Interim / Quarterly Report • Aug 16, 2017
Interim / Quarterly Report
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INTERIM
PRESS RELEASE AUGUST 16, 2017
| Q2, APR-JUN | INTERIM PERIOD, JAN-JUN | FULL YEAR | |||||
|---|---|---|---|---|---|---|---|
| (MSEK) | 2017 | 2016 | Change | 2017 | 2016 | Change | 2016 |
| Order intake | 49,3 | 30,4 | 62% | 89,5 | 43,4 | 106% | 113,5 |
| Net sales | 32,2 | 15,6 | 106% | 58,0 | 32,9 | 76% | 82,7 |
| Gross profit margin | 58% | 54% | 59% | 50% | 57% | ||
| Operating loss | 4,1 $\sim$ |
9,8 $\overline{\phantom{a}}$ |
58% | 9,8 $\overline{\phantom{a}}$ |
18,0 $\overline{\phantom{a}}$ |
46% | $-30,4$ |
| Net results after tax | 4,3 $\sim$ |
10.1 ۰. |
57% | $-10.1$ | $-18.6$ | 46% | $-31,2$ |
| Cash | 9,1 | 15,5 | $-41%$ | ۰ | ۰ | 12,7 | |
| Share price* | 22,6 | 9,1 | 148% | ۰ | $\overline{\phantom{a}}$ | 12,1 | |
| Order backlog *SEK, balance sheet day |
118,4 | 63,5 | 86% | ۰ | - | 83,5 |
2
C-RAD´s growth continued to develop strongly in the second quarter with an increase of more than 100 percent in revenues and 62% percent in order intake compared to the second quarter last year. This momentum is underlining the augmented demand for our leading technology, that we see in the market place.
During the second quarter, we delivered a new all-time high in revenues – a development from 16 MSEK in the first quarter of 2016 to sizeable 32.5 MSEK. In the same period order intake increased to from 30.4 MSEK to 49.3 MSEK
The EMEA region showed a notable development during the second quarter, driven by a steady increase in most countries and an outstanding order from France. In this project, a private hospital group decided to equip all their linear accelerators with the C-RAD surface tracking solution. This project resulted in an order of 9 MSEK. This customer had already previously equipped their CT's with C-RAD's Sentinel 4DCT™ solution. It is a positive signal, that also existing customers are upgrading their C-RAD solution as they grow.
Looking at the different segments, it should be noted that our life cycle business – primarily the sales of services - was exceeding 13 MSEK in order intake. This is an increase of almost 400 percent compared to the same period previous year. The positive trend continues that more customers are considering service contracts for their products to cover hard- and software updates, spare parts and preventive maintenance for a period of in average 5 years. For new sales, often the customer purchases a service contract along with the system, whereas existing customers are upgrading their installed base. Service contracts are providing a stable recurring revenue stream over the entire term. Sales of our positioning products – our main product line was exceeding 33 MSEK, whereas it was 25 MSEK in the second quarter 2016. All in all the order book increased to 118 MSEK providing a solid base for future revenues.
Our focus on cost control and the substantial increase in revenues has enabled us to deliver a positive increase in EBITDA. The gross profit margin improvements during the last quarters is contributing to this development.
In the beginning of the third quarter we received prestigious large orders for two well-reputed customers with a total value of 29 MSEK. Whereas this was certainly a very positive start, it shows at the same time that individual quarters might be volatile in order intake in our business.
The momentum and the strong growth we are having confirms our previous assessment of an increased market acceptance that translates into a growing demand for our advanced surface tracking solution. We continue to see a substantial potential in essentially all our markets. C-RAD continues to deliver on our strategy and is now a significantly larger business with higher growth rates, compared with a year ago, says Tim Thurn, CEO of C-RAD.
C-RAD and Miami Cancer Institute at Baptist Health South Florida announced on April 18, 2017 that both parties have signed an agreement to equip the new proton therapy facility in Miami with C-RAD's surface tracking solution. Total order value: MSEK 7.5 MSEK.
On June 28, 2017, C-RAD announced an order to equip five treatment machines with the latest SIGRT solution for two cancer centers located in the Bretagne in France. The customer had already previously equipped their CT's with C-RAD's Sentinel 4DCT™ solution. Total order value: 9 MSEK.
The Patent and Market appeal court confirmed in its judgment on June 20 C-RAD's right to the invention named "Patient Monitoring Radiation Machines". The company Beamocular had filed suit in November 2014 claiming ownership of one of C-RAD's patent families.
C-RAD and the Department of Radiation Oncology of the University Medical Center Freiburg announced on July 21, 2017 to equip the center with the latest SIGRT (Surface Image Guided Radiation Therapy) solution and their intention to enter into a research partnership. Total order value: 7.8 MSEK.
C-RAD announced on Aug 3, 2017 that a contract, to supply Nya Karolinska Solna (NKS) and Södersjukhuset in Stockholm, Sweden with its latest SIGRT (Surface Image Guided Radiation Therapy) solution, has been signed. Total order value: 21 MSEK.
Order intake during the second quarter amounted to 49.3 MSEK compared to 30.4 MSEK in the previous year, an increase of 62%. Order intake growth was primarily driven by sales in EMEA and US region. Sales of positioning products increased by 33% during the second quarter 2017 compared to the same period in 2016, whilst order intake for Life Cycle Business services increased by 385%.
Revenues increased from 15.6 MSEK during the first quarter 2016 to 32.2 MSEK during the second quarter 2017, an increase of 106%. EMEA and North America stood for the large part of the deliveries during the quarter following their strong order intake during the last quarters. The average delivery time improved to three months in average during the second quarter.
There is a seasonal pattern in C-RAD's operations. The second half of the year and the fourth quarter in particular are usually the strongest periods, both in terms of order intake and revenues. This is due to the fact that a large number of customers are hospitals and clinics, which have annual budgets per calendar year. As the larger part of C-RAD's cost base is fixed, fluctuations in revenue has a direct impact on the quarterly operating profit.
The order backlog represents orders that have been received but not delivered and invoiced. The backlog amounted to 118.4 MSEK at the end of second quarter 2017 compared to 63.5 MSEK at the same period 2016, an increase of 86%. From the total order backlog, 80.9 (51.2) MSEK involves products and 37.5 (12.3) MSEK refer to Life Cycle Business (service contracts). 5.2 MSEK of the order backlog for Life Cycle Business will be recognized as revenue within 12 months, as service contracts are recognized as revenue over the contract period. The service contract can be up to eight years while the average duration is around five years
The weighted average delivery time for products recognized as revenue in the second quarter was just above three months, a large improvement from the previous rates of around six months. This is the time from receiving an order until the order is delivered and revenue recognized. In the graph below the development of the order backlog is presented. Service contracts are presented separately from Q4 2014 onwards.
Gross profit was 58% during the second quarter 2017, compared to 54% in the corresponding period in 2016. The gross profit has continually improved during the last quarters as a result of C-RAD's focus on improving the supply chain. Fluctuations in gross profit can be expected in shorter periods as it is dependent on the product mix and market as well as the exchange rate fluctuations.
Operational expenses for the second quarter 2017 amounted to 8.9 MSEK compared to 8.3 MSEK in the previous year. Following the verdict in the patent case against Beamocular in June, C-RAD should be fully reimbursed for legal fees incurred. This had a positive effect on operational expenses of 1.1 MSEK during the second quarter. Full payment was received in July, 2017.
Personnel expenses for the second quarter 2017 amounted to 13.2 (9.4) MSEK. The increase compared to last year is mainly related to the expansion of operations, which entails sales resources being enhanced. Compared to the first quarter of 2017, personnel cost increased by 1 MSEK, mainly related to one-off items in conjunction with increased service activity. The average number of employees increased from 39 in Q2 2016 to 46 in the corresponding period in 2017. At the end of June 2017, the number of employees in the Group amounted to 46 (41).
Net results before tax during the quarter amounted to -4.3 MSEK compared to -10.1 MSEK in 2016.
Capitalized development costs amounted to 22.0 (20.8) MSEK at the end of June. Capitalizations during Q2 2017 of KSEK 890 are related to the Gemini project. GEMini is continually showing good progress in performance test, both in shortterm repetitive tests and long-term. Further verification of the product is needed, but we continue to be confident of the technical success of the project.
The financial statements are presented in SEK, the functional currency of C-RAD. Sales and orders are largely generated in foreign currency, mainly EUR and USD and, in addition, foreign subsidiaries and associates are included in the consolidation. The average EUR rate during the first half 2017 was 9.6 (9.3), while the average USD rate in the period was 8.9 (8.3).
C-RAD holds a credit facility with Nordea of 2 MSEK and with Erik Penser Bank AB of 10 MSEK. There is also an invoice discounting facility for the Swedish company C-RAD Positioning AB with a max amount of 12 MSEK. The credit line agreement with Erik Penser Bank is valid until further notice with 12 month notice from the financier.
During the first half of 2017, cash flow was negative in the amount of -3.4 MSEK. Cash flow from financing activities amounted to 12,7 MSEK due to increased utility of the invoice discounting solution from Erik Penser, which had a balance of 11.8 MSEK by the end of the quarter, and cash flow related to the employee warrant program. Negative cash flow from operations amounted to -7.2 MSEK and from working capital to -6,2 MSEK. The negative cash flow from working capital refers to accounts receivables as a large part of deliveries were made in the end of the second quarter. Capitalized development costs are included in investment activities, but not as adjustment for non-cash items.
On April 28, 2017, the Annual General Meeting decided to issue 550 000 warrants with the purpose of using them as part of an employee incentive program for C-RAD AB. In total, the employees of the C-RAD group signed up for a total of 235 559 warrants. Out of this amount, CEO, senior management and other key employees signed up for 140 588 warrants or 88% of their allotted warrants.
Reference is made to the Annual Report for 2016 page 56-59, regarding significant risks and uncertainties, and how these are managed. The capitalized development costs for the Gemini project amounts to 1,6 MSEK for the first half of 2017. Until the project is launched and starts to generate revenues, a certain degree of uncertainty prevails. If the project does not develop in line with expectations, the Company will be forced to write down all or part of the capitalized development costs. Valuations of intangible assets and deferred tax asset are based on future sales and order backlog under the assumption that sufficient funding will be available for future expectations to be fulfilled.
No operations are carried in the Parent Company except for Group Management and administration.
October 27, 2017 Q3, 2017 report January 31, 2018 Q4, 2017 report
| (Amounts in KSEK) | 2017 | 2016 | 2017 | 2016 | 2016 |
|---|---|---|---|---|---|
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | Jan-Dec | |
| Operating income | |||||
| Net sales | 32 201 | 15 618 | 57 959 | 32 888 | 82 654 |
| Work performed by the company for its own use and capitalized | 890 | 883 | 1 968 | 1 539 | 3 489 |
| Other operating income | -142 | 61 | 358 | 228 | 507 |
| Total operating income | 32 949 | 16 563 | 60 285 | 34 655 | 86 650 |
| Gross profit margin | 58% | 54% | 59% | 54% | 57% |
| Operating expenses | |||||
| Raw material and consumables | -13 604 | -7 183 | -24 029 | -15 166 | -35 904 |
| Other external costs | -8 919 | -8 314 | -17 689 | -15 263 | -33 683 |
| Personnel costs | -13 174 | -9 363 | -25 361 | -19 120 | -41 532 |
| Depreciations | -1 353 | -1 486 | -2 971 | -3 114 | -5 887 |
| Other operating expenses | 0 | 0 | 0 | 0 | 0 |
| Total operating expenses | -37 049 | -26 346 | -70 050 | -52 663 | -117 006 |
| Operating profits/loss | -4 100 | -9 784 | -9 765 | -18 008 | -30 356 |
| Financial income | 0 | 4 | 0 | 7 | 8 |
| Financial costs | -184 | -289 | -365 | -637 | -861 |
| Profit (loss) before tax | -4 283 | -10 069 | -10 130 | -18 638 | -31 209 |
| Income tax | 0 | 0 | 0 | 0 | 0 |
| Net results for the period | -4 283 | -10 069 | -10 130 | -18 638 | -31 209 |
| Translation difference from foreign operations | 363 | 133 | 0 | -37 | -325 |
| Comprehensive results for the period (1) | -3 920 | -9 936 | -10 130 | -18 675 | -31 534 |
| Results per share before dilution | -0.14 | -0.44 | -0.33 | -0.83 | -1.21 |
| Results per share after dilution | -0.13 | -0.41 | -0.31 | -0.78 | -1.14 |
(1) 100% attributable to shareholders in the Parent Company
| (Amounts in KSEK) Segment revenue |
2017 apr-jun |
2016 apr-jun |
2017 jan-jun |
2016 jan-jun |
2016 jan-dec |
|---|---|---|---|---|---|
| Positioning external sales | 32 049 | 15 439 | 57 652 | 32 520 | 81 946 |
| Imaging external sales | 152 | 179 | 307 | 368 | 708 |
| Total | 32 201 | 15 618 | 57 959 | 32 888 | 82 654 |
| Positioning operating results | -3 809 | -9 703 | -9 393 | -17 709 | -29 517 |
| Imaging operating results | -291 | -81 | -372 | -299 | -839 |
| Rörelseresultat | -4 100 | -9 784 | -9 765 | -18 008 | -30 356 |
| Revenue per gegraphical market | |||||
| North America | 11 479 | 4 378 | 14 367 | 13 105 | 30 326 |
| EMEA | 17 840 | 9 258 | 29 054 | 17 358 | 38 639 |
| APAC | 2 882 | 1 982 | 14 538 | 2 425 | 13 689 |
| 32 201 | 15 618 | 57 959 | 32 888 | 82 654 |
Segment reporting is based on the same accounting principles as applied in the consolidated financial statement for 2016.
| (Amounts in KSEK) | |||
|---|---|---|---|
| Assets | 30-6-2017 | 30-6-2016 | 31-12-2016 |
| Assets | |||
| Intangible assets | |||
| Capitalized development expenditure | 21 980 | 20 789 | 21 016 |
| Distribution rights | 4 8 0 2 | 5 6 5 0 | 5 2 2 6 |
| Patents, licenses and similar rights | 683 | 833 | 740 |
| 27 465 | 27 27 2 | 26 982 | |
| Tangible assets | 2 6 7 9 | 4 3 9 2 | 3 3 3 7 |
| Equipment | |||
| Financial assets | |||
| Long-term receivables | 106 | 106 | 106 |
| Deferred tax asset | 7 0 9 4 | 7 0 9 4 | 7094 |
| Total non-current assets | 37 344 | 38 864 | 37 520 |
| Current assets | |||
| Inventory | 6 1 8 6 | 10 635 | 6 3 6 0 |
| Trade receivables | 37 097 | 9848 | 36 528 |
| Other receivables | 6 9 25 | 5 1 9 8 | 3 4 4 3 |
| Prepayments and accrued income | 10 621 | 6786 | 5 5 6 8 |
| Cash and bank | 9 1 0 1 | 15 487 | 12 683 |
| Total current assets | 69 930 | 47 954 | 64 583 |
| Total assets | 107 274 | 86 819 | 102 102 |
| Equity and liabilities | 30-6-2017 | 30-6-2016 | 31-12-2016 |
| Equity | |||
| Share capital | 4 4 3 0 | 4 1 3 0 | 4 4 3 0 |
| Additional paid in capital | 254 467 | 233 015 | 255 230 |
| Retained earnings | $-187828$ | $-156859$ | $-157524$ |
| Profit (loss) for the year | $-9765$ | $-18638$ | $-31534$ |
| Total equity | 61 303 | 61 647 | 70 602 |
| Long term liabilities | |||
| Convertible bonds ……………………………………………………………………………………………… | 11 682 | 11 718 | 11 829 |
| Other long-term liabilities | 642 | 993 | 642 |
| 12 3 24 | 12 711 | 12 471 | |
| Current liabilities | |||
| Accounts payable | 6 0 05 | 5 9 5 5 | 7582 |
| Warranty provisions | 1 2 2 5 | 1 1 3 4 | 1 2 2 5 |
| Other current liabilities | 17 295 | 683 | 2 3 3 7 |
| Accrued expenses and deferred income | 9 1 2 3 | 4688 | 7885 |
| Total current liabilities | 33 649 | 12 460 | 19 029 |
| Total liabilities | 45 973 | 25 171 | 31 500 |
| Total equity and liabilities | 107 274 | 86 819 | 102 102 |
| (Amounts in KSEK) |
|---|
| Statement of cash flow | 2017 | 2016 | 2016 |
|---|---|---|---|
| Jan-Jun | Jan-Jun | Jan-Dec | |
| Operating activities | |||
| Profit (loss) before financial items | (9 765) | (18 008) | (30 356) |
| Adjustment for non-cash items, etc | 2 971 | 3 039 | 5 748 |
| Interests received | 0 | 7 | 8 |
| Interests paid | (365) | (637) | (861) |
| Cash flow from operating activites before working capital | |||
| changes | (7 158) | (15 599) | (25 461) |
| Working Capital Changes | (6 150) | (6 769) | (19 162) |
| Cash flow from operating activites | (13 308) | (22 368) | (44 623) |
| Cash flow from investing activities | (2 795) | (2 310) | (4 005) |
| Cash flow from financing activities | 12 669 | 35 665 | 56 702 |
| Net increase (decrease) in cash and cash equivalents | (3 435) | 10 987 | 8 074 |
| Cash and cash equivalents at beginning of period | 12 683 | 4 426 | 4 426 |
| Exchange rate differences | (147) | 74 | 183 |
| Cash and cash equivalents at end of period | 9 101 | 15 487 | 12 683 |
(Amounts in KSEK) Statement of changes in equity 2017 2016 2016 Jan-Jun Jan-Jun Jan-Jun 70 602 40 047 40 047 973 45 472 66 967 0 (5 279) (5 368) 37 111 (195) (179) (29) 51 831 40 275 61 455 (10 130) (18 675) (30 900) Closing balance at end of period ............................................................................................................... 61 303 61 647 70 602 Issue expenses .................................................................................................................................................................. Equity part of convertible loan ...................................................................................................................................... Translation and other differences .................................................................................................................................. Changes in the period ................................................................................................................................ Loss for the period .......................................................................................................................................................... Share increase and option program ............................................................................................................................... At beginning of period ..............................................................................................................................
| mounts in KSEK) | |||
|---|---|---|---|
| 2017 | 2016 | 2016 | |
| $Jan-Iun$ | Jan-Jun | Jan-Dec | |
| Total income | 8884 | 9 9 4 1 | 19768 |
| Other costs | $-3,569$ | $-4444$ | $-8.095$ |
| Other personnel costs | $-4060$ | $-4267$ | -8 9 9 9 |
| Depreciation tangible assets | $-12$ | $-23$ | |
| $-424$ | $-424$ | $-847$ | |
| Amortization intangible assets | |||
| Total operating expenses | $-8065$ | $-9147$ | $-17964$ |
| Financial income | |||
| Financial costs | $-437$ | $-12718$ | |
| Result from financial costs | -67 | $-433$ | $-12713$ |
| Result before tax | 361 | $-10.909$ | |
| Tax | $\Omega$ | ||
| Net results | 144 | 361 | $-10909$ |
| 2017 30 Jun |
2016 $30$ Jun |
2016 31 Dec |
|
|---|---|---|---|
| Assets | |||
| Intangible assets | 4 8 0 2 | 5 6 5 0 | 5 2 2 6 |
| Tangible assets | 27 | 50 | 38 |
| Shares in Group companies | 108 128 | 92.512 | 108 128 |
| Receivables in Group companies | 58 737 | 57 378 | 62 040 |
| Other receivables | 940 | 765 | 121 |
| Prepayments and accrued income | 852 | $\Omega$ | 690 |
| Cash and bank | 706 | 7 0 5 0 | 466 |
| Total assets | 174 193 | 163 405 | 176 709 |
| Equity and liabilities | |||
| Share capital | 4 4 3 0 | 4 1 3 0 | 4 1 3 0 |
| Other equity | 155 226 | 144 133 | 154 109 |
| Total equity | 159 655 | 148 263 | 158 239 |
| Convertible bonds | 11 718 | 11 718 | 11 718 |
| Long term liabilities | 642 | 993 | 642 |
| Accounts payable | 780 | 1 2 2 7 | 1058 |
| Liabilities to Group companies | $\Omega$ | $\Omega$ | 2,440 |
| Other current liabilities | 626 | 486 | 1 2 5 9 |
| Accrued expenses and deferred income | 771 | 718 | 1 0 5 4 |
| Total liabilities | 14 5 37 | 15 142 | 18 17 1 |
| Total equity and liabilities | 174 193 | 163 405 | 176 409 |
Oct-Dec This interim report is prepared, for the Group, in accordance with IAS 34, RFR1 "Redovisning för koncerner" and the Annual Accounts Act and, for the Parent company, the Annual Accounts Act and RFR 2.
There has been no significant changes to existing accounting policies or new applied acccounting principles in 2017, thus the applied accounting principles are consistent with what is stated in note 1 in the Financial Statements for 2016.
C‐RAD has reviewed what impact IFRS 15, the new standard for revenue recognition, will have on the company's revenue reporting. The Company's assessment is that the application of the new standard will not imply any significant changes to the current revenue recognition for the Group. The new standard will be applied as of January 1st, 2018.
Updated IFRS standards and interpretations from IFRIC have no impact on the Group or the Parent Company's results or financial position.
Orders, order back‐log and income statement are translated at the period‐average exchange rate while balance sheet items are translated at the closing rate.
There has been no transactions with related parties in the reporting period.
Development expenses that fulfil the recognition criteria in IAS38 are capitalized. At least annually an impairment test is performed. The progress of current development projects is reviewed on a regular basis.
Deferred tax assets are reviewed at the end of each reporting period and adjusted in line with the probable future taxable result.
Contingent liability of SEK 2 000 000 in the Parent company refer to guarantee committment for subsidiary.
The pledges refer to to a chattle mortgage for the Companys credit line with Nordea and Erik Penser Bank AB (security of 12.150.000 SEK) and a chattel
| 2017 30 Jun |
2016 30 Jun |
2016 Dec 31 |
|
|---|---|---|---|
| Number of shares | 29 531 653 | 27 531 653 | 29 531 653 |
| Average number of shares | 29 531 653 | 23 279 543 | 25 703 763 |
| Average number of diluted shares | 31 135 288 | 24 799 493 | 27 269 084 |
| Number of options outstanding | 1 818 749 | 1 509 746 | 1 768 749 |
| Solvency | 57% | 71% | 69% |
| Result per share before dilution | (0,33) | (0,83) | (1,21) |
| Result per shares after dilution | (0,31) | (0,78) | (1,00) |
| Equity per share before dilution | 2,08 | 2,65 | 2,39 |
| Equity per share after dilution | 1,97 | 2,49 | 2,26 |
| Operating margin | Neg. | Neg. | Neg. |
This interim report provides a true and fair view of the Group's operations, financial position and earnings. If there are any deviations between the reports in English and Swedish, the Swedish version is valid. This interim report has not been reviewed by the company auditors.
Uppsala, Aug 15 2017
Lars Nyberg Tim Thurn Chairman of the Board CEO
Board member Board member
Kicki Wallje‐Lund Peter Hamberg
Åsa Hedin Peter Eidensjö David Sjöström Board member Board member Board member
Bredgränd 18, SE‐753 20 Uppsala, Sweden Telephone +46 (0)18 ‐ 66 69 30 www.c‐rad.com Corp. reg. no 556663‐9174
Since December 2014, C‐RAD AB has been listed on the Nasdaq Stockholm exchange Small Cap list. The information in this interim report is such that C‐RAD is required to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication on Aug 16, 2017 at 8:30 am.
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