Quarterly Report • Feb 15, 2017
Quarterly Report
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Preliminary Annual Report
Gentian Diagnostics AS is a medical diagnostics company listed on Merkur Market, Oslo Stock Exchange with the ticker "GENT-ME".
Gentian is headquartered in Moss, Norway, with a representative office in China and distribution subsidiaries in Sweden and USA.
The subsidiary Gentian AS designs, develops and markets in vitro diagnostic reagents (IVD) based on its proprietary Nanosense technology. The goal is to offer efficient and accurate reagents for major clinical chemistry platforms with a focus within the areas of kidney disease, cardiac disease, inflammation and veterinary medicine. The Nanosense technology will enable users to move assays from low volume immunology platforms to fully automated, high throughput instruments with shorter turnaround times, better workflow and improved cost efficiency.
The subsidiary PreTect AS develops and manufactures molecular diagnostic tests to detect oncogenic activity in cervical samples. The products PreTect SEE and PreTect HPV Proofer contribute to earlier detection of cervical cancers.
Comparative numbers for Gentian 2015 in ()
Total operating revenue ended at MNOK 9.1 (MNOK 6.1) for 4Q16 and MNOK 31.0 (MNOK 25.6) for 2016.
Sales revenue in 4Q16 ended at MNOK 7.1 (MNOK 5.1), of which MNOK 0.9 came from the recently acquired subsidiary. Sales revenue for the year ended at MNOK 24.5 (MNOK 20.3), a 20,4 % increase compared to 2015.
Geographic split:
| MNOK | 4Q16 | 4Q15 | 1-4Q16 | 1-4Q15 |
|---|---|---|---|---|
| US | 0,4 | 0,1 | 1,1 | 0,9 |
| Europe | 3,6 | 1,5 | 10,4 | 6,2 |
| Asia | 3,1 | 3,6 | 12,9 | 13,2 |
| Total | 7,1 | 5,1 | 24,5 | 20,3 |
Organic growth was 11.4% on a currency neutral basis for the year.
Other operating revenue ended at MNOK 0.2 (MNOK 0.2) for Gentian for 4Q16, and MNOK 2.5 (MNOK 2.5) for 2016. SkatteFUNN funding ended at MNOK 1.8 (MNOK 0.8) for 4Q16 and MNOK 4.0 (MNOK 2.8) for the full year.
COGS ended at MNOK 1.9 for 4Q16 (MNOK 1.1), which represents 27 % (22 %) of sales revenue. As stated in the 3Q16 report, our move to in-house production of key components has been a challenge from an efficiency point of view. However, the gross margin improved from 66 % in 3Q16 to 73 % in 4Q16, which demonstrates that we are on the right path.
For the full year, COGS ended at MNOK 7.5 (MNOK 5.7), which represents 31 % (28 %) of sales revenue.
Immaterial correction of less than 1% in 2Q16.
Total operating expenses before capitalization of R&D expenses ended at MNOK 12.1 (MNOK 6.6) for 4Q16 and MNOK 34.4 (MNOK 23.7) for 2016.
Operating costs include total salary and social expenses of MNOK 7.1 (MNOK 4.3) and other expenses of MNOK 5.0 (MNOK 2.3) for 4Q16.For the full year, total salary and social expenses were MNOK 20.1 (MNOK 14.2) and other expenses were MNOK 14.3 (MNOK 9.5). The increase in costs is a planned development as the company is ramping up its R&D- and marketing activities.
Total operating expenses after capitalization of R&D expenses ended at MNOK 9.9 (MNOK 5.9) for 4Q16 and MNOK 31.2 (MNOK 20.5) for the full year.
R&D expenses amounted to 34 % (48 %) of total operating expenses before capitalization for 4Q16 and 34 % (57 %) for the full year.
The R&D expenses are not comparable y/y due to reallocation between operating expenses and R&D expenses in 2016.
Operating profit before depreciation and amortization (EBITDA) ended at MNOK -2.7 (MNOK -0.9) for 4Q16, and at MNOK -7.8 (MNOK -0.7) for the year.
Net financial income/expense ended at MNOK 0.6 (MNOK -0.1) for 4Q16, and MNOK 1.1 (MNOK -1.3) for the year.
Net profit ended at MNOK -2.8 (MNOK -1.3) for 4Q16 and MNOK -9.0 (MNOK -3.2) for 2016.
Cash and cash equivalents as of 31.12.2016 was MNOK 76.0 (MNOK 67.9). Of this, MNOK 1.6 is placed in a collateral account for currency contracts and customs credit, and MNOK 1.3 is
currently held in a deposit account and a tax withholding account. The remaining cash balance, a total of MNOK 73.0, is in current financial assets.
Capitalization of R&D expenses in 4Q16 amounted to MNOK 2.2 (MNOK 0.7), which gives a total capitalization of MNOK 3.2 (MNOK 3.2) for the year.
Accounts receivables as of 31.12.2016 was MNOK 2.9 (MNOK 3.7).
The total value of all currency contracts in 2016 (as of 31.12.2016) was zero. No new currency contracts (neither FX Outright nor NDF) have been entered into during 3Q16.
Cash flow from operating activities ended at MNOK -8.1 (MNOK -4.6) for the year. The cash flow from operating activities in 4Q16 was MNOK -1.1.
Cash flow from investment activities ended at MNOK -4.3 (MNOK -4.6) for the year and includes the cost of renovation of new and old facilities as well as the acquisition of the new subsidiary in 4Q16. The cash flow from investment activities in 4Q16 was MNOK -2.4.
Cash flow from financial activities ended at MNOK 20.4 (MNOK 75.3).
Net cash and cash equivalents ended at MNOK 76.0 (MNOK 67.9).
The acquisition of PreTect AS on October 10th 2016 allowed Gentian access to a broader technology platform for medical diagnostics. Gentian now owns a molecular diagnostic technology utilizing mRNA for controlling negative samples from cervix cancer screening. In addition to increasing the revenue base, this technology also contributes to ongoing development projects addressing the market for diagnosis of infectious diseases.
There has been continued progress in our ongoing R&D programs during the fourth quarter. Our development of a homogenous test measuring calprotectin in blood was signed off as optimized on December 19th 2016, and verification and validation has commenced. These are the last steps before receiving a CE mark and the European launch in 2017. Moreover, we have had good progress in all of our three proof-of-concept projects, although none has yet been published as complete.
Gentian Diagnostics AS got listed on Merkur Market at Oslo Stock Exchange on 14th December 14th 2016 under the ticker "GENT-ME".
The company expects launch of gCAL, a turbidimetric test for calprotectin in blood samples (serum and plasma), in the second half of 2017. We also expect to publish results from ongoing and new clinical demonstrations, and to start sales, distribution and regulatory activities. The results from these initiatives will be important for the acceptance in 2018.
Furthermore, we expect that Gentian's R&D department will deliver at least two proofs-of concept in 2017. The company will also initiate proof-of-concept work on a new test.
We have previously announced that our largest distributor in the Chinese market is challenged by new Chinese import regulations for human material. The distributor has put an order due for delivery in March 2017 on hold while waiting for the approval
Gentian Diagnostics AS successfully completed a private placement of MNOK 100.0 in January 2017. The net proceeds from the Private Placement will be used to further develop the Company's distribution platform, pursue selected identified M&A opportunities, as well as for general corporate purposes.
20 largest shareholders in Gentian Diagnostics AS as of 30.12.2016 according to VPS:
| Shareholder | Number of Shares | % | |
|---|---|---|---|
| Holta Life Sciences AS | 1 928 496 | 17,31 % | |
| Salix AS | 1 368 630 | 12,29 % | |
| Safrino AS | 1 350 000 | 12,12 % | |
| Storebrand Vekst | 1 030 420 | 9,25 % | |
| Vingulmork Predictor AS | 535 710 | 4,81 % | |
| Cognitio Invest AS | 496 430 | 4,46 % | |
| Kristianro AS | 493 910 | 4,43 % | |
| Cressida AS | 385 000 | 3,46 % | |
| Silvercoin Industries AS | 381 695 | 3,43 % | |
| Portia AS | 375 000 | 3,37 % | |
| Bård Sundrehagen | 357 010 | 3,21 % | |
| Viola AS | 319 990 | 2,87 % | |
| Statoil Pensjon | 313 900 | 2,82 % | |
| Strawberry Capital AS | 300 300 | 2,70 % | |
| Spar Kapital Investor AS | 184 000 | 1,65 % | |
| Mutus AS | 147 210 | 1,32 % | |
| Fougner Invest AS | 110 410 | 0,99 % | |
| Carpe Diem Afseth AS | 92 320 | 0,83 % | |
| Statoil Forsikring A.S | 83 900 | 0,75 % | |
| Fjelljakt AS | 75 000 | 0,67 % | |
| Employee Shareholders | 169 654 | 1,52 % | |
| Other Shareholders | 640 165 | 5,75 % | |
| Total Shares | 11 139 150 | 100,00 % |
| 2016 | 2016 | 2015 | 2015 | |
|---|---|---|---|---|
| (figures in NOK thousands) | Q4 | 01.01-31.12 | Q4 | 01.01-31.12 |
| Operating Revenue | ||||
| Sales revenue | 7 105 | 24 470 | 5 149 | 20 332 |
| Royalties | 48 | 48 | - | - |
| Other operating revenue | 224 | 2 471 | 228 | 2 496 |
| SkatteFUNN - tax deduction | 1 767 | 3 970 | 754 | 2 759 |
| Total Operating Revenue | 9 144 | 30 958 | 6 130 | 25 587 |
| Operating Expenses/Costs | ||||
| Cost of goods sold | -1 929 | -7 529 | -1 106 | -5 736 |
| Operating costs | -12 073 | -34 406 | -6 611 | -23 709 |
| Capitalization | 2 155 | 3 198 | 735 | 3 188 |
| Total Operating Expenses/Costs | -11 847 | -38 738 | -6 982 | -26 258 |
| EBIDTA | -2 703 | -7 779 | -852 | -671 |
| Depreciation | -637 | -2 304 | -369 | -1 219 |
| EBIT | -3 340 | -10 083 | -1 221 | -1 890 |
| Financial income/expense | 563 | 1 129 | -76 | -1 332 |
| Net Profit | -2 777 | -8 955 | -1 297 | -3 222 |
| Statement of Financial Position Gentian Group | |||||
|---|---|---|---|---|---|
| ----------------------------------------------- | -- | -- | -- | -- | -- |
| 2016 | 2015 | |
|---|---|---|
| (figures in NOK thousands) | 31.12 | 31.12 |
| Assets | ||
| Non-Current Assets | ||
| Property, plants and equipment | 4 743 | 974 |
| Capitalized development costs | 12 108 | 10 078 |
| Other intangible assets | 14 074 | 9 514 |
| Shares in other companies | 2 000 | |
| Financial assets | 2 914 | 22 466 |
| Total Non-Current Assets | 35 840 | 43 032 |
| Current Assets | ||
| Inventory | 7 546 | 3 147 |
| Accounts receivables | 2 855 | 3 737 |
| Other receivables | 5 311 | 4 574 |
| Cash and cash equivalents | 73 044 | 45 468 |
| Derivatives | - | - |
| Total Currents Assets | 88 757 | 56 926 |
| Total Assets | 124 597 | 99 958 |
| Equity and Liabilities | ||
| Equity | ||
| Net profit (Loss) | 8 955 | 3 222 |
| Other equity | -124 413 | -98 284 |
| Equity | -115 458 | -95 061 |
| Non-Current Liabilities | ||
| Interest-bearing loans and dept | - | - |
| Total Non-Current Liabilities | - | - |
| Current liabilities | ||
| Accounts payables | -3 163 | -1 673 |
| Public dept | -1 824 | -1 310 |
| Accrued expenses | -4 151 | -1 211 |
| Derivatives | - | -702 |
| Bank overdraft | - | - |
| Total Current Liabilities | -9 138 | -4 896 |
| Total Equity and Liabilities | -124 597 | -99 958 |
| 2016 | 2015 | |
|---|---|---|
| (figures in NOK thousands) | 31.12 | 31.12 |
| Cash Flow from Operating Activities | ||
| Net profit (loss) | -8 955 | -3 222 |
| Depreciation | 2 304 | 1 219 |
| Change Inventory | -3 671 | 264 |
| Change Accounts Receivables | 1 137 | -3 233 |
| Change Accounts Payables | 877 | -503 |
| Change in other short-term receivables/ liabilities | 235 | 848 |
| Net Cash Flow from Operating Activities | -8 072 | -4 626 |
| Cash Flows from Investment Activities | ||
| Acquisition of Property, plant and equipment | -3 725 | -935 |
| Investment in intangible assets | -3 198 | -3 188 |
| Investment in other companies* | 3 329 | |
| Other changes in financial items | -702 | -499 |
| Net Cash Flow from Investment Activities | -4 296 | -4 621 |
| Cash Flow from Financial Activities | ||
| New debt | - | 2 500 |
| Down payment of loans | - | -4 500 |
| Change in Bank overdraft | - | -4 076 |
| Cash flows from share issues | 20 400 | 81 351 |
| Dividend payment | - | - |
| Net Cash Flow from Financial Activities | 20 400 | 75 276 |
| Net Change in Cash and Cash Equivalents | 8 033 | 66 029 |
| Cash flow from last period | 67 934 | 1 962 |
| Currency adjustment | -9 | -56 |
| Net Cash and Cash Equivalents | 75 958 | 67 934 |
*Investment in other companies relates to the acquisition of PreTect AS.
Note: 31.12.2015 uses 31.12.2014 as a comparison and starting point in the Cash Flow Statement.
| Share Capital Share Premium Other Reserves Other Equity | Total Equity | ||||
|---|---|---|---|---|---|
| As of 31st December 2014 | 392 122 | 8 736 175 | 1 467 131 | -3 200 555 | 7 394 873 |
| Net profit (loss) | - | ||||
| Proceeds from share issue | 18 000 | 2 475 000 | 2 493 000 | ||
| Share Issue Cost | - | ||||
| Other changes in equity | - | ||||
| As of 30th June 2015 | 410 122 | 11 211 175 | 1 467 131 | -3 200 555 | 9 887 873 |
| Net profit (loss) | -3 222 155 | -3 222 155 | |||
| Proceeds from share issue | 547 761 | 90 945 087 | 91 492 848 | ||
| Share Issue Cost | -3 040 819 | -3 040 819 | |||
| Other changes in equity | -56 263 | -56 263 | |||
| As of 31st December 2015 | 957 883 | 99 115 443 | 1 467 131 | -6 478 973 | 95 061 484 |
| Net profit (loss) | - | ||||
| Proceeds from share issue | 3 400 | 396 440 | 399 840 | ||
| Share Issue Cost | - | ||||
| Other changes in equity | -6 223 | -6 223 | |||
| As of 30th June 2016 | 961 283 | 99 511 883 | - | -6 485 196 | 95 455 101 |
| Net profit (loss) | -8 954 604 | -8 954 604 | |||
| Proceeds from share issue | 152 632 | 28 847 448 | 29 000 080 | ||
| Share Issue Cost | - | ||||
| Other changes in equity | -42 291 | -42 291 | |||
| As of 31st December 2016 | 1 113 915 | 128 359 331 | - | -15 482 091 | 115 458 286 |
The interim report for Q4 2016 has been prepared in accordance with IAS 34 Interim Reporting. The accounting policies applied in the interim report corresponds to what was used in preparing the annual financial statements for 2015.
The Company uses currency rates given by DNB ASA.
There are currently two projects where the Gentian Group is capitalizing R&D expenses.
Gentian calculates and recognizes SkatteFUNN funding continuously in the same year as the cost has incurred, while PreTect recognizes the SkatteFUNN funding when the refund has been received.
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