Ladies and gentlemen, welcome to the PolyPeptide Full Year 2023 Results Presentation and Business Update Conference Call and live webcast. I'm Vicky, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions or comments in writing via the relevant field. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Michael Stäheli, Head of Investor Relations and Corporate Communications at PolyPeptide Group. Please go ahead, sir.
Thank you, Vicky, and good morning, everybody. Thank you for joining our 2023 earnings call and your interest in PolyPeptide. Before we start, I draw your attention to our usual disclaimer on slide number two. I'm joined here by Juan José Gonzalez, our CEO, and Marc Augustin, our CFO. Juan José and Marc will go through the presentation, and after that, they will answer your questions. You will be able to ask your questions over the phone or in writing through the chat function. We planned this call to run for about 45-60 minutes, so please limit the number of your questions so that everybody has a chance to ask. With the short introduction, I hand over to Juan José. Please.
Thank you, Michael, and warm welcome to everyone. I'm going to spend a few minutes talking about the strategy for the company and the progress in 2023, and then Marc will talk about the financial results and guidance for 2024. And as Michael said, then we'll open for a Q&A. So when we talk about PolyPeptide, we talk about the transformation. And let me just give you a little bit more color in terms of what we mean by that. We are basically going from a lab scale CDMO to an industrial scale CDMO. And this transformation is underway. And if you look at our results in 2023, you can see some of the highlights there. There are four main takeaways when you look at the progress of PolyPeptide last year. Number one, we are well positioned in a very attractive market.
Our multi-site manufacturing and development network, together with our rich pipeline, position us very well for the growth coming in front of us. Number two, the operational improvements are taking shape in the second half of the year. We achieved record revenue growth in the second half versus the first half of the year, and we also were able to improve our profitability and cash flow. I will talk in a little bit more detail regarding where we are in our operational improvement journey. The third point is that we see, on the back of the rapid growth of GLP-1, a rapid portfolio shift. We have growth across many therapeutic areas, but our mix is shifting towards metabolic and large pharmaceutical customers. Finally, we have been successful in advancing our commercial agenda.
Three new large agreements concluded in 2023, and together with the agreement previously announced in December 2022, these four agreements have the potential to double the company revenues. This is something that we are going to expand at the first half of 2024 earnings call when we provide our mid-term outlook. Now, let's spend a couple of minutes talking about the peptide market. And there has been, I would say, an incredible transformation also of the peptide market. It's becoming one of the most attractive CDMO markets. We see a broad development pipeline. There are about 1,000 peptide drug projects, 314 clinical development. There are robust outsourcing trends. Customers continue to focus on their core competencies. The molecular entities are becoming more and more complex, so customers need more and more the expertise of CDMOs specialized in peptides. And of course, there are growing volume needs, mainly driven by GLP-1.
If you look at 2023, it actually reflects everything we're talking regarding how dynamic this market is. There were six FDA approvals, four new chemical entities, and two product expansions. There has also been robust GLP-1 clinical results. The most important thing is that these clinical results not only show the benefits in terms of weight reduction, but also the benefits in terms of comorbidity, whether it is cardiovascular or liver disease. Finally, we are seeing accelerated investments by large pharma. Before, most of the early-stage development activity was done by biotech, but actually, you see now large pharma building dedicated R&D peptide organizations, and now you are seeing several development programs coming from large pharma. We think that is going to be very healthy for the development of the peptide market. Within this peptide market, let's talk about how PolyPeptide is positioned.
We consider PolyPeptide very well positioned with some very clear competitive advantages. First of all, PolyPeptide has over 70 years of track record manufacturing peptides. We actually have manufactured over 1,000 peptides. Today, we manufacture one-third of all commercially available peptides. We have been able to achieve this through our multi-site development and manufacturing network that gives us significant customer proximity. Today, PolyPeptide is well known for its development expertise. We have cutting-edge process development capabilities. So if a customer has a complex molecular entity that requires deep peptide expertise, they tend to partner with PolyPeptide. We actually have seen that in terms of the development of our pipeline over the years. Now, let's talk about our operations improvement plan. This is something which is very important as a priority for the company over the next three years.
I mean, PolyPeptide started an aggressive expansion in the midst of significant market volatility between COVID, supply chain disruptions, trying to scale up across multiple sites with programs that were more and more complex. The company was not well prepared to achieve something like that. And we saw that in the performance in 2022, and we certainly saw that during the first half of 2023. So this operational improvement program is very important because at the core is what will ensure that our growth translates into higher profitability and cash flow. And we are basically focusing on meeting high customer demand efficiently. We are focusing on process optimization, technical proficiency, what we talk about, hiring the right profile, training, deploying. And we are also doing organizational changes. We are basically bringing to the company CDMO talent with deep industrial expertise.
In the second half of the year, we are starting to see the progress on this agenda. If you look at our metrics in terms of quality conformity, schedule adherence, speed of batch release, OTIF, we are actually improving month by month. Now, we said that this agenda will last until the end of 2024, and we believe we are on track to meet our goals by then. It's a challenging agenda because the company has a high-growth nature, and we are going to be scaling up over 30 programs, for example, in 2024. But it's 100% under our control. We know exactly what we need to do, and it's just important to make sure that we remain focused on these operational improvements. Now, we will not only focus on improving our operations. In parallel, we will continue to do investment projects.
Last year, we completed several downstream projects across our key sites. In terms of the construction for the large SPPS infrastructure, our 1,600-liter, that was completed at the end of 2023, the validation is ongoing, and we expect the ramp-up to start during the second half of 2024. We initially were planning to finish it around mid-H1, but now we believe it's going to be during the second half of the year. Now, we have been producing this product over the last two years, so we know exactly what we need to do, but of course, we need to do it at a larger scale. Here, the most important thing is that we finish the year with this ramp-up and operating as we are expecting. In parallel, we are also driving our innovation. This is very important.
We believe that we should not only improve our operations, not only expand our capacity, but also upgrade the way chemical synthesis is being done. We have two priorities. One is integrating green chemistry efforts, and the second one is increasing the output, especially in our upstream process. We have some proprietary technology that I will talk in a minute regarding this. Now, why don't we talk about our growth performance in 2022? Basically, what we have seen is a strong acceleration in the second half of the year. First of all, on a full-year basis, we had a guidance of mid to high single digits last year, and we ended up growing at 14%, which was 18% at constant currency rates. We were able to fully phase out the COVID business.
Excluding COVID, the growth of the company was actually 37%, and just give you a sense in terms of the strong underlying growth of the company. Then in the second half of the year, we saw an acceleration. Excluding COVID, during the first half of the year, we grew at 29%, and in the second half of the year, we grew 42%. One of the reasons why we were able to grow this fast was our operational improvement agenda that allowed us to release and invoice batches faster than what we were expecting. Now, behind this strong growth is our pipeline. And the main highlight in terms of our pipeline is that phase three projects are advancing towards commercialization.
What you have here is a table with our pipeline in 2022 and our commercial projects, and then our pipeline in 2023, and then the number of commercial projects. There are two main highlights. Number one, in the case of early-stage pipeline, we did see, especially in the second half of the year, the impact of the limited funding climate. In the later stage, we actually see the benefit and progress of our pipeline, with the number of phase two projects increasing and the number of our commercial projects also increasing. So we basically have been successful in terms of continuing to support our customers in projects that move from phase three into commercialization. Now, just to give you a sense in terms of how rich our phase three pipeline is, we always refer to projects, but there are projects that have multiple peptides.
These 29 projects, which is about twice the number of projects that a key competitor has, equates to 55 peptides. I refer in terms of how many peptides we have in the entire market, and that just gives you a sense in terms of how we over-index in terms of the number of phase three projects. Of course, as our pipeline moves from phase to phase, the impact of phase three and commercial projects for our revenues will continue to increase. In 2023, it's around 70%. Now, we can see the benefit of the increase in the number of commercial projects in our revenue performance by business area. What you have here on the left-hand side is the revenue by business area for 2022 and 2023. A couple of things. One is our contract manufacturing business is the fastest-growing business segment, growing at 53%.
In 2023, excluding COVID, it already accounts for 42% of our revenues, when in 2022, it was only 37%. More importantly, we see very positive customer momentum. We are able to secure prepayments to increase our capacity. As I mentioned before, we signed three new large agreements, and this is a combination between GLP-1 agreements and non-GLP-1 agreements, which is important for us. We want to make sure that we are very well positioned towards GLP-1, but that we also have a strong position across other exciting therapeutic areas like oncology or rare diseases. Now, with the agreement that we announced at the end of December 2022, with these three agreements, just these four agreements, we'll double PolyPeptide revenues.
This is something, again, we will discuss in more detail when we provide our mid-term outlook, but it just gives you a sense in terms of the strong growth profile of the company because outside of these four agreements, we have the whole pipeline also coming in and moving into commercialization. Now, if we talk about our portfolio, what we see is a positive impact from the exposure in GLP-1. On the left-hand side, you have the revenue by therapeutic area, and you can see how metabolics increased its share of revenue from 27% to 39%. On the right-hand side, you have the revenue by customer type, where large pharma increased its share of revenue from 42% to 58%. We expect, as we move forward, that metabolics and large pharma will continue to increase its share of the overall business.
Now, let me just finish by talking about innovation. Again, our objective is to make sure that as we move forward, we also continue to advance the peptide manufacturing technology. We have two priorities. One is green chemistry, where we actually have proprietary technology to reduce the amount of relative solvent consumption. So for example, last year, we deployed this technology, and we were able to reduce it by 23.5%. We also have projects that are using green solvents. So 12.5% of all new development projects, for example, now have green solvents. We also are evaluating recycling technology, just looking at what some of the other industry has been applying. Then on the manufacturing side, we actually have developed proprietary technology that significantly increased the throughput during the upstream process.
This is very important because it's going to take, let's say, a 1,600-liter, being able to produce twice or three times more than what it normally should. We also have a scientific collaboration agreement to advance our innovation agenda. We also have a partnership agreement for biochemical production. This is basically for recombinant projects. The idea is to make sure that as a company, we are not only positioned as the one with deep development expertise, but that we also have advanced technology to advance the environmental agenda of our customers, and that we can manufacture also with very high levels of productivity. This is what I wanted to share with all of you. Before I pass it to Marc, let me just say one thing. Marc is a good example in terms of our talent agenda. Marc came from Lonza. He worked in biologics.
When he joined, biologics was about CHF 600 million in revenues. By the time he left, it was CHF 3.3 billion. It's a very good example in terms of bringing someone that knows what it takes to scale up a company rapidly, what do you need to have in place to make sure that you pursue this growth agenda. And I have to say, we are very, very happy to have him with us. So Marc.
Thank you, Juan José. Good morning also from my side. It's a pleasure to be here and present to you the 2023 financial results from PolyPeptide. Let's start with the revenue trend. As Juan José already explained, we could finish 2023 with a significant sales growth of 14% versus 2022, and at 18.2% with constant exchange rates. As you can see on the slide, EUR 45 million of COVID-related sales could be overcompensated by growth across the network. Driving into the underlying product mix change, you notice that we have a balanced growth between metabolics and other therapeutic areas. Excluding COVID-related revenue, the growth is approaching 37%. 35 new programs were introduced, and we had various scale-up projects. All this is illustrating the significant transition PolyPeptide is currently going through.
I also show you on the slide the growth by business area, with a solid growth of 10.3% in customer projects, 22.2% in contract manufacturing, and stable growth in generic and cosmetics. We grow in all our sites in the network, which is supporting our natural hedging approach, which is mitigating our effect exposure both on the sales and on the cost side. Overall, a strong performance, especially in the second half of 2023, with a growth of 43% versus the first half. With that, I turn to the EBITDA bridge. There are three main drivers for the unfavorable EBITDA evolution in 2023, which led to an EBITDA of EUR 6 million. First, we incurred significant higher write-downs of EUR 19.3 million versus 2022, including obsolete inventory of EUR 12.5 million and higher production scrap, mainly linked to ramp-up and product mix changes activities.
Second, in 2023, we were faced with higher operational costs of EUR 18.3 million, which mainly includes higher labor costs and energy costs, as well as unfavorable variances, which are mainly driven by a lower utilization due to the introduction of new programs and ramp-up activities. Third, although the loss of the COVID-related products could be overcompensated on the sales side, on the EBITDA level, we see a negative impact of EUR 5 million driven by the above-average profitability of the COVID-related products. On the right side, you see the EBITDA comparison 2022 versus 2023 by half year. And you see the significant improvement which has been achieved in the second half of 2023, showing a positive EBITDA of EUR 13 million or a margin of 7.1%. We have more work in front of us to get back to a sustainable EBITDA level.
The positive development of the second half of 2023 is giving us evidence that the implemented measures show the expected impact. We are going the right direction to improve our full-year margin in 2024. With that, I move over to the P&L. I touched on revenue and EBITDA evolution on the prior slides and want to focus here now on the financial results. In 2023, we were hit by a non-cash effects impact of about EUR 12 million linked to the revaluation of intercompany loans due to different functional currencies, which is impacting unfavorably the P&L and offset in the OCI. We are currently reviewing our internal financing structure to avoid these impacts going forward. The interest expense of EUR 5.6 million contains the costs for the new RCF and the shareholder loan. Including an income tax benefit of EUR 6.8 million, the result of the year is minus EUR 51.4 million.
With the net loss reported in 2023, the group will not propose a payment of a dividend at the AGM on April 10th. With that, I move to the next slide. Before we talk about the cash flow, I would like to highlight two facts. First, we secured a revolving credit facility of EUR 111 million and a loan from our main shareholder of EUR 40 million. Second, we received prepayments from our customers of EUR 38.8 million, which are both strengthening our position to pursue our growth ambitions. In 2023, net cash flow from operating activities reached EUR 36.5 million versus EUR 5.5 million in 2022, mainly driven by a reduction in net working capital of EUR 46.2 million. Net cash flow from investing activities is -EUR 56.7 million. This is all adding up to a total free cash flow of -EUR 20.2 million versus a -EUR 73.3 million in 2022.
At the end of 2023, cash and cash equivalents reached EUR 95.7 million versus EUR 37.5 million at the end of 2022. Let me move to CapEx. 2023 was a year of consolidation in regard of CapEx spend. The focus was on the advancement and completion of several investment projects. Let me talk about our CapEx evolution over the recent years now. Before 2020, the average investment was around 12% of sales, followed by three years of accelerated investments with rates between 20%-30% of sales, driving various growth projects across the network. In 2023, PolyPeptide invested EUR 54.9 million, mainly in Braine, to finalize the construction of the 600-liter project. Let me now turn to my last slide about priorities and guidance 2024. In 2024, our priorities will be meeting the increasing customer demand, continue to strengthen operations and profitability, and further capacity expansion.
For 2024, we expect a mid to high single-digit revenue growth at constant currency rates. The EBITDA will turn positive, but we still expect to operate at a net loss. The capital expenditure will be between EUR 60-EUR 70 million. As in the last years, we expect a stronger second half compared to the first half, pronounced by the capacity ramp-up in the second half of 2024. For the first half of 2024, we foresee a comparable revenue level as in the first half of 2023, with an improved EBITDA and at a net loss. We are currently preparing our mid-term outlook, which we plan to publish together with the 2024 mid-year results in August. In the context, we will also revisit our approach to certain disclosures around the development of our business. With that, I close my presentation and hand over back to Michael for questions.
Vicky, are there questions on the telephone line?
We will now begin the question-and-answer session. Anyone who wishes to ask a question or make a comment may press star and one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only headsets while asking a question. Webcast viewers may submit their questions or comments in writing via the relevant field. Anyone who has a question may press star and one at this time. First question from Daniel Buchta, ZKB. Please go ahead.
Yes, thank you very much. Good morning, gentlemen. Maybe the first question on the new large contracts. I mean, congrats to those. But maybe just on the CapEx side, I mean, I guess there is more CapEx needed to get the capacity for these very significant contracts. Your free cash flow is not the strongest at the moment. How can you fund those investments? And also, what is the timeline for this doubling of sales with those four contracts? Maybe you could provide a bit more clarity on this. The second one then on the ramp-up relates to the one first large customer. I mean, how did the customer react to those delays, H2 instead of somewhere over H1 ramp-up there?
Then also, what gives you the confidence that you can really get full efficiency there maybe towards the end of this year, given the unprecedented size of the reactors there and the volumes needed by that customer? That would be it. Thank you very much.
Daniel, thank you very much for your question. This is Juan José. So in terms of the new large contracts, we will need to invest additional capacity. But Marc mentioned that we actually have received customer prepayments, and they are in connection with these contracts. So we are using these prepayments to be able to build our capacity. So with the model that we have, we basically are going to be able to execute on these contracts. And we are very excited about these contracts because it not only shows confidence on PolyPeptide, but of course, a much higher level of commitment with these payments.
Now, in terms of the timing to double our sales, let me answer this question when we provide our mid-term outlook, just to give you a sense in terms of just how our sales are going to evolve, but also what will be our capacity expansion strategy. Now, in terms of the ramp-up, I mean, we have experienced about a 3-month delay. I have to say, these are very large projects. And our customer, I would say, has a high level of understanding and patience in terms of all the suppliers across, not just peptides, but fill and finish. And everybody's trying to ramp up capacity as fast as they can. When we talk about our confidence to execute, so two things. One is we have been producing this product for over two years. So we know what it takes to be able to do it well.
But as you said, of course, we have to do it at a larger scale. And we just have to make sure that we are prudent and we take our time in terms of how we go about doing it. But we are confident that we are going to have it operational, at a good level of operation toward the end of 2024. And then we will really start seeing the benefits in 2025.
Okay. That's very helpful. Thank you.
Thank you, Daniel.
The next question from Laura Pfeifer, Octavian. Please go ahead.
Yes. Hello. Good morning. Thanks for taking my questions. I have two. Maybe first on the EBITDA. For this year, you did not provide a quantitative guidance. So I would be glad if you maybe could guide us a little bit more how we should think about it. Is maybe the second-half margin of 7% a point of reference? And yeah, maybe what are the drivers and the headwinds we should consider in modeling for the 2024 margin progression? And secondly, maybe also related to the previous question on these new contracts, I'm just wondering if you could share a little bit what development stage are these projects? I mean, are they phase three? Are they already filed? Are they already commercial scale? And also, how big each of them are? Are they comparable in size to each other? Thank you.
Thank you, Laura. Let me start with the new contracts. They are a mix between phase three and commercialization stage. But of course, we expect they to be very material relative to PolyPeptide size. In terms of the EBITDA guidance, there are a couple of things which are important to know in terms of context. Number one, we have the operational improvement program. Number two, we have over 30 programs being scaled up in 2024. Then number three, we have the 1,600-liter coming online. You're going to have different moves in terms of capacity utilization and performance. That's really what is driving our EBITDA guidance. Marc, I don't know if you want to comment a bit more in terms of what should they expect.
I think one important point, which we said in the guidance, is turning positive. So I think that's very important. We also were discussing about the improvement measures we have implemented, which led to a very nice improvement in the second half of 2023. And I think that, combined with what you said about the challenges we have in front of us, is giving more light to it.
Okay. But is it fair to assume that the EBITDA in H1 will still be a negative territory and only for the full-year basis since it's positive?
We are giving guidance on the full year, turning positive. We also said that the EBITDA margin will improve in the first half.
Okay. Thank you.
The next question from Vineet Agrawal, Citi. Please go ahead.
Hi. Good morning, guys. Thanks for taking my question. Most have been answered, but just maybe one on EBITDA bridge. It looks a bit different to what you presented at first half. So maybe you could explain any of the differences. I think you had some impact from changes in cost absorption, etc., but I can't see that now. Just trying to see if this is what we should be using as a reference point going forward. And then I'm just trying to see if you can quantify how much of the EBITDA impact is from the ramp-up of the facilities. And the reason for this question is because one of your large peers is investing heavily in CapEx, but there seems to be very little impact on the margins.
So I'm just trying to understand, is it only just different accounting that you follow, which means that you can't capitalize some of the cost? So yeah, I mean, any help on that would be really appreciated. Thank you.
I will start on the bridge. The bridge you see for the second half, you can take as a reference for us going forward. There are a little bit of changes on the naming. Here, we are referring to operational cost. You saw these operational costs on the half-year bridge as well. We had there also the position of change in cost absorption. This is now more combined in the change in the cost.
Yeah. And Vineet, in terms of your question regarding the CapEx expansion and the impact on the margins, there are two reasons why you see more impact on PolyPeptide. Number one, because we have lower profitability and an operational improvement plan underway. And the second thing is that PolyPeptide is a smaller company. So big changes in terms of investment and performance drive significant volatility. And we think we are going to face this volatility, of course, until the company gets to a scale where it can actually absorb some of these investments and one-off, no? But there is no reason why PolyPeptide shouldn't go back to very healthy profitability levels.
Right now, our objective is to make sure that we meet customer demand, that we invest in capacity, and that we do this investment without using equity, that we do a combination of bank financing and customer support, and that we improve our profitability year after year. That's basically the plan for PolyPeptide.
All right. Thank you.
Next question.
The next question from Anja Pomrehn. Please go ahead.
Good morning, gentlemen. Two questions from my side as well. First of all, you mentioned in one of the slides that your sales contribution from commercial and phase three projects contribute roughly 70%. Could you kindly divide that sort of how much of that is in commercial and how much is in phase three? That would be question one. And question two, also relating to the ramp-up of your large-scale plant. I mean, you clearly indicated you want to start ramping up in the second half 2024. So what do you think is the likelihood that you will be running at full capacity by the end of 2025? Thank you.
Thank you very much, Anya. So in terms of how much of the 70% is driven by phase three and how much is driven by commercialization, I think if you go to slide 10, where you get the revenue by business area, you can assume that commercialization is add our revenues in contract manufacturing plus genetic and cosmetics. So that will be about EUR 160 million. That basically means that around 50% of the company revenues are in what we call commercialization phase. And then about the other 20% will be in phase three. Listen, in terms of the 1,600-liter, we don't expect it to be operating at full capacity by the end of 2024. We are planning, actually, for a much more thoughtful ramp-up.
What we want to make sure is that we have the production under control, that we can meet the quality requirements, and that we can release. We expect to reach full capacity in 2025.
Yes. That was my question. So basically, you expect full capacity by the end of 2025?
Yeah. At some point in 2025, yes.
Okay. That was my question. 2025. Okay. Thank you very much.
Thank you, Anya. Let's go to the next question.
Next question from Nildo Delgado. Please go ahead.
Hi. Good morning. Thanks for taking my questions. A couple of them. The first one is, do you see any potential risks in securing future large-volume contracts due to past delays and operational issues? The second question would be, could you break down the specific measures implemented in the second half of 2023 that you believe had the most impact on performance? Thank you.
Thank you, Ada Nildo. I mean, that's why we have made our number one priority to meet customer demand. One way for you to see that we have been able to maintain our relationship with our customers is the fact that if you look at our phase two project, they have increased from 2023 versus 2022. Then we have been able, in phase three projects, to move toward commercialization because our commercial projects have also increased from 60 to 64. Basically, we have been able to continue to maintain our relationships. With new commercial agreements we just shared, we're showing that we are able to expand. But of course, it's very important to make sure that we maintain our focus on execution, that we are able to meet our demand forecast, and of course, in parallel, that we do that while improving our profitability.
In terms of the measures in the second half of the year that had the biggest impact in terms of our performance, I will point to our ability to meet the quality requirements and release on time. I think there has been a lot of focus to make sure that we're able to do that. Now, this is a plan that will take us all the way towards the end of 2024 because there are also some other areas that we are working on, which is very important. And we are not just actually looking to deliver the performance of the company today, but of course, we are making sure that we have an operational performance that can support a company that will be much larger. And that's really where the focus is. Now, should we go to the next question?
The next question comes from Daniel Buchta from ZKB. Please go ahead.
Daniel? I think he's on mute.
Wait. Yeah. I think there was also a question from Charles. Can we take Charles?
Hello. Can you hear me?
Yeah. Daniel? Or Charles? Who was speaking now?
The line of Mr. Charles Weston is open. You may proceed with your question.
Thank you. It's Charles Weston from RBC. Two questions from me as well, please. What are the terms of the two debt facilities that PolyPeptide has from the banks and from your shareholder just in terms of covenants, their term, and how they're secured? And my second question is, how much more prepayment could we look for in 2024? And can you give us some guidance on the expected net working capital movements in 2024 as well? Thank you.
Thank you, Charles. Let me start with the prepayments. First of all, I think you should expect prepayments next year. Now, we don't really guide for prepayments, but this is something that you're going to see as part of our cash flow performance. Now, Marc will talk about the terms that we have with the banks and with our anchor shareholder. Let me just say one thing. First of all, it was very important to make sure that we increase our financing capacity. Basically, with these two agreements, we have been able to double our financing capacity. The second thing is that having our anchor shareholder come in to support the company is also a very good sign in terms of the commitment and stability that PolyPeptide can have as it embarks on a growth journey.
Now, Marc, do you want to comment on the terms for the loan and the working capital?
So first of all, net working capital is a key priority for us. We have done quite some good work in 2023 to improve the net working capital. We will proceed working on net working capital, especially of inventory, receivables, and payables. These are key priorities for us in 2024. Of course, I cannot go into the details of the terms regarding the loan agreements with the bank and the shareholder. Nevertheless, we see that as the banks and the shareholder showing huge confidence in our future plans and the expectation for a good trajectory.
Good, Dayar. There are no more questions on the phone line. There are a few questions in the chat function, which I will read to you. The first is from [Søren Svenhøydt]. Please comment on the customer risk profile of the company due to the new larger customer contracts driving growth. Few customers will have a larger share of your revenues?
Yes. Thank you for that question. It is true. Our customer base is concentrated towards fewer large customers. This is driven by the GLP-1 opportunity. We will see the concentration of customers continue to increase year-over-year. Now, we actually do not see this as a higher risk. We have been working with these clients over many, many years. We have an agenda with them that goes from development all the way to phase three and then commercialization. So you have very broad relationships. We also find them as very sophisticated, very supportive, and also very long-term in nature. They actually want to see PolyPeptide being successful. I would say in terms of higher concentration, I don't see it correlated as a higher risk profile.
But of course, we need to make sure that in our most important strategic relations, that we have high levels of performance.
Thank you. Then there is another question from Søren. Do you consider your revenue growth mid to high single-digit growth guidance for 2024 to be conservative considering that your growth in 2023 was 37% adjusting for COVID projects?
Yeah. I mean, we have had last year a very strong underlying growth. And I have to say our guidance in 2024 reflects the fact that we still have our operational improvement agenda, that we are scaling up many programs, and that we have, of course, this 1,600-liter capacity expansion. So there could be some variability in terms of how we end up by the end of the year. But at this point, we think it's a good guidance that reflects pretty much what we think we're going to do.
I think in the chat function, there are no more questions that have not been answered before. I think with that, I hand over back to you, Juan José, for a closing statement.
Thank you very much, Michael. Thank you again for joining us this morning. The transformation of PolyPeptide from a lab scale to an industrial scale is undergoing. We have a high growth profile as a company in what is considered one of the most attractive CDMO markets. There is a lot of work for us to do still to improve our profitability and cash flow. We are very much committed to achieve that. There is no reason why this company cannot scale up and return to similar profitability levels. I'm certainly looking forward to meet all of you at our third half 2024 earnings call where, again, we will share our midterm outlook.
And then you will get a sense in terms of the scale of the ambitions that PolyPeptide has. Thank you very much. And enjoy the day.
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