Annual Report • Feb 7, 2019
Annual Report
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(Figures in parentheses and comparative figures in the text refer to the corresponding period of last year. The comparative figures in the balance sheet refer to 31 December 2017).
"2018 was yet another year of strong growth for BioGaia. We achieved sales of SEK 742 million which represents growth of 16% excluding foreign exchange effects. Sales increased in all regions, EMEA, Asia Pacific and the Americas, and in both the Pediatrics and Adult Health segments. Our growth continues to outpace the market which is expected to grow by approximately 10% per year. As the new Managing Director, I am taking charge of a business with a positive trend – and with major potential," says Isabelle Ducellier, Managing Director BioGaia.
Net sales amounted to SEK 209.7 million (170.1), an increase of 23% (excluding foreign exchange effects, 16%).
Net sales in the Pediatrics segment reached SEK 158.0 million (138.6), an increase of 14%.
Net sales in the Adult Health segment amounted to SEK 49.1 million (31.0), an increase of 58%.
Operating profit amounted to SEK 75.1 million (61.9), an increase of 21%. The company has a changed accounting standard as of 1 January 2018, which means that foreign exchange gains/losses attributable to forward contracts are recognized in operating profit (previously in financial items). These amounted to SEK 2.6 million (-2.8). With an unchanged standard, operating profit would have amounted to SEK 72.5 million (64.7), an increase of 12%.
Profit after tax was SEK 57.0 million (48.4), an increase of 18%.
Earnings per share totaled SEK 3.29 (2.79). No dilutive effects arose.
Cash flow amounted to SEK 26.9 million (65.5). The difference is due to increased working capital.
Isabelle Ducellier took over as the new Managing Director in November.
MetaboGen's first product became ready for safety study.
No key events occurred after the end of the period.
Net sales amounted to SEK 741.9 million (615.0), an increase of 21% (excluding foreign exchange effects, 16%).
Net sales in the Pediatrics segment reached SEK 596.5 million (492.6), an increase of 21%.
Net sales in the Adult Health segment amounted to SEK 141.7 million (116.2), an increase of 22%.
Operating profit amounted to SEK 277.4 million (233.0). Operating profit excluding revaluation of the former associate shareholding in MetaboGen, amounted to SEK 270.4 million (233.0), an increase of 16%. With an unchanged accounting standard (see comments on operating profit for the fourth quarter), operating profit, excluding the revaluation of MetaboGen, would have amounted to SEK 276.5 million (233.8), an increase of 18%.
Profit after tax was SEK 214.2 million (180.6), an increase of 19%. Excluding revaluation of the former associate shareholding in MetaboGen, profit after tax rose 15%.
Earnings per share totaled SEK 12.40 (10.42). No dilutive effects arose.
Cash flow amounted to SEK -22.9 million (63.5). The negative cash flow is due to the acquisition of MetaboGen, dividends and an increase in working capital. Cash and cash equivalents at 31 December 2018 amounted to SEK 285.0 million (305.9).
The Board proposes that the upcoming Annual General Meeting on 8 May 2019 approves an ordinary dividend according to the policy of SEK 4.05 (4.31) per share and an extraordinary dividend of SEK 5.95 (4.69) per share, amounting to a total dividend of SEK 10.00 (9.00) per share.
The Board further proposes that the upcoming Annual General Meeting approves a provision of SEK 3.2 million (2.7) to the "Foundation to prevent antibiotic resistance".
Teleconference: Investors, analysts and the media are invited to take part in a teleconference on the year-end report to be held today 7 February 2019 at 09:30 CET with Managing Director Isabelle Ducellier. To participate in the teleconference, please see https://www.biogaia.com/investors/financial-calendar for telephone numbers. The teleconference can also be followed at https://tv.streamfabriken.com/biogaia-q4-2018.
This is a translation of the Swedish version of the interim report. When in doubt, the Swedish wording shall prevail.
The Board of Directors and the Managing Director of BioGaia AB hereby present the year-end report for 2018.
2018 was yet another year of strong growth for BioGaia. We achieved sales of SEK 742 million which represents growth of 16% excluding foreign exchange effects. Sales increased in all regions, EMEA, Asia Pacific and the Americas, and in both the Pediatrics and Adult Health segments. Our growth continues to outpace the market which is expected to grow by approximately 10% per year. As the new Managing Director, I am taking charge of a business with a positive trend – and with major potential.
Sales for the fourth quarter of 2018 amounted to SEK 210 million, which was an increase of 23% (16% excluding foreign exchange effects) compared to the same period of last year.
Sales in the Pediatrics segment amounted to SEK 158 million, an increase of 14% (7% excluding foreign exchange effects) compared to the fourth quarter last year. The increase was driven by strong sales growth for BioGaia Protectis drops in all markets, but above all in the Americas, as well as favorable growth for BioGaia Protectis tablets.
Sales in the Adult Health segment increased by a full 58% (48% after foreign exchange effects), compared to the fourth quarter last year, to SEK 49 million. Sales of both BioGaia Prodentis oral health lozenges and BioGaia Protectis tablets showed strong growth. Sales of oral health products increased above all in Japan but also in several countries in Europe. Oral health lozenges are now sold in some 30 countries. It is also satisfactory to see that sales of BioGaia Protectis tablets are rising again after the weak third quarter. Sales increased in all regions but especially in EMEA and Asia Pacific. In Finland, competition remains intense but our partner there has a positive view of the market for the coming year. Sales of BioGaia Gastrus increased marginally during the quarter but we can see higher demand and launches in new countries continue.
Operating expenses increased by 20% during the quarter. The increase is mainly attributable to R&D costs where we are making considerable investments in new research projects, clinical studies and product development. We have also increased our investments in marketing activities. All these factors also create an increased personnel requirement. Since the fourth quarter of last year, we have increased the number of employees by 23 people, including three attributable to the acquisition of MetaboGen and ten in the subsidiary in Japan.
Due to the strong sales growth, operating profit increased, despite higher expenses, by 21% to SEK 75 million and the operating margin amounted to 36% (36). With unchanged accounting standards, operating profit would have amounted to SEK 73 million with an operating margin of 35% (38).
A number of launches of existing products in established markets took place during the quarter – see table on page 3.
I took over as the new Managing Director at the beginning of November and during my first months at BioGaia I have visited some of our most important distributors around the world. I am impressed by their work in their markets, but there is much still to be done in particular regarding the launch of existing products in more countries and when it comes to consumer marketing. We will now look specifically at China and the USA where a large proportion of our sales already today take place via Alibaba in China and Amazon in the USA.
Another thing I have noted during my travels is the substantial demand for probiotic products and it is gratifying to see how this market is growing worldwide. With a growing older population, I also see higher demand for products that contribute to healthy aging.
Finally, I would like to thank BioGaia's employees for yet another fantastic year and I look forward with confidence to the years ahead.
Isabelle Ducellier Managing Director BioGaia 7 February 2019
Consolidated net sales amounted to SEK 209.7 million (170.1) which is an increase of SEK 39.6 million (23%) (excluding foreign exchange effects, 16%) compared to the fourth quarter of last year.
Sales in the Pediatrics segment amounted to SEK 158.0 million (138.6), an increase of 14% (excluding foreign exchange effects, 7%). This was mainly due to higher sales of BioGaia Protectis drops which increased in all regions but primarily in the Americas. Sales of BioGaia Protectis tablets in the Pediatrics segment also increased during the quarter, mainly in the Americas and EMEA. Royalties from sales of Growing Up Milk with Lactobacillus reuteri Protectis for children older than one year to Nestlé decreased by SEK 10 million compared to the fourth quarter of the previous year. As already communicated, this is due to a reduction in the geographic scope of the agreement.
Sales in the Adult Health segment amounted to SEK 49.1 million (31.0), an increase of 58% (excluding foreign exchange effects, 48%). This was due to increased sales of BioGaia Prodentis oral health lozenges, primarily in Asia Pacific but also in EMEA, and increased sales of BioGaia Protectis tablets which rose in all regions but mainly in EMEA and Asia Pacific. Sales of BioGaia Gastrus tablets increased slightly during the quarter.
The total gross margin for the quarter was 75% (77%). The gross margin for the Pediatrics segment was 76% (78%). The decrease is related to lower royalties. The gross margin for the Adult Health segment was 72% (71%). The increase is mainly due to increased sales in Japan where margins are higher.
Operating expenses (selling, administrative and R&D expenses) rose by SEK 13.6 million (20%) compared to the fourth quarter of last year to SEK 83.0 million. The increase is due to higher personnel expenses, increased costs for research projects and clinical studies as well as marketing activities. Expenses also include a provision for the incentive program of SEK 4.5 million (3.0) (see below under Employees). Also included are expenses of SEK 2.2 million (1.0) for the subsidiaries BioGaia Pharma and MetaboGen (which has been consolidated in the Group since 6 April 2018).
Other operating expenses/income refer to exchange gains/losses on receivables and liabilities of an operating nature and amounted to SEK 0.5 million (-0.2). The company changed its accounting standard as of 1 January 2018, after which all exchange gains/losses attributable to forward exchange contracts are recognized in other operating expenses/income (previously in financial items). These amounted to SEK 2.6 million (-2.8).
Operating profit amounted to SEK 75.1 million (61.9), an increase of 21%. Operating margin was 36% (36%). Excluding the effect of changed accounting standards, operating profit rose by 12% to SEK 72.5 million and the operating margin was 35% (38%).
Profit after tax amounted to SEK 57.0 million (48.4) an increase of SEK 8.6 million (18%). The effective tax rate was 24% (22%). The higher tax rate is due to a loss in the subsidiary MetaboGen where no deferred tax asset was recognized.
Earnings per share amounted to SEK 3.29 (2.79). No dilutive effects arose.
Launches in the fourth quarter
| Distributor/licensee | Country | Product |
|---|---|---|
| HansaMed | Canada | BioGaia Prodentis lozenges |
| Sunflower | China | BioGaia Protectis drops with vitamin D, BioGaia Prodentis lozenges |
| Casen/Recordati | Spain | BioGaia Protectis tablets with new flavor (strawberry) |
| Everidis | USA | BioGaia Prodentis lozenges |
Isabelle Ducellier took over as Managing Director on 5 November 2018. Isabelle's latest position was General Secretary at the Swedish Childhood Cancer Fund. She previously held a number of senior positions within the Pernod Ricard Group for 20 years, in particular as CEO of Pernod Ricard Sweden.
BioGaia's subsidiary MetaboGen has achieved an important development goal. In October, the company announced that the first version of its next generation probiotic product is now ready to go into a safety study. During the quarter the ethical application for the first safety study on humans was approved and the clinical study is underway.
Two bacterial strains from the human microbiome, Faecalibacterium prausnitzii (DSM 32379) and Desulfovibrio piger (DSM 32187), have been chosen in this project. Because of the oxygen sensitive properties of the strains, MetaboGen has developed, and patented, a unique production technology that gives the bacteria a significantly better ability to survive in oxygen. This has been a crucial step in the product development and something that may potentially also be suitable for other similar strains.
Future products based on these strains are intended to be used in the management of metabolic diseases, such as type 2 diabetes, gestational diabetes and non-alcoholic fatty liver disease.
No key events occurred after the end of the period.
Consolidated net sales totaled SEK 741.9 million (615.0) which is an increase of SEK 126.9 million (21%) (excluding foreign exchange effects, 16%) compared to the previous year.
Sales in the Pediatrics segment amounted to SEK 596.5 million (492.6) an increase of SEK 103.9 million (21%), (excluding foreign exchange effects, 17%). The increase was driven mainly by sales of BioGaia Protectis drops.
Sales of drops, which make up the bulk of sales, increased sharply in all regions. In EMEA sales rose in most countries but the increase was particularly strong in several countries in Eastern Europe, Spain, South Africa and France, in the Americas in the USA and Brazil, and in Asia Pacific primarily in China but also Indonesia, South Korea and India.
Sales of BioGaia Protectis tablets in the Pediatrics segment increased compared to the previous year above all in EMEA (mainly the Eastern European countries, Spain and France). In Asia Pacific and the Americas, sales were largely unchanged over the previous year.
Royalty revenues from the sale of Growing Up Milk with Lactobacillus reuteri Protectis for children over the age of one, decreased by approximately SEK 5 million compared to the previous year. As already communicated in earlier reports, BioGaia's royalty agreement with Nestlé expired at the end of the year. Nestlé has renegotiated the royalty agreement which restricted the number of markets compared with the previous agreement which applied worldwide. BioGaia's assessment is that the new agreement will lead to a reduction in royalty revenues of approximately SEK 40 million in 2019 compared to 2018.
Sales of culture, at low margins, for use in Nestlé's infant formula decreased compared to the previous year.
Royalty revenue from the collaboration agreement with Nestlé amounted to SEK 10.1 million (14.3). The collaboration agreement with Nestlé was signed in March 2014. Royalty revenue totals SEK 91.8 million and has been divided between the Pediatrics segment and Other Sales over the period 2014-2018. Through 31 December 2018, BioGaia has recognized total revenue of SEK 91.8 million, of which SEK 42.2 million in Other Sales and SEK 49.6 million in the Pediatrics segment.
Net sales in the Adult Health segment amounted to SEK 141.7 million (116.2), an increase of SEK 25.5 million (22%), (excluding foreign exchange effects, 16%) compared to the previous year.
Sales growth was mainly driven by oral health products which increased substantially compared to last year. Sales increased in Asia Pacific (Japan) and in EMEA (several countries). In the Americas, BioGaia Prodentis oral health lozenges have just been launched in the USA. At present, oral health lozenges are not sold in Latin America. The company is making active efforts to find additional distribution partners for the product.
Sales of BioGaia Protectis tablets also increased compared to the previous year. Sales rose in Asia Pacific, primarily Japan but also Hong Kong, while they decreased in EMEA. In EMEA sales increased in several markets including Belgium, Italy and Sweden but fell in Finland. In the Americas, sales increased slightly but remain at a low level.
Sales of BioGaia Gastrus tablets remain at a low level but increased sharply compared to last year. Sales rose in all regions in countries such as the USA, Spain, Japan, South Korea and Hong Kong. The company is making active efforts to find additional distribution partners for this product.
Other Sales amounted to SEK 3.7 million (6.3), a decrease of SEK 2.5 million (40%). No foreign exchange effects arose. Other sales included royalty revenue of SEK 0 million (3.5) relating to the collaboration agreement with Nestlé (see above under Pediatrics).
Sales in EMEA amounted to SEK 437.9 million (393.5), an increase of 11%. The increase was mainly attributable to the Pediatrics segment but the Adult Health segment also increased.
Sales in Asia Pacific amounted to SEK 130.1 million (95.5), an increase of 36%. The increase was more or less equally divided between the Pediatrics and Adult Health segments.
In the Americas, sales amounted to SEK 173.9 million (126.1), an increase of 38%. The increase was mainly attributable to the Pediatrics segment.
Of total finished consumer products (drops, tablets, oral health lozenges, oral rehydration solution, etc.) sold in 2018, 69% (69%) were sold under the BioGaia brand including co-branding.
Total gross margin was unchanged at 75% (75%).
Gross margin for Pediatrics amounted to 76% (77%). The slightly lower gross margin was due to lower royalty revenue during the year.
The gross margin for the Adult Health segment was 71% (67%). The increase was mainly due to higher sales in Japan where the margin is higher than in other markets.
Operating expenses (selling, administrative and R&D expenses) amounted to SEK 280.5 million (224.9), an increase of 25%. During the year major marketing activities were carried out in a number of countries (including Italy, Brazil and Sweden). In addition, personnel expenses rose because of an increase in the number of employees and a one-time expense of SEK 3.1 million for the outgoing Managing Director. Expenses also include a provision to the incentive program of SEK 10.9 million (5.6) (see below under Employees). In addition, R&D costs increased due to research projects and a large number of ongoing clinical studies.
Furthermore, the Group includes two new companies since last year, BioGaia Pharma AB and MetaboGen AB. Expenses for these companies amounted to SEK 8.3 million (1.4).
Other operating expenses/income refers to exchange gains/losses on receivables and liabilities of an operating nature. These amounted to SEK -4.6 million (-4.7). The Group has changed an accounting standard (see below under New accounting standards) and with effect from 2018 (and including comparative figures for the previous year) recognizes exchange gains/losses on forward exchange contracts in operating profit or loss since the assessment is that they are attributable to operations. Other operating expenses/income include an exchange loss relating to forward exchange contracts of SEK 6.1 million (0.8). At 31 December 2018 the company had outstanding forward exchange contracts for EUR 14.1 million at an average exchange rate of SEK 10.08 and for USD 9.8 million at an average exchange rate of SEK 8.28. The actual exchange loss/gain depends on the exchange rate on the maturity dates of the contracts.
MetaboGen was an associated company in BioGaia until 6 April 2018. The share of profits of associates refers to BioGaia's share (36%) of MetaboGen AB's profits up to 6 April 2018 and amounted to SEK -0.5 million (-0.8).
Operating profit amounted to SEK 277.4 million (233.0). Operating profit, excluding revaluation of the former associate shareholding in MetaboGen, amounted to SEK 270.4 million (233,0), an increase of SEK 37.4 million (16%). The company changed an accounting standard with effect from 1 January 2018, which means that exchange gains/losses attributable to forward exchange contracts are recognized in operating profit or loss (previously in financial items). These amounted to SEK 6.1 million (0.8). With unchanged accounting standards, operating profit would have increased by 18%.
The operating margin amounted to 36% (38%). With unchanged accounting standards, the operating margin would amount to 37% (38%).
In a step acquisition all previous equity interests in the acquiree are adjusted to fair value and all gains or losses thus arising are recognized in profit or loss. As a result, a gain of SEK 7.0 million is recognized in operating profit regarding the previous associate shareholding in MetaboGen since BioGaia increased its holding to 62% in the second quarter and thereby obtained a controlling interest in MetaboGen whereby this company was consolidated as a subsidiary with effect from 6 April 2018.
Profit after tax amounted to SEK 214.2 million (180.6), an increase of SEK 33.6 million (19%). Excluding revaluation of the former associate shareholding in MetaboGen of SEK 7.0 million profit after tax increased by 15%.
The effective tax rate for the Group was 23% (22%).
Owing to the distribution and license agreement signed in Japan at the end of 2016, it will be possible to utilize a large share of the earlier loss carryforward in Japan in the Japanese company. The exclusivity fees relating to product rights will be recognized successively over the term of the agreement and a deferred tax asset was therefore recognized. At 31 December 2018 the deferred tax asset amounted to SEK 8.4 million (9.3). No deferred tax has been recognized for MetaboGen.
Earnings per share amounted to SEK 12.40 (10.42). No dilutive effects arose.
Total assets amounted to SEK 660,0 million (576.1). During the year cash and cash equivalents and equity decreased as a result of dividends, while inventories and trade receivables increased. The increase is due to higher sales. Furthermore, a surplus value due to the acquisition of MetaboGen increased total assets by SEK 51.2 million.
Cash flow amounted to SEK -22.9 million (63.6). Cash flow included dividends of SEK 158.7 million (130.0), as well as the net investment in MetaboGen of SEK 33.9 million (0). In addition, working capital increased by SEK 50.2 million mainly attributable to trade receivables and inventories due to increased sales. Cash and cash equivalents at 31 December 2018 amounted to SEK 285.0 million (305.9).
Investments in property, plant and equipment amounted to SEK 13.5 million (26.6) of which the majority relates to the subsidiary BioGaia Production.
Net sales in the Parent Company amounted to SEK 705.8 million (587.9) and profit before tax was SEK 229.6 million (232.1). The financial performance of the Parent Company is in all material respects in line with that of the Group.
The result for the year includes an impairment recognized in the shares in the subsidiary CapAble of SEK 7.5 million. The figures for the previous year included the reversal of a previously impaired receivable on a loan to the subsidiary in Japan of SEK 23.3 million since the subsidiary repaid part of the loan in the first quarter of 2017.
Cash flow amounted to SEK -46.5 million (55.1).
Net sales in the Japanese subsidiary amounted to SEK 61.2 million (44.7). Operating profit for the Japanese operations amounted to SEK 7.0 million (3.1). The figure for the previous year included compensation for knowhow transfer from the agreement with Kabaya Ohayo.
BioGaia Production is a wholly owned subsidiary of BioGaia that manufactures the company's products, primarily drops. Net sales amounted to SEK 104.2 million (81.7). Operating profit amounted to SEK 34.5 million (25,5).
CapAble is owned 90.1% by BioGaia and 9.9% by CapAble's Managing Director. Net sales in CapAble amounted to SEK 1.7 million (1.9). Operating profit was SEK -0.6 million (-1.4).
In June 2017, BioGaia announced that the company had established a subsidiary, BioGaia Pharma, to take advantage of the opportunities to develop drugs identified in the R&D activities conducted as part of the company's normal operations. BioGaia Pharma is owned 96% by BioGaia and 4% by the company's Managing Director. The company has no revenues. Operating profit for the period amounted to SEK -4.7 million (-1.4). The company has received a conditional shareholder contribution of SEK 8.0 million from the Parent Company, of which SEK 6.0 million in 2018.
MetaboGen is a research-driven company that was founded in 2011 in Gothenburg. The company's founders include Professor Fredrik Bäckhed at the University of Gothenburg and Professor Jens B. Nielsen at Chalmers University of Technology. These researchers still work with the company. MetaboGen conducts research in the microbiome area including sequencing of all genes in the microflora, for example in the human intestine, to find previously unknown components and patterns in the microbial diversity and link this to health and disease. BioGaia has owned 36% of the company since 2014. At the beginning of April 2018, an additional 26% of the company was acquired for SEK 11.7 million. Set milestones were achieved in the second quarter which led to new agreements with the University of Gothenburg and Chalmers University of Technology which give BioGaia and MetaboGen a more extensive and closer collaboration with the universities. At the beginning of July, BioGaia therefore acquired an additional 30% of MetaboGen's shares for SEK 27.8 million. BioGaia's shareholding thus amounts to 92%. BioGaia will also acquire the remaining 8% in the company within a three-year period. The additional purchase consideration can amount to a maximum of SEK 12 million depending on how many milestones are achieved.
Operating profit for MetaboGen starting from 6 April amounted to SEK -3.6 million.
The number of employees in the Group at 31 December 2018 was 143 (120). The Group acquired 36 new employees during the year, of whom 16 in BioGaia AB, 1 in BioGaia Pharma, 6 in BioGaia Production, 10 in BioGaia Japan and 3 from the acquisition of MetaboGen. 13 people left the Group during the year.
The company has an incentive program for all employees in BioGaia AB and BioGaia Production based on the company's sales and profits. The maximum bonus amounts to 12% of salary. Onethird of the bonus relates to a long-term incentive program where the employee is required to reinvest the yearly paid-out compensation (after tax) in BioGaia class B shares and hold these for at least three years. Maximum bonuses were achieved for 2018 and the costs of the incentive program amounted to SEK 10.9 million (5.6).
BioGaia's goal is to create strong value growth and a good return for the shareholders. This will be achieved through a greater emphasis on the BioGaia brand, increased sales to both existing and new customers and a controlled cost level.
The long-term financial target is an operating margin (operating profit in relation to sales) of at least 34% with continued strong growth and increased investments in research, product development, brand building and the sales organization.
BioGaia's dividend policy is to pay a shareholder dividend equal to 40% of profit after tax.
In view of the company's strong portfolio consisting of an increased number of innovative products that are sold predominantly under the BioGaia brand, successful clinical trials and an expanding distribution network that covers a large share of the key markets, BioGaia's future outlook remains bright.
Significant risks and uncertainties are described in the administration report of the annual report for 2017, on pages 40 and 41 and in Notes 28 and 29. No significant changes in these risks and uncertainties are assessed to have taken place at 31 December 2018.
The Parent Company owns 100% of the shares in BioGaia Biologics Inc. USA, BioGaia Japan Inc., BioGaia Production AB and Tripac AB. The Parent Company also owns 90.1% of the shares in CapAble AB and 96% of the shares in BioGaia Pharma AB. With effect from 4 July 2018 BioGaia owns 92.4% of the former associated company MetaboGen AB.
Annwall & Rothschild Investment AB holds 740,668 class A shares and 509,332 class B shares, corresponding to 7.2% of the share capital and 33% of the voting rights in BioGaia AB. Annwall & Rothschild Investment AB is owned by Peter Rothschild and Jan Annwall. Peter Rothschild is Chairman of the Board of BioGaia AB. The only transaction that took place during the period was a dividend of SEK 9.00 per share.
| A shares, |
B shares |
Share capital |
No. of votes |
Holding, | Votes, | ||
|---|---|---|---|---|---|---|---|
| 000s | 000s | SEK 000s | 000s | % | % | ||
| 1 | Annwall & Rothschild Inv. AB | 741 | 359 | 1,100 | 7,766 | 6.3% | 32.4% |
| 2 | Swedbank Robur fonder | 1,627 | 1,627 | 1,627 | 9.4% | 6.8% | |
| 3 | Fjärde AP-fonden | 1,408 | 1,408 | 1,408 | 8.1% | 5.9% | |
| 4 | Öhman Bank S.A | 1,164 | 1,164 | 1,164 | 6.7% | 4.9% | |
| 5 | State Street Bank & Trust co | 713 | 713 | 713 | 4.1% | 3.0% | |
| 6 | David Dangoor | 519 | 519 | 519 | 3.0% | 2.2% | |
| 7 | Banque Pictet &CiE | 459 | 459 | 459 | 2.6% | 1.9% | |
| 8 | SSB and Trust company, Boston | 413 | 413 | 413 | 2.4% | 1.7% | |
| 9 | State Street Bank & Trust com., Boston | 390 | 390 | 390 | 2,2% | 1.6% | |
| 10 | BNY Mellon SA/NV (Former BNY) | 332 | 332 | 332 | 1.9% | 1.4% | |
| Other shareholders | 9,211 | 9,211 | 9,211 | 53.1% | 38.4% | ||
| Total: | 741 | 16,596 | 17,336 | 24,002 | 100% | 100% |
This interim report has been prepared for the Group in accordance with IAS 34, Interim Financial Reporting and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act. Disclosures in accordance with IAS 34 are provided both in notes and elsewhere in the interim report.
The consolidated financial statements are presented in compliance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the interpretations published by the IFRS Interpretations Committee (IFRIC) that have been endorsed by the European Commission for application in the EU. Unless otherwise stated below, the accounting standards applied for the Group and the Parent Company are consistent with those used in preparation of the most recent annual report. The Parent Company presents its financial statements in accordance with RFR 2, Accounting for Legal Entities, and the Annual Accounts Act, and applies the same accounting and valuation policies as in the most recent annual report.
The accounting standards applied concur with those set out in the 2017 Annual Report with the exception of those applying to "Financial instruments" (IFRS 9 replaces IAS 39) and "Revenue from Contracts with customers" (IFRS 15 replaces IAS 18 och IAS 11).
The Group has reviewed its financial assets and liabilities and assessed that the effects of IFRS 9 on the consolidated financial statements at 1 January 2018 amounts to SEK 0.3 million. According to IFRS 9 entities shall recognize a reserve that corresponds to expected credit losses within the next 12 months. This means that BioGaia's trade receivables are written down at initial application of IFRS 9. In assessment of the credit risk, incurred credit losses and an adjustment for expected future losses provide the basis for the reserve. BioGaia has no incurred credit losses. Default rate shall be evaluated each quarter.
The adjustment relates to a reserve for uncertainty in trade receivables and has been recognized in changes in equity. At 31 December 2018 the reserve amounted to SEK 0.5 million. The difference compared to 1 January 2018 is recognized in profit or loss. The Group has also changed policy from recognition of all derivatives in net financial items to recognition based on the item they hedge. Changes in value in relation to operating receivables, liabilities and derivatives are recognized in operating profit or loss while changes in value of financial receivables, liabilities and derivatives are recognized in net financial items. Forward contract hedges are recognized at fair value through profit or loss in accordance with the items they hedge. This means the company's exchange gains and losses relating to forward exchange contracts are recognized in operations with effect from 1 January 2018.
New accounting standards for financial instruments are provided below.
.
Financial instruments recognized in the statement of financial position include on the assets side cash and cash equivalents, trade receivables, other current receivables and currency derivatives to the extent these have a positive fair value. On the liabilities side, there are trade payables, other current liabilities, loans and currency derivatives to the extent these have a negative fair value. The category to which the Group's financial assets and liabilities belong is specified in the note Financial assets and liabilities – classification and measurement of fair value.
A financial asset or liability is recognized in the statement of financial position when the company becomes party to the contractual terms of the instrument. A receivable, except trade receivables, is recognized when the company has performed and a contractual obligation exists for the counterparty to pay, even if no invoice has yet been sent. Trade receivables are recognized in the statement of financial position when an invoice has been sent. Liabilities, except trade payables, are recognized when the counterparty has performed and a contractual obligation to pay exists, even if an invoice has not yet been received. Trade payables are taken up when an invoice is received. A financial asset is derecognized from the statement of financial position when the contractual rights are realized, expire or the company has relinquished control. The same applies to part of a financial asset. A financial liability is derecognized from the statement of financial position when the contractual obligations are met or otherwise extinguished. The same applies to part of a financial liability. No currency derivatives or other financial assets and liabilities are offset in the statement of financial position since the terms for offsetting are not met. Acquisition and disposal of financial assets are recognized on the transaction date. The transaction date is the day the company undertakes to acquire or dispose of the asset.
Financial assets are classified on the basis of the business model in which the asset is held and its cash flow characteristic. If the financial asset is held within the framework of a business model whose objective is collecting contractual cash flows and the financial assets at identified dates give rise to cash flows that are solely payments of principal and interest on the principal, the asset is recognized at amortized cost.
If the financial asset is held in a business model whose objective can be achieved both by collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise to cash flows that are solely payments of principal and interest on the principal at identified dates, the asset is recognized at fair value through other comprehensive income.
All other business models where the purpose is speculation, held for trading or where the cash flow characteristic excludes other business models result in recognition at fair value through profit or loss.
Amortized cost for a financial asset is the amount at which the financial asset is measured at initial recognition minus principal repayments, plus the cumulative amortization using the effective interest method of any difference between that principal and the outstanding principal, adjusted for any impairment. The gross carrying amount of a financial asset is the amortized cost of a financial asset before adjustment for any loss allowance.
Financial liabilities are recognized at amortized cost using the effective interest method or at fair value through profit or loss.
Loans and other financial liabilities, e.g. trade payables, are included in this category. Liabilities are measured at amortized cost.
Financial liabilities at fair value through profit or loss
This category consists of financial liabilities held for trading. This category includes the Group's derivatives with negative fair value.
Effective from 1 January 2018 the Group recognizes a loss allowance for expected credit losses on a financial asset measured at amortized cost or fair value through other comprehensive income, for a lease receivable or for a contract receivable. At each closing date, the Group shall recognize in profit or loss the change in expected credit losses since the initial recognition date.
For trade receivables, contract assets and lease receivables there is a simplified model which means that the Group recognizes directly expected credit losses for the remaining term of the assets. The expected credit losses for these financial assets are calculated with the aid of a provision matrix which is based on historical events, current conditions and forecasts for future economic conditions and the time value of the money if applicable. For all other financial assets the Group shall measure a loss allowance to an amount that corresponds to 12 months' expected credit losses. For financial instruments for which a significant increase in credit risk has occurred since the initial recognition date, an allowance is recognized based on credit losses for the entire term to maturity of the asset.
Equity instruments are not subject to these impairment rules.
BioGaia has conducted a review of the Group's current policies for revenue recognition and compared these with IFRS 15. IFRS 15 means that revenue is recognized when control is transferred to a purchaser compared with the current method that is based on risks and rewards. The analysis of the introduction of IFRS 15 has been based on a detailed review of BioGaia's revenue streams. BioGaia has chosen to apply the modified retrospective method for transfer to IFRS 15. According to IFRS 15 this means that BioGaia recognized the combined effect of initial application of this standard as an adjustment to the opening balance of retained earnings for the financial year that includes the initial date of application, i.e. 1 January 2018 for BioGaia. This means that IFRS 15 is only applied retrospectively for contracts that are not completed at 1 January 2018. BioGaia has chosen to apply this practical solution to all contract changes that take place before the date of initial application (i.e. 1 January 2018) to not retroactively recalculate the contract for these contract changes.
After its completed analysis, BioGaia assesses that the effect on the consolidated financial statements will not have an impact on BioGaia's consolidated financial statements for 2018.
IFRS 15 includes a new model for revenue recognition (the five-step model) that is based on when control of a good or service is transferred to the customer. The basic principle is that an entity recognizes revenue to differentiate between the transfer of promised goods or services to customers and an amount that reflects the compensation to which the entity is expected to be entitled in exchange for such goods or services.
Step 1. Identify the contract with a customer
Step 2. Identify the performance obligations in the contract Step 3. Determine the transaction price
Step 4. Allocate the transaction price to each performance obligation
Step 5. Recognize revenue when a performance obligation is satisfied
Revenue is recognized on the basis of the amount specified in a contract with a customer and does not include any amounts received on account of a third party. BioGaia recognizes revenue when the Group transfers control of a product or service to a customer. Details of these new requirements and BioGaia's revenue streams are provided below.
BioGaia's revenues mainly comprise sales of goods. No commitment for BioGaia remains after delivery since BioGaia does not provide customers with any extended guarantees or the option to return. Control is transferred to the customer when the good is placed at the disposal of the purchaser. In addition to the sales of goods, other revenues consist of royalties or exclusivity rights linked to product distribution in a defined market/territory. These contracts include obligations over time and revenue is recognized in pace with fulfilment of BioGaia's performance obligations. The transaction price, i.e. the compensation BioGaia expects to receive in exchange for the goods and services is in most cases fixed and therefore easy to determine. Variable compensation exists in individual cases often in combination with minimum levels relating to compensation which simplifies assessment of the transaction price. In summary, the transfer to IFRS 15 will result in no change in BioGaia's accounting as regards the timing of revenue recognition.
BioGaia applies IFRS 16 Leases with effect from 1 January 2019. BioGaia has carried out a review of all leasing and rental contracts.
BioGaia has chosen the simplified transition method which means that on the date of initial application the right of use is set at an amount that corresponds to the lease liability. The right of use assets on the initial application date amount to SEK 24.8 million and leases with the highest materiality are rental contracts for the offices in Stockholm and Lund which amount to SEK 8.5 million and SEK 11.2 million respectively and expire in 2021 and 2026 respectively. At 1 January 2019 the company's assets will increase by SEK 24,8 million, liabilities by SEK 27.0 million and equity will decrease by SEK 2.2 million.
Most of the company's sales are denominated in foreign currency, primarily EUR but also USD and JPY. With unchanged exchange rates, compared with the previous year, net sales would have been SEK 27.5 million lower in 2018. Exchange rate differences affect both revenues and expenses.
| (Amounts in SEK 000s) | Jan-Dec | Jan-Dec | Oct-Dec | Oct-Dec |
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| Net sales (Note 1) | 741,870 | 615,003 | 209,673 | 170,148 |
| Cost of sales | -185,956 | -151,655 | -52,092 | -39,030 |
| Gross profit | 555,914 | 463,348 | 157,581 | 131,118 |
| Selling expenses | -153,109 | -127,115 | -46,259 | -39,649 |
| Administrative expenses | -27,653 | -22,063 | -6,886 | -6,031 |
| Research and development expenses | -99,742 | -75,700 | -29,822 | -23,743 |
| Share of profit of subsidiaries | -500 | -820 | - | 380 |
| Revaluation of former associate shareholding (Note 2) | 7,004 | - | - | - |
| Other operating expenses/income | -4,555 | -4,659 | 494 | -186 |
| Operating profit | 277,359 | 232,991 | 75,108 | 61,889 |
| Interest income | 641 | 112 | 367 | 112 |
| Financial expenses | -405 | -192 | -204 | -38 |
| Profit before tax | 277,595 | 232,911 | 75,271 | 61,963 |
| Deferred tax | -909 | -1,094 | -216 | -1,094 |
| Tax expense | -62,453 | -51,253 | -18,102 | -12,517 |
| PROFIT FOR THE PERIOD | 214,233 | 180,564 | 56,953 | 48,352 |
| Items that may be subsequently reclassified to profit or loss |
||||
| Gains/losses arising on translation of the | ||||
| statement of foreign operations | -187 | 565 | 85 | -287 |
| Comprehensive income for the period | 214,046 | 181,129 | 57,038 | 48,065 |
| Profit for the period attributable to: | ||||
| Owners of the Parent Company | 214,890 | 180,564 | 57,048 | 48,352 |
| Non-controlling interests | -657 | 0 | -95 | 0 |
| Comprehensive income for the period attributable | 214,233 | 180,564 | 56,953 | 48,352 |
|---|---|---|---|---|
| to: | ||||
| Owners of the Parent Company | 214,703 | 181,129 | 57,133 | 48,065 |
| Non-controlling interests | -657 | 0 | -95 | 0 |
| 214,046 | 181,129 | 57,038 | 48,065 | |
| Earnings per share | ||||
| Earnings per share (SEK) *) | 12.40 | 10.42 | 3.29 | 2.79 |
| Number of shares (thousands) | 17,336 | 17,336 | 17,336 | 17,336 |
| Average number of shares (thousands) | 17,336 | 17,336 | 17,336 | 17,336 |
*) No dilutive effects arose.
| CONSOLIDATED BALANCE SHEETS | 31 Dec | 31 Dec |
|---|---|---|
| Summary (amounts in SEK 000s) | 2018 | 2017 |
| ASSETS Property, plant and equipment R&D projects in progress (note 2) Goodwill (note 2) Shares in associates Deferred tax assets Other non-current receivables |
105,935 45 850 5,300 - 8,430 43 |
102,465 - - 9,932 9,339 39 |
| Total non-current assets Current assets excl. cash and cash equivalents Cash and cash equivalents |
165,558 209,453 284,962 |
121,775 148,481 305,856 |
| Total current assets TOTAL ASSETS |
494,415 659,973 |
454,337 576,112 |
| Equity attributable to owners of the Parent Company | 504,982 | 463,904 |
|---|---|---|
| Non-controlling interests | 3,139 | -16 |
| Total equity (Note 3) Provision for deferred tax |
508,121 6,679 |
463,888 778 |
| Current liabilities | 145,173 | 111,446 |
| TOTAL LIABILITIES AND EQUITY | 659,973 | 576,112 |
Other current liabilities include forward exchange contracts with a fair value of SEK 7.0 million. All forward exchange contracts are attributable to level 2 of the fair value hierarchy. The fair values of other receivables, cash and cash equivalents, trade payables and other liabilities are estimated to be equal to their carrying amounts (amortized cost) due to the short maturity.
| CONSOLIDATED CASH FLOW STATEMENTS | Jan-Dec | Jan-Dec | Oct-Dec | Oct-Dec |
|---|---|---|---|---|
| Summary (amounts in SEK 000s)) | 2018 | 2017 | 2018 | 2017 |
| Operating activities Operating profit Depreciation/amortization Unrealized gains/losses on forward exchange |
277,359 7,546 |
232,991 6,573 |
75,108 1,931 |
61,889 2,196 |
| contracts Revaluation of former associate shareholding in MetaboGen (note 2) |
6,098 -7,004 |
842 - |
-2,581 0 |
2,825 - |
| Other non-cash items | 1,497 | 1,716 | 2,053 | -529 |
| Paid tax Interest received and paid |
285,496 -52,408 240 |
242,122 -49,547 -157 |
76,511 -14,072 168 |
66,381 -12,387 -2 |
| Cash flow from operating activities before changes in working capital Changes in working capital |
233,328 -50,208 |
192,418 30,197 |
62,607 -32,903 |
53,992 15,438 |
| Cash flow from operating activities Acquisition of property, plant and equipment Sale of property, plant and equipment Acquisition of subsidiary Reduction of non-current receivables |
183,120 -13,454 75 -33,922 - |
222,615 -26,624 - - -19 |
29,704 -2,873 75 - - |
69,430 -1,498 - - -19 |
| Cash flow from investing activities Dividends Provision to the Foundation to Prevent Antibiotic Resistance |
-47,301 -156,028 -2,700 |
-26,643 -130,023 -2,400 |
-2,798 - - |
-1,517 - -2,400 |
| Formation of BioGaia Pharma | - | 2 | - | 2 |
| Cash flow from financing activities | -158,728 | -132,421 | 0 | -2,398 |
| Cash flow for the period Cash and cash equivalents at the beginning |
-22,909 | 63,551 | 26,906 | 65,515 |
| of the period Exchange differences in cash and cash |
305,856 | 243,069 | 257,491 | 240,154 |
| equivalents | 2,015 | -764 | 565 | 187 |
| Cash and cash equivalents at end of period | 284,962 | 305,856 | 284,962 | 305,856 |
The Executive Management has analyzed the Group's internal reporting system and established that the Group's operations are governed and evaluated based on the following segments:
formula), as well as royalty revenue for pediatric products.)
Adult Health segment (gut health tablets, oral health lozenges and cultures as an ingredient in a licensee's dairy products).
Other segment (Smaller segments such as revenue from packaging solutions.)
For the above segments BioGaia reports revenue and gross profit, which are monitored regularly by the Managing Director (who is regarded as the chief operating decision maker) together with the Executive Management. There is no monitoring of the company's total assets against the segments' assets.
| Revenue by segment (SEK 000s) | Jan-Dec 2018 |
Jan-Dec 2017 |
Oct-Dec 2018 |
Oct-Dec 2017 |
|---|---|---|---|---|
| Pediatrics Adult Health Other |
596,457 141,680 3,733 |
492,550 116,176 6,277 |
157,981 49,103 2,589 |
138,590 30,997 561 |
| Total | 741,870 | 615,003 | 209,673 | 170,148 |
| Gross profit by segment | , | |||
| Pediatrics Adult Health Other |
451,636 100,711 3,567 |
378,936 78,173 6,239 |
119,717 35,275 2,589 |
108,499 22,096 523 |
| Total | 555,914 | 463,348 | 157,581 | 131,118 |
| Selling, administrative and R&D expenses | -280,504 | -224,878 | -82,967 | -69,423 |
| Share of profits of associates Revaluation of former associate shareholding (Note 2) Other operating expenses |
-500 7,004 -4,555 |
-820 - -4,659 |
- - 494 |
380 - -186 |
| Operating profit Net financial items Profit before tax |
277,359 236 277,595 |
232,991 -192 232,799 |
75,108 163 75,271 |
61,889 -38 61,851 |
| Sales by geographic market | ||||
| Asia Pacific Pediatrics |
49,303 | 31,236 | 17,014 | 14,819 |
| Adult Health Other |
80,599 172 |
63,993 246 |
28,793 0 |
20,407 0 |
| Total Asia Pacific | 130,074 | 95,475 | 45,807 | 35,226 |
| EMEA Pediatrics Adult Health Other Total EMEA |
379,144 55,177 3,555 437,876 |
338,716 49,394 5,360 393,470 |
98,282 18,426 2,589 119,297 |
104,117 10,358 500 114,975 |
| Americas Pediatrics Adult Health Other Total Americas |
168,010 5,904 6 173,920 |
122,598 2,789 671 126,058 |
42,685 1,884 0 44,569 |
19,654 232 61 19,947 |
| Total | 741,870 | 615,003 | 209,673 | 170,148 |
Performance oblifations met on specific date (Product sales)
| Jan Dec 2018 |
Jan-Dec 2017 |
Oct Dec 2018 |
Oct-Dec 2017 |
|
|---|---|---|---|---|
| Pediatrics Adult Health Other |
523,537 136,606 2,005 |
410,099 106,902 5,092 |
139,080 46,658 1,827 |
109,664 30,612 500 |
| Total | 662,148 | 522,093 | 187,565 | 140,776 |
| time (Royalty) | ||||
|---|---|---|---|---|
| Pediatrics | 72,920 | 82,451 | 18, 901 | 28,926 |
| Adult Health | 5,074 | 9,274 | 2,445 | 385 |
| Other | 1,728 | 1,185 | 762 | 61 |
| Total | 79,722 | 92,910 | 22,108 | 29,372 |
| Total | 741,870 | 615,003 | 209,673 | 170,148 |
On 6 April 2018, BioGaia acquired 26% of MetaboGen AB for SEK 11.7 million. The purchase consideration was paid in cash. BioGaia already held 36% of the company and recognized it as an associated company. In a step acquisition, all previous equity interests in the acquiree are adjusted to fair value and all gains and losses thus arising are recognized in profit or loss. As a result of this, a gain of SEK 7.0 million is recognized in operating profit regarding the previous associate shareholding in MetaboGen. Since BioGaia increased its holding to 62% in the second quarter and thereby obtained a controlling interest in MetaboGen, the company is consolidated as a subsidiary as of 6 April 2018.
There are no contractual obligations for additional purchase considerations, but an agreement was signed to acquire the remaining shares in MetaboGen in two steps provided certain milestones are achieved. During the second quarter the set milestones were achieved, which resulted in new agreements with the University of Gothenburg and Chalmers University of Technology. These agreements will give BioGaia and MetaboGen more extensive and closer collaboration with the universities. At the beginning of July, BioGaia therefore acquired a further 30% of the company for SEK 27.8 million. This has been recognized in equity as a transaction between owners with an effect on Equity attributable to owners of the Parent Company of SEK -14.6 million, as a result of a higher valuation of the acquisition of the further 30% of MetaboGen's shares.
BioGaia will also acquire the remaining 8% of the company within a three-year period. The additional purchase consideration can amount to a maximum of SEK 12 million depending on the number of milestones achieved.
MetaboGen was founded in 2011 by Professor Fredrik Bäckhed at the University of Gothenburg and Professor Jens B. Nielsen at Chalmers University of Technology, together with GU Ventures, which commercializes research results and develops companies with ties to the University of Gothenburg. The company is domiciled in Gothenburg, Sweden. Aside from assignments for BioGaia, MetaboGen collaborates with the pharmaceutical company Ferring and holds a number of patents and patent applications in the microbiome area. The company has a laboratory in Gothenburg where development of new probiotic strains takes place.
Research on the microbiome is advancing very rapidly and pharmaceutical companies are making major investments in this area. Through the investment in MetaboGen, BioGaia will be able to maintain its strong position in the field of probiotic research.
| Property, plant and equipment | 364 |
|---|---|
| Current assets | 261 |
| Cash and cash equivalents | 5,600 |
| Trade payables and other operating liabilities | -6,426 |
| Net identifiable assets and liabilities | -201 |
| Less non-controlling interests | -17,062 |
| Less fair value of previously held equity | |
| interests | -16,436 |
| R&D projects in progress | 45,850 |
| Goodwill | 5,300 |
| Provision to deferred tax | -5,763 |
| Consideration transferred | 11,688 |
The acquisition was carried out on 6 April 2018 and the acquired company has contributed net sales of SEK 0 million and a net loss of SEK 2.4 million. If the acquisition had taken place on 1 January 2018, management's assessment is that during the period 1 January – 31 December 2018 the acquired company would have contributed SEK 0 million to the Group's net sales and SEK -4.7 million to the Group's net profit.
Work on the purchase price allocation was completed in the fourth quarter and according to the analysis SEK 45.8 million of the surplus value is attributable to R&D projects and SEK 5.3 million to Goodwill. Deferred tax has been taken into account.
MetaboGen has a number of R&D projects in progress. The company has made the assessment that when these are commercialized they will have a useful life of at least 10 years.
The effect on the Group's cash flow consists of the paid purchase consideration of SEK 11.7 million and acquired cash and cash equivalents of SEK 5.6 million. No other acquisition-related costs exist. During the third quarter BioGaia acquired a further 30% of the company for SEK 27.8 million, which has a total effect on cash flow of SEK 33.9 million. .
| Jan-Dec 2018 |
Jan-Dec 2017 |
|
|---|---|---|
| Opening balance Remeasurement under IFRS 9 |
463,888 -313 |
415,180 - |
| Open balance after change of accounting standard | 463,575 | 415,180 |
| Dividend | -156,028 | -130,023 |
| Provision to the Foundation to Prevent Antibiotic Resistance1) |
-2,700 | -2,400 |
| Formation of BioGaia Pharma | - | 2 |
| Non-controlling interests related to the acquisition of MetaboGen |
17,062 | - |
| Transaction between owners related to further acquisition of shares in MetaboGen |
-27,834 | - |
| Comprehensive income for the period | 214,046 | 181,129 |
| Closing balance | 508,121 | 463,888 |
1) Provision to the Foundation to Prevent Antibiotic Resistance was approved at the AGM and is in accordance with the Swedish Companies Act, Chapter 17 section 5 on donations for charitable purposes. Support for recognition of the provision in equity is found in the Conceptual Framework for Financial Reporting in the section Financial performance reflected by accrual accounting (1.17ff).
| Jan-Dec | Jan-Dec | |
|---|---|---|
| 2018 | 2017 | |
| Net sales, SEK 000s Growth,% Operating profit, SEK 000s Profit after tax, SEK 000s Return on |
741,870 21% 277,359 214,233 |
615,003 15% 232,991 180,564 |
| - average equity - average capital employed Capital employed, SEK 000s Number of shares, thousands 1) |
44% 57% 514,800 17,336 |
41% 53% 464,666 17,336 |
| Average number of shares (thousands) Earnings per share, SEK 1) 2) Equity per share, SEK 1) |
17,336 12.40 29.13 |
17,336 10.42 26.76 |
| Equity/assets ratio Operating margin Profit margin Average number of employees |
77% 37% 37% 130 |
81% 38% 38% 115 |
| 1) No dilutive effects arose |
2) Key ratio defined according to IFRS
| Key ratio | Definition/Calculation | Purpose |
|---|---|---|
| Return on equity | Profit attributable to the owners of the Parent Company in relation to average equity attributable to the owners of the Parent Company. |
Return on equity is used to measure profit generation, over time, given the resources attributable to the owners of the Parent Company. |
| Return on capital employed | Profit before net financial items plus financial income as a percentage of average capital employed. |
Return on capital employed is used to analyze profitability, based on the amount of capital used. |
| Equity per share | Equity attributable to the owners of the Parent Company divided by the average number of shares. |
Equity per share measures the company's net value per share and indicates whether a company will increase the shareholders' wealth over time. |
| Operating margin (EBIT margin) | Operating profit expressed as a percentage of net sales. | The operating profit margin is used to measure operational profitability. |
| Equity/assets ratio | Equity as a percentage of total assets. | A traditional measure to show financial risk expressed as the share of total assets financed by the shareholders. Shows the company's stability and ability to withstand losses. |
| Capital employed | Total assets less interest-free liabilities. | Capital employed measures the company's ability, in addition to cash and liquid assets, to meet the requirements of business operations. |
| Growth | Sales for the period less sales for the corresponding period of the previous year divided by sales for the previous period. |
Shows the company's realized sales growth over time. |
| Earnings per share (EPS) | Profit for the period attributable to the owners of the Parent Company divided by average number of shares outstanding (definition according to IFRS). |
EPS measures how much of net profit is available for payment to shareholders as dividends per share |
| Profit margin | Profit before tax in relation to net sales. | This key ratio makes it possible to compare profitability regardless of corporate income tax rate. |
| Jan-Dec | Jan-Dec | |
|---|---|---|
| Return on average equity | 2018 | 2017 |
| Profit attributable to owners of the Parent Company (A) | 214,890 | 180,564 |
| Equity attributable to owners of the Parent Company | 504,982 | 463,904 |
| Average equity attributable to owners of the Parent Company (B) |
484,443 | 439,551 |
| Return on equity (A/B) | 44% | 41% |
| Return on average capital employed | ||
|---|---|---|
| Jan-Dec | Jan-Dec | |
| 2018 | 2017 | |
| Operating profit | 277,359 | 232,991 |
| Financial income | 641 | 112 |
| Profit before net financial items + financial income (A) | 278,000 | 233,103 |
| Total assets | 659,973 | 576,112 |
| Interest-free liabilities | -145,173 | -111,446 |
| Capital employed | 514,800 | 464,666 |
| Average capital employed (B) | 490,279 | 440,089 |
| Return on capital employed (A/B) | 57% | 53% |
| 31 Dec. | 31 Dec. | |
| Equity/assets ratio | 2018 | 2017 |
| Equity (A) | 508,121 | 463,888 |
| Total assets (B) | 659,973 | 576,112 |
| Equity/assets ratio (A/B) | 77% | 81% |
| Jan-Dec | Jan-Dec | |
| Operating margin | 2018 | 2017 |
| Operating margin | 2018 | 2017 |
|---|---|---|
| Operating profit (A) Net sales (B) |
277,359 741,870 |
232,991 615,003 |
| Operating margin (A/B) | 37% | 38% |
| exchange effects) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Pediatrics | Adult Health |
Other | Total | ||||||
| Jan-Dec | Oct-Dec | Jan-Dec | Oct-Dec | Jan-Dec | Oct-Dec | Jan-Dec | Oct-Dec | ||
| 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | 2018 | ||
| Description | |||||||||
| A | Previous year's net sales according to the average rate |
492,550 | 138,590 | 116,176 | 30,997 | 6,277 | 561 | 615,003 | 170,148 |
| B | Net sales for the year according to the average rate |
596,457 | 157,981 | 141,680 | 49,103 | 3,733 | 2,589 | 741,870 | 209,673 |
| C | Recognized change (B-A) | 103,907 | 19,391 | 25,504 | 18,106 | -2,544 | 2,028 | 126,867 | 39,525 |
| Percentage change (C/A) | 21% | 14% | 22% | 58% | -41% | 361% | 21% | 23% | |
| D | Net sales for the year according to the previous year's average rate (D) |
575,392 | 148,589 | 135,243 | 46,013 | 3,733 | 2,589 | 714,368 | 197,191 |
| E | Foreign exchange effects (C-F) | 21,065 | 9,392 | 6,437 | 3,090 | 0 | 0 | 27,502 | 12,482 |
| Percentage change (E/A) | 4% | 7% | 6% | 10% | 0% | 0% | 4% | 7% | |
| F | Organic change (D-A) | 82,842 | 9,999 | 19,067 | 15,016 | -2,544 | 2,028 | 99,365 | 27,043 |
| Organic change percent (F/A) | 17% | 7% | 16% | 48% | -41% | 361% | 16% | 16% | |
| Average key exchange rates | Jan-Dec | Oct-Dec | Jan-Dec | Oct-Dec |
|---|---|---|---|---|
| 2018 | 2018 | 2017 | 2017 | |
| EUR | 10.26 | 10.32 | 9.63 | 9.79 |
| USD | 8.69 | 9.04 | 8.54 | 8.31 |
| JPY | 7.87 | 8.01 | 7.61 | 7.37 |
| Key exchange rates on closing | ||||
| date | 31 Dec. | 31 Dec. | ||
| 2018 | 2017 | |||
| EUR | 10.28 | 9.57 | ||
| USD | 8.97 | 8.11 | ||
| JPY | 8.12 | 7.21 |
| Effects on assets, 1 January 2018 | |||||
|---|---|---|---|---|---|
| IAS 39 Recognized at 31 Dec 2017 |
IFRS 9 Recognized at 1 Jan 2018 |
||||
| Category | Fair value through profit or loss |
Loans and trade receivables |
Remeasurement due to IFRS 9 |
Business model Other |
Business model Hold to collect |
| Trade receivables 1) | 80,101 | -313 | 79,788 | ||
| Short-term investments 1) | 5,000 | 5,000 | |||
| Cash and cash equivalents 1) | 305,856 | 305,856 |
| Jan-Dec 2017 according to IAS 39 |
Reclassification | Jan-Dec 2017 according to new accounting standard |
|
|---|---|---|---|
| Other operating expenses | -3,817 | -842 | -4,659 |
| Net financial items | -922 | 842 | -80 |
| Oct-Dec | Oct-Dec 2017 | ||
| 2017 | according to | ||
| according | new accounting | ||
| to IAS 39 | Reclassification | standard | |
| Other operating income/expenses |
2,639 | -2,825 | -186 |
| Net financial items | -2,751 | 2,825 | 74 |
| Jan-Dec | Jan-Dec 2018 | ||
| 2018 | according to | ||
| according | new accounting | ||
| to IAS 39 | Reclassification | standard | |
| Other operating | |||
| income/expenses | 1,542 | -6,097 | -4,555 |
| Net financial items | -5,861 | 6,097 | 236 |
| Oct-Dec | Oct-Dec 2018 | ||
| 2018 | according to | ||
| according | new accounting | ||
| to IAS 39 | Reclassification | standard | |
| Other operating income/expenses |
-2,088 | 2,582 | 494 |
| Net financial items | 2,745 | -2,582 | 163 |
| Pledged assets and contingent liabilities | GROUP | PARENT COMPANY | ||
|---|---|---|---|---|
| 31 Dec | 31 Dec | 31 Dec | 31 Dec | |
| 2018 | 2017 | 2018 | 2017 | |
| Floating charges | 2,000 | 2,000 | 2,000 | 2,000 |
| Total | 2,000 | 2,000 | 2,000 | 2,000 |
| Contingent liabilities | None | None | None | None |
| PARENT COMPANY INCOME STATEMENT | Jan-Dec | Jan-Dec |
|---|---|---|
| (Amounts in SEK 000s) | 2018 | 2017 |
| Net sales | 705,762 | 587,937 |
| Cost of sales | -219,991 | -177,578 |
| Gross profit | 485,771 | 410,359 |
| Selling expenses | -130,219 | -102,332 |
| Administrative expenses | -23,547 | -20,227 |
| R&D expenses | -91,834 | -74,032 |
| Other operating expenses | -4,625 | -4,648 |
| Operating profit | 235,546 | 209,120 |
| Impairment loss on shares in subsidiary | -7,465 | -1,427 |
| Reversal of earlier impairment of receivable in subsidiary | - | 26,180 |
| Net financial items | 1,480 | -1,751 |
| Profit before tax | 229,561 | 232,122 |
| Tax | -53,962 | -45,502 |
| PROFIT FOR THE PERIOD | 175,599 | 186,620 |
| PARENT COMPANY BALANCE SHEET | 31-Dec | 31-Dec |
|---|---|---|
| 2018 | 2017 | |
| ASSETS | ||
| Property, plant and equipment | 5,218 | 4,076 |
| Shares in group companies | 109,902 | 54,570 |
| Shares in associates | - | 12,001 |
| Non-current receivables from subsidiaries | 45,835 | 55,835 |
| Total non-current assets | 160,955 | 126,482 |
| Current assets excl. cash and cash equivalents | 188,052 | 127,674 |
| Cash and cash equivalents | 224,732 | 270,050 |
| Total current assets | 412,784 | 397,724 |
| TOTAL ASSETS | 573,739 | 524,206 |
| EQUITY AND LIABILITIES | ||
| Equity | 450,102 | 433,231 |
| Interest-free current liabilities | 123,637 | 90,975 |
| TOTAL LIABILITIES AND EQUITY | 573,739 | 524,206 |
| PARENT COMPANY CASH FLOW STATEMENT | Jan-Dec | Jan-Dec |
|---|---|---|
| 2018 | 2017 | |
| Operating activities Operating profit Depreciation Other non-cash items Forward exchange contracts Tax paid Interest received and paid |
235,546 950 -1,851 6,098 -48,100 1,480 |
209,120 515 897 -1,337 -46,698 1,078 |
| Cash flow from operating activities before changes in working capital |
194,123 | 163,575 |
| Changes in working capital | -44,381 | 6,510 |
| Cash flow from operating activities Acquisition of property, plant and equipment Sale of property, plant and equipment Acquisition of financial assets Repayment of loan from subsidiary |
149,742 -2,093 75 -45,523 10,000 |
170,085 -3,897 - -2,049 23,352 |
| Cash flow from investing activities | -37,541 | 17,406 |
| Dividend | -156,028 | -130,023 |
| Provision to Foundation to Prevent Antibiotic Resistance | -2,700 | -2,400 |
| Cash flow from financing activities | -158,728 | -132,423 |
| Cash flow for the period | -46,527 | 55,068 |
| Cass and cash equivalents at beginning of the period | 270,050 | 215,880 |
| Exchange rate differences in cash and cash equivalents | 1,209 | -898 |
| Cash and cash equivalent at end of the period | 224,732 | 270,050 |
| (Amounts in SEK 000s) | Jan-Dec | Jan-Dec |
|---|---|---|
| 2018 | 2017 | |
| Opening balance | 433,231 | 379,034 |
| Dividend | -156,028 | -130,023 |
| Provision to Foundation to Prevent Antibiotic Resistance | -2,700 | -2,400 |
| Profit for the period | 175,599 | 186,620 |
| Closing balance | 450,102 | 433,231 |
| 7 February 2019, 09:30 CET Teleconference with Managing Director Isabelle Ducellier. To take part in the conference, please see | |
|---|---|
| https://www.biogaia.com/investors/financial-calendar/ for telephone numbers. The teleconference can also be | |
| followed at https://tv.streamfabriken.com/biogaia-q4-2018 | |
| Last week of March 2019 | Annual Report 2018 |
| 8 May 2019, 08:00 CET | Interim Management Statement 1 January – 31 March 2019 |
| 8 May 2019, 16:00 CET | AGM at Kapitel 8, Klara strand, Klarabergsviadukten 90, Stockholm |
| 8 August 2019, 8:00 CET | Interim Report 1 January – 30 June 2019 |
| 23 October 2019, 8:00 CET | Interim Management Statement 1 January- 30 September 2019 |
| 6 February 2020, 8:00 CET | Year-end report 2019 |
The Board of Directors and the Managing Director hereby confirm that this interim report provides a true and fair overview of the Parent Company's and the Group's operations, financial position and performance, and describes material risks and uncertainties facing the Parent Company and the Group.
Stockholm, 7 February 2019
Peter Rothschild Ewa Björling David Dangoor Chairman of the Board Board member Board member
Board member Board member Board member
Peter Elving Inger Holmström Anthon Jahreskog
| Brit Stakston | Isabelle Ducellier |
|---|---|
| Board member | Managing Director |
We have reviewed the accompanying condensed interim financial statements of BioGaia AB (publ) at 31 December 2018 and for the twelve-month period then ended. The Board of Directors and the Managing Director are responsible for the preparation and fair presentation of this interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim financial information based on our review.
We conducted our review in accordance with the Standard on Review Engagements ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with ISA (International Standards on Auditing) and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information does not, in all material aspects, give a true and fair view of the financial position of the Group in accordance with IAS 34 and the Swedish Annual Accounts Act and of the Parent Company in accordance with the Swedish Annual Accounts Act.
Stockholm, 7 February 2019
Deloitte AB
Birgitta Lööf Authorized Public Accountant
BioGaia is a healthcare company that develops, markets and sells probiotic products with documented health benefits. The products are primarily based on different strains of the lactic acid bacterium Lactobacillus reuteri in combination with unique packaging solutions that make it possible to create probiotic products with a long shelf life.
The class B shares of the Parent Company BioGaia AB are quoted on the Mid Cap list of Nasdaq OMX Nordic Exchange Stockholm.
BioGaia has 143 employees, of whom 122 are based in Sweden (Stockholm, Lund, Eslöv and Gothenburg), two in the USA, one in Singapore and 18 in Japan.
BioGaia works with three international networks within the areas of research, production and distribution.
BioGaia's revenue comes mainly from the sale of drops, gut health tablets, oral rehydration solution (ORS) and oral health products to distributors. Revenue is also earned from the sale of bacterial cultures to be used in licensee products (such as infant formula and dairy products), as well as royalties for the use of Lactobacillus reuteri in licensee products and sales of delivery systems such as straws and caps.
The products are sold through nutrition and pharmaceutical companies in approximately 100 countries worldwide.
BioGaia holds patents for the use of Lactobacillus reuteri and certain packaging solutions in all major markets.
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At the beginning of 2006 BioGaia launched its own consumer brand and today there are a number of distribution partners that sell finished products under the BioGaia brand in a large number of markets. One central part of BioGaia's strategy is to increase the share of sales consisting of BioGaia-branded products.
Some of BioGaia's distributors sell finished consumer products under their own brand names. On these products, the BioGaia brand is shown on the consumer package since BioGaia is both the manufacturer and licensor.
BioGaia's licensees add Lactobacillus reuteri culture to their products and sell these under their own brand names. On these products, the BioGaia brand is most often shown on the package as the licensor/patent holder.
BioGaia's strains of Lactobacillus reuteri are some of the world's most well researched probiotics, especially in young children. To date, 202 clinical studies using BioGaia's human strains of Lactobacillus reuteri have been performed on around 17,200 individuals of all ages.
Studies have been performed on:
Latest press releases from BioGaia:
26 November 2018 Sale of shares in BioGaia AB
19 November 2018 Isabelle Ducellier takes over as Managing Director of BioGaia
24 October 2018 BioGaia AB, Interim management statement 1 January – 30 September 2018
BioGaia AB Box 3242 103 64 STOCKHOLM Street address: Kungsbroplan 3, Stockholm Telephone: +46 8 555 293 00, Corp. identity number 556380-8723 www.biogaia.se For additional information, contact: Isabelle Ducellier, Managing Director, BioGaia AB, tel +46 8 555 293 00/+46 70-994 58 74 Margareta Hagman, Executive Vice President BioGaia AB, tel +46 8 555 293 00/+46 708-72 82 33
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