Interim / Quarterly Report • Aug 24, 2017
Interim / Quarterly Report
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| AMOUNTS IN SEK 000S | APR JUN | JAN-JUN | FULL YEAR | |||
|---|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | JUN 2017 | 2016 | |
| Net sales | 141,634 | 118.982 | 268,422 | 214.383 | 585.507 | 531,468 |
| Operating profit | 26,839 | 37,493 | 60,305 | 60.845 | 199.019 | 199,559 |
| Operating margin, % | 18.9 | 31.5 | 22.5 | 28.4 | 22.5 | 37.5 |
| Profit for the period | 20,092 | 28.837 | 46.366 | 46,597 | 46.366 | 151,408 |
| Earnings per share before/after dilution, SEK | 0.59 | 0.84 | 1.35 | 1.36 | 4.41 | 4.42 |
| Cash flow from operating activities | 25,640 | 14.908 | 65,027 | 36.771 | 149.104 | 120,848 |
| Cash flow before financing activities | $-11,471$ | $-11.439$ | $-3.486$ | $-15.651$ | 26.064 | 13,899 |
| Return on equity, % | 4.6 | 9.2 | 10.7 | 14.8 | 35.0 | 38.8 |
| Equity/assets ratio at the end of the period, % | 67.1 | 64.3 | 67.1 | 64.3 | 67.1 | 64.2 |
| Share price at the end of the period, SEK | 235.50 | 119.00 | 235.50 | 119.00 | 235.50 | 184.50 |
The favorable growth trend continued with net sales in the second quarter being the second highest ever and revenue from RayStation rose 27 percent to SEK 240 M (189) during the first half of the year.
Strengthened by our success with RayStation, we have expanded our global sales and service organization substantially in 2017 with both more employees and more subsidiaries to accelerate sales of RayStation and ensure the best possible customer
service. This expansion will continue, which may reduce the company's operating margin in the short term, but will improve the possibilities for high growth with good margins in the future.
RayStation is already firmly established in all major global markets as the most advanced treatment planning system for radiation therapy, and global demand for our innovative software is growing. One of RayStation's strengths is that the system can support more types of radiation therapy devices than any other treatment planning system, and the launch of RayStation 6 has made RayStation the only treatment planning system that can create plans for both conventional linear accelerators and Accuray's TomoTherapy™ treatment system.
RayStation helps to improve the radiation therapy and to extend the lifetime of therapy devices, which means they can be used more efficiently. Clinics that want to improve and develop their treatment are no longer dependent on buying the latest hardware - they can achieve similar, positive outcomes by choosing RayStation as their treatment planning system.
Proton therapy is a key area of focus for RaySearch. The eight new proton orders we received in the first half of the year brought our total number of proton therapy center customers to 35, representing a market share of over 50 percent. Today, less than one percent of all radiation therapy patients receive proton therapy, but according to experts* about 20 percent of radiation therapy patients could benefit from proton therapy. This means there is great growth potential in this area.
In the first half of the year, net sales rose 25 percent to SEK 268 M [214]. Operating profit totaled SEK 60 M [61], representing an operating margin of 22 percent (28). The lower margin was attributable to the US dollar weakening relative to the Swedish krona and increased selling expenses due to the expansion of our global sales and service organization.
We are still working actively to strengthen our cash flow and in the first half of the year, cash flow before financing activities improved to a negative SEK 3 M (neg: 16), despite sharp increased investment in RayCare.
RaySearch's overall objective is to improve cancer treatment through innovative software. Improving care outcomes and quality of life for cancer patients worldwide is the underlying driver of everything we create, and all decisions we make. The launch of RayCare, a next-generation oncology information system, in December 2017 will be an important milestone for both inpatient oncology units and for RaySearch. RayCare brings integrated cancer treatment within reach of many cancer clinics, and will create clinical opportunities that existing systems simply cannot do. The response from the clinical community to date has been overwhelmingly positive, and shows how badly this system is needed.
To ensure that we meet clinical needs, our development activities are conducted in close collaboration with leading cancer clinics. We can now announce that our existing group of business partners for RayCare - the University of California, San Francisco and MD Anderson in the US, the University Medical Center Groningen in the Netherlands and the radiation therapy department of the Iridium Kankernetwerk in Belgium - has now been joined by the University of Wisconsin-Madison in the US. Solving the coordination, safety and efficiency needs of the world's largest cancer care clinics is one of our most exciting challenges to date. Our development model is based on partnerships with leading clinics and provides ideal conditions for success by combining their extensive clinical knowledge and resources with RaySearch's ability to develop innovative software solutions.
*Source: MEDRays Intell Proton Therapy World Market Report 2015
To accelerate the pace of RayCare's development, we will be expanding our development department in 2017 and also establishing development offices in two strategic cities: Toronto and San Francisco. Both of these regions are home to many of our business partners and offer good access to talented people, which will increase our ability to recruit personnel with the right knowledge.
Our sales and earnings will continue to vary by quarter, since the order intake remains subject to relatively large fluctuations. The second quarter is typically our weakest quarter due to high selling expenses for trade fairs and other seasonality, and historically RaySearch made a loss in the second quarter during four out of the last seven years. However, we are seeing continued sales growth, a steady rise in our recurring support revenues from RayStation and cash flow improvements. Combined with a clear strategic plan, this provides a stable base for continued investment in both RayStation and RayCare.
To date, 420 cancer clinics in 29 countries have purchased RayStation. At the same time, there are more than 8,000 radiation therapy clinics worldwide, and that number is expected to grow sharply over the next decade. The driving forces include rising cancer rates, growing awareness of the advantages of radiation therapy and major investment in cancer therapies in Asia. The market is therefore growing steadily and we will continue to grow considerably faster than the market. Our aim is that at least 3,000 clinics will have purchased RayStation within ten years, representing a market share of about 30 percent.
Software is driving many of the advances in cancer treatment today. RaySearch is uniquely positioned to contribute to this trend and we have excellent prospects for succeeding with our joint mission - to continue the advancement of cancer treatment by developing innovative software solutions that save lives and improve quality of life for cancer patients.
Stockholm, August 24, 2017
Johan Löf President and CEO of RaySearch Laboratories AB (publ)
In the second quarter of 2017, order intake excluding service agreements declined 15.7 percent to SEK 108.8 M [129.1], of which order intake for RayStation excluding service agreements declined 18.9 percent to SEK 98.0 M (120.8). The second quarter is normally weakest, but order intake in the second quarter of 2016 was strong and remains the company's secondhighest order intake ever. Over a two-year period, order intake for the second quarter has increased 22.9 percent annually.
| Rolling | Full-uear | ||||||
|---|---|---|---|---|---|---|---|
| Order intake (amounts in SEK M) | $02-17$ | 01-17 | 04-16 | 03-16 | $02 - 16$ | 12 months | 2016 |
| Order intake excl. service agreements - RayStation | 98.0 | 93.8 | 176.3 | 91.2 | 120.8 | 459.4 | 461.0 |
| Order intake excl. service agreements - Partners | 10.8 | 11.1 | 12.7 | 9.8 | 8.3 | 44.4 | 40.1 |
| Total order intake excl. service agreements | 108.8 | 104.9 | 189.0 | 101.1 | 129.1 | 503.7 | 501.1 |
| Order backlog for RayStation at the end of the | |||||||
| period | 36.0 | 58.1 | 67.6 | 55.5 | 65.2 | 36.0 | 67.6 |
In the first half of 2017, order intake excluding service agreements rose 1.3 percent to SEK 213.7 M [211.0], of which order intake for RayStation declined 0.8 percent to SEK 191.8 M [193.4]. At June 30, 2017, the order backlog for RayStation was SEK 36.0 M (65.2).
In the second quarter of 2017, net sales rose 19.0 percent to SEK 141.6 M (119.0). Net sales consist of license revenues from sales of the RayStation treatment planning system, sales of software modules via partners, and support revenues. The growth in net sales was largely attributable to increased revenues from RayStation, which rose 18.4 percent to SEK 127.6 M (107.8). In the second quarter, sales had the following geographic distribution: North America, 44 percent (56); Asia, 19 percent (12); Europe and the rest of the world, 37 percent [32].
| Rolling | Full-year | ||||||
|---|---|---|---|---|---|---|---|
| Revenues (amounts in SEK M) | 02-17 | 01-17 | 04-16 | 03-16 | 02-16 | 12 months | 2016 |
| License revenues - RayStation | 116.0 | 99.8 | 164.3 | 104.5 | 100.7 | 484.5 | 443.4 |
| License revenues - Partners | 10.8 | 11.1 | 12.7 | 9.8 | 8.3 | 44.4 | 40.1 |
| Support revenues - RayStation | 11.1 | 11.5 | 9.5 | 8.0 | 6.9 | 40.1 | 31.1 |
| Support revenues - Partners | 3.2 | 3.4 | 3.9 | 3.3 | 2.8 | 13.8 | 15.4 |
| Training and other revenues - RayStation | 0.6 | 1.0 | 1.0 | 0.1 | 0.3 | 2.7 | 1.5 |
| Net sales | 141.6 | 126.8 | 191.4 | 125.7 | 119.0 | 585.5 | 531.5 |
| Sales growth, corresp. period, % | 19.0% | 32.9% | 45.0% | 25.0% | 53.6% | 31.0% | 33.7% |
| Organic sales growth, corresp. period, % | 13.8% | 28.1% | 39.2% | 24.0% | 55.4% | 26.6% | 31.6% |
In the first half of 2017, sales rose 25.2 percent to SEK 268.4 M (214.4), of which revenues from RayStation increased 27.3 percent to SEK 240.0 M (188.6). In the first half of the year, sales had the following geographic distribution: North America, 41 percent (43); Asia, 12 percent (14); Europe and the rest of the world, 47 percent (43).
Recurring support revenues from RayStation rose 66 percent to SEK 22.6 M (13.6), representing 9.4 percent (7.2) of total revenues from RayStation in the first half of the year.
Revenues from sales of software modules via partners rose 10.5 percent to SEK 28.5 M (25.8), representing 10.6 percent (12.0) of net sales.
In the second quarter of 2017, operating profit declined to SEK 26.8 M [37.5], representing an operating margin of 18.9 percent (31.5). The lower profit was due to currency effects and increased selling expenses. The continued expansion of RaySearch's research and development departments and the global marketing organization has led to higher operating expenses. This cost increase was not fully offset by the increase in sales during the second quarter of 2017.
Other operating income and expenses refers to exchange-rate gains and losses, with the net of these amounting to an expense of SEK 8.4 M (income: 3.8) in the second quarter of 2017. This was mainly due to the major portion of accounts receivable denominated in USD, which weakened against the SEK in the second quarter compared with the end of the first quarter.
In the first half of the year, operating profit decreased to SEK 60.3 M [60.8], corresponding to an operating margin of 22.5 percent [28.4].
The company is impacted by exchange-rate trends in the USD and EUR against the SEK, since invoicing is mainly denominated in USD and EUR, while most costs are in SEK. At unchanged exchange rates, organic sales growth was 13.8 percent in the second quarter of 2017, compared with the year-earlier period.
A sensitivity analysis of the company's currency exposure shows that a 1-percentage point change in the USD exchange rate against the SEK would have impacted consolidated operating profit by approximately +/- SEK 3.3 M in the first half of 2017, while a corresponding change in the EUR exchange rate would have impacted consolidated operating profit by approximately +/- SEK 0.6 M.
The company follows the financial policy established by the Board of Directors, whereby exchange-rate changes are not hedged. In the second quarter of 2017, currency effects had an overall positive impact on net sales but a negative impact on operating profit, compared with the year-earlier period.
At June 30, 2017, 125 [103] employees were engaged in research and development. Research and development expenditure includes payroll costs, consulting fees, computer equipment and premises.
| Rolling | Full-year | ||||||
|---|---|---|---|---|---|---|---|
| Capitalization of development expenditure | $02 - 17$ | 01-17 | 04-16 | 03-16 | 02-16 | 12 months | 2016 |
| Research and development expenditure | 42.7 | 39.6 | 42.3 | 32.9 | 35.5 | 157.7 | 141.3 |
| Capitalization of development expenditure | $-31.1$ | $-29.8$ | $-31.0$ | $-22.8$ | $-25.7$ | $-114.7$ | $-104.4$ |
| Amortization of capitalized development | |||||||
| expenditure | 15.2 | 14.7 | 13.7 | 14.0 | 14.8 | 57.6 | 56.3 |
| Research and development expenditure after | |||||||
| adjustments for capitalization and | |||||||
| amortization of | |||||||
| development expenditure | 26.8 | 24.5 | 25.0 | 24.1 | 24.6 | 100.4 | 93.2 |
In the first half of the year, research and development expenditure amounted to SEK 82.3 M (66.1), of which development expenditure of SEK 60.9 M (50.5) was capitalized. The increase mainly pertained to RayCare, which will be launched in December 2017 as planned. Amortization of capitalized development expenditure in the first half of the year amounted to SEK 29.9 M [28.5]. After adjustments for capitalization and amortization of development expenditure, research and development costs totaled SEK 51.3 M [44.1].
In the second quarter of 2017, total amortization and depreciation was SEK 18.2 M [17.5], of which amortization of intangible fixed assets totaled SEK 15.1 M [14.8], primarily related to capitalized development expenditure, and depreciation of tangible fixed assets amounted to SEK 3.1 M [2.7].
In the first half of 2017, total amortization and depreciation was SEK 35.9 M (34.0), of which amortization of intangible fixed assets totaled SEK 29.8 M (28.5), mainly related to capitalized development expenditure, and depreciation of tangible fixed assets amounted to SEK 6.1 M (5.5).
In the second quarter of 2017, profit after tax was SEK 20.1 M [28.8], representing earnings per share before and after dilution of SEK 0.59 [0.84]. In the first half of 2017, profit after tax was SEK 46.4 M [46.6], representing earnings per share before and after dilution of SEK 1.35 [1.36].
In the first half of the year, tax expense was SEK 12.7 M (expense: 13.3), corresponding to an effective tax rate of 21.5 percent [22.2].
In the second quarter of 2017, cash flow from operating activities was SEK 25.6 M [14.9]. A weaker result was offset by a lower year-on-year increase in working capital. The increase in working capital was mainly a result of stronger accounts receivable and accrued income due to high sales growth. At the end of the period, accounts receivable represented 42 percent [47] of net sales over the past 12 months and accrued income for 18 percent [7] of net sales over the past 12 months. Several measures were taken to reduce the period between revenue recognition and payment, and these have now begun to show positive results. In the first half of the year, cash flow from operating activities was SEK 65.0 M (36.8).
In the second quarter, cash flow from investing activities was a negative SEK 37.1 M (neg: 26.3). Investments in intangible fixed assets amounted to a negative SEK 31.0 M (neg: 25.8), and comprised capitalized development expenditure for RauStation and RauCare. Investments in tangible fixed assets amounted to SEK 6.0 M (neg: 0.5).
In the first half of the year, cash flow from investing activities was a negative SEK 68.5 M (neg: 52.4), and a finance lease was used to fund an additional SEK 1.0 M [0.0]. Investments in intangible fixed assets amounted to a negative SEK 60.9 M (neg: 50.6) and comprised capitalized development expenditure. Investments in intangible fixed assets amounted to a negative SEK 8.6 M [1.8].
Cash flow before financing activities was a negative SEK 11.5 M (neg: 11.4) in the second quarter of 2017, and a negative SEK 3.5 M (neg: 15.7) in the first half of 2017.
Cash flow from financing activities was a negative SEK 2.2 M (neg: 9.6) in the second quarter of 2017, mainly attributable to a repayment on the company's financial lease agreement. In the first half of 2017, cash flow from financing activities was a negative SEK 13.2 M (neg: 10.6), mainly attributable to a repayment of SEK 10 M on the company's revolving credit facility.
In the first half of 2017, cash flow for the period was a negative SEK 16.7 M (neg: 26.3) and at June 30, 2017, consolidated cash and cash equivalents amounted to SEK 70.2 M [33.5].
At June 30, 2017, RaySearch's total assets amounted to SEK 757 M (555) and the equity/assets ratio was 67.1 percent (64.3).
Current receivables amounted to SEK 359.7 M (266.2). The receivables mainly comprised accounts receivable and accrued income, and the increase was primarily the result of sharp sales growth.
In May 2017, the company's credit facility was increased from SEK 100 M to SEK 350 M. The credit facility runs until May 2020 and comprises a revolving loan facility of up to SEK 300 M and an overdraft facility of SEK 50 M. Chattel mortgages amount to SEK 100 M. At June 30, 2017, a short-term loan totaling SEK 40 M had been utilized within the framework of the company's revolving loan facility. Of the company's overdraft facility of SEK 50 M, an amount of SEK 9.0 M has been blocked as collateral for bank guarantees.
At June 30, 2017, the Group had negative net debt of SEK 20.8 M (pos: 16.0).
At the end of the first half-year, the Group had 234 (182) employees, of whom 183 were based in Sweden and 51 in foreign subsidiaries. In the January-June period of 2017, the average number of employees was 210 [179].
RaySearch Laboratories AB (publ) is the Parent Company of the RaySearch Group. Since the Parent Company's operations are consistent with the Group's operations in all material respects, the comments for the Group are also largely relevant for the Parent Company. However, the capitalization of development expenditure and items related to finance leases are recognized in the Group, but not in the Parent Company. The Parent Company's current receivables mainly comprise receivables from Group companies and accounts receivable.
In January, it was announced that the latest version of RayStation had been launched, making RayStation the only treatment planning system that can create plans for Accuray's TomoTherapy™treatment system as well as conventional linear accelerators. RayStation 6 also includes other significant new functionality, including a Monte Carlo Pencil Beam Scanning [PBS] model for dose computation, PBS planning with block aperture computation, simultaneous optimization of multiple beamsets, MRI-based planning and automatic reset.
In the second quarter, it was announced that all functionality in RayStation® 6 for Pencil Beam Scanning (PBS) proton therapy could now also be used for Mitsubishi Electric's PBS system.
In the first half of 2017, several of the world's largest and most respected cancer clinics selected RauStation as their treatment planning system, including, Johns Hopkins/Sibley Memorial Hospital, MedStar Georgetown University Hospital, Mayo Clinic Hospital, Kennestone Hospital (part of the WellStar Health System) and Sharp Memorial Hospital (part of Sharp HealthCare] in the US, Nottingham City Hospital in the UK, the Academic Medical Center (AMC) in the Netherlands, Salzburger Landeskliniken (SALK) in Austria, Zhuozhou in China and the Tata Memorial Centre in India. In addition, the Maryland Proton Treatment Center, in partnership with the University of Maryland, has expanded its RayStation installations.
In February, it was announced that University Health Network (UHN) in Canada had licensed a new artificial intelligence (AI) technology for automated radiation therapy treatment planning (AutoPlanning) with exclusive rights to RaySearch.
In February, RaySearch's CEO and founder, Johan Löf, was named Sweden's most successful entrepreneur in the Swedish final of the 2016 EY Entrepreneur of the Year program. The jury citation was: "Johan Löf has created a company that brings benefits to both individuals and society. Advanced products, combined with personal and commercial drive, distinguish his business. Continued expansion is on the agenda for this entrepreneur who improves quality of life for millions of people."
In March, it was announced that RaySearch had entered into a long-term collaborative agreement with the University of Texas MD Anderson Cancer Center in Houston, Texas for RayCare, the next-generation oncology information system (OIS) developed by RaySearch. Johan Löf says: "By combining MD Anderson's extensive clinical knowledge and resources with RaySearch's capacity for innovative development, this partnership has all the prerequisites for success."
In May 2017, the company's credit facility was increased from SEK 100 M to SEK 350 M. The credit facility runs until May 2020 and comprises a revolving loan facility of up to SEK 300 M and an overdraft facility of SEK 50 M. Chattel mortgages amount to SEK 100 M.
In June, it was announced that RaySearch had signed a long-term collaborative agreement for RayCare with the University of Wisconsin-Madison. John Bayouth, Chief of Radiation Oncology Physics at the University of Wisconsin Department of Human Oncology, says: "RayCare has been designed to coordinate our various oncological disciplines and we are hoping to develop the full potential of our multifaceted clinical resources."
In the first half of 2017, another eight proton therapy centers opted for RayStation, bringing the total number of proton therapy centers that have chosen RayStation to 35, representing more than half of all global proton-therapy centers.
At June 30, 2017, the total number of registered shares in RaySearch was 34,282,773, of which 8,654,975 were Class A and 25,627,798 Class B shares. The quotient value is SEK 0.50 and the company's share capital amounts to SEK 17,141,386.50. Each Class A share entitles the holder to ten votes, and each Class B share to one vote, at a general meeting. At June 30, 2017, the total number of votes in RaySearch was 112,177,548.
At June 30, 2017, the total number of shareholders in RaySearch was 6,440 and, according to Euroclear, the largest shareholders were as follows:
| Class A | Share | ||||
|---|---|---|---|---|---|
| Name | shares | Class B shares | Total shares | capital, % | Votes.% |
| Johan Löf | 6,243,084 | 618,393 | 6,861,477 | 20.0 | 56.2 |
| Lannebo Funds | 0 | 3,996,852 | 3,996,852 | 11.7 | 3.6 |
| Swedbank Robur Funds | 0 | 2.998.538 | 2.998.538 | 8.8 | 2.7 |
| Second AP Fund | 0 | 1,741,775 | 1,741,775 | 5.1 | 1.6 |
| Montanaro funds | 0 | 1,455,000 | 1,455,000 | 4.2 | 1.3 |
| First AP Fund | 0 | 1,409,118 | 1,409,118 | 4.1 | 1.3 |
| Anders Brahme | 1,350,161 | 0 | 1,350,161 | 3.9 | 12.0 |
| Carl Filip Bergendal | 1.061.577 | 144.920 | 1,206,497 | 3.5 | 9.6 |
| State Street Bank & Trust | 0 | 1.133.037 | 1.133,037 | 3.3 | 1.0 |
| JPMorgan Chase (UK) | 0 | 778,308 | 778,308 | 2.3 | 0.7 |
| Total, 10 largest | |||||
| shareholders | 8.654.822 | 14.275.941 | 22.930.763 | 66.9 | 89.9 |
| Others | 153 | 11.351.857 | 11,352,010 | 33.1 | 10.1 |
| Total | 8.654.975 | 25.627.798 | 34.282.773 | 100.0 | 100.0 |
RaySearch's 2017 AGM was held on Tuesday, May 23, 2017. The AGM re-elected Carl Filip Bergendal, Johan Löf and Hans Wigzell to the Board, and elected Johanna Öberg as a new Board member. Carl Filip Bergendal was re-elected as Chairman of the Board. The AGM resolved that no dividend would be paid for the 2016 fiscal year.
As a global Group with operations in different parts of the world, RaySearch is exposed to various risks and uncertainties, such as market risk, operational risk and financial risk. Risk management at RaySearch aims to identify, measure and reduce risks related to the Group's transactions and operations. No significant changes have been made to the risk assessment compared with the 2016 Annual Report. For more information about risks and risk management, see pages 7-9 and 31-32 of RaySearch's 2016 Annual Report.
RaySearch's operations are somewhat characterized by seasonal variations that are typical for the industry, whereby the fourth quarter is normally the strongest - mainly because many customers have budgets that follow the calendar year - and the second quarter is normally the weakest.
RaySearch works actively to reduce its negative environmental impact and to become a sustainable enterprise. The company's products, comprising software to improve radiation therapy for cancer treatment, have a limited negative impact on the environment. The company's environmental impact is mainly related to the purchase of goods and services, energy use and transportation. RaySearch aims to contribute to sustainable development and therefore works actively to improve the company's environmental performance wherever this is financially viable. RaySearch has an established environmental policy, and promotes social responsibility and long-term sustainable development based on sound ethical, social and environmental principles.
This interim report has not been reviewed by the company's auditors.
The Board of Directors and President give their assurance that the six-month report provides a true and fair view of the Group's and the Parent Company's operations, positions and earnings, and describes the significant risks and uncertainties facing the Parent Company and the companies included in the Group.
Stockholm, August 24, 2017 The Board of Directors of RaySearch Laboratories AB (publ)
Carl Filip Bergendal Chairman of the Board Johan Löf President and Board member
Hans Wigzell Board member Johanna Öberg Board member
| Johan Löf, President and CEO | Tel: +46 8 510 530 00 |
|---|---|
| Peter Thysell, CFO | Tel: +46 70 661 05 59 |
E-mail: [email protected] E-mail: [email protected]
The information contained in the interim report is such that RaySearch Laboratories AB (publ) is obliged to disclose under the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication on August 24, 2017 at 7:45 a.m. CET.
Interim report for the third quarter, 2017 Year-end report, 2017 Interim report for the first quarter, 2018
November 22, 2017 February 15, 2018 May 9, 2018
| AMOUNTS IN SEK 000S | APR-JUN | JAN-JUN | JUL 2016- | FULL-YEAR | ||
|---|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | JUN 2017 | 2016 | |
| Net sales | 141,634 | 118,982 | 268,422 | 214,383 | 585,507 | 531,468 |
| Cost of goods sold1) | $-10,926$ | $-5,654$ | $-20,908$ | $-10,907$ | $-36,873$ | $-26,872$ |
| Gross profit | 130,708 | 113,328 | 247,514 | 203,476 | 548,634 | 504,596 |
| Other operating income | 3,775 | 6,406 | 10,963 | 17,369 | ||
| Selling expenses | $-52,960$ | $-39,888$ | $-91,913$ | $-71,390$ | $-177,364$ | $-156,841$ |
| Administrative expenses | $-15,758$ | $-15,128$ | $-31,382$ | $-28,388$ | $-69,285$ | $-66,291$ |
| Research and development expenditure | $-26,770$ | $-24,594$ | $-51,283$ | $-44,054$ | $-100,436$ | $-93,207$ |
| Otheroperating expenses | $-8,381$ | $-12,631$ | $-5,205$ | $-13,493$ | $-6,067$ | |
| Operating profit | 26,839 | 37,493 | 60,305 | 60,845 | 199,019 | 199,559 |
| Result from financial items | $-418$ | $-557$ | $-1,259$ | $-986$ | $-1,747$ | $-1,474$ |
| Profit before tax | 26,421 | 36,936 | 59,046 | 59,859 | 197,272 | 198,085 |
| Tax | $-6,329$ | $-8,099$ | $-12,680$ | $-13,262$ | $-46,095$ | $-46,677$ |
| Profit for the period 2) | 20,092 | 28,837 | 46,366 | 46,597 | 151,177 | 151,408 |
| Other comprehensive income | ||||||
| Items to be reclassified to profit or loss | ||||||
| Translation difference of foreign operations for the | ||||||
| period | 1,318 | $-1,393$ | 1,696 | $-906$ | 435 | $-2,167$ |
| Items not to be reclassified to profit or loss | ||||||
| Comprehensive income for the period 2) | 21,410 | 27,444 | 48,062 | 45,691 | 151,612 | 149,241 |
| Earnings per share before and after dilution (SEK) | 0.59 | 0.84 | 1.35 | 1.36 | 4.41 | 4.42 |
$^{11}$ Does not include amortization of capitalized development expenditure, which is included in research and development expenditure.
2) 100 percent attributable to Parent Company shareholders.
| AMOUNTS IN SEK 000S | APR-JUN | JAN-JUN | FULL YEAR | ||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | 2016 | |
| Opening balance | 486,840 | 337.764 | 460,188 | 319,517 | 319,517 |
| Profit for the period | 20,092 | 28,837 | 46,366 | 46.597 | 151,408 |
| Translation difference for the period | 1,318 | $-1,393$ | 1,696 | $-906$ | $-2,167$ |
| Dividend paid | $-8.570$ | $-8.570$ | $-8,570$ | ||
| Closing balance | 508,250 | 356,638 | 508,250 | 356,638 | 460,188 |
| AMOUNTS IN SEK 000S | JUN 30, 2017 | JUN 30, 2016 | DEC 31, 2016 |
|---|---|---|---|
| ASSETS | |||
| Intangible fixed assets | 274,234 | 217,127 | 243,219 |
| Tangible fixed assets | 38,178 | 38,198 | 35,667 |
| Deferred tax assets | 455 | 57 | 512 |
| Other long-term receivables | 14,619 | 2,267 | |
| Total fixed assets | 327,486 | 255,382 | 281,665 |
| Current receivables | 359,716 | 266,164 | 347,869 |
| Cash and cash equivalents | 70,165 | 33,526 | 87,720 |
| Total current assets | 429,881 | 299,690 | 435,589 |
| TOTAL ASSETS | 757,367 | 555,072 | 717,254 |
| EQUITY AND LIABILITIES | |||
| Equity | 508,250 | 356,638 | 460,188 |
| Deferred tax liabilities | 77,424 | 56,192 | 70,601 |
| Long-term liabilities | 10,491 | 36,129 | 61,527 |
| Accounts payable | 17,274 | 20,467 | 11,943 |
| Other current liabilities | 143,928 | 85,646 | 112,995 |
| TOTAL EQUITY AND LIABILITIES | 757,367 | 555,072 | 717,254 |
| AMOUNTS IN SEK 000S | APR-JUN | JAN-JUN | FULL-YEAR | ||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | 2016 | |
| Profit before tax | 26,421 | 36,936 | 59,046 | 59,859 | 198,085 |
| Adjusted for | |||||
| non-cash items 1) | 7,950 | 22,334 | 19,043 | 34,347 | 75,238 |
| Taxes paid | $-3,719$ | $-4,827$ | $-7,885$ | $-11,574$ | $-19,218$ |
| Cash flow from operating activities before changes in | |||||
| working capital | 30,652 | 54,443 | 70,204 | 82,632 | 254,105 |
| Cash flow from changes in working capital | $-5,012$ | $-39,535$ | $-5,177$ | -45,861 | $-133,257$ |
| Cash flow from operating activities | 25,640 | 14,908 | 65,027 | 36,771 | 120,848 |
| Cash flow from investing activities | $-37,111$ | $-26,347$ | $-68,513$ | $-52,422$ | $-106,949$ |
| Cash flow from financing activities | $-2,239$ | $-9,591$ | $-13,230$ | $-10,604$ | 12,291 |
| Cash flow for the period | 13,710 | $-21,030$ | $-16,716$ | $-26,255$ | 26,190 |
| Cash and cash equivalents at the beginning of the period | 84,432 | 54,644 | 87,720 | 59,705 | 59,705 |
| Exchange-rate difference in cash and cash equivalents | $-557$ | -88 | $-839$ | 76 | 1,825 |
| Cash and cash equivalents at the end of the period | 70,165 | 33,526 | 70,165 | 33,526 | 87,720 |
$^{1}$ ] These amounts primarily include amortization of capitalized development expenditure.
| AMOUNTS IN SEK 000S | APR-JUN | JAN-JUN | FULL-YEAR | ||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | 2016 | |
| Net sales | 114,909 | 102,750 | 216,944 | 182,300 | 460,728 |
| Cost of goods sold1) | $-1,958$ | $-2,628$ | $-8,607$ | $-5,227$ | $-15,418$ |
| Gross profit | 112,951 | 100,122 | 208,337 | 177,073 | 445,310 |
| Other operating income | 3,775 | 6,406 | 17,369 | ||
| Selling expenses | $-36,597$ | $-29,518$ | $-60,302$ | -49,276 | $-106,745$ |
| Administrative expenses | $-15,971$ | $-15,373$ | $-31,720$ | $-28.876$ | $-67,178$ |
| Research and development expenditure | $-42,699$ | $-35,481$ | $-82,298$ | $-66,067$ | $-141,312$ |
| Other operating expenses | $-8,381$ | $-12,631$ | $-5,205$ | $-6,067$ | |
| Operating profit | 9,303 | 23,525 | 21,386 | 34,055 | 141,377 |
| Result from financial items | $-314$ | $-414$ | $-970$ | $-692$ | 2,012 |
| Profit after financial items | 8,989 | 23,111 | 20,416 | 33,363 | 143,389 |
| Appropriations | $-40,144$ | ||||
| Profit before tax | 8,989 | 23,111 | 20,416 | 33,363 | 103,245 |
| Tax | $-2,612$ | $-5,564$ | $-5,387$ | $-7,925$ | $-25,817$ |
| Profit for the period | 6,377 | 17,547 | 15,029 | 25,438 | 77,428 |
$^{1)}$ Does not include amortization of capitalized development expenditure, which is included in research and development expenditure.
| AMOUNTS IN SEK 000S | APR-JUN | JAN-JUN | FULL YEAR | ||
|---|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | 2016 | |
| Profit for the period | 6.377 | 17.547 | 15.029 | 25.438 | 77.428 |
| Other comprehensive income | $\blacksquare$ | $\overline{\phantom{a}}$ | |||
| Comprehensive income for the period | 6,377 | 17.547 | 15,029 | 25.438 | 77.428 |
| AMOUNTS IN SEK 000S | JUN 30, 2017 | JUN 30, 2016 | DEC 31, 2016 |
|---|---|---|---|
| ASSETS | |||
| Tangible fixed assets | 25,040 | 24,300 | 21,316 |
| Shares and participations | 640 | 639 | 640 |
| Deferred tax assets | 455 | 57 | 512 |
| Other long-term receivables | 9,656 | 2,267 | |
| Total fixed assets | 35,791 | 25,026 | 24,735 |
| Current receivables | 356,356 | 277,802 | 350,149 |
| Cash and cash equivalents | 54,220 | 23,945 | 66,984 |
| Total current assets | 410,576 | 301,747 | 417,133 |
| TOTAL ASSETS | 446,367 | 326,773 | 441,868 |
| EQUITY AND LIABILITIES | |||
| Equity | 253,190 | 186,171 | 238,161 |
| Untaxed reserves | 77,695 | 37,551 | 77,695 |
| Deferred tax liabilities | 163 | ||
| Long-term liabilities | 25,000 | 50,000 | |
| Accounts payable | 15,991 | 22,502 | 16,249 |
| Other current liabilities | 99,491 | 55,386 | 59,763 |
| TOTAL EQUITY AND LIABILITIES | 446.367 | 326,773 | 441.868 |
The RauSearch Group applies International Financial Reporting Standards (IFRS), as adopted bu the EU. The Swedish Financial Reporting Board's recommendation, RFR 1 Supplementary Accounting Rules for Corporate Groups, has also been applied. The Parent Company applies the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities. The interim report for the Parent Company has been prepared in accordance with the Swedish Annual Accounts Act, Chapter 9, Interim report. The accounting policies applied are consistent with those described in the 2016 Annual Report for RaySearch Laboratories AB (publ), which is available on www.rausearchlabs.com New or revised IFRS reporting requirements for 2017 have not impacted RaySearch during the period.
IFRS 15 is effective for fiscal years beginning on or after January 1, 2018. The standard will be applied by the Group and Parent Company as of January 1, 2018. An evaluation of the standard's impact on the financial statements is ongoing. This condensed interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and the applicable provisions of the Swedish Annual Accounts Act.
Preparation of the interim report requires that company management makes estimates affecting the carrying amounts of assets, liabilities, revenues and expenses. The actual outcome could deviate from these estimates. The critical sources of uncertainty in the estimates are the same as those in the most recent Annual Report.
RaySearch's financial assets and liabilities comprise accounts receivable, cash and cash equivalents, accrued income, accrued expenses, accounts payable, bank loans and a finance lease. Long-term accounts receivable and accrued income are discounted, while other financial assets and liabilities have short-term maturities. Accordingly, the fair values of all financial instruments are deemed to correspond approximately to their carrying amounts. RaySearch has not applied net accounting to any financial assets or liabilities, and has no agreements that permit offsetting.
There were no transactions between RaySearch and related parties that materially affected the company's position and earnings during the period.
| AMOUNTS IN SEK 000S | JUN 30, 2017 | JUN 30, 2016 | DEC 31, 2016 |
|---|---|---|---|
| Accounts receivable | 244.864 | 207.946 | 282.535 |
| Prepaid expenses | 16.622 | 19.660 | 14,167 |
| Accrued income | 91.485 | 31,590 | 47,576 |
| Other current receivables | 6.745 | 6.968 | 3,591 |
| Total current receivables | 359,716 | 266,164 | 347.869 |
| AMOUNTS IN SEK 000S | JUN 30, 2017 | JUN 30. 2016 | DEC 31, 2016 |
|---|---|---|---|
| Accrued income | 14.619 | 2.267 | |
| Total current receivables | 14,619 | 2.267 |
| AMOUNTS IN SEK 000S | JUN 30, 2017 | JUN 30, 2016 | DEC 31, 2016 |
|---|---|---|---|
| Tax liabilities | 8.997 | 508 | 11,148 |
| Accounts payable | 17.274 | 20.467 | 11,943 |
| Accrued expenses and prepaid income | 91,348 | 67,070 | 89,616 |
| Bank borrowings | 38,833 | 0 | 0 |
| Other current liabilities | 4,750 | 18,068 | 12,231 |
| Total current receivables | 161.202 | 106,113 | 124.938 |
| AMOUNTS IN SEK 000S | JUN 30, 2017 | JUN 30, 2016 | DEC 31, 2016 |
|---|---|---|---|
| Chattel mortgages | 100,000 | 50.000 | 100.000 |
| Guarantees | 8.996 | 4.000 | 17.700 |
| 2017 | 2016 | 2015 | ||||||
|---|---|---|---|---|---|---|---|---|
| AMOUNTS IN SEK 000s | 02 | 01 | 04 | 03 | 02 | 01 | 04 | 03 |
| Income statement | ||||||||
| Net sales | 141,634 | 126,788 | 191,355 | 125,730 | 118,982 | 95,401 | 131,957 | 100,570 |
| Sales growth, % | 19.0 | 32.9 | 45.0 | 25.0 | 53.8 | 8.7 | 22.4 | 40.5 |
| Operating profit | 26,839 | 33,466 | 100,249 | 38,465 | 37,493 | 23,352 | 44,302 | 20,085 |
| Operating margin, % | 18.9 | 26.4 | 52.4 | 30.6 | 31.5 | 24.5 | 33.6 | 20.0 |
| Profit for the period | 20,092 | 26,274 | 75,924 | 28,887 | 28,837 | 17,760 | 33,311 | 14,480 |
| Net margin, % | 14.2 | 20.7 | 39.7 | 23.0 | 24.2 | 18.6 | 25.2 | 14.4 |
| Cash flow | ||||||||
| Operating activities | 25,640 | 39,387 | 73,866 | 10,211 | 14,908 | 21,863 | 41,224 | 13,093 |
| Investing activities | $-37,111$ | $-31,402$ | $-31,207$ | $-23,320$ | $-26,347$ | $-26,075$ | $-27,564$ | $-18,579$ |
| Cash flow before financing activities | $-11,471$ | 7,985 | 42,659 | $-13,109$ | $-11,439$ | $-4,212$ | 13,660 | $-5,486$ |
| Financing activities | $-2,239$ | $-10,991$ | 13,940 | 8,955 | $-9,591$ | $-1,013$ | $-1,234$ | $-1,012$ |
| Cash flow for the period | $-13,710$ | $-3,006$ | 56,599 | $-4,154$ | $-21,030$ | $-5,225$ | 12,426 | $-6,498$ |
| Capital structure | ||||||||
| Equity/assets ratio, % | 67.1 | 66.2 | 64.2 | 65.8 | 64.3 | 66.5 | 65.9 | 62.3 |
| Net debt | $-20,841$ | $-32,869$ | $-26.193$ | 30,420 | 16,018 | $-4,784$ | $-8,512$ | 4,816 |
| Debt/equity ratio | $-0.0$ | $-0.1$ | $-0.1$ | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net debt/EBITDA | $-0.1$ | $-0.1$ | $-0.1$ | 0.1 | 0.1 | 0.0 | $-0.1$ | 0.0 |
| Per share data, SEK | ||||||||
| Earnings per share before dilution | 0.59 | 0.77 | 2.21 | 0.84 | 0.83 | 0.52 | 0.97 | 0.42 |
| Earnings per share after dilution | 0.59 | 0.77 | 2.21 | 0.84 | 0.83 | 0.52 | 0.97 | 0.42 |
| Equity per share | 14.83 | 14.20 | 13.42 | 11.26 | 10.40 | 9.85 | 9.32 | 8.36 |
| Share price at the end of the period | 235.5 | 235.0 | 184.5 | 198.50 | 119.00 | 120.50 | 122.50 | 119.00 |
| Other | ||||||||
| No. of shares before and after dilution, 000s |
34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 | 34,282.8 |
| Average no. of employees | 219 | 201 | 192 | 185 | 181 | 177 | 175 | 164 |
| AMOUNTS IN SEK 000s | Jul 2016- Jun 2017 |
Apr 2016- Mar 2017 |
Jan 2016- Dec 2016 |
Oct 2015- Sep 2016 |
Jul 2015- Jun 2016 |
Apr 2015- Mar 2016 |
Jan 2015- Dec 2015 |
Oct 2014 Sep 2015 |
|---|---|---|---|---|---|---|---|---|
| Income statement | ||||||||
| Net sales | 585.507 | 562.855 | 531.468 | 472.070 | 446.909 | 405.268 | 397.600 | 373.423 |
| Operating profit | 199.019 | 209.673 | 199.559 | 143.612 | 125.232 | 85.625 | 95.344 | 103,809 |
| Operating margin, % | 34.0 | 37.3 | 37.5 | 30.4 | 28.0 | 21.1 | 24.0 | 27.8 |
The interim report refers to a number of non-IFRS financial measures that are used to provide investors and company management with additional information to assess the company's operations. The various non-IFRS financial measures that are used to complement the financial information reported in accordance with IFRS are described below.
| Non-IFRS financial measures | Definition | Reason for using the measure |
|---|---|---|
| Order intake excluding | The value of all orders received and changes to | Order intake is an indicator of future revenues and is thus |
| service agreements | existing orders during the current period excluding the | is a key figure for the management of RaySearch's |
| value of service agreements. | operations. | |
| Order intake for RayStation | The value of orders received and changes to existing | Order intake is an indicator of future revenues and is thus |
| excluding service agreements | orders for RayStation during the current period, | is a key figure for the management of RaySearch's main |
| excluding the value of service agreements. | operational areas. | |
| Order backlog for RayStation | The value of orders for RayStation at the end of the | The order backlog shows the value of orders already |
| period that the company has yet to deliver and | booked by RaySearch that will be converted to revenues in | |
| recognize as revenue. | the future. | |
| Sales growth | The change in net sales compared with the year- | The measure is used to track the performance of the |
| earlier period expressed as a percentage | company's operations between periods | |
| Organic sales growth | Sales growth excluding currency effects | This measure is used to monitor underlying sales growth |
| driven by changes in volume, pricing and mix for | ||
| comparable units between different periods | ||
| Gross profit | Net sales minus cost of goods sold | Gross profit is used to illustrate the margin before sales, |
| research, development and administrative expenses | ||
| Operating profit | Calculated as earnings before financial items and tax | Operating profit/loss provides an overall picture of the total |
| generation of earnings in operating activities | ||
| Operating margin | Operating profit/loss expressed as a percentage of net | Together with sales growth, the operating margin is a key |
| sales | element for monitoring value creation | |
| Net margin | Profit for the period as a percentage of net sales for | The net margin illustrates the percentage of net sales |
| the period | remaining after the company's expenses have been deducted |
|
| Equity per share | Equity divided by number of shares at the end of the | Illustrates the return generated on the owners' invested |
| period | capital per share from a shareholder perspective | |
| Rolling 12 months' sales, | Sales, operating profit/loss or other results measured | This measure is used to more clearly illustrate the trends |
| operating profit/loss or other | over the last 12-month period | for sales, operating profit/loss and other results, which is |
| results | relevant because RaySearch's revenues are subject to | |
| monthly variations | ||
| Working capital | The Group's working capital is calculated as current | This measure shows how much working capital is tied up in |
| operating receivables less current operating liabilities | operations and can be shown in relation to net sales to | |
| demonstrate the efficiency with which working capital has | ||
| been used | ||
| Return on equity | Calculated as profit/loss for the period as a percentage of average equity Average equity is |
Illustrates the return generated on the owners' invested capital from a shareholder perspective |
| calculated as the sum of equity at the end of the | ||
| period plus equity at the end of the year-earlier period, | ||
| divided by two | ||
| Equity/assets ratio | Equity expressed as a percentage of total assets | This is a standard measure to show financial risk, and is |
| expressed as the percentage of the total restricted equity | ||
| financed by the owners | ||
| Net debt | Interest-bearing liabilities less cash and cash equivalents |
The measure shows the Group's total indebtedness |
| and interest-bearing current and long-term | ||
| receivables | ||
| Debt/equity ratio | Net debt in relation to equity | The measure shows financial risk and is used by |
| management | ||
| to monitor the Group's indebtedness | ||
| Net debt/EBITDA | Net debt in relation to operating profit before | A relevant measure from a credit perspective that shows |
| depreciation over the past 12-month period | the company's | |
| ability to repay its debts |
| AMOUNTS IN SEK 000s | Jun 30, 2017 | Jun 30, 2016 | Dec 31, 2016 |
|---|---|---|---|
| Working capital | |||
| Accounts receivable | 244,864 | 207,946 | 282,535 |
| Accrued income | 91,485 | 31,590 | 47,576 |
| Other current receivables | 23,367 | 26,628 | 17,758 |
| Accounts payable | $-17.274$ | $-20,467$ | $-11,943$ |
| Other current liabilities | $-143,928$ | $-85,646$ | $-112,995$ |
| Working capital | 198,514 | 160,051 | 222,931 |
| AMOUNTS IN SEK 000s | Jun 30, 2017 | Jun 30, 2016 | Dec 31, 2016 |
| Net debt | |||
| Current interest-bearing liabilities | 38,833 | 13,415 | |
| Long-term interest-bearing liabilities | 10,491 | 36,129 | 61,527 |
| Cash and cash equivalents | $-70,165$ | $-33,526$ | $-87,720$ |
| Interest-bearing receivables | |||
| Net debt | $-20,841$ | 16,018 | $-26,193$ |
| AMOUNTS IN SEK 000s | Jul 2016- Jun 2017 |
Jul 2015- Jun 2016 |
Full-year 2016 |
| EBITDA | |||
| Operating profit | 199,019 | 125,232 | 199,559 |
| Amortization and depreciation | 69,239 | 64,415 | 67,339 |
| EBITDA | 268,258 | 189,647 | 266,898 |
RaySearch Laboratories AB (publ) Box 3297 SE-103 65 Stockholm, Sweden
Sveavägen 44, Floor 7 SE-111 34 Stockholm, Sweden
Tel: +46 8 510 530 00 www.rausearchlabs.com Corporate Registration Number: 556322-6157
RaySearch Laboratories AB (publ) is a medical technology company that develops advanced software solutions for improved radiation therapy of cancer. The company develops and markets the RayStation treatment planning system to clinics all over the world and distributes the products through licensing agreements with leading medical technology companies. The company is also developing the next-generation oncology information system, RayCare, which comprises a new product area for RaySearch, and will be launched in 2017. RaySearch's software is currently used by over 2,600 clinics in more than 65 countries. The company was founded in 2000 as a spin-off from the Karolinska Institute in Stockholm and the share has been listed on Nasdaq Stockholm since 2003.
More information about RaySearch is available at www.raysearchlabs.com.
RaySearch's mission is to contribute to the advancement of cancer care by developing innovative software solutions that improve quality of life for cancer patients and save lives.
RaySearch's revenues are generated when customers pay an initial license fee for the right to use RaySearch's software and an annual service fee for access to updates and support. The RayStation treatment planning system is developed at RaySearch's head office in Stockholm, and distributed and supported by the company's global marketing organization.
A radiation therapy clinic essentially needs two software platforms for its operations: an information system, and a treatment planning system. With RayStation and the planned launch of RayCare in 2017, RaySearch will further strengthen its position and continue to grow with high profitability. The strategy rests on a strong focus on software development, leading functionality, broad support for many different types of treatment techniques and radiation therapy devices, as well as extensive investments in research and development.
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