Quarterly Report • Apr 22, 2008
Quarterly Report
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Press Release, 22 April 2008 (10 pages) BioGaia AB Interim report 1 January – 31 March 2008 (Figures in brackets refer to the same period of the previous year)
Latest press releases from BioGaia: 2008-04-21 BioGaia signs agreement for Belgium and Luxembourg 2008-03-19 Notice of Annual General Meeting of BioGaia AB 2008-02-20 BioGaia signs new agreement with Ferring Pharmaceuticals
For additional information contact: Peter Rothschild, Managing Director, telephone: +46 8 555 293 00 Jan Annwall, Deputy Managing Director, telephone: +46 8 555 293 00
BioGaia is a biotechnology company that develops, markets and sells probiotic products with documented health benefits. The products are primarily based on the lactic acid bacterium Lactobacillus reuteri (Reuteri), which has probiotic, health-enhancing effects. The class B share of the Parent Company BioGaia AB is quoted on the Small Cap list of the OMX Nordic Exchange Stockholm. www.biogaia.com
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1 January – 31 March 2008 Figures in brackets refer to the same period of last year.
The Board of Directors and the Managing Director of BioGaia AB (publ) hereby present the interim report for the period 1 January – 31 March 2008.
BioGaia is a biotechnology company that develops, markets and sells probiotic products with documented health benefits. The products are primarily based on the lactic acid bacterium Lactobacillus reuteri (Reuteri) which has health-enhancing effects. BioGaia has also developed unique delivery systems, such as probiotic-containing straws and caps, that make it possible to create probiotic products with a long shelf life.
BioGaia has 37 employees, of whom 15 are based in Stockholm, 14 in Lund, 3 in Raleigh, USA, and 5 in Hiroshima, Japan.
The class B share of the Parent Company BioGaia AB is quoted on the Small Cap list of the OMX Nordic Exchange Stockholm.
BioGaia's revenue is derived mainly from the sale of finished products, but also from license rights for the use of Reuteri cultures in customers' own products (such as baby formula and dairy products). The finished probiotic products consist of tablets, drops and oral health products (chewing gum and lozenges), as well as probiotic-containing straws and caps.
BioGaia's products are sold through nutrition, food, natural health, pharmaceutical and animal feed companies in 36 countries worldwide. In Sweden, BioGaia´s products are sold under the brands Semper Magdroppar (drops) and GUM Periobalance (chewing gum) int the pharmacies and Semper Fullkornsvälling (baby formula with active culture, Prima Liv drinking yoghurt by Skånemejerier and Probiomax
Maghälsotabletter (tablets) in supermarkets.
BioGaia holds patents for the use of Reuteri in all major markets.
Earlier, many of BioGaia's products have been sold under the customer's own brands. BioGaia launched its own brand at the end of 2005 and today has several customers in a large number of countries that sell products partly or entirely under the BioGaia brand. Even in cases where customers use their own brands, the BioGaia brand is featured on the package. BioGaia's strategy is to increase the share of sales consisting of BioGaia-branded products.
BioGaia's research is focused on selection of different probiotics for gut health, the immune system and oral health. Extensive clinical studies have shown that BioGaia's various probiotic products:
stimulate the human immune system,
protect against GI tract and respiratory tract infections,
alleviate the side effects of antibiotic treatment,
reduce the level of H. pylori infection,
relieve infantile colic,
reduce gum inflammation and the risk for dental caries,
reduce the risk of infection in premature infants.
The length of time between contract and launch varies between countries due to differing amounts of time needed for the registration process. The products are normally registered as dietary
supplements and in certain cases as pharmaceuticals.
Sunstar Suisse SA already had an option for a distribution agreement covering a large number of countries. At the beginning of January 2008, Sunstar exercised this option and signed an additional agreement with BioGaia that gives Sunstar exclusive rights to distribute BioGaia's probiotic oral health products in more than 100 countries.
The products will be sold under Sunstar's GUM PerioBalance brand. The agreement also includes possibilities for joint development of new oral products. The launch will be carried out within a 2-year period. One of the first launches will take place in the USA during 2008.
Sunstar already distributes BioGaia's oral health products in Germany, France, Italy, Spain, Sweden and Norway.
The sales of BioGaia Probiotic drops and soy drinks with BioGaia's Probiotic straw that were started in 2007 are continuing in 2008. Efforts to adapt the products and marketing to the Japanese market are in progress. This venture is part of BioGaia's long-term focus on its own brand.
In February BioGaia signed a new agreement with Ferring Pharmaceuticals in Switzerland, giving Ferring exclusive rights to sell BioGaia's Probiotic drops in Australia, New Zealand and Israel, and BioGaia's Probiotic tablets in Brazil, Egypt, Greece, Iran, Jordan, Canada, Lebanon, Mexico, Saudi Arabia and Syria.
The partnership began in the Spring of 2006 and has been so successful that Ferring decided, in connection with the extension of its earlier agreement, to begin marketing BioGaia's Probiotic drops in new markets and to add BioGaia's Probiotic tablets to its product portfolio.
The drops have been launched in Spain, Portugal, the Czech Republic, Canada and Jordan, and will be launched in Mexico in the second quarter of 2008. Ferring also
has exclusive rights to sell BioGaia's Probiotic drops in Brazil, Egypt, Greece, Iran, Lebanon, Saudi Arabia and Syria.
In April BioGaia signed an agreement with the Belgium company NeoCare, giving NeoCare exclusive rights to sell BioGaia's Probiotic drops and tablets in Belgium and Luxembourg. The products will be sold under BioGaia´s trademark.
The Group's net sales amounted to SEK 36.1 million (26.4), an increase of 37% compared to the same period of last year. Compared to the previous quarter, net sales rose by SEK 4.1 million (13%).
BioGaia's Probiotic drops in Europe accounted for most of the period's sales growth.
Gross profit reached SEK 24.4 million, an improvement of SEK 6.8 compared to the same period of last year.
Selling expenses were up by SEK 0.7 million over the same period of last year, which is explained by higher personnel costs and increased costs for the registration of new products.
The period's R&D expenses amounted to SEK 5.3 million (4.3), which is equal to 18% (18%) of total operating expenses. The higher R&D expenses are due to an increased level of activity in clinical studies that began during the quarter. The amortisation component of research and development expenses amounted to SEK 0.8 million (0.9). Investments in capitalised development expenses totalled SEK 0 million (0).
Operating profit was SEK 7.5 million (2.3), an improvement of SEK 5.2 million compared to the same period of last year.
Profit after tax amounted to SEK 8,0 million (2,6), an increase of SEK 5,4 million compared to the same period of last year.
The Group pays no tax due to the existence of a cumulative loss carryforward. The total loss carryforward at 31 December 2007 was SEK 123.1 million.
The Group's cash and cash equivalents at 31 March 2008 totalled SEK 46.5 million (38.6).
Cash flow for the quarter was SEK 3.5 million (-1.1), an improvement of SEK 4.6 million compared to the same period of last year.
In the first quarter of 2008, the company paid a conditional shareholder contribution of SEK 1.0 million to the associated company TwoPac AB.
Cash flow from operating activities before change in working capital was SEK 9.3 million (4.1), an improvement of SEK 5.2 million compared to the same period of last year. The increase in working capital was SEK 3.4 million and is mainly attributable to inventories and accounts receivable.
Consolidated equity amounted to SEK 102.9 million (77.1). The Group's equity/assets ratio was 85% (84%).
Capital expenditure on tangible assets totalled SEK 1.4 million (1.2).
The Parent Company reported net sales of SEK 36.2 million (26.9) and a profit after net financial items of SEK 9.8 million (5.2).
The number of employees in the Group at 31 March 2008 was 37 (36).
No major changes in significant risks and uncertainties have taken place during the period. See pages 4 and 5 and Note 29 of the annual report for 2007.
BioGaia's goal is to provide the shareholders with a good return through long-term profitability based on increased sales to both existing and new customers and limited growth in the cost level.
BioGaia expects the tablets, drops and oral health products to be launched in 2008 and 2009 in a large number of countries.
In view of the Company's strong portfolio of innovative products, successful clinical trials and growing distribution network covering a large share of the key markets, BioGaia's future outlook is bright.
| (Amounts in SEK 000s) | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| Net sales | 36,079 | 26,437 | 106,580 |
| Cost of goods sold | -11,657 | -8,822 | -35,122 |
| Gross profit | 24,422 | 17,615 | 71,458 |
| Other operating income | 164 | 26 | 1,691 |
| Selling expenses | -9,297 | -8,546 | -37,739 |
| Administrative expenses | -2,210 | -1,960 | -7,487 |
| Research and development expenses | -5,279 | -4,339 | -17,938 |
| Other operating expenses | - | -28 | - |
| Share in profit/loss of associated company | -260 | -467 | -1,103 |
| Operating profit | 7,540 | 2,301 | 8,882 |
| Financial income and expenses | 474 | 323 | 1,807 |
| Profit before tax | 8,014 | 2,624 | 10,689 |
| Tax expense for the period | - | - | 8,970 |
| PROFIT FOR THE PERIOD | 8,014 | 2,624 | 19,659 |
| Earnings per share Earnings per share (average number of shares), SEK |
0.47 | 0.15 | 1.14 |
| Earnings per share after dilution, SEK | 0.47 | 0.15 | 1.14 |
| Number of shares, thousands | 17,208 | 17,208 | 17,208 |
| Average number of shares, thousands | 17,208 | 17,208 | 17,208 |
| Average number of shares after dilution, thousands |
17,208 | 17,208 | 17,208 |
| CONSOLIDATED BALANCE SHEETS | 31 Mar | 31 Dec | 31 Mar |
| (Amounts in SEK 000s) | 2008 | 2007 | 2007 |
| ASSETS | |||
| Intangible assets | 7,399 | 8,199 | 10,545 |
| Tangible assets | 3,781 | 2,617 | 2,466 |
| Participations in associated company | 6,325 | 5,585 | 4,721 |
| Long-term receivables | 4,400 | 4,400 | 5,400 |
| Deferred tax asset | 9,000 | 9,000 | - |
| Other long-term receivables | 25 | 27 | 19 |
| Current assets excl. cash and cash equivalents | 43,985 | 37,968 | 30,062 |
| Cash and cash equivalents | 46,487 | 42,977 | 38,626 |
| TOTAL ASSETS | 121,402 | 110,773 | 91,839 |
| EQUITY AND LIABILITIES | |||
| Shareholders' equity | 102,924 | 94,910 | 77,112 |
| Interest-free current liabilities | 18,478 | 15,863 | 14,727 |
TOTAL EQUITY AND LIABILITIES 121,402 110,773 91,839
| CONSOLIDATED CASH FLOW STATEMENTS | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| (Amounts in SEK 000s) | 2008 | 2007 | 2007 |
| Operating activities | |||
| Operating profit | 7,540 | 2,301 | 8,882 |
| Depreciation/amortisation | 1,020 | 1,023 | 3,979 |
| Capital gains/losses on the sale of fixed assets | 7 | - | - |
| Share in profit/loss of associated company | 260 | 467 | 1,103 |
| Other non-cash items | 28 | -35 | -12 |
| Interest received and paid | 474 | 323 | 1,807 |
| Cash flow from operating activities before changes in working capital |
9,329 | 4,079 | 15,759 |
| Changes in working capital | -3,411 | -4,002 | -10,671 |
| Cash flow from operating activities | 5,918 | 77 | 5,088 |
| Cash flow from investing activities | -2,398 | -1,226 | -2,516 |
| Cash flow from financing activities | - | - | 686 |
| Cash flow for the period | 3,520 | -1,149 | 3,258 |
| Cash and cash equivalents at beginning of period Exchange differences in cash and |
42,977 | 39,719 | 39,719 |
| cash equivalents | -10 | 56 | - |
| Cash and cash equivalents at end of period | 46,487 | 38,626 | 42,977 |
| (Amounts in SEK 000s) | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| At beginning of period | 94,910 | 74,530 | 74,530 |
| The period's translation difference | - | -42 | 35 |
| Warrants in BioGaia AB | - | - | 686 |
| Profit for the period | 8,014 | 2,624 | 19,659 |
| At end of period | 102,924 | 77,112 | 94,910 |
| (Amounts in SEK 000s) | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| Sales | 2008 | 2007 | 2007 |
| Europe | 28,154 | 16,048 | 62,354 |
| USA and Canada | 372 | 1,377 | 7,736 |
| Asia | 6,837 | 7,048 | 25,895 |
| Rest of world | 716 | 1,964 | 10,595 |
| 36,079 | 26,437 | 106,580 |
| PARENT COMPANY INCOME STATEMENTS | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| Net sales | 36,176 | 26,857 | 107,034 |
| Cost of goods sold | -11,651 | -9,029 | -35,827 |
| Gross profit | 24,525 | 17,828 | 71,207 |
| Selling expenses | -8,203 | -6,731 | -39,565 |
| Administrative expenses | -2,210 | -1,960 | -7,488 |
| Research and development expenses | -5,287 | -4,298 | -17,784 |
| Other operating income | 164 | 26 | 1,691 |
| Other operating expenses | - | -28 | - |
| Operating profit | 8,989 | 4,837 | 8,061 |
| Result from participations in associated company | - | - | -1,103 |
| Net financial items | 766 | 355 | 2,086 |
| Profit before tax | 9,755 | 5,192 | 9,044 |
| Tax expense for the period | - | - | 9,000 |
| PROFIT FOR THE PERIOD | 9,755 | 5,192 | 18,044 |
| PARENT COMPANY BALANCE SHEETS | 31 Mar | 31 Mar | 31 Dec |
| 2007 | 2007 | 2007 | |
| ASSETS | |||
| Intangible assets | 7,399 | 10,545 | 8,199 |
| Tangible assets | 3,474 | 2,227 | 2,287 |
| Shares in group companies | 4,137 | 4,137 | 4,137 |
| Shares in associated company | 6,585 | 5,188 | 5,585 |
| Long-term receivables from subsidiaries | 2,840 | 3,927 | 1,325 |
| Long-term receivables from associated company | 4,400 | 5,400 | 4,400 |
| Deferred tax asset | 9,000 | - | 9,000 |
| Current assets excl. cash and cash equivalents | 42,017 | 29,207 | 36,392 |
| Cash and cash equivalents | 45,876 | 37,832 | 42,103 |
| TOTAL ASSETS | 125,728 | 98,463 | 113,428 |
| EQUITY AND LIABILITIES | |||
| Shareholders' equity | 104,663 | 81,370 | 94,908 |
| Interest-free current liabilities | 21,065 | 17,093 | 18,520 |
| TOTAL EQUITY AND LIABILITIES | 125,728 | 98,463 | 113,428 |
| Floating charges | 2,000 | 2,000 | 2,000 |
|---|---|---|---|
| Guarantees | None | None | None |
| PARENT COMPANY CASH FLOW STATEMENTS | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| Operating activities | |||
| Operating profit | 8,989 | 4,837 | 8,061 |
| Depreciation/amortisation | 1,005 | 1,014 | 3,902 |
| Capital gains/losses on the sale of fixed assets | 7 | ||
| Other non-cash items | 28 | -39 | -8 |
| Interest received and paid | 766 | 355 | 2,086 |
| Cash flow from operating activities before changes in working capital |
10,795 | 6,167 | 14,041 |
| Changes in working capital | -3,081 | -5,790 | -9,373 |
| Cash flow from operating activities | 7,714 | 377 | 4,668 |
| Cash flow from investing activities | -3,913 | -1,224 | -1,899 |
| Cash flow from financing activities | - | - | 686 |
| Cash flow for the period | 3,801 | -847 | 3,455 |
| Cash and cash equivalents at beginning of period | 42,103 | 38,640 | 38,640 |
| Exchange differences in cash and cash equivalents | -28 | 39 | 8 |
| Cash and cash equivalents at end of period | 45,876 | 37,832 | 42,103 |
| (Amounts in SEK 000s) | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| At beginning of period | 94,908 | 76,178 | 76,178 |
| New issue of warrants | - | - | 686 |
| Profit for the period | 9,755 | 5,192 | 18,044 |
| At end of period | 104,663 | 81,370 | 94,908 |
| SEGMENT REPORTING – PARENT COMPANY | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| (Amounts in SEK 000s) | 2008 | 2007 | 2007 |
| Europe | 28,004 | 16,048 | 62,269 |
| USA and Canada | 372 | 1,322 | 7,544 |
| Asia | 7,084 | 7,523 | 26,626 |
| Rest of world | 716 | 1,964 | 10,595 |
| 36,176 | 26,857 | 107,034 |
(Amounts in SEK 000s)
The Group has a 50% holding in TwoPac AB, which is reported as an associated company.
| Jan-Mar | Jan-Mar | Jan-Dec | |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| Interest income | 70 | 70 | 304 |
| Shareholder contributions paid | 1,000 | - | 500 |
| Loan converted to shareholder contribution | - | - | 1,000 |
| Purchase of goods | 925 | 257 | 2,259 |
| Advance payments for future deliveries | - | - | 600 |
| Purchase of machinery and equipment | - | 1,195 | 1,195 |
Long-term receivables from TwoPac AB
| 31 Mar | 31 Mar | 31 Dec | |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| Long-term receivables from TwoPac AB | 4,400 | 5,400 | 4,400 |
| Current transactions with related parties | |||
| Current receivables from TwoPac AB | 70 | 70 | 85 |
| Current liabilities to TwoPac AB | -155 | -94 | - |
| -85 | -24 | 85 |
| KEY RATIOS 1) | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| 2008 | 2007 | 2007 | |
| Return on | |||
| - average shareholders' equity | 8.1% | 3.5% | 23.2% |
| - average capital employed | 8.1% | 3.4% | 12.7% |
| Capital employed, SEK 000s | 102,924 | 77,112 | 94,910 |
| Number of shares, thousands | 17,208 | 17,208 | 17,208 |
| Average number of shares, thousands | 17,208 | 17,208 | 17,208 |
| Number of outstanding warrants, thousands | 129 | - | 129 |
| Average number of outstanding warrants with a dilutive effect, thousands |
- | - | - |
| Average number of shares after dilution, thousands | 17,208 | 17,208 | 17,208 |
| Earnings per share, SEK | 0.47 | 0.15 | 1.14 |
| Earnings per share after dilution, SEK | 0.47 | 0.15 | 1.14 |
| Equity per share, SEK | 5.98 | 4.48 | 5.52 |
| Equity per share after dilution, SEK | 5.98 | 4.48 | 5.52 |
| Equity/assets ratio | 85% | 84% | 86% |
| Average number of employees | 37 | 36 | 37 |
1) The definitions of key ratios correspond to those in the annual report.
The consolidated financial statements have been prepared in compliance with the International Financial Reporting Standards (IFRS) established by the International Accounting Standards Board (IASB) and the interpretations published by the International Financial Reporting Interpretations Committee (IFRIC) that have been endorsed by the European Commission for application in the EU.
This interim report has been prepared for the Group in accordance with IAS 34, Interim Financial Reporting, and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.
The Group and the Parent Company apply the same accounting and valuation principles as in the 2007 annual report.
20 August 2008 Interim report 1 January – 30 June 2008 23 October 2008 Interim report 1 January – 30 September 2008
This interim report has not been examined by the Company's auditors.
The information in this interim report was submitted for publication on 22 April, 8.30 a.m.
BioGaia AB Box 3242 SE-103 64 STOCKHOLM, Sweden Street address: Kungsbroplan 3A, Stockholm Telephone: +46 (0)8 555 293 00 www.biogaia.com Corp. identity no. 556380-8723
For additional information contact: Peter Rothschild, Managing Director, telephone: +46 (0)8 - 555 293 00, Jan Annwall, Deputy Managing Director, telephone: +46 (0)8 - 555 293 00
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