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BICO Group — Interim / Quarterly Report 2021
May 12, 2021
2891_10-q_2021-05-12_05f87a54-aa0a-4c4c-aceb-508cd48f0005.pdf
Interim / Quarterly Report
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CELLINK AB (publ)
Interim report January-March 2021
HIGH ORGANIC GROWTH, STRENGTHENED GROSS MARGIN AND STRATEGIC ACQUISITIONS. Q1
FIRST QUARTER January-March 2021
Net sales amounted to MSEK 129.5 (38.0), which corresponds to an increase of 241% (55) compared to the corresponding period previous year, of which 62% (25) was organic growth.
Operating profit before depreciation (EBITDA) amounted to MSEK -34.9 (-5.7), corresponding to a margin of -26.9% (-14.9). The operating profit during the quarter was affected by acquisition costs totaling MSEK 20.5.
Profit/loss for the period amounted to MSEK -47.8 (-33.5), which generates earnings per share after dilution of SEK -0.90 (-0.80). The result was positively affected by the market valuation of the company's short-term investments of MSEK 4.4 (-22.7).
The gross margin amounted to 77.3% (74.8), mainly due to higher revenue per product, improved product mix and increased share of sales in services and consumables.
Rolling twelve-month net sales from consumables amounted to MSEK 46.2 (19.2), an increase of 140%. The share of total product sales was 12.9%, a decrease of 0.2 percentage points (13.1% in the comparison period).
During the quarter, the Finnish company Ginolis, specializing in advanced diagnostics automation and advanced robotics solutions was acquired for MSEK 648.8 as well as American MatTek, a global leader in in-vitro technology and alternative drug testing models for pharmaceuticals and cosmetic products for MSEK 610.
During March, the offering of senior unsecured convertible bonds convertible to Class B share and a class B share issue to a total amount of MDSEK 3 were completed.
2 | CELLINK INTERIM REPORT Q1, 2021
CELLINK's transition to reporting per calendar year has meant that the company had a fifth quarter (Q5) 2020 which included four months; September 1, to December 31, 2020. This also meant that 2019/2020 corresponded to reporting from September 1, 2019 to December 31, 2020. All reporting from and including Q1 2021 runs per calendar year.
Group key figures
| Q1 2021 | Q1 2020*** | 2019/2020 | 2020 | |
|---|---|---|---|---|
| MSEK | Jan-Mar | Jan-Mar | Full year 16 months |
Calendar year 12 months |
| Net sales | 129.5 | 38.0 | 416.0 | 365.8 |
| Gross profit | 100.1 | 28.4 | 298.6 | 263.6 |
| Gross margin, % | 77.3% | 74.8% | 71.8% | 72.0% |
| Operating profit before depreciation and amortization (EBITDA) |
-34.9 | -5.7 | 0.8 | 16.4 |
| Operating margin before depreciation and amortization (EBITDA), % |
-26.9% | -14.9% | 0.2% | 4.5% |
| Operating profit (EBIT) | -60.8 | -12.1 | -51.9 | -29.4 |
| Operating margin (EBIT), % | -46.9% | -31.8% | -12.5% | -8.0% |
| Profit/loss for the period | -47.8 | -33.5 | -49.0 | -30.1 |
| Diluted earnings per share, SEK** | -0.90 | -0.80 | -1.10 | -0.64 |
| Net debt(-)/Net cash(+) | 1,254.3 | 355.2 | 755.7 | 755.7 |
| Cash flow from operating activities | -29.3 | -41.3 | -79.4 | -65.6 |
| Average number of shares* ** | 52,852,146 | 42,418,377 | 44,888,273 | 46,730,428 |
| Number of shares at the end of the period** | 56,577,398 | 42,874,776 | 51,601,285 | 51,601,285 |
| Share price on closing day, SEK** | 375.50 | 82.90 | 234.50 | 234.50 |
| Market capitalization on closing day, BSEK | 21.24 | 3.55 | 12.10 | 12.10 |
| Number of employees at the end of the period | 676 | 192 | 396 | 396 |
*Average number of shares including potential ordinary shares.
***The comparison period for Q1 2020 has been recalculated as a result of the financial year's transition to a calendar year from January 2021.
For definitions of alternative performance measures, see page 27.
This is a translation of the Swedish original. In the events of any differences between the translation and the Swedish original, the latter shall prevail.
**CELLINK conducted a 4:1 split on January 10, 2020. Comparison periods have been restated for correct comparison.
SIGNIFICANT EVENTS DURING THE PERIOD
Events during the quarter
January–March 2021
On January 25 CELLINK launched the UP.SIGHT, an effective microscope and singe-cell dispenser with double assurance of clonality within cell line development that increases efficiency across workflows.
On January 28 the cooperation between CELLINK and AstraZeneca in pharmaceutical research was extended for the third year in a row. CELLINK provides the company's latest 3Dbioprinters and workflows for the exploration of new therapies and pharmaceutical research within AstraZeneca's main therapeutical areas.
On February 8 a new distribution agreement was announced between CELLINK and seqWell for Single-Cell RNA Sequencing and NGS Library Preparation.
On February 15 an agreement was signed to acquire Ginolis, active within advanced robotics and diagnostics automation. The purchase price amounted to MSEK 648.8 and the acquisition was completed on March 1, 2021.
On March 10 an agreement was signed to acquire MatTek, the global leader in in-vitro technology and alternative drug testing models. The purchase price amounted to MSEK 610 and the acquisition was completed on March 22, 2021.
On March 11–12 the offer and completion of the offering of Senior Unsecured Convertible Bonds convertible into Class B shares and a Class B share issue was announced, to a total amount of BSEK 3.
On March 15 CELLINK launched The BIO MDX™ series, the next-generation bioprinters. The product line is the first to combine CELLINK's and SCIENION's technologies.
On March 23 CELLINK's bioprinter BIO X6 won the prestigious Red Dot Design Award for outstanding design quality.
Events after the period
On April 6 the cooperation between CELLINK and UPM Biomedicals with the aim to bring together UPM's expertise for producing biomaterials with CELLINK's 3D-bioprinting was communicated.
On April 14 CELLINK received the prestigious gold award for the BIO X6 and two design excellence awards for the C.WASH and UP.SIGHT at the iF Design Awards 2021.
On April 26 decisions were made by the Annual General Meeting 2021 to, among other things, adopt a long-term incentive program for employees, resolved the issue of convertible bonds and authorized the Board to decide on new share issues.
Employees
10+ Offices
1,700+ Publications citing CELLINKs products
2,000+ Laboratories use CELLINK's products
THIS IS CELLINK
Founded in 2016, CELLINK is the world leading bioconvergence company providing innovative and cutting-edge technologies, products, and services for our customers to create, understand and master biology.
We are the frontrunners in the evolving life science universe where we together with our customers develop game-changing solutions by combining biology and technology to create the future of medicine.
We want to ensure that scientific breakthroughs are made accessible around the globe to help address the pressing needs of preventing, diagnosing, and treating chronic diseases, and assist in controlling the rising costs of healthcare.
With a focus on the application areas of bioprinting, multiomics, cell line development, and diagnostics, we develop and markets innovative technologies that enable researchers in the life sciences to culture cells in 3D, perform high-throughput drug screening and print human tissues and organs for medical use as well as to the pharmaceutical- and cosmetic industries.
Our products are trusted by more than 2,000 laboratories, including ones at all the top 20 pharmaceutical companies, are being used in more than 65 countries, and have been cited in more than 1,700 publications.
Mission
Providing the technologies, products and services to create, understand, and master biology.
Financial targets 2019-2022
Sales Organic annual growth of at least 35 percent and grow further through acquisitions.
Profitability
Show a positive EBITDA margin.
Dividend policy
According to the company's dividend policy, the company intends not to distribute any dividend within the next three years. Decisions on dividends and the amount of dividends must take into account the company's plans for expansion and potential acquisitions, as well as the company's financial position and indebtedness.
Capital structure
The company's net debt-to-EBITDA ratio should normally not exceed 3 times.
Vision
Create the future of medicine.
Focus areas 2021
M&A and technical development Strengthen our position in bioconvergence
Financial Deliver on our financial targets
Customers
The best customer care, supply chain, quality and design in the industry
Employees
A happy and motivated team
Sustainability
Develop a sustainability agenda
High organic growth, strengthened gross margin and strategic acquisitions.
CEO COMMENT
CELLINK ended the first quarter and began its 5th year as a listed company with high organic growth, acquisitions, and a strengthened gross margin. The company's position in the global market improved because of new product launches, the acquisitions of Ginolis and MatTek, effective work by the global sales teams and the further development of our global workforce. I would like to thank the CELLINK team for outstanding efforts, the Board of Directors for their guidance and cooperation, and our shareholders for their continued confidence in us.
High organic growth and strengthened gross margin Sales
The Group's net sales for the first quarter amounted to MSEK 129.5 (38.0), up 241% compared with the year-earlier period. This increase was mainly attributable to sales revenue from the company's dispensing products (3D bioprinting, sample preparation and single-cell dispensing), sales from the companies acquired during the year and the growing share of service revenue. The organic growth in the first quarter was also strong, amounting to 62% (25) owing to favorable demand for systems from drug development customers. The Group reported a strong order intake in the first quarter, although this was not fully reflected in our sales figures since an influx of orders late in the quarter meant we were unable to keep up with timely deliveries as the order intake increased. We will take measures to shorten our lead time to customers in the future. The first quarter has historically been weak in terms of sales, particularly for Industrial Solutions which tends to have a substantially stronger second half of the year.
The pandemic continued to have a negative impact on the company's growth, most notably in Laboratory Solutions whose customer base includes academic laboratories and institutions. Both new and existing major research projects have been postponed until it is possible for lab work to resume in person. Most of our academic customers in key markets such as Germany, the UK and France still have limited access to their laboratories.
Earnings and profitability
The Group reported a high gross margin of 77.3% (74.8) in the first quarter, mainly due to higher average revenue per product and an improved product mix and that the Group during the quarter increased the share of sales of consumables and services compared with the last quarter last year.
In terms of earnings, the Group delivered EBITDA corresponding to a margin of -26.9% (-14.9). The decline in earnings compared with the previous quarter and the corresponding quarter last year was due to three main reasons. The first was attributable to costs associated with our active acquisition agenda. These costs will ultimately strengthen the company but lead to a temporary decline in earnings. The costs related to the acquisitions of Ginolis and MatTek had a negative impact of approximately MSEK 20.5. Ginolis was incorporated into the reporting from March and Mat-Tek did not have a material impact on the first quarter's results as it was acquired late in the quarter. The second was that CELLINK continued to invest in strategic recruitment, Group-wide systems and costs related to the company's innovative product development during the quarter. The third reason was that Industrial Solutions had a strong positive impact on the result in the previous quarter (Q5, 2019/2010). The variation is due to the order and the delivery situation during the year, where the segment historically has made its entire profit in the second half of the year. During the first quarter, Industrial Solutions had an overall negative impact on earnings due to a lower delivery rate. However, it should be emphasized that the segment ended the quarter with a historically large order backlog.
In geographic terms, North America remained the most important market for the company's products. Growth in the quarter was driven by demand in the US, and we are well positioned to continue our aggressive pace of growth in North America. The US market gradually reopened toward the end of the first quarter, which was the main reason for the strong order intake at the end
of the quarter. We are seeing apparent indications of a recovery in demand as vaccinations to control the pandemic are beginning to take effect.
The pandemic and its effects continued to have a negative impact on the company in the first quarter. We expect this to remain the case in the coming quarters since many of our key markets – such as Germany, Japan, the UK and France are still in the midst of the pandemic. During the first quarter, the pandemic continued to limit our ability to meet with customers face to face. Both trade fairs and product launches were carried out virtually. This is expected to continue in the second quarter.
The age of bioconvergence is here
As the leading company in bioconvergence, we must have the ability to prioritize, the courage to challenge, the strength to follow through and the expertise to develop offerings that create value for our customers and push research, and perhaps most importantly, treatment forward. After all, it is when biology converges with technology that the most interesting and relevant business opportunities arise for CELLINK. Therein also lie the answers to many of the difficult healthcare challenges we face today.
We have started to see a paradigm shift as a growing number of companies are beginning to realize the business opportunities that can be created by capitalizing on the convergence of these important scientific areas. During the quarter, we made strategic progress in several parallel processes at different paces but with a single purpose: to reinforce our position in bioconvergence.
1. Acquisitions in line with our commercial strategy and with the aim to create strong bioconvergence offerings
During the quarter, we acquired the Finnish company Ginolis in order to fill an important gap in advanced diagnostics automation and advanced robotics solutions for the medical and diagnostics industries, particularly in Industrial Solutions. Many existing and future bioconvergence applications require modern, advanced automation and robotics in order to increase the level of reproducibility in workflows, a major concern that we have identified among our existing customers.
In Laboratory Solutions, the need to offer tissue models directly to the cosmetics industry was the main factor underlying the acquisition of the US company MatTek, a global leader in in-vitro technology and alternative drug testing models for pharmaceuticals and cosmetic products.
These two acquisitions are in line with CELLINK's bioconvergence strategy, complementing our product offering and bringing us closer to patients through cutting-edge products used in pre-clinical and clinical studies. The business models of both companies are based on strong, innovation-driven agendas that complement CELLINK's existing offering. These acquisitions create the opportunity for several major synergies and will enable CELLINK to offer even more advanced workflows.
By combining CELLINK's and MatTek's revolutionary technologies, we can offer market-leading in-vitro methods. These solutions allow researchers to gather better data through more physiologically relevant models and thus make better predictions. Perhaps even more importantly, alternative testing models enable reduction in, and in some cases the elimination of, animal testing.
Ginolis' robotics provide flexibility and a platform for the scaling-up of bioprinting systems and the Group's product offerings to research and biotech customers. Ginolis' innovative modular robotics, workflows and platforms enable precisionoriented manufacturing of microfluidic, multiplex assays and POC diagnostic tests. For example, Ginolis' 3D metrology system, Pixie, will enable rapid quality assurance of bioprinted tissues. This ensures higher quality and better bioprinting results, including faster throughput of printed tissues and more reliable and reproducible data.
2. Product launches demonstrate our innovative capacity and synergies between Group companies
In March, CELLINK launched the BIO MDX™ series, backed by more than 25 years of research and development. The BIO MDX™ series is the next generation of bioprinters, designed for high throughput biofabrication and precision 3D bioprinting for biomedical manufacturing. Over the past five years, bioprinting has increasingly become the method of choice for researchers in tissue engineering, cell culturing and regenerative medicine. Equipped with technology from SCIENION's arrayers, the BIO MDX™ represents the first cross-business systems for the CELLINK Group. The series is the result of the successful integration of SCIENION's intellectual property with CELLINK's bioprinting expertise. This launch also illustrates our commitment to the bioconvergence revolution by combining and bringing forward new technologies to solve the most pressing challenges in the life sciences.
3. Financing paves the way for continued customer centric acquisition agenda
In March 2021, CELLINK completed an offering of unsecured convertible bonds convertible into Class B shares and a Class B share issue totaling BSEK 3, and both were well received by the market. This demonstrated the market's confidence in our business model, strategy and direction. We are proud to welcome our new owners and pleased to note the continued confidence of our existing investors. Part of the net proceeds were used for the acquisition of MatTek and, going forward, we will continue to actively pursue our customer centric acquisition agenda.
We are committed to challenging and advancing the industry and pushing the boundaries of what is possible.
We have closed the books on the first quarter and are well into the second quarter at the time of writing. Going forward we are continuing to persistently challenge and advance the industry through our bioconvergence agenda, and our focus will be to work hard to deliver on our strategy. We are well positioned and, along with my colleagues, I will continue to safeguard the trust that you – our investors and shareholders – have placed in us to create the future of medicine.
Erik Gatenholm
President and CEO of CELLINK Group
THE GROUP
Net sales
Net sales in the first quarter amounted to MSEK 129.5 (38.0), an increase of 241% (55) compared with the corresponding period last year, of which 62% (25) was organic growth.
During the quarter, two acquisitions were completed, MatTek Corp. and Ginolis Oy. As of March 31, both companies are included in the closing balances for the reporting period. Ginolis was included for the entire month of March and had a minor negative effect on the result for the period. However, MatTek did not have a significant impact on the first quarter's results as it was acquired late in the quarter. The quarter was characterized by continued strong demand for the company's products and, above all, order intake was strong towards the end of the quarter. Late orders and high demand for products such as BIO X6 and I.DOT meant that we had a larger share of outstanding orders than usual at the end of the quarter.
During the quarter, the share of sales of consumables and services increased compared with the last quarter last year. This despite that a large proportion of the company's customers are not yet active due to the ongoing pandemic.
Results
Gross profit in the first quarter amounted to MSEK 100.1 (28.4), resulting in a gross margin of 77.3% (74.8). During the first quarter, the gross margin improved sharply against the same period last year despite a negative effect from the strengthened krona against the same period last year. The improved margins are an effect of reduced discounts for customers, a product mix with higher margins thanks to launches of upgraded products and the fact that a higher proportion of sales is attributable to reagents. The gross margin was also positively affected by the inventory valuation attributable to a weaker krona compared with the end of previous year.
Operating profit for the first quarter amounted to MSEK -60.8 (-12.1), corresponding to an operating margin of -46.9% (-31.8). The main reasons for the weaker result are the seasonally weaker first quarter for Industrial Solutions, which means that the segment has a negative impact on earnings, and costs of approximately MSEK 20.5 attributable to the two completed acquisitions. Industrial Solutions had a strong positive impact on the result in previous quarter, the variation is due to the order and the delivery situation during the year where the segment historically has made its entire profit in the second half of the year.
Net sales Rolling 12 months
CELLINK continued to invest in strategic recruitment, Group-wide systems and costs related to the company's innovative product development during the quarter.
Other operating income for the first quarter amounted to MSEK 7.9 (8.6). Other operating income mainly consists of positive currency effects.
Operating profit/loss in the first quarter was affected by depreciation of acquired intangible assets of MSEK 11.0 (-1.8). The increase from previous periods is due to the acquisitions of SCIENION and Ginolis.
Financial items were affected by a positive development in the company's short-term interest funds of MSEK 4.4 (-22.7) in the quarter. The negative return in the corresponding period last year was a consequence of the market turmoil that arose due to COVID-19 in the spring of 2020.
Earnings after tax for the first quarter amounted to MSEK -47.8 (-33.5) corresponding to earnings per share after dilution of SEK -0.90 (-0.80).
Cash flow, investments and liquidity
Cash flow from operating activities for the first quarter amounted to MSEK -29.3 (-41.3). A large part of the negative cash flow from operations can be attributed to the acquisition costs for the two acquisitions that took place during the quarter and inventory build-up of approximately MSEK 39. Accounts receivable in relation to the rolling twelve-month sales continue to decrease during the quarter, which in relative terms improves cash flow. The Group works actively with the collection of receivables and management of working capital.
Cash flow from investing activities during the first quarter amounted to MSEK -632.0 (-267.8), of which MSEK -863.5 is attributable to the acquisition prices paid in cash, Ginolis and MatTek and MSEK 279.0 (-241.9) is attributable to the sale of short-term interest rate funds during the quarter. No acquisitions took place in the comparison period January-March 2020. The timing and structure of the acquisitions that the Group makes thus significantly affect the cash flow from investing activities.
The diagram shows the proportion of consumables in relation to total net sales for products (excluding sales of hygiene products) over a rolling twelve months for all periods. Consumables include sales of bioinks, consumables, software and accessories.
During the first quarter, the Group invested MSEK -37.2 (-21) in intangible fixed assets, mainly attributable to product development. This increase is attributable to increased investments in product development, primarily in bioprinting, live cell imaging and single cell proteomics. Investments in R&D are not planned to increase at the same rate as sales growth, which in the long run will contribute to an improved total cash flow.
Cash flow from financing activities for the first quarter amounted to MSEK 2,899.1 (383.5) and consists mainly of contributions from completed new issues and raised loans attributable to completed convertible issues. Amortization has also taken place of loans which were taken over in connection with the acquisition of Ginolis.
The first quarter's total cash flow amounted to MSEK 2,237.8 (383.5).
The company carried out a new share issue on March 12, 2021, which provided the company with BSEK 1.5 before issue costs and comprised of 3,571,429 new B shares, corresponding to approximately 7.0 percent of the current outstanding share capital of B shares in CELLINK and 6.8 percent of the current outstanding total share capital in CELLINK and a convertible issue of BSEK 1.5, provided that full conversion takes place, entails a dilution of 4.8 percent of the total number of outstanding shares and 3.8 percent of the votes in CELLINK through an increase in the number of outstanding B shares by approximately 2,505,750.26. The subscription price in the new share issue amounted to SEK 420 per new B share and was set through a so-called accelerated bookbuilding process. A large number of Swedish and international institutional investors as well as existing shareholders participated in the rights issue.
A total of BSEK 3 was added to the company before issue costs through the share and convertible issue. The proceeds have been used in part to finance the acquisition of MatTek and the remaining proceeds will be used for the company's continued expansion activities.
As of March 31, 2021, the entire convertible debt is booked as a short-term interest-bearing debt pending the decision made by the Annual General Meeting on April 26, 2021. During the second quarter (after the Annual General Meeting), a share of the convertible will be classified as equity and in addition there are a number of embedded derivatives in the convertible agreement which need to be investigated more closely and are taken into account for accounting purposes.
At the end of the period, the Group's cash and cash equivalents and short-term investments amounted to MSEK 2,754.2 (365.3). The Group's external financing consists of interest-bearing liabilities of MSEK 1,499.9 of which MSEK 1,469.7 pertains to the convertible loan, net of transaction costs. Furthermore, there are financial leasing liabilities totaling MSEK 110.6. The Group thus has a strong net cash position in relation to the company's need for working capital.
The short-term investments are invested in fixed income funds with a majority in short-term interest funds. During the first quarter, the funds generated an impact on the income statement of MSEK 4.4 (-22.7). During the previous financial year, the volatile markets that started with the COVID outbreak resulted in a decrease in the value of financial instruments during March 2020 and thereafter a sharp rise during the remainder of the calendar year.
PARENT COMPANY
The Parent Company's net sales during the first quarter amounted to MSEK 46.9 (22.8), of which MSEK 19.1 (7.2) pertained to intra-group revenues. Profit for the period after financial items for the first quarter amounted to MSEK -23.8 (-30.3) and profit for the period amounted to MSEK -18.9 (-27.1).
At the end of the quarter, the parent company's cash and cash equivalents and short-term investments amounted to MSEK 2,556.5 (330.4). The parent company's external financing consists of a convertible debt of MSEK 1,469.7, external loans of MSEK 7.5 and other long-term financing of MSEK 0.6. The convertible debt will be settled after April 26, 2021, more information in Note 7.
BIO MDX™ SERIES
The BIO MDX™ series is backed by more than 25 years of research and development. Equipped with technology found on SCIENION arrayers, these bioprinters represents the first cross business systems for the CELLINK Group. Demonstrating a successful integration of SCIENION's intellectual property with CELLINK's bioprinting expertise.
The BIO MDX™ Series is the next generation of bioprinters designed for high throughput biofabrication and precision 3D bioprinting for biomedical manufacturing, including biocompatible medical devices.
Over the past 5 years, as bioprinting has increasingly become the method of choice for researchers in tissue engineering, cell culturing and regenerative medicine, there has been a greater need for improved automation, precision, and reproducibility.
With up to six printheads, nanoliter and picoliter dispensing channels and easy robotic integration, the BIO MDX™ and BIO MDX+™ bioprinters have been specifically designed to meet the demands of the ever-advancing cell-based technologies.
"Leveraging synergies across the group, this launch represents an important step toward developing systems and solutions that bring CELLINK closer to patient care and creating the future of medicine. Biomedical manufacturing has desperately needed improved technologies, and the BIO MDX Series provides just that." ''
Héctor Martínez, CTO CELLINK
ADDITIONAL INFORMATION
COVID-19
The company continuously monitors the development of COVID-19 and its impact on the global economy. The company monitors developments closely and takes measures on an ongoing basis to reduce the risk that the company and its employees will be negatively affected. The health and safety of the employees has been the highest priority.
During the first quarter of the financial year, the company continued to face challenges with travel restrictions, canceled trade fairs and difficulties in conducting demonstrations in customers' laboratories. The company is affected differently depending on the product category, where products with a large customer base in academic research have been most negatively affected, while products for automation and liquid handling can be used to help with the production and carrying out of tests. A lower activity level in the company's customers' laboratories is reflected in subdued demand for consumables in relation to instrument sales.
Development related to COVID-19 after the end of the period
The ongoing pandemic continues to limit global mobility and makes product demonstrations of the company's instruments more difficult. The company enjoys continued good demand for its products and a good response to the digital activities that have replaced trade fairs and in-person customer visits.
However, there is reason to expect a continued negative impact on sales as long as the pandemic continues to limit travel and physical meetings.
Employees
As of March 31, 2021, the number of employees in the CELLINK Group was 676 (192). With the acquisition of Ginolis in March 2021, approximately 90 more employees were added and with the acquisition of MatTek in March 2021, approximately 90 more employees were added. The Group intends to continue to increase its workforce organically in the future, albeit at a slower pace than sales growth as a critical mass has been reached to handle a large part of the investments planned for the future.
Seasonal variations
CELLINK's sales are affected by seasonal effects. During holiday periods (June-August) there is usually a decline in orders. The reason why orders decrease during the holiday periods is that the universities' semesters affect purchases and budgets. Overall, total demand is usually slightly higher in the second calendar half of the year compared to the first.
The Industrial Solutions segment has historically had a sales cycle which means higher sales and earnings during the second half year and especially in the fourth calendar quarter, October-December, compared with other quarters.
Transactions with related parties
No transactions that materially affected the company's earnings and financial position were carried out with related parties during the quarter. For information on related party relations, see the Annual Report for 2019/2020, Note 28, page 108.
Risk management
The group is exposed to various types of risks through its operations. Risks can be divided into external risks, operational risks and financial risks. External risks include changes in economic conditions, commodity prices and the legal environment. Operational risks include CELLINK's ability to develop, patent and sell new innovative products and solutions, and that the Group can attract and retain qualified employees.
The financial risks are summarized under currency risk, liquidity and financing risk, market risk, credit risk and interest rate risk. CELLINK's risks and uncertainties are described in the Annual Report for 2019/2020 on pages 62-64.
Reporting per calendar year
CELLINK's transition to reporting per calendar year from January 1, 2021 meant that the company had a fifth quarter (Q5) 2020 which corresponded to four months; September 1 to December 31, 2020. Comparative figures for Q1 2020 are in this report recalculated per calendar year, i.e., January-March 2020.
Reporting segments
From a reporting perspective CELLINK is divided in two segments: Industrial Solutions and Laboratory Solutions which consists of business areas Biosciences and Bioprinting.
Review of the interim report
This interim report has not been subject to review by the company's auditors.
CONDENSED CONSOLIDATED INCOME STATEMENTS
| Note | Q1 2021 Jan-Mar |
Q1 2020*** Jan-Mar |
2019/2020 Full year |
2020 Calendar year |
|
|---|---|---|---|---|---|
| MSEK | 16 months | 12 months | |||
| Net sales | 3 | 129.5 | 38.0 | 416.0 | 365.8 |
| Change in inventories | 37.3 | 1.0 | 3.5 | -2.7 | |
| Capitalized work for own account | 16.1 | 16.1 | 60.7 | 48.3 | |
| Other operating income | 7.9 | 8.6 | 28.1 | 17.7 | |
| Operating expenses | |||||
| Raw materials and supplies | -66.7 | -10.5 | -120.8 | -99.6 | |
| Other external costs | -70.9 | -22.3 | -142.4 | -111.9 | |
| Personnel expenses | -86.6 | -36.5 | -230.8 | -190.7 | |
| Depreciation and amortization of fixed assets | -25.9 | -6.4 | -52.7 | -45.8 | |
| Other operating expenses | -1.5 | - | -13.4 | -10.6 | |
| Operating profit/loss | -60.8 | -12.1 | -51.9 | -29.4 | |
| Income from financial items | |||||
| Financial income | 9.7 | 0.1 | 0.6 | 0.4 | |
| Financial expenses | -3.2 | -22.8 | -2.9 | -2.7 | |
| Profit/loss after financial items | -54.3 | -34.9 | -54.2 | -31.8 | |
| Tax for the period | 6.5 | 1.3 | 5.2 | 1.7 | |
| Net profit/loss for the period | -47.8 | -33.5 | -49.0 | -30.1 | |
| Attributable to: | |||||
| Parent company shareholders | -47.5 | -33.4 | -48.2 | -29.3 | |
| Non-controlling interest | -0.3 | -0.1 | -0.8 | -0.8 | |
| Earnings per share before dilution, SEK** | -0.90 | -0.80 | -1.10 | -0.64 | |
| Earnings per share after dilution, SEK** | -0.90 | -0.80 | -1.10 | -0.64 | |
| Average number of shares* ** | 52,852,146 | 42,418,377 | 44,888,273 | 46,730,428 | |
| Number of shares at the end of the period** | 56,577,398 | 42,874,776 | 51,601,285 | 51,601,285 |
*Average number of shares including potential ordinary shares.
**CELLINK conducted a 4:1 split on January 10, 2020. Comparison periods have been restated for correct comparison.
***The comparison period for Q1 2020 has been recalculated as a result of the financial year's transition to a calendar year from January 2021.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Q1 2021 Jan-Mar |
Q1 2020 Jan-Mar |
2019/2020 Full year |
2020 Calendar year |
|
|---|---|---|---|---|
| MSEK | 16 months | 12 months | ||
| Profit for the period | -47.8 | -33.5 | -49.0 | -30.1 |
| Items that have been transferred or can be transferred to the profit for the period |
||||
| Translation differences for the period when translating foreign operations |
51.0 | 22.2 | -58.4 | -45.7 |
| Tax attributable to items that have been transferred or can be transferred to the profit for the period |
0.6 | - | 0.6 | 0.6 |
| Total comprehensive income | 3.8 | -11.3 | -106.8 | -75.2 |
| Attributable to | ||||
| Parent company shareholders | 3.8 | -11.2 | -105.7 | -74.2 |
| Non-controlling interest | 0.0 | -0.1 | -1.1 | -1.0 |
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| MSEK | Note | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | 6 | 2,573.0 | 430.7 | 1,260.9 |
| Property, plant and equipment | 98.1 | 17.1 | 52.5 | |
| Right-of-use assets | 111.2 | 36.5 | 80.8 | |
| Financial fixed assets | 11.9 | 5.3 | 13.0 | |
| Deferred tax asset | 71.7 | 13.0 | 39.5 | |
| Total fixed assets | 2,865.9 | 502.6 | 1,446.7 | |
| Current assets | ||||
| Inventories | 148.4 | 41.0 | 85.3 | |
| Accounts receivables | 178.5 | 54.7 | 176.4 | |
| Prepaid expenses and accrued income | 22.9 | 5.7 | 10.3 | |
| Other current assets | 78.5 | 13.5 | 10.8 | |
| Short-term investments | 4 | 74.9 | 235.0 | 349.5 |
| Cash and cash equivalents | 2,679.3 | 130.3 | 434.9 | |
| Total current assets | 3,182.5 | 480.2 | 1,067.3 | |
| TOTAL ASSETS | 6,048.4 | 982.8 | 2,514.0 | |
| EQUITY AND LIABILITIES | ||||
| Equity attributable to parent company shareholders | 4,053.5 | 884.8 | 2,201.9 | |
| Non-controlling interest | 6.6 | 2.1 | 6.6 | |
| Total equity | 4,060.1 | 886.9 | 2,208.5 | |
| Long-term liabilities | ||||
| Long-term interest-bearing liabilities | 28.2 | 8.1 | 26.7 | |
| Long-term lease liabilities | 82.5 | 26.4 | 60.1 | |
| Other provisions | 5.0 | 1.6 | 4.7 | |
| Deferred tax liabilities | 87.7 | 15.9 | 59.6 | |
| Total long-term liabilities | 203.4 | 51.9 | 151.1 | |
| Current liabilities | ||||
| Interest-bearing loans | 7 | 1,471.7 | 2.0 | 2.0 |
| Short-term lease liabilities | 28.1 | 8.7 | 20.1 | |
| Accounts payables | 88.9 | 14.1 | 33.0 | |
| Advances from customers | 35.8 | 1.1 | 26.2 | |
| Other current liabilities | 35.3 | 4.3 | 9.3 | |
| Accrued expenses and deferred income | 125.1 | 13.9 | 63.8 | |
| Total current liabilities | 1,784.9 | 44.0 | 154.4 | |
| Total liabilities | 1,988.3 | 95.9 | 305.5 | |
| TOTAL EQUITY AND LIABILITIES | 6,048.4 | 982.8 | 2,514.0 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
| Q1 2021 Jan-Mar |
Q1 2020 Jan-Mar |
2019/2020 Full year |
2020 Calendar year |
|
|---|---|---|---|---|
| MSEK | 16 months | 12 months | ||
| Profit/loss after financial items | -54.3 | -34.9 | -54.2 | -31.8 |
| Adjustments for non-cash items | 22.7 | 30.3 | 64.9 | 55.7 |
| Income tax paid | -6.4 | -0.1 | 0.9 | 1.2 |
| Increase (-)/Decrease (+) in inventories | -38.6 | -0.2 | 13.3 | 25.7 |
| Increase (-)/Decrease (+) in trade receivables | 11.5 | -31.0 | -118.5 | -130.1 |
| Increase (+)/Decrease (-) of trade liabilities | 35.8 | -5.5 | 14.4 | 13.6 |
| Cash flow from operating activities | -29.3 | -41.3 | -79.4 | -65.6 |
| Acquisition of property, plant and equipment | -10.3 | -4.9 | -30.1 | -25.2 |
| Acquisition of intangible fixed assets | -37.2 | -21.0 | -103.8 | -85.5 |
| Acquisition of subsidiaries/operations, net proceeds | -863.5 | - | -417.5 | -417.5 |
| Acquisition/disposal of short-term investments, net | 279.0 | -241.9 | -276.6 | -330.4 |
| Cash flow from investing activities | -632.0 | -267.8 | -828.0 | -858.5 |
| Option premiums received | - | 8.4 | 11.7 | 11.7 |
| New issues | 1,520.2 | 384.1 | 1,336.3 | 1,336.3 |
| Issue costs | -32.8 | -16.4 | -53.8 | -53.6 |
| Repurchase of own options | - | - | -0.1 | -0.1 |
| Borrowings, net arrangement fees | 1,469.7 | 10.0 | 30.1 | 30.1 |
| Repayment of loans | -52.9 | -0.5 | -2.0 | -2.0 |
| Amortization of lease liabilities | -5.1 | -2.0 | -13.4 | -11.9 |
| Cash flow from financing activities | 2,899.1 | 383.5 | 1,308.9 | 1,310.6 |
| Cash flow for the period | 2,237.8 | 74.4 | 401.5 | 386.5 |
| Opening cash and cash equivalents | 434.9 | 53.9 | 39.8 | 53.9 |
| Exchange difference in cash and cash equivalents | 6.6 | 2.0 | -6.5 | -5.5 |
| Closing cash and cash equivalents | 2,679.3 | 130.3 | 434.9 | 434.9 |
CONSOLIDATED CHANGES IN EQUITY
| Other contributed |
Translation | Balanced profit including profit |
Non controlling |
|||
|---|---|---|---|---|---|---|
| MSEK | Share capital | capital | reserve | for the period | interest | Total equity |
| Opening balance as of September 1, 2019 |
1.0 | 541.9 | 5.1 | 1.7 | 0.0 | 549.7 |
| Net profit/loss for the period | - | - | - | -48.2 | -0.8 | -49.0 |
| Other comprehensive income | - | - | -57.6 | - | -0.3 | -57.9 |
| New share issue | 0.2 | 1,330.1 | - | - | 6.0 | 1,336.3 |
| Non-cash issue | 0.1 | 456.9 | - | - | - | 457.0 |
| Transaction costs, net of tax | - | -42.7 | - | - | - | -42.7 |
| Options premiums | - | 11.8 | - | - | - | 11.8 |
| Share-based compensation | - | 3.3 | - | - | - | 3.3 |
| Repurchase of own options | - | -0.1 | - | - | - | -0.1 |
| Disposal to non-controlling interests | - | -1.7 | - | - | 1.7 | 0.0 |
| Closing balance as of December 31, 2020 |
1.3 | 2,299.5 | -52.5 | -46.4 | 6.6 | 2,208.5 |
| Opening balance as of | ||||||
| January 1, 2021 | 1.3 | 2,299.5 | -52.5 | -46.4 | 6.6 | 2,208.5 |
| Net profit/loss for the period | - | - | - | -47.5 | -0.3 | -47.8 |
| Other comprehensive income | - | - | 51.3 | - | 0.3 | 51.6 |
| New share issue | 0.1 | 1,520.1 | - | - | - | 1,520.2 |
| Non-cash issue | 0.0 | 242.2 | - | - | - | 242.2 |
| Transaction costs, net of tax | 0.0 | 110.4 | - | - | - | 110.4 |
| Option premiums | - | -26.0 | - | - | - | -26.0 |
| Share-based compensation | - | 1.0 | - | - | - | 1.0 |
| Closing balance as of March 31, 2021 |
1.4 | 4,147.2 | -1.2 | -93.9 | 6.6 | 4,060.1 |
CONDENSED INCOME STATEMENTS FOR THE PARENT COMPANY
| Q1 2021 | Q1 2020 | 2019/2020 | 2020 | |
|---|---|---|---|---|
| MSEK | Jan-Mar | Jan-Mar | Full year 16 months |
Calendar year 12 months |
| Net sales | 46.9 | 22.8 | 167.1 | 139.4 |
| Change in inventories | 11.5 | -1.2 | 9.4 | 4.0 |
| Capitalized work for own account | 6.8 | 3.0 | 19.4 | 16.7 |
| Other operating income | 5.8 | 12.7 | 38.5 | 27.8 |
| Operating expenses | ||||
| Raw materials and supplies | -39.0 | -4.0 | -67.1 | -55.2 |
| Other external costs | -37.7 | -22.1 | -135.8 | -106.6 |
| Personnel expenses | -23.0 | -17.0 | -87.9 | -67.9 |
| Depreciation and amortization of fixed assets | -4.8 | -1.8 | -10.9 | -9.0 |
| Other operating expenses | -0.9 | -0.3 | -10.7 | -8.1 |
| Operating income | -34.3 | -7.8 | -77.9 | -58.7 |
| Income from financial items | ||||
| Profit from shares in Group companies | -0.3 | - | -3.8 | -3.8 |
| Financial income | 12.5 | 0.2 | 1.0 | 0.9 |
| Financial expenses | -1.6 | -22.7 | -4.0 | -4.3 |
| Profit/loss after financial items | -23.8 | -30.3 | -84.8 | -65.9 |
| Tax for the period | 4.9 | 3.3 | 16.5 | 14.8 |
| Net profit/loss for the period* | -18.9 | -27.1 | -68.3 | -51.1 |
*Profit for the year and comprehensive income for the year amount to the same amount for all reported periods.
CONDENSED PARENT COMPANY STATEMENTS OF FINANCIAL POSITION
| MSEK | Note | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|---|
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | 152.1 | 85.3 | 132.5 | |
| Property, plant and equipment | 10.3 | 7.5 | 9.1 | |
| Shares in Group companies | 6 | 2,600.5 | 365.3 | 1,321.3 |
| Receivables from Group companies | 135.9 | 31.9 | 48.2 | |
| Other financial fixed assets | 1.0 | 1.9 | 1.2 | |
| Deferred tax assets | 41.9 | 11.1 | 30.3 | |
| Total fixed assets | 2,941.8 | 503.0 | 1,542.6 | |
| Current assets | ||||
| Inventories | 35.0 | 18.2 | 23.9 | |
| Accounts receivables | 49.7 | 26.8 | 44.0 | |
| Receivables from Group companies | 22.6 | 29.5 | 14.0 | |
| Other current assets | 8.8 | 9.0 | 5.8 | |
| Prepaid expenses and accrued income | 7.8 | 4.8 | 7.1 | |
| Short-term investments | 74.9 | 235.0 | 349.5 | |
| Cash and cash equivalents | 2,481.6 | 95.4 | 302.4 | |
| Total current assets | 2,680.3 | 418.7 | 746.8 | |
| TOTAL ASSETS | 5,622.1 | 921.7 | 2,289.4 |
| MSEK | Note | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|---|
| EQUITY AND LIABILITIES | ||||
| Equity | 4,066.2 | 888.9 | 2,238.7 | |
| Long-term liabilities | ||||
| Other provisions | 0.5 | 0.5 | 0.5 | |
| Long-term interest-bearing liabilities | 6.1 | 8.1 | 6.6 | |
| Total long-term liabilities | 6.6 | 8.6 | 7.1 | |
| Current liabilities | ||||
| Short-term interest-bearing liabilities | 7 | 1,471.7 | 2.0 | 2.0 |
| Advances from customers | 0.3 | 0.3 | 0.0 | |
| Liabilities to Group companies | 14.0 | 0.0 | 1.9 | |
| Accounts payables | 28.8 | 9.9 | 15.0 | |
| Other current liabilities | 10.0 | 1.0 | 1.3 | |
| Accrued expenses and deferred income | 24.4 | 11.0 | 23.3 | |
| Total current liabilities | 1,549.3 | 24.2 | 43.6 | |
| TOTAL EQUITY AND LIABILITIES | 5,622.1 | 921.7 | 2,289.4 |
NOTES TO THE FINANCIAL REPORTS
Note 1. Accounting principles
This condensed interim report for the Group has been prepared in accordance with IAS 34 Interim Report and the relevant provisions of the Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with The Annual Accounts Act and RFR 2. For the Group and the Parent Company, the same accounting principles and calculation bases have been applied as in the most recent annual report. In addition to the financial reports and their accompanying notes, disclosures pursuant to IAS 34.16A are also disclosed in other parts of the interim report.
Note 2. Estimates and assessments
The preparation of the interim report requires management to make assessments and estimates and to make assumptions that affect the application of the accounting principles and the reported amounts of assets, liabilities, income and expenses. The actual outcome may differ from these estimates and judgments. The critical assessments and sources of uncertainty in estimates during the first quarter 2021 are generally the same as described in the annual report 2019/2020, Note 3, pages 84-85.
Although COVID-19 has meant deferred cash flows from customers, the company's assessment is that the reported values of intangible assets, deferred taxes and other valuation items are not significantly affected by the pandemic.
The purchase price allocation regarding the acquisition of SCIENION in September 2019 has been adjusted by MSEK 1.3 after the end of the previous financial year, thereby increasing the goodwill value. This is due to an adjustment of the acquired company's net assets.
Information and the purchase price allocation regarding the companies acquired during the first quarter, Ginolis and MatTek, are shown in Note 6.
Note 3. Revenue
The majority of CELLINK's sales are products, which clearly represent separate performance commitments. Sales of products are normally recognized in connection with delivery to the customer, depending on the terms of delivery. Major projects that run over several periods are also recognized as revenue over time in accordance with IFRS 15.
CELLINK also sells services linked to products. The services are partly invoiced in advance and are recognized as income over the duration of the service contracts. Non-recognized revenue for service income is recognized as deferred income (contractual liabilities) in the balance sheet. In addition to these service contracts, the company provides services in the form of contract manufacturing. CELLINK considers that these services also clearly constitute separate performance commitments.
The Group's products offered on the market consist of instruments, bioinks, consumables and hygiene products. Of the Group's other revenues, the majority consists of different types of government grants that the Group receives to run development projects.
Segments
The Group's operations are organized in such a way that Group management monitors the sales and earnings generated by the Group's various segments. Each operating segment has a manager who is responsible for day-to-day operations and who regularly reports the outcome of the operating segment's performance and the need for resources to Group management. As Group management monitors the results of operations and decides on the distribution of resources based on the goods and services that the Group offers on the market, these constitute the Group's operating segments.
The Group's segments are identified on the basis that different market offerings have been merged into one segment in cases where they have similar economic properties, products, production processes, customers and distribution methods. Follow-up of the Group's segments takes place mainly at sales and gross margin level, which is why these performance measures are presented in the tables on next page.
Segment reporting
CELLINK consists of two segments, Laboratory Solutions and Industrial Solutions, where SCIENION and Ginolis are included in Industrial Solutions.
Laboratory Solutions
The operations within Laboratory Solutions consist of CELLINK and the acquired companies Dispendix, CYTENA and MatTek. The segment offers 3D printers, single-cell dispensing instruments and liquid handling instruments, as well as services and consumables associated with these products. With the acquisition of MatTek, the segment also offers 3D reconstructed human-derived tissue models used for product development and regulatory testing applications.
The operations in the segment have a similar customer base and distribution chain. In addition, the segment's products complement each other within the framework of customer demand, with Group management following up on this business as a segment. MatTek will be included in the reporting from the second quarter of 2021.
Industrial Solutions
The operations within Industrial Solutions consists of SCIENION which was acquired in 2020 as well Ginolis which was acquired in March 2021. The segment offers products in precision dispensing and biosensor technology to industrial customers that contribute to customers' high capacity production as well as diagnostics automation and advanced robotics solutions for medical and diagnostic industries. Due to the different customer base, order structure and production process compared with the rest of the Group, this part is reported as a separate segment.
The tables below show the distribution of net sales for products and services and by geographic market, as well as segment reporting for the two segments as well as the distribution of product sales between consumables and instruments.
The CELLINK Group
Net sales by geographic region
| MSEK | Q1 2021 Jan-Mar |
Q1 2020 Jan-Mar |
2019/2020 Full year 16 months |
2020 Calendar year 12 months |
|---|---|---|---|---|
| Europe | 53.2 | 12.2 | 128.5 | 111.7 |
| North America | 55.4 | 14.0 | 191.1 | 173.2 |
| Asia | 18.8 | 10.2 | 82.6 | 69.1 |
| Rest of the world | 2.0 | 1.5 | 13.8 | 11.9 |
| Total | 129.5 | 38.0 | 416.0 | 365.8 |
Net sales broken down by products and services
| MSEK | Q1 2021 Jan-Mar |
Q1 2020 Jan-Mar |
2019/2020 Full year 16 months |
2020 Calendar year 12 months |
|---|---|---|---|---|
| Products | 102.3 | 36.7 | 366.0 | 317.6 |
| Services | 27.2 | 1.3 | 50.0 | 48.2 |
| Total | 129.5 | 38.0 | 416.0 | 365.8 |
Net sales products broken down by consumables and instruments
| MSEK | Q1 2021 Jan-Mar |
Q1 2020 Jan-Mar |
2019/2020 Full year 16 months |
2020 Calendar year 12 months |
|---|---|---|---|---|
| Consumables | 15.9 | 4.5 | 64.7 | 58.7 |
| Instruments | 86.4 | 32.2 | 301.3 | 258.9 |
| Total products | 102.3 | 36.7 | 366.0 | 317.6 |
Gross profit and gross margin
| MSEK | Q1 2021 Jan-Mar |
Q1 2020 Jan-Mar |
2019/2020 Full year 16 months |
2020 Calendar year 12 months |
|---|---|---|---|---|
| Net sales | 129.5 | 38.0 | 416.0 | 365.8 |
| Raw materials and supplies reduced with changes in inventories |
-29.4 | -9.6 | -117.4 | -102.3 |
| Gross profit | 100.1 | 28.4 | 298.6 | 263.6 |
| Gross margin, % | 77.3% | 74.8% | 71.8% | 72.0% |
Segment reporting
| Laboratory Solutions | Industrial Solutions | Total | ||||||
|---|---|---|---|---|---|---|---|---|
| MSEK | Q1, 2021 Jan-Mar |
Q1, 2020 Jan-Mar |
Q1, 2021 Jan-Mar |
Q1, 2020 Jan-Mar |
Q1, 2021 Jan-Mar |
Q1, 2020 Jan-Mar |
2019/2020 Full year 16 months |
2020 Calendar year 12 months |
| Net sales | 61.5 | 38.0 | 68.0 | - | 129.5 | 38.0 | 416.0 | 365.8 |
| Raw materials and supplies reduced with changes in inventories |
-11.4 | -9.6 | -18.0 | - | -29.4 | -9.6 | -117.4 | -102.2 |
| Gross profit | 50.1 | 28.4 | 50.0 | - | 100.1 | 28.4 | 298.6 | 263.6 |
| Gross margin, % | 81.5% | 74.8% | 73.5% | - | 77.3% | 74.8% | 71.8% | 72.0% |
| Capitalized work for own account |
- | - | - | - | 16.1 | 16.1 | 60.7 | 48.3 |
| Other income | - | - | - | - | 7.9 | 8.6 | 28.1 | 17.7 |
| Other external costs | - | - | - | - | -70.9 | -22.3 | -142.4 | -111.9 |
| Personnel expenses | - | - | - | - | -86.6 | -36.5 | -230.8 | -190.7 |
| Depreciation and amorti zation of fixed assets |
- | - | - | - | -25.9 | -6.4 | -52.7 | -45.8 |
| Other operating expenses | - | - | - | - | -1.5 | - | -13.4 | -10.6 |
| Financial income | - | - | - | - | 9.7 | 0.1 | 0.6 | 0.4 |
| Financial expenses | - | - | - | - | -3.2 | -22.8 | -2.9 | -2.7 |
| Profit/loss before tax | - | - | - | - | -54.3 | -34.9 | -54.2 | -31.8 |
Note 4. Financial instruments – fair value
The Group's financial instruments consist of long-term receivables, accounts receivable, cash and cash equivalents, interest-bearing liabilities, leasing liabilities, accounts payable, and short-term investments. All instruments except short-term investments are valued at amortized cost.
The Group's short-term investments, which mainly consist of listed fixed income funds, are valued at fair value in accordance with IFRS 13 level 1 (listed market values in an active market).
Valuation at fair value regarding short-term investments during the first quarter generated an impact on the income statement of MSEK 4.4 (-22.7). This effect is reported among financial items. During the previous financial year, the volatile markets which started with the COVID outbreak resulted in a decrease in the value of financial instruments during March 2020 and thereafter a sharp rise during the remaining calendar year. During the quarter, the company issued a convertible bond totaling BSEK 1.5, more information on this can be found under Note 7.
For financial instruments that are not reported at fair value, fair values do not differ significantly from the reported values.
| MSEK | Level | 2021-03-31 | 2020-03-31 | 2020-12-31 |
|---|---|---|---|---|
| Financial assets valued at fair value | ||||
| Short-term investments | 1 | 74.9 | 235.0 | 349.5 |
Note 5. Incentive programs
CELLINK already have three long-term incentive programs aimed at the Group's staff and board members. The purpose of the incentive programs is to encourage broad share ownership among CELLINK's employees, facilitate recruitment, retain competent employees and increase motivation to achieve or exceed the Group's goals.
The first program includes a maximum of 1,273,352 options* for employees and 240,000 options* for the Board, each redeemable for a share at a price of SEK 44.375*. Exercise of warrants takes place during the period February to August of 2021. During the first quarter of the financial year, option holders chose to exercise a total of 454,480 options corresponding to 454,480 shares registered during the month of March.
The second program includes a maximum of 1,600,000 options* for employees and 80,000 options* for the Board, each redeemable for a share at a price of SEK 74.34*. The program expires in January 2022 for the employees and in January 2023 for the Board.
The third program includes a maximum of 1,600,000 options for employees and 220,000 options for board members. For employees, each of the options will be redeemable for a share at a price of SEK 126.46 in January 2023. For board members, each of the options will be redeemable for a share at a price of SEK 143.32 during the period December 2024 to December 2025.
Valuation and accounting policies for the first three incentive programs are described in Note 6 of the Annual Report for 2019/2020.
As of March 31, 2021, a total of 2,656,541 options are outstanding, of which 1,203,396 options are reported under IFRS 2. The remaining outstanding options have been issued at market prices and are therefore not subject to the rules of IFRS 2.
If all outstanding options were to be exercised for shares, this would correspond to a total dilution of approximately 4.7% as of March 31, 2021.
The Annual General Meeting 2021 decided on 26 April 2021 to introduce a fourth incentive program aimed at employees within the CELLINK Group. The program covers a maximum of 3,000,000 options. For employees, each of the options will be redeemed for one share at a price of SEK 598.50 in May 2025, provided that the following conditions are met:
-
- 50 percent if the CELLINK Group's sales per share has amounted to or equated SEK 50 per share during 2024; and
-
- 50 percent if the EBITDA of the CELLINK Group has been positive during each year from and including 2021 up to and including 2024 (the vesting shall decrease with 12.5 percent for each year the EBITDA of the CELLINK Group has not been positive from and including 2021 up to and including 2024).
*After split 4:1 completed January 10, 2020.
Note 6. Acquisitions
Ginolis
On March 1, 2021, CELLINK acquired 100 percent of the shares in the Finnish company Ginolis Oy based in Oulu, Finland, a company that focuses on automation of production of diagnostic tests using advanced robots. The purchase price amounted to MSEK 648.8, of which MSEK 242 consisted of 666,028 newly issued CELLINK shares and MSEK 407 was paid in cash. The share price in the non-cash issue was determined as a weighted average of the market price on Nasdaq Stockholm the day before closing.
Through Ginolis' complementary technology offering CELLINK has recognized great synergies that will support future growth in the Industrial Solutions business area.
Ginolis' turnover amounted to MEUR 18 in 2020 with an EBITDA margin of 12 percent. CELLINK estimates that Ginolis has the capacity to grow in line with the company's financial goals.
In addition to net assets in Ginolis, surplus values in the form of technology, customer relationships and entered into customer contracts have been identified in the purchase price allocation.
A majority of the purchase price has been attributed to goodwill. The goodwill value includes the value of the acquired staff's know-how and synergy effects in the form of more efficient production and sales processes in the Group after the acquisition. No part of the goodwill is expected to be tax deductible.
Ginolis' net assets at the time of acquisition
MSEK
| Transferred compensation | 648.8 |
|---|---|
| Group goodwill | 587.4 |
| Net identifiable assets and liabilities | 61.4 |
| Deferred tax liability | -22.5 |
| Accounts payable and other operating liabilities | -68.5 |
| Interest-bearing liabilities | -66.2 |
| Cash and cash equivalents | 6.4 |
| Accounts receivable and other receivables | 30.7 |
| Inventory | 8.8 |
| Deferred tax assets | 22.3 |
| Intangible fixed assets | 134.3 |
| Tangible fixed assets | 15.9 |
MatTek
On March 22, 2021, CELLINK acquired 100 percent of the shares in the US company MatTek Corp., headquartered in Boston, USA, a company that focuses on in vitro-based innovative human tissue models, cell isolation and cell culture. The purchase price amounted to MSEK 610, of which MSEK 110 consisted of 284,176 newly issued CELLINK shares and MSEK 500 was paid in cash. The share price in the non-cash issue was determined as a weighted average of the market price on Nasdaq Stockholm three days before the conclusion of the purchase agreement and three days after.
With MatTek's complementary technology offering, CELLINK is strengthening its product offering in 3D tissues, accelerating the development of new reagents and tissues.
MatTek's sales amounted to MUSD 16.6 in 2020 with an EBITDA margin of 21.9 percent. CELLINK estimates that MatTek has the capacity to grow faster than historically through synergies that can be realized in the Bioprinting business area.
Due to the fact that the acquisition was completed late in the quarter no preliminary purchase price allocation has yet been prepared, which is why no surplus values have been identified, instead the entire sum has been allocated to goodwill. The company intends to identify surplus values in the coming quarters.
If MatTek would have been included in the company's accounts in the quarter, sales would have increased by approximately MSEK 32.4. If Ginolis would have been included in the company's accounts for the entire quarter, the acquisition would have contributed a total of approximately MSEK 39 instead of the reported MSEK 13.4. In total, sales would had been MSEK 58 higher. MatTek has historically had an even sales distribution over the year, while Ginolis has historically reported a stronger second half year.
Acquisition-related expenses
Acquisition-related expenses amounted to MSEK 20.5 (including transaction taxes) for the first quarter, of which MSEK 15.1 was attributable to Ginolis and MSEK 5.4 pertained to MatTek. The costs were related to fees to consultants in connection with due diligence and a tax cost of MSEK 10 that the buyer is obliged to pay on company acquisitions in Finland. These expenses have been reported as other external costs in the consolidated income statement.
Share issue expenses related to the acquisitions amount to MSEK 0.3 for the period, and have been reported as a reduction in equity after deduction of deferred tax.
Note 7. New issue of shares and convertibles
In connection with the acquisitions, CELLINK has issued 666,028 shares to the sellers as consideration for Ginolis and 284,176 shares to the sellers of MatTek, a total of 950,204 Series B shares. The company also carried out a new share issue on March 12, 2021 raising BSEK 1.5 before transaction costs and was comprised of 3,571,429 new B shares, corresponding to approximately 7.0 percent of the current outstanding share capital of B shares in CELLINK and 6.8 percent of the current outstanding total share capital in CELLINK, and a convertible issue of BSEK 1.5, as provided that full conversion takes place entails a dilution of 4.8 percent of the total number of outstanding shares and 3.8 percent of the votes in CELLINK through an increase in the number of outstanding B shares with approximately 2,505,750.
The subscription price in the new share issue amounted to SEK 420 per new B share and was set through a so-called accelerated bookbuilding procedure. A large number of Swedish and international institutional investors as well as existing shareholders participated in the rights issue.
The issued convertibles will have an interest coupon of 2.875 percent annually, paid semi-annually with the first payment on September 19, 2021. The conversion rate was set at SEK 598.50 corresponding to a premium amounting to 42.5% compared to the subscription price of a B share in the new share issue. The initial conversion rate is established but can be adjusted to keep the holders' position unchanged relative to the holders of shares.
A total of BSEK 3 was added to the company before transaction costs through the share and convertible issues. The proceeds have been used in part to finance the acquisition of MatTek and the remaining proceeds will be used for the company's continued expansion activities.
As of March 31, 2021, the entire convertible debt is booked as a short-term interest-bearing debt pending the decision made by the Annual General Meeting on April 26, 2021. During the second quarter (after the Annual General Meeting), a share of the convertible will be classified as equity and in addition, there are a number of embedded derivatives in the convertible agreement which need to be investigated in more detail and taken into account for accounting purposes.
During the first quarter, 454,480 options were exercised for the same number of shares for a price of SEK 44,375 per share, which added MSEK 20 to the company. This reduced the outstanding number of options in the first program. More information about this in note 5.
Gothenburg, May 12, 2021 CELLINK AB (publ)
Erik Gatenholm CEO
ALTERNATIVE KEY RATIOS
In this interim report, alternative key ratios are stated, which supplement the measures defined or specified in the applicable rules for financial reporting. Some of these measures are defined in IFRS, others are alternative measures and are not recognized in accordance with applicable financial reporting frameworks or other legislation.
The alternative key ratios are derived from the company's consolidated financial statements. The measures are used by CELLINK to provide clearer or more in-depth information in their context than the measures defined in the applicable rules for financial reporting, and thus to help investors and management alike to analyze its operations. Below are descriptions of the measures in this interim report, together with definitions and the reason why they are used.
| Alternative key ratio | Definition | Purpose |
|---|---|---|
| Equity ratio | Equity divided by total assets. | CELLINK considers that solvency is a useful measure for the company's survival. |
| Gross profit | Net sales less raw materials and supplies reduced by inventory change. |
Shows efficiency in CELLINK's operations and together with EBITDA gives an overall picture of the ongoing profit generation and expenses. |
| Gross margin | Gross profit as a percentage of net sales. | The ratio is used for analysis of the Company's effectiveness and profitability |
| Net debt (-)/Net cash (+) excl. leasing |
Short-term investments and cash and cash equivalents, reduced by interest bearing long-term and short-term liabilities excluding leasing liabilities. A positive number indicates net cash. |
CELLINK believes that net debt/net cash is a useful measure of the company's survival and the ability to execute on an established business plan. |
| Operating profit before depreciation and amortization (EBITDA) |
Earnings before interest, tax, depreciation, amortization and impairment. |
This alternative key ratio is a useful measure for demonstrating the result generated in day-to day operations. As operating profit is burdened by amortization of surplus values linked to the acquisitions made by CELLINK, the Group's management considers that operating profit for depreciation (EBITDA) is a fair measure of the Group's earning capacity. |
| Operating margin (EBITDA), % | Earnings before interest, tax, depreciation and amortization (EBITDA) as a percentage of net sales. |
CELLINK considers operating margin (EBITDA, %) to be a useful measure for showing the perfor mance generated in operating activities. |
| Operating profit (EBIT) | Earnings before interest and similar items and tax. |
CELLINK considers operating profit (EBIT) to be a useful measure for demonstrating the result generated in operating activities. |
| Operating margin (EBIT), % | Operating profit (EBIT) as a percentage of net sales. |
CELLINK considers that operating margin (EBIT, %) is a useful measure for showing the result generated in operating activities. |
| Organic revenue growth | Growth generated from operations in companies that existed in the Group during the corresponding comparison period. |
Shows the growth in the existing business adjusted for acquisitions in the last 12 months. |
RECONCILIATION OF ALTERNATIVE KEY RATIOS
| Q1 2021 | Q1 2020 | 2019/2020 | 2020 | |
|---|---|---|---|---|
| Gross profit, MSEK | Jan-Mar | Jan-Mar | Full year 16 months |
Calendar year 12 months |
| Net sales | 129.5 | 38.0 | 416.0 | 365.8 |
| Raw materials and supplies reduced by inventory change | -29.4 | -9.6 | -117.4 | -102.3 |
| Gross profit | 100.1 | 28.4 | 298.6 | 263.6 |
| Gross margin, % | ||||
| Gross profit | 100.1 | 28.4 | 298.6 | 263.6 |
| Net sales | 129.5 | 38.0 | 416.0 | 365.8 |
| Gross margin, % | 77.3% | 74.8% | 71.8% | 72.0% |
| Operating profit before depreciation and amortization (EBITDA), MSEK |
||||
| Operating income | -60.8 | -12.1 | -51.9 | -29.4 |
| Depreciation and amortization | 25.9 | 6.4 | 52.7 | 45.8 |
| Operating profit before depreciation and amortization (EBITDA) |
-34.9 | -5.7 | 0.8 | 16.4 |
| Operating margin before depreciation and amortization, (EBITDA), % |
||||
| EBITDA | -34.9 | -5.7 | 0.8 | 16.4 |
| Net sales | 129.5 | 38.0 | 416.0 | 365.8 |
| EBITDA margin, % | -26.9% | -14.9% | 0.2% | 4.5% |
| Operating margin (EBIT), % | ||||
| Operating income | -60.8 | -12.1 | -51.9 | -29.4 |
| Net sales | 129.5 | 38.0 | 416.0 | 365.8 |
| EBIT margin, % | -46.9% | -31.8% | -12.5% | -8.0% |
| Organic revenue growth, % | ||||
| Net sales | 129.5 | 38.0 | 416.0 | 365.8 |
| Net sales generated from companies acquired in the last 12 months |
-68.0 | -186.3 | 169.9 | |
| Organic net sales | 61.4 | 229.7 | 196.0 | |
| Net sales comparison period | 38.0 | 155.6 | 132.7 | |
| Organic revenue growth, % | 62% | 48% | 48% | |
| 2021-03-31 | 2020-03-31 | 2020-12-31 | ||
| Equity ratio, % | ||||
| Equity | 4,060.1 | 886.9 | 2,208.5 | |
| Total assets | 6,048.4 | 982.8 | 2,514.0 | |
| Equity ratio, % | 67% | 90% | 88% | |
| Net debt (-)/Net cash (+) excl. leasing, MSEK | ||||
| Short-term investments | 74.9 | 235.0 | 349.5 | |
| Cash and cash equivalents | 2,679.3 | 130.3 | 434.9 | |
| Long-term interest-bearing liabilities excl. leasing liabilities | -28.2 | -8.1 | -26.7 | |
| Short-term interest-bearing liabilities excl. leasing liabilities | -1,471.7 | -2.0 | -2.0 | |
| Net debt (-)/Net cash (+) | 1,254.3 | 355.2 | 755.7 |
CONSOLIDATED INCOME STATEMENTS BY QUARTER
| MSEK | 2021 Jan-Mar |
2019/2020 Sep-Dec 4 months |
2019/2020 Jun-Aug |
2019/2020 Mar-May |
2019/2020 Dec-Feb |
2019/2020 Sep-Nov |
2018/2019 Jun-Aug |
2018/2019 Mar-May |
|---|---|---|---|---|---|---|---|---|
| Net sales | 129.5 | 239.2 | 51.5 | 41.6 | 37.2 | 46.4 | 32.0 | 29.6 |
| Change in inventories | 37.3 | -6.5 | -3.0 | 10.2 | 0.5 | 2.3 | 2.1 | 3.4 |
| Capitalized work for own account |
16.1 | 21.4 | 7.5 | 7.6 | 15.0 | 9.2 | 5.5 | 3.1 |
| Other operating income | 7.9 | 8.5 | 3.3 | 3.5 | 4.5 | 8.9 | 7.1 | 4.8 |
| Operating expenses | ||||||||
| Raw materials and supplies | -66.7 | -58.4 | -14.7 | -21.0 | -12.3 | -14.5 | -11.9 | -10.9 |
| Other external expenses | -70.9 | -56.8 | -20.9 | -19.1 | -22.7 | -23.0 | -17.4 | -12.4 |
| Personnel expenses | -86.6 | -103.6 | -31.5 | -31.1 | -36.0 | -28.5 | -19.4 | -16.2 |
| Depreciation and amorti zation of fixed assets |
-25.9 | -26.3 | -7.7 | -7.0 | -6.3 | -5.6 | -2.5 | -1.9 |
| Other operating expenses | -1.5 | -3.5 | -6.7 | -2.2 | - | -1.7 | -0.3 | -0.1 |
| Operating income | -60.8 | 14.2 | -22.1 | -17.5 | -20.0 | -6.5 | -5.0 | -0.6 |
| Profit/loss from financial items |
||||||||
| Financial income | 9.7 | 5.7 | 8.3 | 0.0 | - | 0.2 | 3.0 | 0.8 |
| Financial expenses | -3.2 | -0.8 | -0.3 | -14.4 | -0.9 | -0.2 | - | 0.0 |
| Profit/loss after financial items |
-54.3 | 19.1 | -14.1 | -31.9 | -20.9 | -6.4 | -2.0 | 0.2 |
| Tax for the period | 6.5 | -5.8 | -0.2 | 6.3 | 3.6 | 1.3 | 0.2 | 0.1 |
| Net profit/loss for the period |
-47.8 | 13.2 | -14.3 | -25.5 | -17.3 | -5.1 | -1.7 | 0.3 |
| Attributable to | ||||||||
| Parent company shareholders |
-47.5 | 13.7 | -14.2 | -25.3 | -17.2 | -5.1 | -1.7 | 0.3 |
| Non-controlling interest | -0.3 | -0.5 | 0.0 | -0.2 | -0.1 | - | - | - |
This information is such that CELLINK is required to publish in accordance with the EU Market Abuse Regulation. The information was submitted for publication by the following contact persons on May 12, 2021 at 08.00 (CEST). Financial Calendar
For more information, please contact:
Erik Gatenholm, CEO +46 73 267 00 00, +1 (650) 515 5566, [email protected]
Gusten Danielsson, CFO +46 70 991 86 04, +1 (857) 332 2138, [email protected]
Isabelle Ljunggren, Head of Communications/IR +46 70 830 08 90, [email protected]
Digital Capital Markets Day 2021 | May 12, 2021 Q2 report 2021 | August 18, 2021 Q3 Report 2021 | November 10, 2021 Year-end report 2021 | February 23, 2022 Annual report 2021 | March, 16 2022
Visit www.cellink.com/investors for CELLINK's financial reports archive and this interim report.
Welcome to CELLINK's Digital Capital Markets Day May 12, 2021, 2-5pm (CEST). Sign up at www.cellink.com/investors. Welcome!
Presentation material will be available from 1.45pm (CEST) May 12, 2021 and recorded presentations from the Digital Capital Markets Day will be available on: www.cellink.com/investors.
| BERLIN | BLACKSBURG | BOSTON | FREIBURG | GOTHENBURG | KYOTO | OULU | PHOENIX | STUTTGART |
|---|---|---|---|---|---|---|---|---|
CELLINK AB (publ) Arvid Wallgrens backe 20 413 46 Gothenburg, Sweden CELLINK 451 D Street, Suite 900 Boston, MA, 02210, USA CONTACT www.cellink.com [email protected]
Company registration number: 559050-5052