities primarily reflected
shares repurchased and cancelled.
Principal Risks
Update
The Board of Directors oversees the
approach to risk management so that the principal risks, including
those that would threaten the Group's business model, future
performance or viability, are effectively managed and/or mitigated.
While the Group aims to identify and manage such risks, no risk
management strategy can provide absolute assurance against loss.
The principal risks facing the Group will be set out in the Group's
Annual Report for the 2023 financial year available in March 2024.
They remain broadly unchanged compared to the prior year, except
for two principal risks. With the continued worldwide pricing and
reimbursement pressure on pharmaceuticals products, combined with
the entrance by another company of a long-acting injectable for the
treatment of opioid use disorder (OUD) in the U.S., the
Commercialization principal risk has increased. Conversely, the
Supply principal risk has decreased, given the U.S. FDA regulatory
approval of an alternate third-party filling site for SUBLOCADE and
PERSERIS and the acquisition of the Group's aseptic manufacturing
site in November 2023, which, although not able to manufacture our
products today, now provides an opportunity for the Group to bring
such manufacturing in-house in the future.
Exchange
Rates
The average and period end exchange
rates used for the translation of currencies into U.S. dollars that
have most significant impact on the Group's results
were:
|
Full Year to December
31,
2023
|
Full Year to December
31,
2022
|
GB £ period end
|
1.2731
|
1.2083
|
GB £ average rate
|
1.2435
|
1.2386
|
|
|
|
€ Euro period end
|
1.1037
|
1.0698
|
€ Euro average
|
1.0814
|
1.0545
|
Webcast
Details
A live webcast presentation will be
held on February 22nd, 2024, at 13:00 GMT (8:00 am EST) hosted by
Mark Crossley, CEO. The details are below. All materials will be
available on the Group's website prior to the event at www.indivior.com. Please copy and paste the below web
links into your browser.
The webcast link: https://edge.media-server.com/mmc/p/kymnerij
Participants may access the
presentation telephonically by registering with the following link
(please cut and paste into your browser):
https://register.vevent.com/register/BI7bc18cb84a3744af8c4ad20973d37a5a
(Registrants will have an option to be called
back directly immediately prior to the call or be provided a
call-in # with a unique pin code following their
registration)
For Further
Information
Investor Enquiries
|
Jason Thompson
|
VP, Investor Relations
Indivior PLC
|
+1 804 402 7123
jason.thompson@indivior.com
|
|
Tim Owens
|
Director, Investor Relations
Indivior PLC
|
+1 804 263 3978
timothy.owens@indivior.com
|
Media Enquiries
|
Jonathan Sibun
|
Teneo
U.S. Media Inquiries
|
+44 (0)20 7353 4200
+1 804 594 0836
Indiviormediacontacts@indivior.com
|
Corporate
Website
www.indivior.com
This announcement does not
constitute an offer to sell, or the solicitation of an offer to
subscribe for or otherwise acquire or dispose of shares in the
Group to any person in any jurisdiction to whom it is unlawful to
make such offer or solicitation.
About
Indivior
Indivior is a global pharmaceutical
company working to help change patients' lives by developing
medicines to treat substance use disorders (SUD) and serious mental
illnesses. Our vision is that all patients around the world will
have access to evidence-based treatment for the chronic conditions
and co-occurring disorders of SUD. Indivior is dedicated to
transforming SUD from a global human crisis to a recognized and
treated chronic disease. Building on its global portfolio of OUD
treatments, Indivior has a pipeline of product candidates designed
to both expand on its heritage in this category and potentially
address other chronic conditions and co-occurring disorders of SUD,
including alcohol use disorder and cannabis use disorder.
Headquartered in the United States in Richmond, VA, Indivior
employs more than 1,000 individuals globally and its portfolio of
products is available in 37 countries worldwide. Visit www.indivior.com to learn more. Connect with Indivior
on LinkedIn by visiting www.linkedin.com/company/indivior.
Important Cautionary Note
Regarding Forward-Looking Statements
This announcement contains certain statements that are forward-looking.
Forward-looking statements include, among other things, statements
regarding the Indivior Group's financial guidance including
operating and profit margins for 2024 and its medium- and long-term
growth outlook; assumptions regarding expected changes in market
share and expectations regarding the extent and impact of
competition; assumptions regarding future exchange rates; strategic
priorities, strategies for value creation, and operational goals;
expected future growth and expectations for sales levels for
particular products; expected market growth rates, growing
normalization of medically assisted treatment for opioid use
disorder, and expanded access to treatment; our product development
pipeline and potential future products, expectations regarding
regulatory approval of such product candidates, the timing of such
approvals, and the timing of commercial launch of such products or
product candidates, and eventual annual revenues of such future
products; expectations regarding future production at the Group's
Raleigh, North Carolina manufacturing facility; and other
statements containing the words "believe," "anticipate," "plan,"
"expect," "intend," "estimate," "forecast," "strategy," "target,"
"guidance," "outlook," "potential," "project," "priority," "may,"
"will," "should," "would," "could," "can," "outlook," "guidance,"
the negatives thereof, and variations thereon and similar
expressions. By their nature, forward-looking statements involve
risks and uncertainties as they relate to events or circumstances
that may or may not occur in the future.
Actual results may differ materially
from those expressed or implied in such statements because they
relate to future events. Various factors may cause differences
between Indivior's expectations and actual results, including,
among others, the material risks described in the most recent
Indivior PLC Annual Report and in subsequent releases; the
substantial litigation and ongoing investigations to which we are
or may become a party; our reliance on third parties to manufacture
commercial supplies of most of our products, conduct our clinical
trials and at times to collaborate on products in our pipeline; our
ability to comply with legal and regulatory settlements, healthcare
laws and regulations, requirements imposed by regulatory agencies
and payment and reporting obligations under government pricing
programs; risks related to the manufacture and distribution of our
products, most of which contain controlled substances; market
acceptance of our products as well as our ability to commercialize
our products and compete with other market participants; the fact
that a substantial portion of our revenue derives from a small
number of key proprietary products; competition; the uncertainties
related to the development of new products, including through
acquisitions, and the related regulatory approval process; our
dependence on third-party payors for the reimbursement of our
products and the increasing focus on pricing and competition in our
industry; unintended side effects caused by the clinical study or
commercial use of our products; our use of hazardous materials in
our manufacturing facilities; our ability to successfully execute
acquisitions, partnerships, joint ventures, dispositions or other
strategic acquisitions; our ability to protect our intellectual
property rights and the substantial cost of litigation or other
proceedings related to intellectual property rights; the risks
related to product liability claims or product recalls; the
significant amount of laws and regulations that we are subject to,
including due to the international nature of our business;
macroeconomic trends and other global developments such as armed
conflicts and pandemics; the terms of our debt instruments, changes
in our credit ratings and our ability to service our indebtedness
and other obligations as they come due; changes in applicable tax
rate or tax rules, regulations or interpretations and our ability
to realize our deferred tax assets; and volatility in our share
price due to factors unrelated to our operating performance or that
may result from the potential move of our primary listing to the
U.S.
Forward-looking statements speak
only as of the date that they are made and should be regarded
solely as our current plans, estimates and beliefs. Except as
required by law, we do not undertake and specifically decline any
obligation to update, republish or revise forward-looking
statements to reflect future events or circumstances or to reflect
the occurrences of unanticipated events.
Unaudited condensed consolidated income
statement
|
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
Notes
|
$m
|
$m
|
$m
|
$m
|
Net Revenue
|
2
|
293
|
241
|
1,093
|
901
|
Cost of sales
|
|
(52)
|
(43)
|
(186)
|
(159)
|
Gross Profit
|
|
241
|
198
|
907
|
742
|
Selling, general and administrative
expenses
|
3
|
(157)
|
(431)
|
(811)
|
(763)
|
Research and development
expenses
|
3
|
(30)
|
(29)
|
(106)
|
(72)
|
Net other operating
income
|
|
6
|
4
|
6
|
8
|
Operating Profit/(Loss)
|
|
60
|
(258)
|
(4)
|
(85)
|
Finance income
|
4
|
10
|
10
|
43
|
19
|
Finance expense
|
4
|
(9)
|
(8)
|
(38)
|
(29)
|
Net Finance Income/(Expense)
|
|
1
|
2
|
5
|
(10)
|
Profit/(Loss) Before Taxation
|
|
61
|
(256)
|
1
|
(95)
|
Income tax
(expense)/benefit
|
5
|
(7)
|
73
|
1
|
42
|
Net Income/(Loss)
|
|
54
|
(183)
|
2
|
(53)
|
|
|
|
|
|
|
Earnings/(Loss) per ordinary share (in
dollars)
|
|
|
|
|
|
Basic earnings/(loss) per
share
|
6
|
$0.39
|
$(1.34)
|
$0.01
|
$(0.38)
|
Diluted earnings/(loss) per
share
|
6
|
$0.38
|
$(1.34)
|
$0.01
|
$(0.38)
|
Unaudited condensed consolidated statement of comprehensive
income/(loss)
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Net income/(loss)
|
54
|
(183)
|
2
|
(53)
|
Other comprehensive income/(loss)
|
|
|
|
|
Items that may be reclassified to profit or loss in subsequent
years:
|
|
|
|
|
Foreign currency translation
adjustment, net
|
13
|
17
|
4
|
(19)
|
Other comprehensive
income/(loss)
|
13
|
17
|
4
|
(19)
|
Total comprehensive income/(loss)
|
67
|
(166)
|
6
|
(72)
|
The notes
are an integral part of these unaudited condensed consolidated
interim financial statements.
Unaudited condensed consolidated balance
sheet
|
|
Dec 31,
2023
|
Dec 31,
2022
|
|
Notes
|
$m
|
$m
|
ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Intangible assets
|
7
|
237
|
70
|
Property, plant and
equipment
|
|
84
|
54
|
Right-of-use assets
|
|
33
|
31
|
Deferred tax assets
|
5
|
268
|
219
|
Investments
|
8
|
41
|
98
|
Other assets
|
9
|
28
|
38
|
|
|
691
|
510
|
Current assets
|
|
|
|
Inventories
|
|
142
|
114
|
Trade receivables
|
|
254
|
220
|
Other assets
|
9
|
457
|
27
|
Current tax receivable
|
5
|
-
|
5
|
Investments
|
8
|
94
|
119
|
Cash and cash
equivalents
|
|
316
|
774
|
|
|
1,263
|
1,259
|
Total assets
|
|
1,954
|
1,769
|
|
|
|
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Borrowings
|
10
|
(3)
|
(3)
|
Provisions
|
11
|
(407)
|
(303)
|
Other liabilities
|
11
|
(125)
|
(79)
|
Trade and other payables
|
14
|
(743)
|
(617)
|
Lease liabilities
|
|
(9)
|
(8)
|
Current tax liabilities
|
5
|
(18)
|
(9)
|
|
|
(1,305)
|
(1,019)
|
Non-current liabilities
|
|
|
|
Borrowings
|
10
|
(236)
|
(237)
|
Provisions
|
11
|
(12)
|
(5)
|
Other liabilities
|
11
|
(367)
|
(428)
|
Lease liabilities
|
|
(34)
|
(29)
|
|
|
(649)
|
(699)
|
Total liabilities
|
|
(1,954)
|
(1,718)
|
Net assets
|
|
-
|
51
|
|
|
|
|
EQUITY
|
|
|
|
Capital and reserves
|
|
|
|
Share capital
|
15
|
68
|
68
|
Share premium
|
|
11
|
8
|
Capital redemption
reserve
|
|
7
|
6
|
Other reserve
|
|
(1,295)
|
(1,295)
|
Foreign currency translation
reserve
|
|
(35)
|
(39)
|
Retained earnings
|
|
1,244
|
1,303
|
Total equity
|
|
-
|
51
|
The
notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Unaudited condensed consolidated statement of changes in
equity
|
Notes
|
Share
capital
|
Share
premium
|
Capital
redemption reserve
|
Other
reserve
|
Foreign
currency translation reserve
|
Retained
earnings
|
Total
equity
|
|
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Balance at January 1, 2022
|
|
70
|
7
|
3
|
(1,295)
|
(20)
|
1,438
|
203
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
-
|
-
|
-
|
-
|
(53)
|
(53)
|
Other comprehensive loss
|
|
-
|
-
|
-
|
-
|
(19)
|
-
|
(19)
|
Total comprehensive loss
|
|
-
|
-
|
-
|
-
|
(19)
|
(53)
|
(72)
|
Transactions recognized directly in equity
|
|
|
|
|
|
|
|
|
Shares issued
|
|
1
|
1
|
-
|
-
|
-
|
-
|
2
|
Share-based plans
|
|
-
|
-
|
-
|
-
|
-
|
16
|
16
|
Settlement of tax on equity
awards
|
|
-
|
-
|
-
|
-
|
-
|
(10)
|
(10)
|
Shares repurchased and
cancelled
|
|
(3)
|
-
|
3
|
-
|
-
|
(90)
|
(90)
|
Transfer to share repurchase
liability
|
|
-
|
-
|
-
|
-
|
-
|
(9)
|
(9)
|
Taxation on share-based
plans
|
|
-
|
-
|
-
|
-
|
-
|
11
|
11
|
Balance at December 31, 2022
|
|
68
|
8
|
6
|
(1,295)
|
(39)
|
1,303
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2023
|
|
68
|
8
|
6
|
(1,295)
|
(39)
|
1,303
|
51
|
Comprehensive income
|
|
|
|
|
|
|
|
|
Net income
|
|
-
|
-
|
-
|
-
|
-
|
2
|
2
|
Other comprehensive
income
|
|
-
|
-
|
-
|
-
|
4
|
-
|
4
|
Total comprehensive income
|
|
-
|
-
|
-
|
-
|
4
|
2
|
6
|
Transactions recognized directly in equity
|
|
|
|
|
|
|
|
|
Shares issued
|
|
1
|
3
|
-
|
-
|
-
|
-
|
4
|
Share-based plans
|
|
-
|
-
|
-
|
-
|
-
|
22
|
22
|
Settlement of tax on equity
awards
|
|
-
|
-
|
-
|
-
|
-
|
(22)
|
(22)
|
Shares repurchased and
cancelled
|
|
(1)
|
-
|
1
|
-
|
-
|
(33)
|
(33)
|
Transfer to share repurchase
liability
|
|
-
|
-
|
-
|
-
|
-
|
(23)
|
(23)
|
Transfer from share repurchase
liability
|
|
-
|
-
|
-
|
-
|
-
|
9
|
9
|
Taxation on share-based
plans
|
|
-
|
-
|
-
|
-
|
-
|
(14)
|
(14)
|
Balance at December 31, 2023
|
|
68
|
11
|
7
|
(1,295)
|
(35)
|
1,244
|
-
|
The
notes are an integral part of these unaudited condensed
consolidated interim financial statements.
Unaudited condensed consolidated cash flow
statement
|
2023
|
2022
|
For the twelve months ended December 31
|
$m
|
$m
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
Operating Loss
|
(4)
|
(85)
|
Depreciation and amortization of
property, plant and equipment and intangible assets
|
19
|
13
|
Depreciation of right-of-use
assets
|
9
|
8
|
Gain on disposal of intangible
assets
|
-
|
(1)
|
Share-based payments
|
22
|
16
|
Impact from foreign exchange
movements
|
(11)
|
(3)
|
Settlement of tax on employee
awards
|
(22)
|
(10)
|
Increase in trade
receivables
|
(33)
|
(21)
|
(Increase)/decrease in current and
non-current other assets
|
(415)
|
72
|
Increase in inventories
|
(21)
|
(25)
|
Increase/(decrease) in trade and
other payables
|
115
|
(98)
|
Increase in provisions and other
liabilities1
|
49
|
197
|
Cash (used in)/provided by operations
|
(292)
|
63
|
Interest paid
|
(32)
|
(24)
|
Interest received
|
42
|
15
|
Tax refunds
|
19
|
-
|
Taxes paid
|
(52)
|
(57)
|
Transaction costs related to debt
refinancing
|
-
|
(1)
|
Net cash outflow from operating activities
|
(315)
|
(4)
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
Acquisition of assets, net of cash
acquired (refer to Note 16)
|
(124)
|
-
|
Acquisition of business (refer to
Note 17)
|
(5)
|
-
|
Purchase of property, plant and
equipment
|
(8)
|
(5)
|
Purchase of investments
|
(45)
|
(245)
|
Maturity of investments
|
129
|
27
|
Purchase of intangible
asset
|
(45)
|
(1)
|
Proceeds from disposal of
intangible assets
|
-
|
1
|
Net cash outflow from investing activities
|
(98)
|
(223)
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
Repayment of borrowings
|
(12)
|
(3)
|
Principal elements of lease
payments
|
(8)
|
(9)
|
Lease incentive received
|
3
|
-
|
Shares repurchased and
cancelled
|
(33)
|
(90)
|
Proceeds from the issuance of
ordinary shares
|
4
|
2
|
Net cash outflow from financing activities
|
(46)
|
(100)
|
|
|
|
Exchange difference on cash and
cash equivalents
|
1
|
(1)
|
|
|
|
Net decrease in cash and cash equivalents
|
(458)
|
(328)
|
Cash and cash equivalents at
beginning of the period
|
774
|
1,102
|
Cash and cash equivalents at end of the
period
|
316
|
774
|
1Changes in the line item provisions and other liabilities for
FY 2023 include
litigation settlement payments totaling $195m (FY 2022: $108m). $3m of interest paid on the DOJ Resolution in
FY 2023 has been
recorded in the interest paid line item (FY
2022: $4m).
The notes
are an integral part of these unaudited condensed consolidated
interim financial statements.
Notes to the unaudited condensed consolidated financial
statements
1.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
Indivior PLC (the 'Company') is a
public limited company incorporated on September 26, 2014 and
domiciled in the United Kingdom. In these unaudited condensed
consolidated financial statements ('Condensed Financial
Statements'), reference to the 'Group' means the Company and all
its subsidiaries.
The Condensed Financial Statements
are unaudited and do not include all the information and
disclosures required in the annual financial statements. Therefore
the Condensed Financial Statements should be read in conjunction
with the Group's Annual Report and Accounts for the year ended
December 31, 2022, which were prepared in accordance with U.K.
adopted International Accounting Standards and in conformity with
the Companies Act 2006 as applicable to
companies reporting under those standards. These Condensed
Financial Statements were approved for issue on February 21, 2024.
In May 2023, the International
Accounting Standards Board issued International Tax Reform-Pillar Two Model
Rules which amended IAS 12 Income Taxes. Refer to Note 5 for
details.
In March 2023, the Group acquired
100% of the share capital of Opiant Pharmaceuticals, Inc.
("Opiant") which has been accounted for as an asset acquisition as
substantially all of the fair value of the gross assets acquired is
concentrated in the value of the in-process research and
development. The Group has disclosed new accounting policies in
Note 16 regarding the policy elected for treatment of contingent
consideration and the method used to evaluate whether an
acquisition is a business combination or asset
acquisition.
Following the effectiveness of the
additional U.S. listing of Indivior shares, presentation of
exceptional items and adjusted results has been removed from the
Condensed Financial Statements. This change creates consistency
with presentation of financial statements included in Indivior's
SEC registration statement and better aligns to the market practice
for companies with U.S. listings. The change has been applied to
all periods presented.
In preparing these
Condensed Financial Statements, the significant judgments made by
management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those that
applied to the consolidated financial statements for the year ended
December 31, 2022, except for estimates used in
determining the valuation of the in-process research and
development associated with the acquisition of Opiant and estimates
used in determining the fair value of the assets acquired and
liabilities assumed in the acquisition of an aseptic manufacturing
facility (refer to Note 17).
The Directors have assessed the
Group's ability to maintain sufficient liquidity to fund its
operations, fulfill financial and compliance obligations as set out
in Note 11, and comply with the minimum liquidity covenant in the
Group's term loan for the period to June 2025 (the going concern
period). A base case model was produced reflecting:
•
Board reviewed financial plans for the period; and
•
settlement of liabilities and provisions in line with contractual
terms, which are expected to be fully approved by the courts as
agreed.
The Directors also assessed a
'severe but plausible' downside scenario which included the
following key changes to the base case within the going concern
period:
• the
risk that SUBLOCADE will not meet revenue growth expectations by
modeling a 10% decline on forecasts;
• an
accelerated decline in U.S. SUBOXONE Film net revenue to generic
analogues; and
• a
further decline in rest of world sublingual product net
revenues.
Under both the base case and the
downside scenario, sufficient liquidity exists and is generated
from operations such that all business and covenant requirements
are met for the going concern period. As a result of the analysis
described above, the Directors reasonably expect the Group to have
adequate resources to continue in operational existence for at
least one year from the approval of these Condensed Financial
Statements and therefore consider the going concern basis to be
appropriate for the accounting and preparation of these Condensed
Financial Statements.
The financial information contained
in this document does not constitute statutory accounts as defined
in section 434 and 435 of the Companies Act 2006. The Group's
statutory financial statements for the year ended December 31,
2022, were approved by the Board of Directors on March 7, 2023, and
delivered to the Registrar of Companies. The auditor's report on
those accounts was unqualified, did not contain an emphasis of
matter paragraph and did not contain any statement under
section 498 of the Companies Act 2006.
2.
SEGMENT INFORMATION
The Group is engaged in a single
business activity, which is predominantly the development,
manufacture, and sale of buprenorphine-based prescription drugs for
treatment of opioid dependence and related disorders. The CEO
reviews disaggregated net revenue on a geographical and product
basis and allocates resources on a functional basis between
Commercial, Supply, Research and Development, and other Group
functions. Financial results are reviewed on a consolidated basis
for evaluating financial performance and allocating resources.
Accordingly, the Group operates in a single reportable
segment.
Net
revenue and non-current assets
Revenues are attributed
geographically based on the country where the sale originates. The
following tables represent net revenues and non-current assets, net
of accumulated depreciation, amortization and impairment, by
country. Non-current assets for this purpose consist of intangible
assets, property, plant and equipment, right-of-use assets,
investments, and other assets.
Net revenue:
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For
the three and twelve months ended December 31
|
$m
|
$m
|
$m
|
$m
|
United States
|
249
|
198
|
912
|
731
|
Rest of World
|
44
|
43
|
181
|
170
|
Total
|
293
|
241
|
1,093
|
901
|
On a disaggregated basis, the
Group's net revenue by major product line:
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For
the three and twelve months ended December 31
|
$m
|
$m
|
$m
|
$m
|
SUBLOCADE®
|
176
|
118
|
630
|
408
|
PERSERIS®
|
12
|
8
|
42
|
28
|
Sublingual/other
|
105
|
115
|
421
|
465
|
Total
|
293
|
241
|
1,093
|
901
|
Non-current assets:
|
Dec 31,
2023
|
Dec
31,
2022
|
|
$m
|
$m
|
United States
|
214
|
65
|
Rest of World
|
209
|
226
|
Total
|
423
|
291
|
3.
OPERATING EXPENSES
The table below sets out selected
operating costs and expense information:
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Research and development expenses
|
(30)
|
(29)
|
(106)
|
(72)
|
|
|
|
|
|
Selling and marketing
expenses
|
(68)
|
(58)
|
(236)
|
(218)
|
Administrative and general
expenses1
|
(89)
|
(373)
|
(575)
|
(545)
|
Selling, general, and administrative
expenses
|
(157)
|
(431)
|
(811)
|
(763)
|
|
|
|
|
|
Depreciation, amortization, and
impairment2
|
(5)
|
(3)
|
(15)
|
(13)
|
1 Administrative and general expenses include $240m in FY 2023 related to increases in legal provisions
(FY 2022 and
Q4 2022:
$296m). Refer to Note 11 for details. The
Group also incurred acquisition-related costs of $22m and $6m, respectively, in
FY 2023 and
Q4 2023 related to
the acquisition of Opiant and an aseptic manufacturing facility.
Refer to Notes 16 and 17 for details.
2 Depreciation and amortization expense is included in research
and development and selling, general and administrative expenses.
Additionally, depreciation and amortization expense in FY 2023 of $13m (FY 2022: $8m) and Q4 2023 of $5m (Q4 2022: $1m) for intangible
assets and right-of-use assets is included within cost of
sales.
The increase in research and
development expenses is primarily due to greater activity level
related to post-marketing studies for SUBLOCADE, process validation
testing related to LAI (long-acting injectable) capacity expansion
and phasing of ongoing early-stage pipeline activities.
Higher selling, general, and
administrative expenses primarily reflect an increase in legal
provisions (refer to Note 11). Other contributing factors include
increased SUBLOCADE commercial investments, the addition of the
Opiant business and subsequent launch expenses for OPVEE, legacy
legal defense costs and cost inflation.
4.
NET FINANCE INCOME/(EXPENSE)
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Finance income
|
|
|
|
|
Interest income on cash and cash
equivalents/investments
|
10
|
9
|
43
|
18
|
Other finance income
|
-
|
1
|
-
|
1
|
Total finance income
|
10
|
10
|
43
|
19
|
Finance expense
|
|
|
|
|
Interest expense on
borrowings
|
(6)
|
(6)
|
(27)
|
(20)
|
Interest expense on lease
liabilities
|
(1)
|
-
|
(3)
|
(2)
|
Interest expense on legal
matters
|
(2)
|
(2)
|
(7)
|
(7)
|
Other interest expense
|
-
|
-
|
(1)
|
-
|
Total finance expense
|
(9)
|
(8)
|
(38)
|
(29)
|
Net
finance income/(expense)
|
1
|
2
|
5
|
(10)
|
The increases to finance income and
finance expense for full year periods were primarily due to higher
interest rates. Investments in corporate debt and U.S. Treasury
securities in 2022 also contributed to the increase in finance
income.
5.
TAXATION
In the twelve months ended December 31,
2023, the reported total tax benefit is $1m (FY 2022 tax benefit: $42m). The
effective tax rate in both periods was impacted by an increase in
the U.K. tax rate from 19% in 2022 to 25% on April 1, 2023,
(blended rate in 2023 is 23.5%) as well as the
absence of U.K. innovation incentives due to losses in 2022
and 2023. During 2023, the Group recorded a tax expense of $6m due
to limitations on the deduction of executive compensation by U.S.
publicly traded companies, including the write-off of accumulated
deferred tax assets of $5m. The Group recorded a tax expense of $3m
relating to a change in estimate as to the tax benefit of legal
provisions booked in the prior year. The Group benefited from
additional R&D credits in the year of $3m.
The Group's balance sheet at
December 31, 2023 includes a current
tax receivable of $nil (FY 2022: $5m), current tax
liabilities of $18m (FY 2022: $9m), and deferred tax
assets of $268m (FY 2022: $219m). The increase in
deferred tax assets is primarily due to net operating loss
carryforwards in the U.K. resulting from litigation
provisions.
The Group recognizes deferred tax
assets to the extent that sufficient future taxable profits are
probable against which these future tax deductions can be utilized.
At December 31, 2023, the Group's net
deferred tax assets of $268m relate
primarily to net operating loss carryforwards, inventory costs
capitalized for tax purposes, and litigation liabilities.
Recognition of deferred tax assets is reliant on forecast taxable
profits arising in the jurisdiction in which the deferred tax asset
is recognized. The Group has assessed recoverability of deferred
tax assets using Group-level budgets and forecasts consistent with
those used for the assessment of viability and asset impairments,
particularly in relation to levels of future net revenues. These
forecasts are subject to similar uncertainties to those
assessments. This is reviewed each quarter and, to the extent
required, an adjustment to the recognized deferred tax asset may be
made. With the exception of specific assets that are not currently
considered realizable, Management have concluded full recognition
of deferred tax assets to be appropriate and do not believe a
significant risk of material change in their assessment exists in
the next 12 months from the balance sheet date.
Other tax matters
U.S. tax laws limit deductibility of
compensation for certain management roles for U.S. listed
companies. With the U.S. listing completed in June 2023, the Group
wrote off deferred tax assets of $5m to tax expense and
$7m to equity relating to future tax
deductions of share-based compensation for which book expense has
already been recognized. Additionally, the Group's current tax
liabilities increased by $5m, due to disallowance of current year
compensation.
In June 2023, Finance (No.2) Act
2023 was substantively enacted in the U.K., introducing the OECD's
Pillar Two model rules and a global minimum effective tax rate of
15% through implementation of a domestic top-up tax and a
multinational top-up tax. The legislation was also enacted or
substantively enacted in other jurisdictions in which the Group
operates. The Pillar Two legislation will be effective for the
Group's financial year beginning January 1, 2024. The Group
performed an assessment of the potential exposure to Pillar Two
income taxes. This assessment, which will be monitored
prospectively, is based on modelling of adjusted accounting data
for the period ended December 31, 2023. Based on the assessment,
the Group believes it qualifies for one of the transitional safe
harbors provided in the rules in all territories in which it
operates. Therefore, the Group does not anticipate a material
impact from Pillar Two legislation in the near future. The Group
has applied the recent amendment to IAS 12 which provides temporary
relief to the recognition of deferred taxes relating to top-up
income taxes. Accordingly, the legislation did not impact the
Group's taxes in 2023.
As a multinational group, tax
uncertainties remain in relation to Group financing, intercompany
pricing, the location of taxable operations, and certain
non-recurring costs. Management have concluded tax provisions made
to be appropriate and do not believe a significant risk of material
change to uncertain tax positions exists in the next 12 months from
the balance sheet date. Including matters under audit, an estimate
of reasonably possible additional tax liabilities that could arise
in later periods on resolution of these uncertainties is in the
range from $nil to $35m.
6.
EARNINGS/(LOSS) PER SHARE
Share consolidation
In September 2022, the Company's
shareholders approved a 5-for-1 share consolidation. In October
2022, the Company completed this share consolidation. Shareholders
received 1 new ordinary share with a nominal value of $0.50 each
for every 5 previously existing ordinary shares which had a nominal
value of $0.10 each.
The table below sets out basic and
diluted earnings/(loss) per share for each period:
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$
|
$
|
$
|
$
|
Basic earnings/(loss) per
share
|
$0.39
|
$(1.34)
|
$0.01
|
$(0.38)
|
Diluted earnings/(loss) per
share
|
$0.38
|
$(1.34)
|
$0.01
|
$(0.38)
|
Basic
Basic earnings/(loss) per share is
calculated by dividing net income/(loss) for the period
attributable to owners of the Group by the weighted average number
of ordinary shares in issue during the period.
Diluted
Diluted earnings/(loss) per share is
calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential
ordinary shares. The Group has dilutive potential ordinary shares
in the form of stock options and awards. The weighted average
number of shares is adjusted for the number of shares granted to
the extent performance conditions have been met at the balance
sheet date and as determined using the treasury stock
method.
Weighted average number of shares
The weighted average number of
ordinary shares outstanding (on a basic basis) for FY 2023 includes the favorable
impact of 1,897k ordinary shares
repurchased in FY 2023. See Note 15 for further discussion. Conditional
awards of 1,761k and 1,568k (reflective of the share consolidation in
October 2022) were granted under the Group's Long-Term Incentive
Plan in FY 2023 and
FY 2022,
respectively.
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
thousands
|
thousands
|
thousands
|
thousands
|
Weighted average shares on a basic
basis
|
137,325
|
136,784
|
137,306
|
139,012
|
Dilution from share awards and
options1
|
4,625
|
-
|
4,494
|
-
|
Weighted average shares on a diluted
basis
|
141,950
|
136,784
|
141,800
|
139,012
|
1 As there was a loss in FY 2022 and Q4 2022, the effect of
potentially dilutive shares of 6,605k and
7,164k, respectively, were not
dilutive.
7.
INTANGIBLE ASSETS
|
Dec 31,
2023
|
Dec
31,
2022
|
Intangible assets, net of accumulated amortization and
impairment
|
$m
|
$m
|
Products in development
|
79
|
36
|
Marketed products
|
150
|
29
|
Goodwill
|
5
|
-
|
Software
|
3
|
5
|
Total
|
237
|
70
|
The increase in marketed products is
primarily due to the acquisition of Opiant which resulted in the
recognition of an intangible asset related to the in-process
research and development value for OPVEE® (nalmefene nasal spray),
formerly the pipeline product OPNT003, for $126m (refer to Note
16). Upon approval by the U.S. Food and Drug
Administration (FDA) in May 2023, the intangible asset
became classified as a marketed product and amortization commenced
over the patent life.
The increase in products in
development is primarily due to the acquisition of full ownership
of INDV-2000 (oral Orexin-1 receptor antagonist) from C4X Discovery
and acquisition of global rights to develop, manufacture, and
commercialize Alar Pharmaceuticals Inc.'s portfolio of
buprenorphine-based ultra long-acting injectables.
Goodwill arose through the
acquisition of a business consisting of a manufacturing facility,
workforce, and supply contracts in November 2023 (refer to Note
17).
8.
INVESTMENTS
|
Dec 31,
2023
|
Dec
31,
2022
|
Current and non-current investments
|
$m
|
$m
|
Equity securities at FVPL
|
10
|
10
|
Debt securities held at amortized
cost
|
84
|
109
|
Total investments, current
|
94
|
119
|
Debt securities held at amortized
cost
|
41
|
98
|
Total investments, non-current
|
41
|
98
|
Total
|
135
|
217
|
The Group's investments in debt and
equity securities do not create significant credit risk, liquidity
risk, or interest rate risk. Debt
securities held at amortized cost consist of investment-grade debt.
As of December 31, 2023, expected
credit losses for the Group's investments held at amortized cost
are deemed to be immaterial.
The decrease in investments is
primarily due to reduced investable liquidity following legal
settlement related payments.
Fair value hierarchy
Fair value is the price that would
be received to sell an asset or transfer a liability in an orderly
transaction between market participants at the measurement date.
The different levels have been defined as follows:
• Level 1: Quoted prices
(unadjusted) in active markets for identical assets or
liabilities
• Level 2: Inputs other than quoted
prices included within Level 1 that are observable for the asset or
liability, either directly or indirectly
• Level 3: Unobservable inputs for
the asset or liability
The Group's only financial
instruments which are measured at fair value are equity securities
at FVPL. The fair value of equity securities at FVPL is based on
quoted market prices on the measurement date.
The following table categorizes the
Group's financial assets measured at fair value by valuation
methodology used in determining their fair value at December 31, 2023.
Financial assets at fair value
|
Level
1
$m
|
Level
2
$m
|
Level
3
$m
|
Total
$m
|
Equity securities at FVPL
|
10
|
-
|
-
|
10
|
The Group also has certain financial
instruments which are not measured at fair value. The carrying
value of cash and cash equivalents, trade receivables, other
assets, and trade and other payables is assumed to approximate fair
value due to their short-term nature. At December 31, 2023, the carrying value of
investments held at amortized cost approximated the fair value. The
fair value of investments held at amortized cost was calculated
based on quoted market prices which would be classified as Level 1
in the fair value hierarchy above.
9.
CURRENT AND NON-CURRENT OTHER ASSETS
|
Dec 31,
2023
|
Dec
31,
2022
|
Current and non-current other assets
|
$m
|
$m
|
Current prepaid expenses
|
23
|
14
|
Other current assets
|
434
|
13
|
Total other current assets
|
457
|
27
|
Non-current prepaid
expenses
|
19
|
20
|
Other non-current assets
|
9
|
18
|
Total other non-current assets
|
28
|
38
|
Total
|
485
|
65
|
Other current assets primarily
relate to the funding placed in escrow for the Antitrust MDL (refer
to Note 13). At December 31, 2023, this included $385m for the
direct purchaser class settlement, subject to final court approval,
and $30m for the end payor class settlement. During 2023, surety
bond holders returned $19m of collateral
(including accrued interest) held within other non-current
assets in relation to intellectual property related matters.
Long-term prepaid expenses primarily relate to payments for
contract manufacturing capacity.
10. FINANCIAL LIABILITIES - BORROWINGS
The table below sets out the
current and non-current portion obligation of the Group's term
loan:
|
Dec 31,
2023
|
Dec
31,
2022
|
Term loan
|
$m
|
$m
|
Term loan - current
|
(3)
|
(3)
|
Term loan - non-current
|
(236)
|
(237)
|
Total term loan
|
(239)
|
(240)
|
*Total term loan borrowings reflect
the principal amount drawn including debt issuance costs of $5m (FY 2022:
$6m).
At December 31, 2023, the term loan fair value was
approximately 100% (FY 2022: 98%) of par value. The key terms of the term loan in
effect at December 31, 2023, are as
follows:
|
|
Currency
|
Nominal interest
margin
|
Maturity
|
Required annual
repayments
|
Minimum
liquidity
|
Term Loan facility
|
|
USD
|
SOFR +
0.26% + 5.25%
|
2026
|
1%
|
Larger of
$100m or 50% of Loan Balance
|
The term loan amounting to
$244m (FY 2022:
$246m) is secured against the assets of
certain subsidiaries of the Group in the form of guarantees issued
by respective subsidiaries.
• Nominal interest margin is
calculated as USD SOFR plus 26 bps, subject
to a floor of 0.75%, plus a credit spread
adjustment of 5.25%.
• There are no revolving credit commitments.
11. PROVISIONS AND OTHER LIABILITIES
Provisions
|
|
|
Total
|
|
|
Total
|
|
Current
|
Non-Current
|
Dec 31,
2023
|
Current
|
Non-Current
|
Dec 31,
2022
|
Current and non-current provisions
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
Multidistrict antitrust class and
state claims
|
(385)
|
-
|
(385)
|
(290)
|
-
|
(290)
|
Onerous contracts
|
(18)
|
(10)
|
(28)
|
-
|
-
|
-
|
False claims allegations
|
(4)
|
-
|
(4)
|
(5)
|
-
|
(5)
|
Intellectual property related
matters
|
-
|
-
|
-
|
-
|
(3)
|
(3)
|
Other
|
-
|
(2)
|
(2)
|
(8)
|
(2)
|
(10)
|
Total provisions
|
(407)
|
(12)
|
(419)
|
(303)
|
(5)
|
(308)
|
Multidistrict antitrust class and state
claims
During 2023, settlement agreements
were entered into with all three classes of plaintiffs in the
multidistrict antitrust claims, resulting in the recognition of an
additional $228m charge to the provision. The State settlement
amount of $103m was paid in June 2023 and the $30m end payor
settlement amount was transferred to an escrow account and is
reflected in other liabilities. The current provision of
$385m at December 31, 2023 (December 31,
2022: $290m) reflects the amount that
Indivior is required to pay in the settlement agreements with the
direct purchaser class. The direct purchaser settlement has been
preliminarily approved by the Court and remains subject to a notice
period and final approval by the Court. A fairness hearing
concerning the direct purchaser settlement is set for February 27,
2024. Refer to Note 13, Antitrust Litigation and Consumer
Protection for additional details.
Onerous contracts
In November 2023, through an
acquisition of a business consisting of a manufacturing facility,
workforce, and supply contracts (refer to Note 17), the Group
assumed onerous contracts and carries a provision of $28m at
December 31, 2023. The facility continues to manufacture products
for customers based on the terms of contracts that existed
pre-acquisition and the expected costs to fulfill these contracts
are in excess of the economic benefits expected to be received. The
minimum performance periods in the onerous contracts end on various
dates through September 2025 and the provision is recorded at its
discounted value, using a market rate at the time of the
transaction determined to be 7.6%.
False Claims Act allegations
The Group carries a
provision of $4m (FY 2022: $5m) pertaining to all outstanding False
Claims Act allegations as discussed in Note 13. These matters are
expected to be settled within the next 12 months.
Intellectual property related matters
The intellectual property related
provision was increased by $12m during 2023 and the resulting
provision of $15m was utilized in Q4 following settlement of these
matters.
Other
Other provisions of $2m (FY 2022: $10m) represent retirement benefit costs which are not
expected to be settled within one year. The decrease in the
provision reflects the settlement of general legal matters during
2023.
Other liabilities
|
|
|
Total
|
|
|
Total
|
|
Current
|
Non-Current
|
Dec 31,
2023
|
Current
|
Non-Current
|
Dec 31,
2022
|
Current and non-current other liabilities
|
$m
|
$m
|
$m
|
$m
|
$m
|
$m
|
DOJ resolution
|
(53)
|
(344)
|
(397)
|
(52)
|
(392)
|
(444)
|
Multidistrict antitrust class and
state claims
|
(30)
|
-
|
(30)
|
-
|
-
|
-
|
Intellectual property related
matters
|
(11)
|
-
|
(11)
|
(10)
|
(11)
|
(21)
|
RB indemnity settlement
|
(8)
|
(15)
|
(23)
|
(8)
|
(22)
|
(30)
|
Share repurchase
|
(23)
|
-
|
(23)
|
(9)
|
-
|
(9)
|
Other
|
-
|
(8)
|
(8)
|
-
|
(3)
|
(3)
|
Total other liabilities
|
(125)
|
(367)
|
(492)
|
(79)
|
(428)
|
(507)
|
DOJ Resolution Agreement
In July 2020, the Group settled
criminal and civil liability with the United States Department of
Justice (DOJ), the U.S. Federal Trade Commission (FTC), and U.S.
state attorneys general. Pursuant to the resolution agreement,
aggregate payments of $210m (including
interest) have been made through December 31, 2023. An additional
payment of $53m was paid in January 2024
and three annual installments of $50m plus
interest will be due every January 15 from 2025 to 2027, with the final installment of $200m due
in December 2027. The Group has the option to
prepay. Interest accrues at 1.25% on
certain portions of the resolution and will be paid with the annual
installment payments. For non-interest-bearing portions, the
liability has been recorded at the net present value based on
timing of the estimated payments using a discount rate equal to the
interest rate on the interest-bearing portions. In FY 2023, the Group recorded
interest expense totaling $6m (FY 2022: $6m).
Multidistrict antitrust class and state
claims
As noted above, the multidistrict
antitrust claims were resolved during 2023 through settlement
agreements entered into with three classes of plaintiffs. The
current liability of $30m at December 31, 2023 reflects the
settlement amount payable to the end payor class. An equivalent
amount is held in an escrow account (refer to Note 9).
IP
related matters
Other liabilities for intellectual
property related matters of $11m (FY
2022: $21m) relate
to the settlement of litigation with DRL in June 2022. Under the
settlement agreement, the Group has made payments to DRL of
$60m to date, including $10m in 2023, with
a final payment due in 2024. This liability has been recorded at
net present value, using a market interest rate at the time of the
settlement determined to be 4.50%, considering the timing of
payments and other factors. In FY
2023, the Group recorded $nil of finance expense (FY
2022: $1m) for time
value of money on the liability.
RB
indemnity settlement
Under the RB indemnity settlement,
the Group has paid $26m of the $50m
settlement agreement through December 31, 2023. An additional $8m
was paid in January 2024, with remaining annual installment
payments of $8m due in January 2025 and
2026. The Group carries a liability totaling $23m (FY 2022: $30m) related to this settlement. This liability has
been recorded at the net present value, using a market interest
rate at the time of the settlement determined to be 3.75%,
considering the timing of payments and other factors. In YTD
2023, the Group recorded $1m of finance expense (YTD 2022: $nil) for time value of
money on the liability.
Share repurchase
In November 2023, the Group
commenced a share repurchase program of $100m. As of December 31, 2023, the liability of $23m represents the amount to be spent under the program
through February 23, 2024, after which date the Company has the
ability to modify or terminate the program. As of December 31,
2022, the current liability of $9m represented the amount to be
spent under a 2022 share repurchase program through February 16,
2023.
Other
Other liabilities primarily
represent employee related liabilities which are non-current as of
December 31, 2023.
12. CONTINGENT LIABILITIES
The Group has assessed certain
legal and other matters to be not probable based upon current facts
and circumstances, including any potential impact the DOJ
resolution could have on these matters. Where liabilities related
to these matters are determined to be possible, they represent
contingent liabilities. Except for those matters discussed in Note
13 under "Multidistrict antitrust class and state claims" and
"False Claims Act allegations", for which liabilities or provisions
have been recognized, Note 13 sets out the details for legal and
other disputes for which the Group has assessed as contingent
liabilities. Where the Group believes that it is possible to
reasonably estimate a range for the contingent liability this has
been disclosed.
13. LEGAL PROCEEDINGS
There are certain ongoing legal
proceedings or threats of legal proceedings in which the Group is a
party, but in which the Group believes the possibility of an
adverse impact is remote and they are not discussed in this
Note.
Antitrust Litigation and Consumer Protection
Multidistrict Antitrust Class and State
Claims
• Indivior Inc. has entered into settlement agreements to
resolve all claims of all plaintiff groups in the company's
previously-disclosed antitrust multidistrict litigation ("Antitrust
MDL"). In the Antitrust MDL, civil antitrust claims had been filed
by three classes of Plaintiffs -namely, (i) 41
states and the District of Columbia (the "States"), (ii) end
payors, and (iii) direct purchasers (collectively, the
"Plaintiffs"). The Plaintiffs generally alleged, among other
things, that Reckitt Benckiser Pharmaceuticals Inc. ("RBPI," now
known as Indivior Inc.) violated U.S. federal and/or state
antitrust and consumer protection laws in attempting to delay
generic entry of alternatives to SUBOXONE Tablets. Plaintiffs
further alleged that RBPI unlawfully acted to lower the market
share of these products.
• After
engaging in informal settlement discussions and formal mediation,
Indivior Inc. reached a settlement with the States for $103m on
June 1, 2023. Indivior Inc. entered into a settlement agreement
with the end payor class for $30m on August 14, 2023 and received
final court approval on December 5, 2023. On October 22, 2023,
Indivior Inc. entered into a settlement agreement with the
remaining direct purchaser class for $385m. The direct purchaser
settlement has been preliminarily approved by the Court and remains
subject to a notice period and final approval by the Court. A
fairness hearing concerning the direct purchaser settlement is set
for February 27, 2024.
Other Antitrust and Consumer Protection
Claims
• In
2013, RBPI (now known as Indivior Inc.) received notice that it and
other companies were defendants in a lawsuit initiated by writ in
the Philadelphia County (Pennsylvania) Court of Common Pleas. See
Carefirst of Maryland, Inc. et
al. v. Reckitt Benckiser Inc., et al., Case. No. 2875,
December Term 2013. The plaintiffs included approximately 79
entities, most of which appeared to be insurance companies or other
providers of health benefits plans. The Carefirst plaintiffs' claims were
resolved in connection with final approval of the end payor
settlement in the Antitrust MDL, and the Carefirst action accordingly was
dismissed on February 14, 2024.
•
Humana, Inc. filed a Complaint in state court in Kentucky on August
20, 2021 with substantially the same claims as were raised in the
Antitrust MDL. See Humana Inc. v.
Indivior Inc., No. 21-CI-004833 (Ky. Cir. Ct.) (Jefferson
Cnty). The court lifted a stay on October 30, 2023. Centene
Corporation, Wellcare Healthcare Plans, Inc., New York Quality
Healthcare Corp. (d/b/a Fidelis Care), and Health Net, LLC filed a
complaint in the Circuit Court for the County of Roanoke, Virginia
alleging similar claims on January 13, 2023. See Centene Corp. v. Indivior Inc.,
No. CL23000054-00 (Va. Cir. Ct.) (Roanoke Cnty). Indivior demurred
to the complaint and asserted pleas in bar in early February
2024.
•
Cases filed by (1) Blue Cross and Blue Shield of Massachusetts,
Inc., Blue Cross and Blue Shield of Massachusetts HMO Blue, Inc.,
(2) Health Care Service Corp., (3) Blue Cross and Blue Shield of
Florida, Inc., Health Options, Inc., (4) BCBSM, Inc. (d/b/a Blue
Cross and Blue Shield of Minnesota) and HMO Minnesota (d/b/a Blue
Plus), (5) Molina Healthcare, Inc., and (6) Aetna Inc. were filed
in the Circuit Court for the County of Roanoke, Virginia.
See Health Care Services Corp. v.
Indivior Inc., No. CL20-1474 (Lead Case) (Va. Cir. Ct.)
(Roanoke Cnty). In July 2023, Indivior Inc.
and BCBSM, Inc. and HMO Minnesota agreed to mutual releases and
settlement. The remaining plaintiffs asserted
claims under federal and state RICO statutes, state antitrust
statutes, state statutes prohibiting unfair and deceptive
practices, state statutes prohibiting insurance fraud, and common
law fraud, negligent misrepresentation, and unjust enrichment. The
Group filed demurrers, which the court sustained in part and
overruled in part. Separately, Indivior Inc. filed counterclaims
against several plaintiffs alleging violations of certain insurance
fraud statutes. The plaintiffs demurred. The court overruled HCSC's
demurrer but sustained the demurrers of the remaining plaintiffs
named in Indivior Inc.'s counterclaims. A jury trial on the Group's
pleas in bar to the remaining plaintiffs' fraud claims was held on
October 30 - November 3, 2023. The jury rendered a verdict finding
that the plaintiffs' fraud claims are not barred by the statute of
limitations. A jury trial on the merits has been set for July 15,
2024 - August 8, 2024.
• The
Group is still in the process of evaluating the claims, believes it
has meritorious defenses, and intends to defend itself. No estimate
of the range of potential loss can be made at
this time.
Civil Opioid Litigation
• The
Group has been named as a defendant in more than 400 civil lawsuits
alleging that manufacturers, distributors, and retailers of opioids
engaged in a longstanding practice to market opioids as safe and
effective for the treatment of long-term chronic pain to increase
the market for opioids and their own market shares for opioids, or
alleging individual personal injury claims. Most of these cases
have been consolidated and are pending in a federal multidistrict
litigation ("the Opioid MDL") in the U.S. District Court for the
Northern District of Ohio. See In
re National Prescription Opiate Litigation, MDL No. 2804
(N.D. Ohio). Nearly two-thirds of the cases in the Opioid MDL were
filed by cities and counties, while nearly one-third of the cases
were filed by individual plaintiffs, most of whom assert claims
relating to neonatal abstinence syndrome ("NAS"). Litigation
against the Group in the Opioid MDL is stayed. Motions to remand
have been denied or withdrawn in more than 50 cases to which the
Group is a party (among numerous other defendants). Motions to
remand remain pending in additional cases to which the Group is a
party.
• The
court in the Opioid MDL has indicated that it does not expect to
set additional bellwether trials involving county and municipality
plaintiffs, provided that the parties are progressing on a
settlement track. By order dated October 25, 2023, the Court
selected four third-party payor (TPP) cases for bellwether trials.
Indivior is not named as a defendant in any of the four TPP cases
selected for bellwether trials.
• The
court in the Opioid MDL has indicated that it does not intend to
set additional bellwether trials for Tier 2 and Tier 3 manufacturer
and distributor defendants, provided that those defendants remain
actively engaged in mediation. The plaintiffs' executive committee
indicated that it may seek leave to amend complaints to name
additional defendants based on ARCOS data concerning opioid
products. The court held a status conference on February 14, 2024,
but did not rule on whether such amendment will be
permitted.
•
Regarding civil opioid cases not in the Opioid MDL:
â—¦ In 2017, Indivior Inc.
was named as one of numerous defendants in International Brotherhood of Electrical
Workers Local 728 Family Healthcare Plan v. Allergan, PLC et
al., Case ID: 190303872 (C.P. Phila. Cnty). That case was
consolidated with Lead Case No. 2017-008095 in Delaware County and
stayed. The court held a hearing on September 29, 2023 regarding
the status of settlement discussions and other issues in various
groups of cases in the consolidated action. On December 29, 2023,
the court issued an order remanding all third-party payor cases,
including the case involving Indivior, back to the Philadelphia
Court of Common Pleas. By agreement of the parties, objections to
the complaints are due on February 26, 2024, or one week after the
remand order is docketed, whichever is later.
â—¦ Indivior also was named as one of numerous defendants in
various other federal and state court cases that are not in the
Opioid MDL and were brought by municipalities. These cases include,
for example, 35 actions filed in New York state court that were
removed to federal court, as well as cases filed in federal
district courts sitting in Alabama, Florida, and Georgia. The
plaintiffs filed motions to remand the New York cases, which remain
pending. The plaintiffs in the case filed in the Northern District
of Alabama have voluntarily dismissed their complaint, subject to
certain tolling agreements. The various other federal actions
currently are stayed, and Indivior is not yet required to
substantively respond to the complaints.
â—¦ Indivior Inc. was named as a defendant in five individual
complaints filed in West Virginia state court that were transferred
to West Virginia's Mass Litigation Panel. See In re Opioid
Litigation, No. 22-C-9000 NAS (W.V.
Kanawha Cnty. Cir. Ct.) ("WV MLP Action"). All five of Indivior
Inc.'s cases in the WV MLP Action involved claims related to NAS.
Indivior Inc. moved to dismiss all five complaints on January 30, 2023. By order dated April 17, 2023, the court
granted Indivior's motions to dismiss. The plaintiffs filed a
notice of appeal on June 30, 2023. Appellate briefing in the cases
involving Indivior has been stayed.
•
Given the status and preliminary stage of litigation in both the
Opioid MDL and the separate federal and state court actions,
no estimate of possible loss in the opioid litigation can be
made at this time.
False Claims Act Allegations
• In
August 2018, the United States District Court for the Western
District of Virginia unsealed a declined qui tam complaint alleging causes of
action under the Federal and state False Claims Acts against
certain entities within the Group predicated on best price issues
and claims of retaliation. See United States ex rel. Miller v. Reckitt
Benckiser Group PLC et al., Case No. 1:15-cv-00017 (W.D.
Va.). The suit also seeks reasonable attorneys' fees and costs. The
Group filed a Motion to Dismiss in June 2021, which was granted in
part and denied in part on October 17, 2023. The relator filed a
sixth amended complaint against only Indivior Inc. on December 7,
2023. Indivior's deadline to respond to the sixth amended complaint
is March 18, 2024.
• In
May 2018, Indivior Inc. received an informal request from the
United States Attorney's Office ("USAO") for the Southern District
of New York, seeking records relating to the SUBOXONE Film
manufacturing process. The Group provided the USAO certain
information regarding allegations that the government received
regarding SUBOXONE Film. There has been no communication regarding
this matter with the USAO since 2022.
U.K. Shareholder Claims
• On
September 21, 2022, certain shareholders issued representative and
multiparty claims against Indivior PLC in the High Court of Justice
for the Business and Property Courts of England and Wales, King's
Bench Division. On January 16, 2023, the representative served its
Particular of Claims setting forth in more detail the claims
against the Group, while the same law firm that represents the
representative also sent its draft Particular of Claims for the
multiparty action. The claims made in both the representative and
multiparty actions generally allege that Indivior PLC violated the
U.K. Financial Services and Markets Act 2000 ("FSMA 2000") by
making false or misleading statements or material omissions in
public disclosures, including the 2014 Demerger Prospectus,
regarding an alleged product-hopping scheme regarding the switch
from SUBOXONE Tablets to SUBOXONE Film. Indivior PLC filed an
application to strike out the representative action. On December 5,
2023, the court handed down a judgment allowing the Group's
application to strike out the representative action. The court
subsequently awarded certain costs to the Group. On January 23,
2024, the claimants requested permission to appeal the decision to
the court of appeals.
• The
Group has begun its evaluation of the claims, believes it has
meritorious defenses, and intends to vigorously defend itself.
Given the status and preliminary stage of the litigation,
no estimate of possible loss can be made at this
time.
Tooth Damage Allegations
• The
Group has been named as a defendant in more than 30 lawsuits that
have been consolidated into a multidistrict litigation in the
Northern District of Ohio. See In
Re Suboxone (Buprenorphine/Naloxone) Film Products Liability
Litigation, MDL No. 3092 (N.D. Oh.). The plaintiffs
generally allege that the Group failed to properly warn physicians
of the risk of dental injury, and further allege that SUBOXONE
products were defectively designed. The plaintiffs generally seek
compensatory damages, as well as punitive damages and attorneys'
fees and costs. On February 2, 2024, the Judicial Panel on
Multidistrict Litigation entered an order establishing
multidistrict litigation proceedings in the United States District
Court for the Northern District of Ohio. Product liability cases
such as these typically involve issues relating to medical
causation, label warnings and reliance on those warnings,
scientific evidence and findings, actual, provable injury and other
matters. These cases are in their preliminary stages. The Group is
evaluating the claims and its defenses, believes it has meritorious
defenses, and intends to defend itself. No estimate of the range of
potential loss can be made at this time. These lawsuits follow a
June 2022 required revision to the Prescribing Information and
Patient Medication Guide about dental problems reported in
connection with buprenorphine medicines dissolved in the mouth to
treat opioid use disorder. This revision was required by the FDA of
all manufacturers of these products.
14. TRADE AND OTHER PAYABLES
|
|
Dec 31,
2023
|
Dec
31,
2022
|
|
|
$m
|
$m
|
Accrual for rebates, discounts and
returns
|
|
(507)
|
(428)
|
Accounts payable
|
|
(65)
|
(36)
|
Accruals and other
payables
|
|
(152)
|
(138)
|
Other tax and social security
payable
|
|
(19)
|
(15)
|
Total trade and other
payables
|
|
(743)
|
(617)
|
15. SHARE CAPITAL
|
|
Equity ordinary shares
(thousands)
|
Nominal value paid per
share
|
Aggregate nominal value
$m
|
Issued and fully paid
|
|
|
|
|
At
January 1, 2023
|
|
136,481
|
$0.50
|
68
|
Ordinary shares issued
|
|
1,942
|
$0.50
|
1
|
Shares repurchased and
cancelled
|
|
(1,897)
|
$0.50
|
(1)
|
At
December 31, 2023
|
|
136,526
|
|
68
|
|
|
Equity ordinary shares
(thousands)
|
Nominal value paid per
share
|
Aggregate nominal value
$m
|
Issued and fully paid
|
|
|
|
|
At January 1, 2022
|
|
702,440
|
$0.10
|
70
|
Ordinary shares issued
|
|
4,185
|
$0.10
|
1
|
Shares repurchased and
cancelled
|
|
(17,815)
|
$0.10
|
(2)
|
Share consolidation
|
|
(551,048)
|
|
|
Shares repurchased and cancelled
(post share consolidation)
|
|
(1,281)
|
$0.50
|
(1)
|
At December 31, 2022
|
|
136,481
|
|
68
|
Ordinary shares issued
During the period, 1,942k ordinary shares at
$0.50 each (FY
2022: 4,185k at
$0.10 each) were issued to satisfy
vesting/exercises under the Group's Long-Term Incentive Plan, the
Indivior U.K. Savings-Related Share Option Scheme, and the U.S.
Employee Stock Purchase Plan. In FY 2023,
net settlement of tax on employee equity awards was $22m (FY 2022: $10m).
Share consolidation
In October 2022, the Company
completed a share consolidation. Shareholders received 1 new
ordinary share with a nominal value of $0.50 each for every 5
previously existing ordinary shares which had a nominal value of
$0.10 each.
Shares repurchased and cancelled
On May 3, 2022, the Group commenced
a share repurchase program for an aggregate purchase price up to no
more than $100m or 39,699k of ordinary shares, (equivalent shares
post consolidation: 7,940k) which concluded on February 28, 2023.
Over the duration of the program, 17,559k of the
Company's ordinary shares at $0.10 per share (equivalent
shares post consolidation: 3,512k) and
1,765k at $0.50 per share were repurchased
and cancelled.
On November 17, 2023, the Group
commenced a share repurchase program for an aggregate purchase
price up to no more than $100m or 13,632k of ordinary shares and
ending no later than August 30, 2024. Under this program, 1,413k
ordinary shares were repurchased at $0.50 per share through
December 31, 2023.
During the period, the Group
repurchased and cancelled a total of 1,897k ordinary shares at
$0.50 per share for an aggregate nominal
value of $1m. In FY
2022, 17,815k
ordinary shares at $0.10 (equivalent shares post consolidation:
3,563k) were repurchased and cancelled for
an aggregate nominal value of $2m,
including 256k ordinary shares purchased as
part of the Group's share repurchase program executed in 2021 and
cancelled in January 2022. In FY
2022, subsequent to the share
consolidation, the Group repurchased and cancelled 1,281k ordinary shares for an aggregate nominal value
of $1m ($0.50 per share).
All ordinary shares repurchased
during the period under share repurchase programs were cancelled
(except for 68k shares that were cancelled
in January 2024) resulting in a transfer of the aggregate nominal
value to a capital redemption reserve. The total cost of the
purchases made under the share repurchase programs during the
period, including directly attributable transaction costs, was
$33m (FY
2022: $90m). A net
repurchase amount of $23m has been recorded
as a financial liability and reduction of retained earnings which
represents the amount to be spent under the program through
February 23, 2024, after which date the Company has the ability to
modify or terminate the program. Total purchases
under the share repurchase program will be made out of
distributable profits.
16. ACQUISITION OF OPIANT
On March 2, 2023, the Group acquired
100% of the share capital of Opiant, which at the time was a
publicly traded company in the United States, for upfront cash
consideration of $146m and an additional amount to be potentially
paid upon achievement of net sales milestones. Opiant was a
specialty pharmaceutical company focusing on developing drugs for
addictions and drug overdose. As a result of the acquisition, the
Group added OPVEE (nalmefene nasal spray),
formerly the pipeline product OPNT003, an opioid
overdose treatment well-suited to confront illicit synthetic
opioids like fentanyl, to its addiction science portfolio.
OPVEE was approved by the FDA in May 2023 and
launched in October 2023.
Management elected to apply the
optional concentration test under IFRS 3. For the acquisition of
Opiant, substantially all of the fair value of the gross assets
acquired was concentrated in the in-process research and
development associated with OPVEE. As substantially all of the fair
value of the gross assets acquired (excluding cash and cash
equivalents, deferred tax assets, and goodwill resulting from the
effects of deferred tax liabilities) were concentrated in a single
asset, the Group accounted for the transaction as an asset
acquisition. With the closing of this transaction, a relative fair
value approach was taken for allocating the purchase consideration
to the acquired assets and liabilities with no goodwill recognized.
The Group recorded an intangible asset associated with OPVEE
for $126m (refer to Note 7). The Group used a
multi-period excess earnings method, a form of the income approach,
to determine the fair value of the intangible
asset.
As part of the acquisition of
Opiant, the Group agreed to provide a maximum of $8.00 per share in
Contingent Value Rights (CVR) post-acquisition. The Group will pay
$2.00 per CVR for each of the following net revenue thresholds
achieved by OPNT003, during any period of four consecutive quarters
prior to the seventh anniversary of the U.S. commercial launch: (i)
$225m, (ii) $300m and (iii) $325m. The remaining (iv) $2.00 per CVR
would be paid if OPNT003 achieves net revenue of $250m during any
period of four consecutive quarters prior to the third anniversary
of the U.S. commercial launch. The potential undiscounted payout of
contingent consideration ranges from $nil to $68m based on the
achievement of the milestones. The Group accounts for contingent
consideration associated with asset acquisitions using a cost
accumulation model. No liabilities are initially recognized at the
date of acquisition. When an obligation associated with a variable
payment is no longer uncertain, it is capitalized as part of the
cost of the asset, as it represents a direct cost of the
acquisition.
An initial recognition exception
applies to the tax attributes acquired whereby only certain items
are recognized with the transaction, such as net operating loss
carryforwards, other tax carryforwards, and tax credits. Such
attributes totaled $9m, recorded as deferred tax assets.
The cash outflow for the acquisition
was $124m, net of cash acquired. Direct transaction costs of $10m
are included in this cash outflow and capitalized as a component of
the total cost of the asset acquisition. Of the $146m upfront
consideration, $2m represents acceleration of vesting of employee
share compensation and has been recognized as a post-combination
expense. As part of the acquisition, the Group assumed outstanding
debt of $10m which was settled and included as a cash outflow from
financing activities.
Additional acquisition-related costs
of $16m were incurred in YTD 2023 and included in selling, general,
and administrative expenses, primarily relating to severance,
acceleration of vesting of Opiant employee share compensation, and
short-term retention accruals.
The following table summarizes the
net assets acquired:
Net assets acquired
|
|
$m
|
Cash and cash equivalents
|
|
30
|
Inventories
|
|
3
|
Right-of-use assets
|
|
2
|
Intangible assets
|
|
126
|
Deferred tax assets
|
|
9
|
Other assets
|
|
6
|
Trade and other payables
|
|
(10)
|
Lease liabilities
|
|
(2)
|
Borrowings
|
|
(10)
|
Total net assets acquired
|
|
154
|
17. BUSINESS COMBINATION
On November 1, 2023, the Group
acquired an aseptic manufacturing facility (the "Facility") in the
United States for upfront consideration of $5m in cash and
assumption of certain contract manufacturing obligations. The
Facility will be further developed to secure the long-term
production and supply of SUBLOCADE and PERSERIS.
The acquisition has been accounted
for as a business combination using the acquisition method of
accounting in accordance with IFRS 3 Business Combinations. The assets
acquired and liabilities assumed were recorded at fair value, with
the excess of the purchase price over the fair value of the
identifiable assets and liabilities recognized as $5m of goodwill.
An onerous contract provision was recorded at fair value to reflect
the present value of the expected losses from assumed contractual
manufacturing obligations. Net operating losses attributable to
these contractual obligations will be recorded against the onerous
contract provision from the date of acquisition through fulfillment
of the contracts in late 2025.
For the period from November 1, 2023
through December 31, 2023, the Facility's contribution to the
Group's revenue and net loss were immaterial. Substantially all of
the Facility's costs were recorded against the onerous contract
provision.
Acquisition-related costs
The Group incurred
acquisition-related costs of $6m for
advisory, legal, and other professional fees. These costs have been
included in selling, general and administrative expenses in the
consolidated income statement.
Identifiable assets acquired and liabilities
assumed
The following table summarizes the
provisional fair value of assets acquired and liabilities assumed
at the date of acquisition:
Net assets acquired
|
|
$m
|
Property, plant and
equipment
|
|
28
|
Deferred tax assets
|
|
2
|
Trade and other payables
|
|
(1)
|
Provisions
|
|
(29)
|
Total net assets acquired
|
|
-
|
Goodwill
Goodwill arising from the
acquisition has been recognized as follows:
|
|
$m
|
Consideration
transferred
|
|
5
|
Fair value of net assets
acquired
|
|
-
|
Goodwill
|
|
5
|
The goodwill is primarily
attributable to Indivior-specific synergies relating to accelerated
in-sourcing of SUBLOCADE production and the skills and technical
talent of the Facility's workforce. None of the
goodwill recognized is expected to be deductible for tax
purposes.
As the acquisition was completed in
late 2023, the Group expects to finalize the purchase accounting as
soon as possible but no later than one year from the acquisition
date.
APPENDIX: ADJUSTED RESULTS
Exceptional items and other adjustments
Exceptional items and other
adjustments represent significant expenses or income that do not
reflect the Group's ongoing operations or the adjustment of which
may help with the comparison to prior periods. Exceptional items
and other adjustments are excluded from adjusted results consistent
with the internal reporting provided to management and the
Directors. Examples of such items could include income or
restructuring and related expenses from the reconfiguration of the
Group's activities and/or capital structure, amortization of
acquired intangible assets, impairment of current and non-current
assets, gains and losses from the sale of intangible assets,
certain costs arising as a result of significant and non-recurring
regulatory and litigation matters, and certain tax related
matters.
Adjusted results are not measures
defined by IFRS and are not a substitute for, or superior to,
reported results presented in accordance with IFRS. Adjusted
results as presented by the Group are not necessarily comparable to
similarly titled measures used by other companies. As a result,
these performance measures should not be considered in isolation
from, or as a substitute analysis for, the Group's reported results
presented in accordance with IFRS. Management performs a
quantitative and qualitative assessment to determine if an item
should be considered for adjustment. The table below sets out
exceptional items and other adjustments recorded in each
period:
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Exceptional items and other
adjustments within cost of sales
|
|
|
|
|
Amortization of acquired intangible
assets1
|
(3)
|
-
|
(8)
|
-
|
Total exceptional items and other
adjustments within cost of sales
|
(3)
|
-
|
(8)
|
-
|
|
|
|
|
|
Exceptional items and other
adjustments within SG&A
|
|
|
|
|
Legal
costs/provision2
|
-
|
(296)
|
(240)
|
(296)
|
Acquisition-related
costs3
|
(6)
|
-
|
(22)
|
-
|
U.S. listing
costs4
|
-
|
(2)
|
(6)
|
(6)
|
Total exceptional items and other
adjustments within SG&A
|
(6)
|
(298)
|
(268)
|
(302)
|
|
|
|
|
|
Exceptional items and other
adjustments within net other operating income
|
|
|
|
|
Income recognized in relation to a
supply agreement5
|
3
|
-
|
3
|
-
|
Insurance
reimbursement6
|
-
|
-
|
-
|
5
|
Total exceptional items and other
adjustments within net other operating income
|
3
|
-
|
3
|
5
|
|
|
|
|
|
Total exceptional items and other adjustments before
taxes
|
(6)
|
(298)
|
(273)
|
(297)
|
Tax on exceptional items and other
adjustments
|
2
|
58
|
63
|
57
|
Exceptional tax
items7
|
(3)
|
18
|
(11)
|
18
|
Total exceptional items and other
adjustments
|
(7)
|
(222)
|
(221)
|
(222)
|
1. With the
acquisition of Opiant and approval of OPVEE, the Group reported
adjusted cost of sales to exclude amortization of acquired
intangible assets on a prospective basis from Q2 2023. Prior period
adjusted results have not been restated as the impact is not
material.
2. In Q4
2022, the Group recognized a provision for
$290m related to certain multidistrict
antitrust class and state claims. In FY
2023, the Group increased this provision by
$228m. Refer to Note 13, Legal Proceedings,
for further details. Additionally, the Group increased a provision
for IP related matters by $12m in
FY 2023 and
recognized a provision of $6m to settle a
dispute over reimbursement of legal costs with a supplier in
FY 2022.
3. In FY 2023 and Q4 2023, the Group
recognized $6m of exceptional costs related
to the acquisition of a business consisting of a manufacturing
facility, workforce, and supply contracts (refer to Note 17). The
Group also recognized $16m of exceptional
costs related to the acquisition of Opiant in FY 2023 (refer to Note
16).
4. In FY 2023, the Group recognized
$6m of exceptional costs in preparation for
an additional listing of Indivior shares on a major U.S. exchange
(FY 2022 and Q4
2022: $6m and $2m).
5. In FY 2023 and Q4 2023, the Group
recognized $3m of exceptional income
related to a supply agreement where no further obligations are
outstanding for the Group to deliver.
6. The Group
recognized $5m of exceptional income in
FY 2022 related to
the proceeds received from a Directors' & Officers' insurance
reimbursement claim.
7. Exceptional tax items are comprised of $5m write off of
deferred tax assets and tax expense due to limitation on the
deduction of executive compensation by U.S. publicly traded
companies, $3m change in estimate as to the tax benefit of legal
provisions booked in the prior year, and $3m accrual for
adjustments to Opiant predecessor period taxes.
Adjusted results
Management provides certain
adjusted financial measures which may be useful to investors. These
adjusted financial measures exclude items which do not reflect the
Group's day-to-day operations and therefore may help with
comparisons to prior periods or among companies. Management may use
these financial measures to better understand trends in the
business.
The tables below present the
adjustments between reported and adjusted results for both
Q4/FY 2023 and Q4/FY 2022.
Reconciliation of gross profit to adjusted gross
profit
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Gross profit
|
241
|
198
|
907
|
742
|
Exceptional items and other
adjustments in cost of sales
|
3
|
-
|
8
|
-
|
Adjusted gross profit
|
244
|
198
|
915
|
742
|
We define adjusted gross margin as
adjusted gross profit divided by net revenue.
Reconciliation of selling, general and administrative expenses
to adjusted selling, general and administrative
expenses
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Selling, general and administrative expenses
|
(157)
|
(431)
|
(811)
|
(763)
|
Exceptional items and other
adjustments in selling, general and administrative
expenses
|
6
|
298
|
268
|
302
|
Adjusted selling, general and administrative
expenses
|
(151)
|
(133)
|
(543)
|
(461)
|
Reconciliation of operating profit/(loss) to adjusted
operating profit
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Operating profit/(loss)
|
60
|
(258)
|
(4)
|
(85)
|
Exceptional items and other
adjustments in cost of sales
|
3
|
-
|
8
|
-
|
Exceptional items and other
adjustments in selling, general and administrative
expenses
|
6
|
298
|
268
|
302
|
Exceptional items and other
adjustments in net other operating income
|
(3)
|
-
|
(3)
|
(5)
|
Adjusted operating profit
|
66
|
40
|
269
|
212
|
Reconciliation of profit/(loss) before taxation to adjusted
profit before taxation
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Profit/(loss) before taxation
|
61
|
(256)
|
1
|
(95)
|
Exceptional items and other
adjustments in cost of sales
|
3
|
-
|
8
|
-
|
Exceptional items and other
adjustments in selling, general and administrative
expenses
|
6
|
298
|
268
|
302
|
Exceptional items and other
adjustments in net other operating income
|
(3)
|
-
|
(3)
|
(5)
|
Adjusted profit before taxation
|
67
|
42
|
274
|
202
|
Reconciliation of tax (expense)/benefit to adjusted tax
expense
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Tax
(expense)/benefit
|
(7)
|
73
|
1
|
42
|
Tax on exceptional items and other
adjustments
|
(2)
|
(58)
|
(63)
|
(57)
|
Exceptional tax items
|
3
|
(18)
|
11
|
(18)
|
Adjusted tax expense
|
(6)
|
(3)
|
(51)
|
(33)
|
Reconciliation of net income/(loss) to adjusted net
income
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
$m
|
$m
|
$m
|
$m
|
Net
income/(loss)
|
54
|
(183)
|
2
|
(53)
|
Exceptional items and other
adjustments in cost of sales
|
3
|
-
|
8
|
-
|
Exceptional items and other
adjustments in selling, general and administrative
expenses
|
6
|
298
|
268
|
302
|
Exceptional items and other
adjustments in net other operating income
|
(3)
|
-
|
(3)
|
(5)
|
Tax on exceptional items and other
adjustments
|
(2)
|
(58)
|
(63)
|
(57)
|
Exceptional tax items
|
3
|
(18)
|
11
|
(18)
|
Adjusted net income
|
61
|
39
|
223
|
169
|
Adjusted diluted earnings per share
Management believes that diluted
earnings/(loss) per share, adjusted for the impact of exceptional
items and other adjustments after the appropriate tax amount, may
provide meaningful information on underlying trends to shareholders
in respect of earnings per ordinary share. A reconciliation of net
income/(loss) to adjusted net income is included above.
Weighted average shares used in
computing diluted earnings/(loss) per share is reconciled to
weighted average shares used in computing adjusted diluted earnings
per share below:
|
Q4
2023
|
Q4
2022
|
FY
2023
|
FY
2022
|
For the three and twelve months ended December
31
|
thousands
|
thousands
|
thousands
|
thousands
|
Weighted average shares used in
computing diluted earnings/(loss) per share
|
141,950
|
136,784
|
141,800
|
139,012
|
Potentially dilutive share
excluded, because effect was anti-dilutive
|
-
|
7,164
|
-
|
6,605
|
Weighted average shares used in
computing adjusted diluted earnings per share
|
141,950
|
143,948
|
141,800
|
145,617
|