Earnings Release • Feb 7, 2019
Earnings Release
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February 7, 2019
1) See definition on pp. 17-18
Biotage AB (publ) Box 8 SE-751 03 Uppsala Visiting address: Vimpelgatan 5 Phone: +46 18 56 59 00 Org. no.: 556539-3138 www.biotage.com Page 1 of 21
2) Based on an exchange rate SEK/USD of 8.93
| Amounts in SEK millions | Q4 | Q4 | 12 months | 12 months |
|---|---|---|---|---|
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
| 2018 | 2017 | 2018 | 2017 | |
| Net sales | 234.6 | 188.9 | 910.9 | 748.1 |
| Cost of sales | -90.5 | -73.3 | -354.3 | -291.5 |
| Gross profit | 144.0 | 115.6 | 556.6 | 456.7 |
| Operating expenses | -108.3 | -83.4 | -384.1 | -323.0 |
| Operating profit/loss (EBIT) | 35.7 | 32.2 | 172.5 | 133.6 |
| Financial items | -0.3 | 0.0 | 3.8 | 2.6 |
| Profit/loss before tax | 35.4 | 32.2 | 176.3 | 136.3 |
| Tax expenses | -8.1 | 2.4 | -8.7 | 2.5 |
| Total profit/loss for the period | 27.3 | 34.6 | 167.6 | 138.7 |
| Gross margin | 61.4% | 61.2% | 61.1% | 61.0% |
| Operating margin (EBIT) | 15.2% | 17.1% | 18.9% | 17.9% |
*See definition pp. 17-18
It is with great pride that I look back on what Biotage achieved in 2018. Biotage sets a new sales record with sales exceeding 900 MSEK for the full-year. Once again we grow with profitability and the operating profit (EBIT) increases by more than 25 percent in 2018. The operating margin for the full-year improves by 1 percent to 18.9 percent, to be compared with Biotage's new profitability target of an average of 20 percent over a three-year period. Biotage reaches the second financial target, a sales growth of 8 percent.
In the last quarter of the year as well as in the full-year Asia accounts for the strongest percentage growth rate. It is still the systems sales in organic chemistry that are driving the sales increase in this region. During 2018 we have initiated marketing activities for analytical chemistry in Asia and we will intensify these initiatives in 2019. The two more mature and single biggest markets for Biotage's products, the Americas and Europe, continue to grow. These markets are not growing at the same expansive rate as Asia, but is satisfying that they both grow faster on a full-year basis than the global market for our products.
On October 1, 2018 Biotage launched a completely new technology platform in our biggest product area, Purification. The new flash purification system Biotage® Selekt together with the associated consumables Biotage® Sfär constitutes a significant investment in more efficient and more environment friendly purification. The launch has been well received by the market and we are looking forward with confidence to the continued sales of these products. In other parts of organic chemistry Biotage has worked successfully with selling in solutions for complete workflows to the customers. Also the sales development of Biotage's industrial products has been healthy during 2018 and they accounted for no less than 10 percent of Biotage's total sales at the end of the year. The analytical chemistry products had a somewhat lean year with lower growth than we expected.
The work with integrating Horizon Technology, Inc., which was acquired in January 2018, has progressed well. We have also worked on improving the margins in the acquired business and they are now on the same level as Biotage's profitability in general. During the fourth quarter a production transfer was also started from our current contract manufacturer of the evaporation system V10 to Horizon. With these activities we bring the integration of Horizon a step further at the same time as we further increase capacity utilization and profitability in the acquired business.
In early December 2018 Biotage signed an agreement concerning the acquisition of another American company, PhyNexus, Inc. and we took over the operations on January 15 2019. With this acquisition we broaden our separation business to smallscale purification of biomolecules – an area which we for a long time have had ambitions to become a part of. The sales organization is now being strengthened in order to fully utilize the opportunities of the acquired business. We are also evaluating a transfer of PhyNexus' instrument manufacturing to Horizon.
Biotage's investment in a minority holding in Chreto A/S was also made with the intention of bringing Biotage further into the biomolecular area, and with opportunity to acquire all shares in Chreto at the end of 2018 at a predetermined price. We did
however consider the predetermined price too high in relation to how far Chreto had progressed in the development and the future investments we believe to be necessary in order to commercialize the technology. Biotage therefore declined this opportunity, but at the same time opened up for a discussion of an acquisition at another valuation.
All in all 2018 was a fantastic year and we have created opportunities for 2019 to become equally exciting. We are looking forward with confidence to taking on PhyNexus' products and technologies, and to establishing Biotage on the map for purification of biomolecules.
Group net sales in the fourth quarter 2018 amounted to 234.6 MSEK (188.9), which is an increase by 24.2 percent. At comparable exchange rates and adjusted for acquisitions sales increased by 7.9 percent compared to the corresponding quarter last year. The Americas was the biggest market with 43 (43) percent of the net sales. The EU and EMEA contributed 29 (31) percent and Asia 28 (27) percent.
The Group's gross margin was 61.4 percent (61.2). The distribution of sales between systems and aftermarket products was 50 (45) and 50 (55) percent, respectively.
The operating expenses amounted to 108.3 MSEK (83.4). Sales costs increased with 12.8 MSEK to 67.8 MSEK (55.0), primarily as a result of expansions in the sales organization, including the acquisition of Horizon and the build-up of the subsidiary in India, but also due to currency effects. Research and development costs increased with 6.5 MSEK to 20.9 MSEK (14.5), largely attributable to the intense work in capitalized development projects in the comparative period – above all the new flash purification system Biotage® Selekt and the associated consumables Biotage® Sfär, which were launched on October 1, 2018. This has also meant increased amortization in the quarter of previously capitalized development costs. The administration costs increased with 4.6 MSEK to 20.9 MSEK (16.3), among other things attributable to the acquisition of Horizon and costs of 3.2 MSEK in the quarter relating to the acquisition of PhyNexus. Other operating items, amounting to 1.3 MSEK (2.3) primarily consists of currency effects on operations related liabilities and receivables and Biotage's share in the result of the associated company Chreto, -0.5 MSEK (-0.5).
Operating profit improved by 10.9 percent to 35.7 MSEK (32.2) and the operating margin (EBIT) amounted to 15.2 percent (17.1). The operating margin was affected by the increase of the operating costs in the quarter with 25.0 MSEK compared to the corresponding period last year, due to the causes described above. Net financial income amounted to -0.3 MSEK (0.0).
The result after tax decreased to 27.3 MSEK (34.6). The decrease is attributable to an increase in reported tax expense with 10.5 MSEK to -8.1 MSEK (2.4). Reported tax is affected by a reversal of deferred tax of -5.1 MSEK (3.5), which is attributable to capitalized fiscal deficits in the Swedish tax subjects. Towards the end of the year the cut-off point was reached at which the book value of this deferred tax exceeded the remaining accumulated fiscal deficit. Remaining deferred tax, corresponding to
unused tax loss carryforwards, will in the coming periods be reduced in the accounting at the rate at which these companies generate taxable profits. This accounting effect does not affect the tax that Biotage de facto pays, this will continue to be lower than a normalized tax level until the remaining loss carryforwards have been utilized.
The cash flow from operating activities was 51.6 MSEK (66.2). The investments amounted to 10.6 MSEK (11.8). Amortizations and write-downs amounted to 10.6 MSEK (8.5). Capitalized development costs accounted for 3.4 MSEK (7.7) of the investments and 5.0 MSEK (4.8) of the amortizations and write-downs.
Group net sales increased by 21.8 percent to 910.9 MSEK (748.1). At comparable exchange rates and adjusted for acquisitions net sales increased by 8.0 percent. The Americas was the biggest market with 42 (42) percent of the net sales. The EU and EMEA contributed 29 (32) percent and Asia 29 (26) percent.
The Group's gross margin amounted to 61.1 percent (61.0). Systems accounted for 51 percent (47) of the sales and aftermarket products for 49 percent (53). The unfavorable product mix has a negative impact on profitability, and so do currency effects at the recalculation of the costs at the production plant in Cardiff from GBP to SEK. This is counteracted, however, by volume increases and improved efficiency in production contributing positively to increased profitability.
The operating expenses amounted to 384.1 MSEK (323.0). The increase is explained primarily by the increase of sales costs with 49.0 MSEK to 256.7 MSEK (207.6) as the result of an expanded sales organization and the acquisition of Horizon. Research and development costs increased with 9.9 MSEK to 65.9 MSEK (56.0) while the administration costs increased with 15.5 MSEK to 70.2 MSEK (54.7). The latter increase is mainly attributable to the acquisition of Horizon. Other operating items, primarily consisting of currency effects on operations related liabilities and receivables and Biotage's share in the result of the associated company Chreto, -1.7 MSEK (-1.2) was 8.6 MSEK (-4.7) for the year, thus a positive effect of 13.3 MSEK between the years.
Operating profit improved by 29.1 percent to 172.5 MSEK (133.6), corresponding to an operating margin (EBIT) of 18.9 percent (17.9). Net financial income amounted to 3.8 MSEK (2.6). The result after tax increased to 167.6 MSEK (138.7), a 21 percent increase.
The cash flow from operating activities was 155.0 MSEK (168.9). The cash flow from changes in operating capital is negative for the full-year, which is explained primarily by new big product launches and the increased sales, which have tied up capital in increased inventory and accounts receivable. The investments amounted to 178.4 MSEK (36.9), 131.2 MSEK of this sum relating to the acquisition of Horizon which was completed in January 2018. Amortizations and write-downs amounted to 39.4 MSEK (34.2). Capitalized development costs accounted for 24.0 MSEK (22.8) of the investments and 17.3 MSEK (18.6) of the amortizations and write-downs.
At December 31, 2018 the Group's cash and cash equivalents amounted to 177.0 MSEK (174.3). At the end of the period the Group had interest-bearing liabilities amounting to 109.4 MSEK (-).The interest-bearing liabilities relate to loans under a credit facility taken out in connection with the acquisition of Horizon Technology Inc. Net cash at December 31 thus amounted to 67.6 MSEK (174.3). During the year dividends to the shareholders have been paid to the amount of 90.6 MSEK (80.9).
The Group reports a total goodwill of 186.1 MSEK (104.0) at December 31. The increase relates to the acquisition of Horizon Technology that was completed in January 2018. Other goodwill relates to the acquisitions of MIP Technologies AB and two product lines from Caliper Life Sciences Inc. in 2010.
Other intangible fixed assets amounted to 192.7 MSEK (118.6). Of this sum capitalized development costs amounted to 101.2 MSEK (102.8). During the year the single biggest activated projects have been the development of the products Biotage® Selekt and Biotage® Sfär which were launched on October 1, 2018. The increase in intangible assets primarily consists of identified surplus value of acquired assets in Horizon.
At December 31 the equity capital amounted to 702.2 MSEK (608.6). The change in equity capital during the year is primarily attributable to the net result 167.6 MSEK (138.7) and dividends to the shareholders -90.6 MSEK (-80.9).
The Group had 405 (349) employees at December 31, compared to 411 at September 30. The increase during the year is mainly attributable to the acquisition of Horizon.
The Group's parent company, Biotage AB, has wholly owned subsidiaries in Sweden, the United States, United Kingdom, Germany, France, Italy, Japan, China, South Korea and India. The parent company is responsible for group management, strategic business development and administrative functions at group level and towards subsidiaries.
The parent company's net income amounted to 0.7 MSEK (0.6) for the fourth quarter and to 2.5 MSEK (2.3) for the full-year. The operating expenses amounted to 7.7 MSEK (5.1) for the quarter and to 24.4 MSEK (20.9) for the year. The increase is mainly explained by costs in connection with the acquisition of PhyNexus. The operating result was -7.1 MSEK (-4.5) for the quarter and -21.9 MSEK (-18.6) for the year.
The parent company's net financial income was 91.0 MSEK (85.3) for the quarter and 92.3 MSEK (88.5) for the year. The parent company's result after financial items was 83.9 MSEK (80.8) for the quarter and 70.7 MSEK (70.0) for the year.
The investments in intangible fixed assets amounted to 0.5 MSEK (0.3) in the quarter and to 2.0 MSEK (1.7) in the year. The parent company's cash and bank balances amounted to 2.1 MSEK (1.5) at December 31 compared to 1.5 MSEK at September 30.
As an international Group, Biotage is exposed to various risks that affect the possibilities to achieve the established targets. There are operational risks, such as the risk that competitive situations affect price levels and sales volumes, and the risk that the economic development in the markets and segments where the Group operates is not stable. There are also financial risks, such as currency risks, interest risks and credit risks. No major changes in significant risks or uncertainty factors have occurred during the period. Our assessment thus remains unchanged compared to the description of the company's risks, uncertainty factors and the handling of these in the company's Annual Report for 2017. Readers wishing to study the Annual Report can download this from the company's website www.biotage.com or order it from Biotage AB, Box 8, SE-751 03, Uppsala, Sweden or [email protected].
The Annual General Meeting 2019 will be held on April 24, 2019. The interim report for the first quarter 2019 will be published on April 24, 2019. The interim report for the second quarter 2019 will be published on July 16, 2019 The interim report for the third quarter 2019 will be published on November 5, 2019. The year-end report for 2019 will be published on February 7, 2020.
The Annual Report for 2018 is planned to be made public in week 14 2019.
All reports are available at Biotage's website from the above dates.
This report has not been reviewed by the company's auditors.
Uppsala February 7, 2019
Torben Jörgensen President and CEO
For further information, please contact:
Torben Jörgensen, President and CEO, phone: +46 707 49 05 84 Erika Söderberg Johnson, CFO, phone: +46 707 20 48 20
This information is information that Biotage AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 08.30 CET on February 7, 2019.
Biotage offers efficient separation technologies from analysis to industrial scale and high quality solutions for analytical chemistry from research to commercial analysis laboratories. Biotage's products are used by government authorities, academic institutions, pharmaceutical and food companies, among others. The company is headquartered in Uppsala and has offices in the US, UK, China, Japan, South Korea and India. Biotage has approx. 405 employees and had sales of 911 MSEK in 2018. Biotage is listed on NASDAQ Stockholm. Website: www.biotage.com
| 2018-10-01 | 2017-10-01 | 2018-01-01 | 2017-01-01 | |
|---|---|---|---|---|
| Amounts in SEK thousands | 2018-12-31 | 2017-12-31 | 2018-12-31 | 2017-12-31 |
| Net sales | 234,574 | 188,888 | 910,896 | 748,147 |
| Cost of sales | -90,534 | -73,271 | -354,270 | -291,483 |
| Gross profit | 144,040 | 115,617 | 556,626 | 456,664 |
| Distribution costs | -67,769 | -54,977 | -256,670 | -207,628 |
| Administrative expenses | -20,883 | -16,258 | -70,165 | -54,705 |
| Research and development costs | -20,937 | -14,481 | -65,925 | -55,986 |
| Other operating income | 1,286 | 2,329 | 8,612 | -4,715 |
| Total operating expenses | -108,303 | -83,387 | -384,148 | -323,034 |
| Operating profit/loss | 35,737 | 32,230 | 172,478 | 133,630 |
| Financial net income | -290 | 2 | 3,811 | 2,631 |
| Profit/loss before income tax | 35,448 | 32,232 | 176,289 | 136,260 |
| Tax expenses | -8,120 | 2,417 | -8,662 | 2,487 |
| Total profit/loss for the period | 27,327 | 34,649 | 167,627 | 138,747 |
| Other comprehensive income | ||||
| Components that may be reclassified to net income: | ||||
| Translation differences related to | ||||
| non Swedish subsidiaries | 1,572 | 4,038 | 16,623 | -12,268 |
| Cash flow hedges | -295 | 285 | -81 | -213 |
| Total other comprehensive income | 1,276 | 4,323 | 16,542 | -12,481 |
| Total comprehensive income for the period | 28,604 | 38,972 | 184,169 | 126,267 |
| 2018-10-01 | 2017-10-01 | 2018-01-01 | 2017-01-01 | |
|---|---|---|---|---|
| Belopp i KSEK | 2018-12-31 | 2017-12-31 | 2018-12-31 | 2017-12-31 |
| Attributable to parent company´s shareholders: | ||||
| Total profit/loss for the period | 27,327 | 34,649 | 167,627 | 138,747 |
| Attributable to parent company´s shareholders: | ||||
| Total comprehensive income for the period | 28,604 | 38,972 | 184,169 | 126,267 |
| Average shares outstanding | 64,714,447 | 64,714,447 | 64,714,447 | 64,714,447 |
| Average shares outstanding after | ||||
| dilution (*) | 64,714,447 | 64,714,447 | 64,714,447 | 64,714,447 |
| Shares outstanding at end of reporting period | 64,714,447 | 64,714,447 | 64,714,447 | 64,714,447 |
| Total profit/loss for the period per share SEK | 0.42 | 0.54 | 2.59 | 2.14 |
| Total profit/loss for the period per share SEK after dilution |
0.42 | 0.54 | 2.59 | 2.14 |
| Earnings per share relates to: | ||||
| Continuing operations | 0.42 | 0.54 | 2.59 | 2.14 |
| Total comprehensive income for the period per share | ||||
| SEK | 0.44 | 0.60 | 2.85 | 1.95 |
| Total comprehensive income for the period per share after dilution SEK |
0.44 | 0.60 | 2.85 | 1.95 |
| Quarterly summary | 2018 | 2018 | 2018 | 2018 | 2017 | 2017 | 2017 | 2017 |
|---|---|---|---|---|---|---|---|---|
| Amounts in KSEK | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Net Sales | 234,574 | 232,204 | 236,071 | 208,048 | 188,888 | 177,716 | 196,315 | 185,228 |
| Cost of sales | -90,534 | -90,815 | -91,678 | -81,242 | -73,271 | -70,469 | -75,270 | -72,473 |
| Gross profit | 144,040 | 141,389 | 144,392 | 126,805 | 115,617 | 107,246 | 121,045 | 112,755 |
| Gross margin | 61.4% | 60.9% | 61.2% | 61.0% | 61.2% | 60.3% | 61.7% | 60.9% |
| Operating expenses | -108,303 | -96,250 | -94,381 | -85,214 | -83,387 | -77,986 | -83,853 | -77,808 |
| Operating profit/loss | 35,737 | 45,139 | 50,011 | 41,591 | 32,231 | 29,260 | 37,192 | 34,947 |
| Operating margin | 15.2% | 19.4% | 21.2% | 20.0% | 17.1% | 16.5% | 18.9% | 18.9% |
| Financial net | -290 | -1,846 | 1,903 | 4,044 | 2 | 725 | 600 | 1,304 |
| Profit/loss before income tax | 35,448 | 43,293 | 51,914 | 45,635 | 32,233 | 29,985 | 37,793 | 36,250 |
| Tax expenses | -8,120 | 735 | -495 | -782 | 2,417 | 1,143 | -116 | -958 |
| Total profit/loss for the period | 27,327 | 44,027 | 51,419 | 44,853 | 34,650 | 31,128 | 37,677 | 35,293 |
| Amounts in SEK thousands | 2018-12-31 | 2017-12-31 |
|---|---|---|
| ASSETS | ||
| Non-Current assets | ||
| Property, plant and equipment | 48,630 | 45,303 |
| Goodwill | 186,055 | 104,023 |
| Other intangible assets | 192,654 | 118,646 |
| Financial assets | 19,221 | 19,243 |
| Deferred tax asset | 62,205 | 60,735 |
| Total non-current assets | 508,765 | 347,949 |
| Current assets | ||
| Inventories | 132,338 | 95,794 |
| Trade and other receivables | 185,080 | 139,195 |
| Cash and cash equivalents | 177,020 | 174,263 |
| Total current assets | 494,438 | 409,252 |
| TOTAL ASSETS | 1,003,203 | 757,201 |
| EQUITY AND LIABILITIES | ||
| Capital and reserves attributable to equity holders of the | ||
| parent company | ||
| Share capital | 89,953 | 89,953 |
| Reserves | -79,877 | -96,419 |
| Retained earnings | 692,104 | 615,077 |
| Total equity | 702,180 | 608,611 |
| Non-current liabilities | ||
| Liabilities to credit institutions | 109,400 | - |
| Other financial liabilities | 1,201 | 656 |
| Deferred tax liability | 14,780 | 1,621 |
| Non-current provisions | 2,245 | 1,936 |
| Total non-current liabilities | 127,625 | 4,212 |
| Current liabilities | ||
| Trade and others liabilities | 167,106 | 139,693 |
| Tax liabilities | 3,132 | 1,899 |
| Current provisions | 3,159 | 2,785 |
| Total current liabilities | 173,397 | 144,377 |
| TOTAL EQUITY AND LIABILITIES | 1,003,203 | 757,201 |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN SUMMARY | |||
|---|---|---|---|
| Accumulated | |||||
|---|---|---|---|---|---|
| Share | translation | Hedging | Retained | Total | |
| Belopp i KSEK | capital | reserve | reserve | earnings | equity |
| Opening balance January 1, 2017 | 89,953 | -84,227 | 288 | 557,223 | 563,238 |
| Changes in equity in the period of | |||||
| January 1, 2017 - December 31, 2017 | |||||
| Total comprehensive income | - | -12,268 | -213 | 138,747 | 126,267 |
| Total non-owners changes | - | -12,268 | -213 | 138,747 | 126,267 |
| Transactions with equity holders of the company | |||||
| Dividend to shareholders of the parent company | - | - | - | -80,893 | -80,893 |
| Closing balance December 31, 2017 | 89,953 | -96,494 | 76 | 615,077 | 608,611 |
| Changes in equity in the period of | |||||
| January 1, 2018 - December 31, 2018 | |||||
| Total comprehensive income | - | 16,623 | -81 | 167,627 | 184,169 |
| Total non-owners changes | - | 16,623 | -81 | 167,627 | 184,169 |
| Transacitions with equity holders of the company | |||||
| Dividend to shareholders of the parent company | - | - | - | -90,600 | -90,600 |
| Closing balance December 31, 2018 | 89,953 | -79,871 | -5 | 692,104 | 702,180 |
| Amounts in SEK thousands | 2018-10-01 2018-12-31 |
2017-10-01 2017-12-31 |
2018-01-01 2018-12-31 |
2017-01-01 2017-12-31 |
|---|---|---|---|---|
| Operating activities | ||||
| Profit/loss before income tax | 35,448 | 32,232 | 176,289 | 136,260 |
| Adjustments for non-cash items | 9,404 | 8,899 | 27,684 | 36,216 |
| 44,852 | 41,131 | 203,974 | 172,476 | |
| Income tax paid | -4,488 | -813 | -9,314 | -5,091 |
| Cash flow from operating activities | ||||
| before changes in working capital | 40,364 | 40,319 | 194,659 | 167,385 |
| Cash flow from changes in working capital: | ||||
| Increase (-)/ decrease (+) in inventories | -6,294 | -2,204 | -21,416 | -12,544 |
| Increase (-)/ decrease (+) in operating receivables | 1,436 | 9,886 | -30,020 | -6,372 |
| Increase (+)/ decrease (-) in operating liabilities | 16,115 | 18,171 | 11,781 | 20,463 |
| Cash flow from changes in working capital | 11,257 | 25,853 | -39,654 | 1,547 |
| Cash flow from operating activities | 51,622 | 66,172 | 155,005 | 168,932 |
| Investing activities | ||||
| Acquisition of intangible assets | -5,798 | -10,159 | -34,179 | -26,998 |
| Acquisition of property, plant and equipment | -4,007 | -2,286 | -12,979 | -10,806 |
| Acquisition of financial assets | -953 | - | -131,253 | - |
| Sale of financial assets | - | 613 | - | 902 |
| Cash flow from investing activities | -10,758 | -11,832 | -178,411 | -36,903 |
| Financing activities | ||||
| Dividend to shareholders | - | - | -90,600 | -80,893 |
| Loan raised | 623 | - | 109,942 | - |
| Repayment of loans | - | -24 | - | -160 |
| Cash flow from financial activities | 623 | -24 | 19,342 | -81,053 |
| Cash flow for the period | 41,487 | 54,317 | -4,064 | 50,976 |
| Cash and cash equivalents opening balance | 134,059 | 119,552 | 174,263 | 128,622 |
| Exchange differences in liquid assets | 1,475 | 394 | 6,821 | -5,336 |
| Cash and equivalents closing balance | 177,020 | 174,263 | 177,020 | 174,263 |
| Additional information: | ||||
| Adjustments for non-cash items | ||||
| Depreciations and impairments | 10,634 | 8,488 | 39,412 | 34,225 |
| Other items | -1,229 | 411 | -11,727 | 1,991 |
| Total | 9,404 | 8,899 | 27,684 | 36,216 |
| 2018-10-01 2017-10-01 2018-01-01 2017-01-01 | ||||
|---|---|---|---|---|
| Amounts in SEK thousands | 2018-12-31 2017-12-31 2018-12-31 2017-12-31 | |||
| Net sales | 665 | 575 | 2,537 | 2,304 |
| Administrative expenses | -7,158 | -4,426 | -21,998 | -18,012 |
| Research and development costs | -570 | -657 | -2,467 | -2,874 |
| Other operating items | -19 | -23 | 17 | 14 |
| Operating expenses | -7,747 | -5,106 | -24,448 | -20,871 |
| Operating profit/loss | -7,082 | -4,530 | -21,911 | -18,567 |
| Profit/loss from financial investments: | ||||
| Interest income from receivables from group companies | 175 | 150 | 216 | 150 |
| Interest expense from liabilities to group companies | - | -636 | - | -2,550 |
| Other interest and similar income | 594 | - | 3,335 | 4,609 |
| Other interest and similar expenses | -417 | -548 | -1,613 | - |
| Group contribution received | 90,645 | 86,334 | 90,645 | 86,334 |
| Financial net income | 90,998 | 85,300 | 92,584 | 88,543 |
| Profit/loss before income tax | 83,916 | 80,770 | 70,673 | 69,976 |
| Tax expenses | -20,126 | 6,608 | -14,872 | 8,649 |
| Total profit/loss for the period | 63,790 | 87,378 | 55,801 | 78,626 |
| STATEMENT OF COMPREHENSIVE INCOME. PARENT | ||||
| Total profit/loss for the period | 63,790 | 87,378 | 55,801 | 78,626 |
| Other comprehensive income: | ||||
| Components that may be reclassified to net income: Translation differences related to |
- | - | - | - |
| Total comprehensive income, parent | 63,790 | 87,378 | 55,801 | 78,626 |
| Amounts in SEK thousands | 2018-12-31 | 2017-12-31 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Intangible assets | ||
| Patents and licenses | 10,983 | 10,053 |
| 10,983 | 10,053 | |
| Financial assets | ||
| Investments in group companies | 471,922 | 470,398 |
| Receivables from group companies | 169,378 | 11,685 |
| Shares in associated companies | 19,284 | 19,284 |
| Deferred tax asset | 33,623 | 48,495 |
| 694,207 | 549,863 | |
| Total non-current assets | 705,190 | 559,916 |
| Current assets | ||
| Current receivables | ||
| Receivables from group companies | 73,783 | 55,600 |
| Other receivables | 2,616 | 307 |
| Prepaid expenses and accrued income | 2,389 | 3,410 |
| 78,788 | 59,317 | |
| Cash and cash equivalents | 2,111 | 1,459 |
| Total current assets | 80,899 - |
60,776 - |
| TOTAL ASSETS | 786,088 - |
620,692 - |
| EQUITY, PROVISIONS AND LIABILITIES | ||
| Equity | ||
| Restricted equity | ||
| Share capital | 89,953 | 89,953 |
| Unrestricted equity | 89,953 | 89,953 |
| Retained earnings | 380,532 | 392,507 |
| Profit/loss for the year | 55,801 | 78,626 |
| 436,333 | 471,133 | |
| Total equity | 526,286 | 561,086 |
| 0 | - | - |
| Longterm liabilities | ||
| Liabiliteis to credit institutions | 110,000 110,000 |
- - |
| Current liabilities | ||
| Trade payables | 1,717 | 876 |
| Liabilities to group companies | 139,974 | 50,669 |
| Other current liabilities | 71 | 47 |
| Accrued expenses and prepaid income | 8,041 | 8,014 |
| 149,802 | 59,607 | |
| TOTAL EQUITY, PROVISIONS AND LIABILITIES | 786,088 | 620,692 |
The Group reporting of Biotage is based on International Financial Reporting Standards as adopted by the EU. The Group's interim report is prepared in accordance with IAS 34 Interim Reporting and the Swedish Accounting Act. The parent company's interim report is prepared in accordance with the Swedish Accounting Act and The Swedish Financial Reporting Board's recommendation RFR 2 Reporting for Legal Entities. The Group and the parent company have applied the same accounting principles and calculation methods in the interim report as in the latest annual report. Information according to IAS 34 Interim Reporting is given in notes as well as in other places in the interim report. Changed and new standards and interpretations from IASB and IFRS Interpretations Committee which have come into effect and apply to the fiscal year 2018 have not had any effect on the Group's financial reporting.
In the preparation of the Group's and the parent company's interim reports, the same accounting principles and calculation methods were applied as in the preparation of the Annual Report for 2017. These are described on pp. 42-50 in the Annual Report.
For balance sheet items figures in brackets refer to the value at the end of the corresponding period last year. For result and cash flow items the corresponding period last year is referred to.
IFRS 9 Financial instruments replaces IAS 39 Financial instruments: Recognition and measurement. The application of IFRS 9 came into effect on January 1 2018. IFRS 9 includes new requirements on classification and measurement of financial instruments, for write-off, impairment and general rules for hedge accounting. The new standard affects the principles of provision for credit losses. The assessment of expected credit losses shall be made directly at the time the credit is incurred, while earlier it was made when an indication of credit loss appeared. This affects the principles for the provision of customer receivables. IFRS 9 does not have any significant effect on the Group's income statement or financial position.
IFRS 15 Revenue from contracts with customers replaces IAS 18 Revenue and IAS 11 Construction contracts. The basic principle for revenue recognition according to IFRS 15 is that a company shall recognize revenue in a way that reflects the transfer of the promised goods or service to the customer, at the amount that the company expects to be entitled to receive in exchange for the goods or service. Revenue is recognized when the customer obtains control of the goods or services. There is extensive guidance in IFRS 15 for specific areas and the disclosure requirements are extensive. IFRS 15 came into effect on January 1 2018. It has not meant any significant changes, as revenue is already recognized in a way that in all essentials coincides with the requirements in IFRS 15. The transition has not had any effect on the accounting. The information regarding the composition of the net sales was extended in accordance with IFRS 15starting last year.
IFRS 16 Leases replaces IAS 17 Leasing agreements. IFRS 16 introduces a new "right of use model" which for the lessee means that practically all leasing agreements shall be reported on the balance sheet, no classification into operational and financial leasing agreements shall thus be made. IFRS 16 is applicable for financial years starting January 1 2019. An analysis of the Group's leasing agreements has been performed in order to ensure that the requirements in the new standard can be met. The largest leasing agreements in the Group relate to leasing of rental contracts and passenger cars and are currently reported exclusively as operational leasing.
As transition method to IFRS 16 a modified retroactive method has been chosen, where the asset value consequently has been set equal to the liability. Calculations made show that leasing assets will have an opening value of 65 MSEK and leasing liabilities will amount to 65 MSEK. There will be no effect on equity while the effect on the result after tax in 2019 is calculated to -0.4 MSEK,
based on existing leasing agreements at the turn of the year 2018. The Group expects the operating profit for 2019 to increase with approx. 0.4 MSEK compared to what would have been the case if the previous accounting principles had been applied, as a part of the leasing costs will now be reported as interest expense. The effect on the result after tax is calculated to – 0.4 MSEK. The cash flow from operating activities is expected to increase and the cash flow from financing activities to decrease with approx. 18 MSEK as the amortization part of the leasing fees will be reported as disbursement of financing activities.
The corporate management's assessment is that the other new and revised standards and interpretations will not have any material effect on the Group's financial statements for the period in which they are applied for the first time. The effects of the new standard will be reported in the 2018 Annual Report.
In 2018 Biotage had a financial asset of 0 MSEK (0.7) measured as fair value concerning an option to acquire all outstanding shares in Chreto Aps. The option expired on December 31, but before then, on December 18, the Board of Directors in Biotage announced its intention to initiate negotiations concerning an acquisition of the company Chreto after a decision not to exercise the current call option to acquire all outstanding shares in Chreto. Biotage owns 22 percent of Chreto. Calculations of fair value are based on level 3 in the fair value hierarchy, which means that fair value has been established according to a valuation model where essential inputs are based on unobservable data. Other financial assets and financial debts are measured according to accrued acquisition value and the value reported for these is considered to be a good approximation of fair value.
For definitions of the key ratios and financial metrics used in the Group's financial reporting, see Biotage's Annual Report for 2017, page 76.
In this report Biotage discloses information that the corporate management uses to assess the development of the Group. Some of the financial metrics presented are not defined according to IFRS. The company believes that these metrics give valuable supplementary information to stakeholders and corporate management, as they contribute to the evaluation of relevant trends and the company's performance. As not all companies calculate financial metrics in the same way, they are not always comparable with the metrics used by other companies. These financial metrics should thus not be seen as a substitute for metrics defined according to IFRS.
Effective July 3, 2016 ESMA's guidelines on "alternative performance measures" are applied, which means increased information demands concerning financial metrics not defined by IFRS. An explanation of the financial metrics that Biotage finds relevant according to the new guidelines is given below.
As the major part of the Group's income is paid in other currencies than the accounting currency SEK, the reported sales are affected to a relatively high degree by exchange rate variations between the periods. In order for stakeholders and corporate management to be able to analyze the sales development cleared of currency effects the company reports the sales development in relation to the comparative period at constant exchange rates. The current period's sales in the respective currencies are recalculated according to the exchange rates used in the reporting of the comparative period.
| Fourth quarter | 12 months | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Sales change in % | 10/1/2018 | 10/1/2017 | 1/1/2018 | 1/1/2017 | |||||
| 12/31/2018 | 12/31/2017 | 12/31/2018 | 12/31/2017 | ||||||
| KSEK | % | KSEK | % | KSEK | % | KSEK | % | ||
| Reported sales in the comparison period | 188,888 | 179,145 | 748,147 | 667,912 | |||||
| Reported sales in the period* | 217,965 | 188,888 | 840,177 | 748,147 | |||||
| Reported Change | 29,077 | 15.4 | 9,743 | 5.4 | 92,031 | 12.3 | 80,235 12.0 | ||
| Sales in current period to the comparable periods exchange rates* |
203,849 | 191,832 | 808,108 | 752,422 | |||||
| Change to comparable rates | 14,961 | 7.9 | 12,687 | 7.1 | 59,961 | 8.0 | 84,510 12.7 | ||
* Excluding sales from companies acquired during the year
In order for stakeholders and corporate management to be able to follow and analyze the Group's financial strength, information on the Group's net cash is reported defined as cash reduced by liabilities to credit institutions.
| Net cash | 12/31/2018 12/31/2017 | |
|---|---|---|
| Cash | 177.0 | 174.3 |
| Liabilities to credit institutions | -109.4 | 0.0 |
| Net cash | 67.6 | 174.3 |
Biotage has chosen to report graphs of the net sales and the operating result on a rolling 12 month basis as corporate management also follows the development over time on a rolling 12 month basis and believes that this provides supplementary information to the calendar-based interim data otherwise given in the report.
| Rolling 12 months | 12/31/2018 | 12/31/2017 | |||
|---|---|---|---|---|---|
| 1/1/2018 | Rolling 12 | 1/31/2017 | Rolling 12 | ||
| 12/31/2018 | months | 12/31/2017 | months | ||
| Net sales | 910.9 | 910.9 | 748.1 | 748.1 | |
| Operating profit | 172.5 | 172.5 | 133.6 | 133.6 | |
| Net sales increase % | 21.8% | 12.0% |
In this report Biotage uses the result measure EBIT, Earnings Before Interest and Taxes, as an alternative term for operating profit.
At December 31, 2018 Biotage had pledged assets amounting to 22.5 MSEK (22.5), no material change has occurred during the reporting period. There are no contingent liabilities of a material character.
On January 16, 2018 Biotage AB acquired 100 percent of the privately held company Horizon Technology Inc. Horizon, based in New Hampshire, USA, is a supplier of automated systems and consumables for separation in the areas of water purification, food testing, petrochemicals and the pharma industry. Horizon's product offering complements Biotage's product portfolio well and strengthens Biotage's position above all in the areas of food safety and environmental applications. Biotage's global direct sales are furthermore expected to benefit the sales of Horizon's products. Biotage acquired all shares in Horizon by cash payment of the entire purchase price of 143 MSEK on the day of acquisition.
In this acquisition analysis no differences between book values and actual values concerning other receivables have been identified.
| Tangible fixed assets | 0.6 |
|---|---|
| Intangible assets: Customer relations | 26.4 |
| Intangible assets: Trademarks | 13.0 |
| Intangible assets: Patents/technology | 19.5 |
| Other intangible assets | 2.1 |
| Stock | 8.2 |
| Accounts receivable and other receivables | 9.0 |
| Cash and cash equivalents | 12.7 |
| Accounts payable and other operating liabilities | -10.0 |
| Deferred tax | -12.4 |
| Net identifiable assets and liabilities | 69.2 |
| Consolidated goodwill | 73.3 |
| Transferred payment | 142.5 |
In the acquisition analysis goodwill amounts to 73 MSEK. The goodwill included in the acquisition corresponds partly to Biotage's estimated ability to increase the sales of Horizon's products in a bigger marketplace due to its global sales organization, partly to the synergies that occur as Biotage's product offering is widened, and also to the knowledge in the environmental area and in water purification that exists in the acquired company. This goodwill is not deemed to be tax deductible.
The acquisition related expenses amounted to 2.8 MSEK and relate to fees paid for external legal counsel and consultants in connection with due diligence, among other things. 2.5 MSEK of these costs were reported already in 2017. The expenses have been reported under Administration costs in the Group's statement of profit or loss and other comprehensive income.
On January 15, 2019 Biotage AB acquired 100 percent of the privately held company PhyNexus, Inc., based in California, USA. Through the acquisition Biotage strengthens its position as a separations company in the growing biomolecules area. With PhyNexus' innovative technology platform with patented pipette-based consumables Biotage will be able to offer its global customers automated solutions for efficient purification of biomolecules such as proteins, plasmids and antibodies in laboratory scale. Biotage predicts that this platform long-term has the potential to address a growing market worth several billion USD. The acquired technology platform can enable the development of new approaches for clinical tests and tests in forensic medicine, the environment and food with streamlined workflows, through dispersive solid phase extraction in combination with high throughput pipetting robotics and development programs for new consumables.
The purchase price amounts to a total of approx. 21.4 MUSD, corresponding to approx. 191.3 MSEK1 , based on a debt-free value, net of cash. Of the total purchase price approx. 10.0 MUSD (approx. 89.3 MSEK) are expected future additional purchase payments for the years 2019 to 2023, which will be based on future results. The remaining purchase price of approx. 11.4 MUSD (approx. 102.0 MSEK) was paid when taking possession. Of this sum approx. 6.6 MUSD (approx. 58.6 MSEK) were in the form of 487,337 newly issued shares in Biotage and approx. 4.8 MUSD (approx. 43.3 MSEK) was cash payment.
The issue of consideration shares for the acquisition increases the number of shares in Biotage from 64,714,447 to 65,201,784, which will result in a dilution of 0.7 percent for existing shareholders. The new shares have been subscribed by the main owners in PhyNexus (including the largest shareholder Doug Gjerde, who represents approx. 60 percent of the shares and votes in PhyNexus). Additional shares may be issued in connection with the price adjustments that may be made after the completion of the acquisition and at the payment of future additional purchase sums.
In this acquisition analysis no differences between book values and actual values concerning other receivables have been identified.
| The acquired company's net assets at the time of acquisition | Acquisition analysis (preliminary) |
|---|---|
| Tangible fixed assets | 0.0 |
| Intangible assets: Customer relations | 49.2 |
| Intangible assets: Trademarks | 10.3 |
| Intangible assets: Patents/technology | 13.4 |
| Stock | 8.3 |
| Accounts receivable and other receivables | 5.3 |
| Cash and cash equivalents | 3.7 |
| Accounts payable and other operating liabilities | -3.1 |
| Deferred tax | -15.3 |
| Net identifiable assets and liabilities | 71.8 |
| Consolidated goodwill | 119.4 |
| Transferred payment | 191.3 |
In the acquisition analysis goodwill amounts to 119 MSEK. The goodwill included in the acquisition corresponds partly to Biotage's estimated ability to increase the sales of PhyNexus' products in a bigger marketplace due to its global sales organization, partly to the synergies that occur as Biotage's product offering is widened, and also to the knowledge in the area of biomolecules that exists in the acquired company. This goodwill is not deemed to be tax deductible.
The acquisition related expenses amounted to 3.2 MSEK with a cash flow effect of -3.1 MSEK and relate to fees paid for external legal counsel and consultants in connection with due diligence, among other things. The expenses have been reported under Administration costs in the Group's statement of profit or loss and other comprehensive income.
1) Based on an exchange rate SEK/USD of 8.93
| Fourth quarter | 12 months | ||||
|---|---|---|---|---|---|
| 10/1/2018 | 10/1/2017 | 1/1/2018 | 1/1/2017 | ||
| Composition of income: | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | |||
| Net sales - distribution between products and services: |
|||||
| Products | 212,817 | 183,575 | 823,870 | 670,206 | |
| Services | 20,279 | 3,538 | 79,645 | 71,838 | |
| Other sales revenue | 1,478 | 1,775 | 7,381 | 6,103 | |
| Total sales revenue | 234,574 | 188,888 | 910,896 | 748,147 |
| Organic Chemistry | Analytical Chemistry | Industrial products | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Revenue by geographical market | 10/1/2018 | 10/1/2017 | 10/1/2018 | 10/1/2017 | 10/1/2018 | 10/1/2017 | 10/1/2018 | 10/1/2017 |
| and product area Q1 2017 | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | ||||
| North- and South America | 42,499 | 35,836 | 49,766 | 29,617 | 10,101 | 9,162 | 102,367 | 74,616 |
| Europa | 31,871 | 39,667 | 25,282 | 17,392 | 7,343 | 12,676 | 64,496 | 69,736 |
| Japan | 16,410 | 14,713 | 4,869 | 3,042 | 4,459 | 1,749 | 25,737 | 19,504 |
| China | 18,685 | 10,246 | 5,998 | 4,129 | 313 | 1,094 | 24,995 | 15,469 |
| EMEA and APAC | 3,052 | 1,730 | 4,431 | 3,230 | 214 | 168 | 7,697 | 5,128 |
| South Korea | 5,188 | 2,929 | 1,114 | 707 | 527 | 547 | 6,830 | 4,184 |
| India | 2,260 | 81 | 180 | 28 | 12 | 143 | 2,452 | 251 |
| Total sales revenue | 119,964 | 105,203 | 91,641 | 58,146 | 22,968 | 25,539 | 234,574 | 188,888 |
| Organic Chemistry | Analytical Chemistry | Industrial products | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Revenue by geographical market | 1/1/2018 | 1/1/2017 | 1/1/2018 | 1/1/2017 | 1/1/2018 | 1/1/2017 | 1/1/2018 | 1/1/2017 |
| and product area Q1 2018 | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | ||||
| North- and South America | 159,172 | 151,631 | 187,853 | 129,862 | 39,161 | 37,014 | 386,186 | 318,507 |
| Europa | 128,837 | 130,355 | 89,681 | 64,687 | 26,741 | 26,253 | 245,259 | 221,295 |
| Japan | 75,580 | 71,630 | 12,298 | 12,334 | 15,912 | 8,815 | 103,790 | 92,779 |
| China | 70,856 | 48,911 | 17,125 | 12,884 | 1,010 | 2,508 | 88,991 | 64,304 |
| EMEA and APAC | 15,357 | 10,217 | 23,325 | 11,903 | 1,950 | 2,750 | 40,632 | 24,869 |
| South Korea | 22,661 | 15,729 | 10,359 | 3,778 | 2,931 | 1,603 | 35,951 | 21,110 |
| India | 8,474 | 3,801 | 1,017 | 663 | 596 | 820 | 10,087 | 5,284 |
| Total sales revenue | 480,937 | 432,273 | 341,658 | 236,111 | 88,301 | 79,762 | 910,896 | 748,147 |
The distribution relates to sales per product area to customers located in the above geographical areas.
| Fourth quarter | 12 months | ||||
|---|---|---|---|---|---|
| 10/1/2018 | 10/1/2017 | 1/1/2018 | 1/1/2017 | ||
| Revenue by sales channel | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | |||
| Direct sales through own sales channel |
226,877 | 183,760 | 870,264 | 717,994 | |
| Sales through distributors | 7,697 | 5,128 | 40,632 | 30,153 | |
| Total sales revenue | 234,574 | 188,888 | 910,896 | 748,147 |
| Fourth quarter | 12 months | ||||
|---|---|---|---|---|---|
| Point in time of transfer of goods | 10/1/2018 | 10/1/2017 | 1/1/2018 | 1/1/2017 | |
| and services | 12/31/2018 12/31/2017 | 12/31/2018 12/31/2017 | |||
| Goods transferred at a point in time | 214,274 | 167,552 | 831,251 | 676,309 | |
| Services transferred at a point in time |
4,474 | 8,957 | 20,381 | 23,200 | |
| Service contracts and other services transferred over a period of time |
15,826 | 12,378 | 59,264 | 48,638 | |
| Total sales revenue | 234,574 | 188,888 | 910,896 | 748,147 |
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