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BioGaia

Quarterly Report May 6, 2021

3013_10-q_2021-05-06_939a7b03-4632-4ded-a2a5-a3649a987750.pdf

Quarterly Report

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Interim Management Statement

JANUARY – MARCH 2021

FIRST QUARTER 2021

Q1

2021

Net sales amounted to SEK 202.0 million (182.8), an increase of 10% (excluding foreign exchange effects, 21%). Product sales, net sales excluding royalty revenues, amounted to SEK 196.8 million (177.0), an increase of 11% (excluding foreign exchange effects, 22%).

Net sales in the Paediatrics segment reached SEK 161.6 million (142.5), an increase of 13%. Product sales within Paediatrics amounted to SEK 160.0 million (139.3), an increase of 15%.

Net sales in the Adult Health segment amounted to SEK 38.7 million (40.2), a decrease of 4%. Product sales within Adult Health amounted to SEK 36.2 million (37.5), a decrease of 4%.

Operating expenses amounted to SEK 81.0 million (77.4), an increase of 5%. Operating expenses included costs for evaluation of acquisition candidates of SEK 2.5 million and costs for restructuring of SEK 7.5 million. Excluding these costs, operating expenses amounted to SEK 71.0 million, a decrease of 9%.

Operating profit increased by 16% to SEK 64.2 million (55.6), which corresponds to an operating margin of 32% (30%).

Profit after tax was SEK 50.4 million (41.7), an increase of 21%.

Earnings per share amounted to SEK 2.50 (2.39). No dilutive effects arose.

Cash flow amounted to SEK 17.2 million (67.4) and cash and cash equivalents at 31 March 2021 amounted to SEK 1,486.8 million (284.1 at 31 March 2020).

Key events in the first quarter of 2021

On 27 January, BioGaia announced that the products Osfortis and Prodentis have been launched in Sweden and that BioGaia's entire Adult Health portfolio is now available in the domestic market.

On 3 February, BioGaia announced that the Board of Directors of BioGaia has chosen to revise the dividend policy so that 50% (previously 40%) of profit after tax in the Parent Company will be distributed to shareholders.

On 12 February, BioGaia announced that the subsidiary MetaboGen has received approval from the Ethics Committee to start a new clinical study to include people with prediabetes.

On 17 March, BioGaia announced that a separate entity, BioGaia Invest, has been established. The focus for BioGaia Invest will be to invest in small companies that promote BioGaia's growth. A total of SEK 150 million has been allocated to enable investments of between SEK 5 and 15 million.

Key events after the end of the first quarter

On 8 April, BioGaia announced that the company has signed an agreement with Minapharm Pharmaceuticals for exclusive rights to sell BioGaia Protectis drops in Egypt.

On 13 April, BioGaia announced that a randomised, doubleblind, placebo-controlled study in children showed that a supplement of two L. reuteri strains significantly reduced fever and pain in children with upper respiratory tract infections.

Jan-Mar 2021 Jan-Mar 2020
Net sales, SEK 000s 201,975 182,808
Growth in net sales 10% 7%
Operating profit, SEK 000s 64,245 55,619
Operating margin 32% 30%
Profit after tax, SEK 000s 50,443 41,748
Number of shares, thousands 20,196 17,336
Earnings per share, SEK 1) 2) 2.50 2.39

1) A bonus issue element from the 2020 new issue has been taken into account in the calculation of earnings per share before and after dilutive effects, which means that comparative figures have been recalculated. There are no other dilutive effects.

2) Key ratio defined according to IFRS.

This information is information that BioGaia AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the CEO, on 6 May 2021, at 08.00 CET.

BioGaia AB (publ.) Interim Management Statement 1 January – 31 March 2021 The Board of Directors and the CEO of BioGaia AB hereby present the interim management statement for the period 1 January – 31 March 2021.

CEO'S COMMENTS

As expected, the pandemic continued to hold the world in its grip in Q1 and will probably continue to do so until a large proportion of the global population has been vaccinated. This situation continues to prevent us from working in the way we and our partners are used to. The increased focus on online sales adopted earlier has now even greater significance and benefits BioGaia, above all in the USA and China. We are therefore giving high priority to increasing our online distribution in several markets and expect that this will further strengthen our sales development even when we can return to more "normal" times.

Following the two first, very strong quarters of 2020, sales decreased in the second half of the year, particularly in some of our more mature markets. It is difficult to predict when the return to more favourable conditions can be expected and it is therefore satisfactory to be able to deliver a sales increase of 10% (an organic growth of 21%) compared to the first quarter of last year. We therefore see a good increase in sales despite the fact that we have lower sales in two large and traditionally strong markets, Finland and Italy. We remain cautious, however, in our assessment of sales growth until the global situation has normalised.

We are working hard to strengthen our marketing and omnichannel strategy through recruitment of new employees who are specialised in this field. We are also increasing the investments behind our strong brand with plans that include introducing the BioGaia brand in Finland where so far our products have been sold under our partner's brand.

We have upped the pace of our digital route to the market in terms of both digital marketing and e-commerce initiatives via marketplaces such as Amazon, local webshops and online pharmacies. The goal is to be in all the places where our consumers are. Our long-term investment in the American market combined with a focus on digital marketplaces has contributed to the USA being BioGaia's largest market today in which the majority of sales take place online.

Finally, we have been very active with launches of both new products and our existing portfolio. With the high demand for immune products as a driving force, we have developed a new BioGaia range strengthened with vitamin D called Immune Boost to meet the strong demand for this type of product. First out with the launch of these products is the USA. By taking advantage of our strong position in paediatrics, we will also launch BioGaia Prodentis Kids in the USA. And thanks to our good reputation among baby products, we are launching Protectis Mum in capsules in the USA, a vegan "free from" product with pregnant women as the target group. Protectis Mum contributes to the development of the child's digestive and immune systems at the same time as also supporting the mother's gastrointestinal and immune systems.

The American market is a perfect example of how to create brand awareness with our scientific medical marketing as a base and how this is strengthened by expertise within online retail broadening the reach among consumers. This has been possible due to a fantastic collaboration between BioGaia as brand owner and our motivated and professional local distributors.

We are accelerating the launch of Osfortis, our probiotic that reduces bone loss. Our colleagues at BioGaia Japan are preparing to launch Osfortis. More than 25% of the Japanese population is over 65 years old and approximately 40% of postmenopausal women will suffer problems due to skeletal fragility. Combined with a high level of income, this makes Japan the perfect market for success with Osfortis.

I am grateful for our distributors' efforts in conjunction with the launch of Gastrus in several markets. The first results are highly encouraging, particularly in France and Latin America, due to both medical marketing aimed at gastroenterologists and marketing in social media.

Once again, I would like to think all my BioGaia colleagues for your efforts during this difficult time and our distributors who have tried to find new ways to do business going forward.

Isabelle Ducellier President and CEO of BioGaia 6 May 2021

Teleconference: Investors, analysts and the media are invited to take part in a teleconference on the interim management statement to be held today 6 May 2021 at 09:30 CET with CEO Isabelle Ducellier and CFO Alexander Kotsinas. To participate in the teleconference, please see Financialhearings.com for telephone numbers. The teleconference can also be followed here.

Revenue

SEKm

Jan-Mar Jan-Mar Change
2021 2020
Paediatrics 161.6 142.5 13%
Adult Health 38.7 40.2 -4%
Other 1.6 0.1 1101%
Total 202.0 182.8 10%
SEKm Jan-Mar Jan-Mar Change
2021 2020
EMEA 94.2 118.0 -20%
APAC 42.4 32.5 30%
Americas 65.4 32.4 102%
Total 202.0 182.8 10%

SALES FIRST QUARTER

Figures in parentheses refer to the corresponding period last year. Consolidated net sales amounted to SEK 202.0 million (182.8) which is an increase of SEK 19.2 million (10%) (excluding foreign exchange effects, 21%) compared to the first quarter of last year. Product sales rose 11% (excluding foreign exchange effects, 22%). Sales in the quarter were affected positively by accrual of several orders. In the past 12-month period, sales decreased by 2%.

Sales in EMEA amounted to SEK 94.2 million (118.0), a decrease of 20%, mainly due to lower sales in the Adult Health segment. Sales in the EMEA decreased primarily in Italy, Spain and Belgium.

Sales in APAC amounted to SEK 42.4 million (32.5), an increase of 30%. The increase was attributable to both the Adult Health and Paediatrics segments. Sales increased primarily in Japan, Taiwan, Australia and China.

Sales in the Americas totalled SEK 65.4 million (32.4), an increase of 102%. The increase was mainly attributable to the Paediatrics segment but Adult Health also increased. Sales mainly increased in the USA, Brazil and Guatemala.

NET SALES BRIDGE FIRST QUARTER

SEKm SEKm Change
2020 182.8
Foreign exchange -19.3 -11%
Organic growth 38.5 21%
2021 202.0 10%

Paediatrics

The Paediatrics segment accounts for approximately 80% of BioGaia's total sales. BioGaia Protectis drops remain the largest product with sales in some 90 countries. Other key products within Paediatrics include BioGaia Protectis drops with vitamin D, oral rehydration solution and tablets as well as cultures to be used as ingredients in licensee products (such as infant formula) and royalty revenues for paediatric products.

SEMm

Jan-Mar Jan-Mar Change
2021 2020
Products 160.0 139.3 15%
Royalties 1.6 3.2 -50%
Total Paediatrics 161.6 142.5 13%

SALES FIRST QUARTER

Figures in parentheses refer to the corresponding period last year. Sales in the Paediatrics segment amounted to SEK 161.6 million (142.5) an increase of 13% (excluding foreign exchange effects, 24%). Product sales in Paediatrics amounted to SEK 160.0 million (139.3), an increase of 15%. Sales in the quarter were affected positively by accrual of several orders. For the past 12-month period, sales decreased by 1%.

Sales of BioGaia Protectis drops increased compared to the corresponding period last year. Sales increased in APAC and the Americas and decreased in EMEA. Sales in APAC increased mainly in Taiwan and Australia and in the Americas, sales increased primarily in the USA, Brazil and Guatemala. In EMEA, sales decreased primarily in Italy, Spain, Germany, Belgium and Hungary.

Sales of BioGaia Protectis tablets increased compared to the corresponding period last year. Sales increased in APAC, the Americas and EMEA. Sales in APAC increased mainly in Taiwan and South Korea and in the Americas, sales increased mainly in Brazil. In EMEA, sales increased mainly in France, South Africa, Ukraine and Slovakia.

.

Adult Health

The Adult Health segment accounts for approximately 20% of BioGaia's total sales. Sales mainly comprise BioGaia Protectis, BioGaia Gastrus, BioGaia Prodentis and BioGaia Osfortis as well as cultures as an ingredient in a licensee's dairy products.

SEKm Jan-Mar Jan-Mar Change
2021 2020
Products 36.2 37.5 -4%
Royalties 2.6 2.7 -5%
Total Adult Health 38.7 40.2 -4%

SALES FIRST QUARTER

Figures in parentheses refer to the corresponding period last year. Sales in the Adult Health segment amounted to SEK 38.7 million (40.2) a decrease of 4% (excluding foreign exchange effects, +6%). Product sales amounted to SEK 36.2 million (37.5), a decrease of 4%. In the past 12-month period, sales decreased by 6%.

Sales of BioGaia Protectis tablets decreased compared to the corresponding period last year. Sales decreased in EMEA, primarily in Italy, Finland and Belgium, while they increased in APAC and the Americas. In APAC, sales increased mainly in Japan, China and Australia. In the Americas, sales increased mainly in the USA.

Sales of BioGaia Gastrus increased compared to the corresponding period last year. Sales rose in EMEA, APAC and the Americas. In EMEA, sales increased mainly in France and in the Americas sales increased primarily in the USA and Mexico. In APAC, sales increased mainly in Japan and China.

Sales of BioGaia Prodentis increased compared to the corresponding period last year. Sales increased in APAC and EMEA, while they decreased in the Americas, primarily in the USA. In EMEA; sales increased primarily in France and Spain and in APAC sales mainly increased in Japan and China.

Earnings

FIRST QUARTER

Gross margin

Q1

2021

Figures in parentheses refer to the corresponding period last year. The total gross margin for the quarter was 72% (73%). The gross margin for the Paediatrics segment amounted to 75% (73%). The gross margin for the Adult Health segment was negatively affected by mix effects and campaigns and amounted to 60% for the quarter (70%).

Operating expenses and operating profit

Operating expenses amounted to SEK 81.0 million (77.4), an increase of SEK 3.6 million. Excluding other operating expenses (exchange losses/gains) operating expenses increased by 8%. Operating expenses included costs for evaluation of acquisition candidates of SEK 2.5 million and costs for restructuring of SEK 7.5 million. The restructuring costs relate to impairment of right-of-use asset linked to a rental contract for premises in Lund (SEK 5.1 million) and personnel (SEK 2.4 million).

Selling expenses amounted to SEK 43.2 million (44.6), a decrease of 3%. The decrease is partly due to lower travel expenses due to Covid-19 and lower costs in Japan which were partly offset by higher personnel costs linked to restructuring (SEK 2.4 million). R&D expenses amounted to SEK 27.2 million (28.2), a decrease of 4%. R&D expenses included costs for the subsidiaries MetaboGen AB and BioGaia Pharma AB of SEK 5.9 million (5.8). The decrease in R&D expenses, excluding costs for MetaboGen AB and BioGaia Pharma AB, are mainly attributable to lower personnel and travel costs.

Administrative expenses amounted to SEK 15.7 million (7.3), an increase of 116%. The increase in administrative expenses is attributable to increased costs for evaluation of acquisition candidates (SEK 2.5 million) as well as impairment of right-of-use assets linked to a rental contract for premises in Lund (SEK 5.1 million).

Other operating expenses/operating income relates to exchange losses/gains on receivables and liabilities of an operating nature and amounted to SEK 5.2 million (2.7).

Operating profit amounted to SEK 64.2 million (55.6), an increase of 16%. The operating margin amounted to 32% (30%).

Profit after tax and earnings per share Profit after tax amounted to SEK 50.4 million (41.7) an increase of 21%. The effective tax rate was 21% (25%) Earnings per share amounted to SEK 2.50 (2.39). No dilutive effects arose.

Balance sheet and cash flow

BALANCE SHEET 31 MARCH 2021

Total assets amounted to SEK 1,946.1 million (717.4). The increase compared to the same period last year is mainly due to the new issue carried out in 2020.

Since year-end 2020, current assets increased slightly while current liabilities decreased. The termination of the rental contract in Lund affected right-of-use assets during the quarter and also affected non-current liabilities.

CASH FLOW FIRST QUARTER

Cash flow amounted to SEK 17.2 million (67.4) . The lower cash flow was partly due to a negative change in working capital of SEK -15.1 million (25.6) . A lower inventory level had a positive impact while increased trade receivables and decreased trade payables made a negative contribution.

Investments in property, plant and equipment amounted to SEK 1.0 million (4.3). Depreciation and impairment amounted to SEK 10.4 million (4.7). Investments in financial assets of SEK 22.2 million relate to acquisition of shares in Boneprox and Skinome in conjunction with the establishment of BioGaia Invest.

Cash and cash equivalents at 31 March 2021 amounted to SEK 1,486.8 million (284.1 at 31 March 2020).

Other disclosures

EMPLOYEES

Q1

2021

The number of employees in the Group totalled 160 at 31 March 2021 (158 at 31 March 2020).

The company has an incentive programme for all employees based on the company's sales and profit and qualitative targets. The maximum bonus is equal to 12% of salary.

FUTURE OUTLOOK

BioGaia's goal is to create strong value growth and a good return for the shareholders. This will be achieved through a greater emphasis on the BioGaia brand, online sales, increased sales to both existing and new customers and a controlled cost level..

The long-term financial target is an operating margin (operating profit in relation to sales) of at least 34% with continued strong growth and increased investments in research, product development, brand building and the sales organisation.

BioGaia's dividend policy is to pay a shareholder dividend equal to 50% of profit after tax.

In view of the company's strong portfolio consisting of an increased number of innovative products that are sold predominantly under the BioGaia brand to an increasing extent through online sales, successful clinical trials and an expanding distribution network that covers a large share of the key markets, BioGaia's future outlook remains bright.

SIGNIFICANT RISKS AND UNCERTAINTIES GROUP AND PARENT COMPANY

Significant risks and uncertainties are described in the administration report of the annual report for 2020 on pages 52 and 53 and in Notes 27 and 28. No significant changes in these risks and uncertainties are assessed to have taken place at 31 March 2021 except for the impact of the Covid-19 pandemic which is set out below.

The first quarter of 2021 continued to be marked by the Covid-19 pandemic and its impact on the world at large and on BioGaia. In several of our largest markets, such as Italy and Spain, we saw reduced sales during the quarter. In these countries, as in most other countries in which BioGaia operates, medical marketing is still the main business model. Due to the Covid-19 situation, our distributors' sales forces have not been able to visit doctors and pharmacy staff, which are our key target groups for medical marketing, to the same extent as previously. Furthermore, long-term lockdowns in many countries have meant that consumers have had limited opportunities to visit the principal sales channels for our products – physical pharmacies, hospitals and, in Japan, dental surgeries.

BioGaia has adapted to the current situation and changed how the company works with marketing and sales. For example, BioGaia has not been able to take part in international fairs and symposia, since these have been cancelled, but has instead focused on supporting its partners with marketing material that can be used online. Furthermore, BioGaia's employees have not been able to visit customers face-to-face but have used telephone and video meetings. BioGaia has not carried out any staff reductions or layoffs due to the pandemic. Nor has BioGaia taken part in any support programme with the exception of a government stimulus programme in Japan.

BioGaia has a strong financial position but a prolonged pandemic can even have a negative impact on a stable company such as BioGaia. A deterioration in the financial position and ability to pay of our distribution partners can lead to longer payment times but also credit losses. Furthermore, disruptions in BioGaia's production and at external suppliers or in logistics can result in BioGaia being unable to deliver products with an ensuing loss of revenue. Depending on how drawn-out this pandemic becomes, there is a risk of continued challenges in 2021.

RELATED PARTY TRANSACTIONS

The Parent Company owns 100% of the shares in BioGaia Biologics Inc. USA, BioGaia Japan Inc, BioGaia Production AB, CapAble AB and Tripac AB. The Parent Company also owns 96% of the shares in BioGaia Pharma AB and 92% of the shares in MetaboGen AB .

Annwall & Rothschild Investment AB owns 740,668 class A shares and 100,000 class B shares, corresponding to 4.2% of the share capital and 27.9% of the voting rights in BioGaia AB. Annwall & Rothschild Investment AB is owned by Peter Rothschild and Jan Annwall. Peter Rothschild is Chairman of the Board of BioGaia AB and receives a director's fee of SEK 670,000 per year. During the quarter, Peter Rothschild received additional remuneration for significant working duties, in addition to his assignment on the Board, of SEK 225,000 in accordance with the decision of the Annual General Meeting and the Board of Directors.

KEY EVENTS IN THE FIRST QUARTER OF 2021

Launches in the first quarter of 2021

Distributor Country Product
Allergycare Switzerland BioGaia Osfortis
BioGaia
Sverige
Sweden BioGaia Prodentis
Abbott Costa Rica BioGaia Protectis drops with
vitamin D
Abbott Panama BioGaia Protectis drops with
vitamin D
Abbott Paraguay BioGaia Protectis drops with
vitamin D
PediAct France BioGaia Protectis capsules
Ewopharma Czech
Republic
BioGaia Protectis tablets D3+

BioGaia launches entire Adult Health portfolio in Sweden. On 27 January, BioGaia announced that Osfortis and Prodentis have been launched in Sweden and that BioGaia's entire Adult Health portfolio is therefore available in the domestic market.

BioGaia revises dividend policy. On 3 February, BioGaia announced that the Board of Directors of BioGaia has chosen to revise the dividend policy so that 50% of profit after tax in the Parent Company will be distributed to shareholders..

MetaboGen reaches new key milestone in its development of novel probiotic products. On 12 February, BioGaia announced that MetaboGen after positive results in the initial clinical study with the strains Faecalibacterium prausnitzii (DSM 32379) and Desulfovibrio piger (DSM 32187) has now received approval from the Ethics Committee to start its next clinical study. The study will include people with prediabetes.

BioGaia Invest established. On 17 March, BioGaia announced that a separate entity, BioGaia Invest, has been established. The focus of BioGaia Invest will be to identify and invest in small companies focusing on ground-breaking technologies, services and products that will support BioGaia's growth. A total of SEK 150 million has been allocated to enable investments of between SEK 5 and 15 million.

KEY EVENTS AFTER THE END OF THE FIRST QUARTER OF 2021

Agreement for Egypt. On 8 April, BioGaia announced that the company has signed an agreement with Minapharm Pharmaceuticals for exclusive rights to sell BioGaia Protectis drops in Egypt.

New study for respiratory tract infections. On 13 April, BioGaia announced that a randomised, double-blind, placebo-controlled study in children showed that a supplement of the probiotic strains L. reuteri ATCC PTA 5289 and L. reuteri DSM 17938 significantly reduced fever and pain in children with upper respiratory tract infections.

Accounting policies

In all material respects, this interim management statement has been prepared in accordance with Nasdaq OMX Stockholm's Guidelines for preparing interim management statements. Disclosures according to IAS 34 Interim Financial Reporting are provided both in notes and elsewhere in the interim management statement. The accounting policies applied in the consolidated statements of comprehensive income and financial position are consistent with the accounting policies applied in preparation of the most recent annual report.

The financial statements and segment information are consistent with the presentation used in the interim reports presented in compliance with IAS 34, in order to achieve comparability in presentation between quarters. The interim management statement contains, among other things, comments from the CEO, although this is not required according to Nasdaq OMX Stockholm's Guidelines for preparing interim management statements. This information is nonetheless considered important in meeting the users' needs.

NEW ACCOUNTING STANDARDS

Management's assessment is that new and amended standards and interpretations will not have a material effect on the Group's financial statements for the period of initial application.

SUMMARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in SEK 000s) Jan-Mar Jan-Mar Jan-Dec Apr 2020 - Apr 2019 -
2021 2020 2020 Mar 2021 Mar 2020
Net sales (Note 1) 201,975 182,808 747,077 766,244 779,898
Cost of sales -56,775 -49,802 -200,159 -207,132 -207,306
Gross profit 145,200 133,006 546,918 559,112 572,592
Selling expenses -43,248 -44,575 -171,634 -170,307 -188,223
Administrative expenses -15,695 -7,269 -26,128 -34,554 -25,238
Research and development expenses -27,179 -28,248 -104,663 -103,594 -106,388
Other operating expenses/income 5,167 2,705 -16,343 -13,881 -1,052
Operating profit 64,245 55,619 228,150 236,776 251,691
Financial income 22 16 155 161 314
Financial expenses -219 -202 -722 -739 -627
Profit before tax 64,048 55,433 227,583 236,198 251,378
Tax -13,605 -13,685 -47,853 -47,773 -57,962
Profit for the period 50,443 41,748 179,730 188,425 193,416
Items that may be subsequently reclassified to profit or loss
Gains/losses arising on translation of the statements of foreign
operations 952 -2,858 -4,059 -249 -2,221
Comprehensive income for the period 51,395 38,890 175,671 188,176 191,195
Profit for the period attributable to:
Owners of the Parent Company 50,443 41,748 179,730 188,425 193,481
Non-controlling interests - - - - -65
50,443 41,748 179,730 188,425 193,416
Comprehensive income for the period attributable to:
Owners of the Parent Company 51,395 38,890 175,671 188,176 191,260
Non-controlling interests - - - - -65
51,395 38,890 175,671 188,176 191,195
Earnings per share
Earnings per share (SEK) *) 2.50 2.39 10.07 10.17 11.07
Number of shares (thousands) 20,196 17,336 20,196 17,336 17,336
Average number of shares (thousands) 20,196 17,474 17,855 18,535 17,474

*) A bonus issue element from the 2020 new issue has been taken into account in the calculation of earnings per share before and after dilutive effects, which means that comparative figures have been recalculated. There are no other dilutive effects.

CONSOLIDATED BALANCE SHEETS

Summary (Amounts in SEK 000s) 31 Mar 31 Mar 31 Dec
2021 2020 2020
ASSETS
Property, plant and equipment 131,601 130,769 133,904
R&D projects in progress 49,763 51,999 50,322
Goodwill 5,300 5,300 5,300
Right-of-use assets 19,980 18,515 28,861
Financial assets 22,229 - -
Deferred tax assets 5,759 6,684 5,279
Other non-current receivables 42 48 39
Total non-current assets 234,674 213,315 223,705
Current assets excl. cash and cash equivalents 224,704 219,954 221,694
Cash and cash equivalents 1,486,770 284,135 1,467,883
Total current assets 1,711,474 504,089 1,689,577
TOTAL ASSETS 1,946,148 717,404 1,913,282
EQUITY AND LIABILITIES
Equity attributable to owners of the Parent Company 1,797,638 546,762 1,746,243
Non-controlling interests 2 2 2
Total equity (Note 2) 1,797,640 546,764 1,746,245
Deferred tax liability 11,218 10,339 11,312
Non-current liabilities 16,632 21,347 20,663
Current liabilities 120,658 138,954 135,062
TOTAL LIABILITIES AND EQUITY 1,946,148 717,404 1,913,282

Other current liabilities include forward exchange contracts with a fair value of SEK 0.9 million on the balance sheet date (in the corresponding period in the previous year forward exchange contracts were included in current liabilities at SEK 9.7 million). All forward exchange contracts are attributable to level 2 of the fair value hierarchy. No changed assumptions with regard to measurement have taken place compared to the 2020 Annual Report. The fair values of other receivables, cash and cash equivalents, trade payables and other liabilities are estimated to be equal to their carrying amounts (amortised cost) due to the short maturity.

CONSOLIDATED CASH FLOW STATEMENTS

Jan-Mar Jan-Mar Jan-Dec
Summary (Amounts in SEK 000s) 2021 2020 2020
Operating activities
Operating profit 64,245 55,619 228,150
Depreciation/amortisation 10,363 4,720 20,530
Unrealised gains/losses on forward contracts 1,532 7,217 -4,876
Other non-cash items -1,721 -2,107 1,167
Paid tax -17,196 -17,406 -72,092
Interest received and paid -196 -186 -646
Cash flow from operating activities before changes in working
capital
57,027 47,857 172,233
Changes in working capital -15,135 25,601 49,023
Cash flow from operating activities 41,892 73,458 221,256
Acquisition of property, plant and equipment -1,040 -4,337 -16,075
Acquisition of intangible assets -22,229 - -
Cash flow from investing activities -23,269 -4,337 -16,075
Dividend - - -65,012
Repayment of lease liability -1,400 -1,747 -7,632
Provision to the Foundation to Prevent Antibiotic Resistance - - -2,800
New issue, net - - 1,126,840
Cash flow from financing activities -1,400 -1,747 1,051,396
Cash flow for the period 17,223 67,374 1,256,577
Cash and cash equivalents at the beginning of the period 1,467,883 213,831 213,831
Exchange differences in cash and cash equivalents 1,664 2,930 -2,525
Cash and cash equivalents at the end of the period 1,486,770 284,135 1,467,883

NOTE 1 REPORTING BY SEGMENT – GROUP

Executive Management has analysed the Group's internal reporting system and established that the Group's operations are governed and evaluated based on the following segments:

  • Paediatrics segment (drops, gut health tablets, oral rehydration solution (ORS) and cultures to be used as ingredients in licensee products (such as infant formula) as well as royalty revenues for paediatric products.)

  • Adult Health segment (gut health tablets, oral health lozenges and cultures as an ingredient in a licensee's dairy products as well as royalty revenues for Adult Health products).

  • Other segment (smaller segments such as revenue from packaging solutions).

For the above segments BioGaia reports revenue and gross profit, which are monitored regularly by the CEO (who is regarded as the chief operating decision maker) together with the Executive Management. There is no monitoring of the company's total assets against the segments' assets.

Jan-Mar Jan-Mar Jan-Dec Apr 2020 - Apr 2019 –
Revenue by segment 2021 2020 2020 Mar 2021 Mar 2020
Paediatrics 161,609 142,491 583,111 602,230 608,969
Adult Health 38,720 40,181 161,186 159,726 169,857
Other 1,646 137 2,780 4,289 1,074
Total 201,975 182,808 747,077 766,245 779,899
Gross profit by segment
Paediatrics 120,404 104,613 431,810 447,601 452,103
Adult Health 23,150 28,257 112,588 107,481 119,416
Other 1,646 137 2,521 4,029 1,074
Total 145,200 133,007 546,918 559,112 572,593
Selling, administrative and R&D expenses -86,122 -80,092 -302,425 -308,455 -319,849
Other operating expenses 5,167 2,705 -16,343 -13,881 -1,052
Operating profit 64,245 55,619 228,150 236,776 251,692
Net financial items -197 -186 -567 -578 -313
Profit before tax 64,048 55,433 227,583 236,196 251,379
Sales by geographical market
APAC
Paediatrics 19,621 16,927 82,689 85,384 75,901
Adult Health 22,482 15,465 86,625 93,641 98,680
Other 251 64 1,432 1,619 193
Total APAC 42,354 32,456 170,746 180,644 174,774
EMEA
Paediatrics 80,525 96,653 312,520 296,392 355,729
Adult Health 12,303 21,279 58,894 49,919 57,549
Other 1,360 57 1,169 2,472 864
Total EMEA 94,188 117,989 372,583 348,783 414,142
Americas
Paediatrics 61,463 28,911 187,902 220,454 177,338
Adult Health 3,935 3,437 15,667 16,165 13,627
Other 35 16 179 199 16
Total Americas 65,433 32,364 203,748 236,818 190,981
Total 201,975 182,808 747,077 766,245 779,898
Date of recognition Performance obligations met on specific date (Product
sales)
Jan-Mar
2021
Jan-Mar
2020
Jan-Dec
2020
Paediatrics 160,024 139,329 570,829
Adult Health 36,161 37,499 148,635
Other 646 137 2,027
Total 196,831 176,965 721,491
Performance obligations met over time (Royalty)
Paediatrics
1,585 3,162 12,282
Adult Health 2,559 2,682 12,551
Other 1,000 - 753
Total 5,144 5,844 25,586
Total 201,975 182,808 747,077

NOTE 2 SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Amounts in SEK 000s) Jan-Mar
2021
Jan-Mar
2020
Jan-Dec
2020
Opening balance 1 746 245 507 874 507 874
New issue, net - - 1 130 512
Dividend - - -65 012
Provision to the Foundation to Prevent Antibiotic Resistance - - -2 800
Comprehensive income for the period 51 395 38 890 175 671
Closing balance 1 797 640 546 764 1 746 245

LARGEST SHAREHOLDERS AT 31 MARCH 2021 (SOURCE: MONITOR)

A shares B shares Share
capital
No. of votes Capital Votes
1 Peter Rothschild & Jan Annwall 740,668 100,000 840,668 7,506,680 4.2% 27.9%
2 EQT 1,625,000 1,625,000 1,625,000 8.0% 6.0%
3 Fjärde AP-Fonden 1,521,584 1,521,584 1,521,584 7.5% 5.7%
4 Swedbank Robur Fonder 1,029,489 1,029,489 1,029,489 5.1% 3.8%
5 Miton Asset Management 818,990 818,990 818,990 4.1% 3.0%
6 Cargill Inc 600,000 600,000 600,000 3.0% 2.2%
7 TIN Fonder 531,835 531,835 531,835 2.6% 2.0%
8 Tredje AP-fonden 373,263 373,263 373,263 1.8% 1.4%
9 Didner & Gerge Fonder 371,038 371,038 371,038 1.8% 1.4%
10 Juno Investment Partners 368,197 368,197 368,197 1.8% 1.4%
Other shareholders 12,116,398 12,116,398 12,116 ,398 60.0% 45.1%
Total 740,668 19,455,794 20,196,462 26,862,474 100.0% 100.0%

Consolidated key ratios

Jan-Mar 2021 Jan-Mar 2020 Jan-Dec 2020
Net sales, SEK 000s 201,975 182,808 747,077
Growth of net sales 10% 7% -3%
Operating profit, SEK 000s 64,245 55,619 228,150
Profit after tax, SEK 000s 50,443 41,748 179,730
Return on average equity 3% 8% 16%
Return on average capital employed 4% 10% 20%
Capital employed, SEK 000s 1,808,858 557,103 1,757,557
Number of shares (thousands) 1) 20,196 17,336 20,196
Average number of shares (thousands) 20,196 17,474 17,855
Earnings per share, SEK 1) 2) 2.50 2.39 10.07
Equity per share, SEK 1) 89.01 31.29 97.80
Equity/assets ratio 92% 76% 91%
Operating margin 32% 30% 31%
Profit margin 32% 30% 30%
Average number of employees 160 155 157

1) A bonus issue element from the 2020 new issue has been taken into account in the calculation of earnings per share before and after dilutive effects and equity per share, which means that comparative figures have been recalculated. There are no other dilutive effects.

2) Key ratio defined according to IFRS.

A list of definitions of key ratios reported in the consolidated financial statements is provided on page 66 of BioGaia's annual report for 2020. In this report, BioGaia reports information used by Executive Management to assess the Group's development. Some of the key ratios presented are not defined according to IFRS. The company is of the opinion that these metrics provide valuable complementary information to stakeholders and the company's management since they contribute to evaluation of relevant trends and the company's performance. Since not all companies calculate key ratios in the same manner, these are not always comparable to metrics used by other companies. These key ratios should therefore not be seen as a replacement for metrics defined according to IFRS. With effect from 3 July 2016, ESMA's guidelines on alternative performance measures are applied which means extended disclosure requirements regarding key ratios not defined according to IFRS. A reconciliation of key ratios that BioGaia considers relevant according to these guidelines is provided below. .

RECONCILIATION KEY RATIOS

(Amounts in SEK 000s)
Jan-Mar Jan-Mar Jan-Dec
Return on equity 2021 2020 2020
Profit attributable to owners of the Parent Company (A) 50,443 41,748 179,730
Equity attributable to owners of the Parent Company 1,797,638 546,762 1,746,243
Average equity attributable to owners of the Parent Company (B) 1,771,941 527,317 1,127,058
Return on equity (A/B) 3% 8% 16%
Return on capital employed
Operating profit 64,245 55,619 228,150
Financial income 22 16 155
Profit before net financial items + financial income (A) 64,267 55,635 228,306
Total assets 1,946,148 717,404 1,913,282
Interest-free liabilities -137,290 -160,301 -155,725
Capital employed 1,808,858 557,103 1,757,557
Average capital employed (B) 1,783,208 537,658 1,137,885
Return on capital employed (A/B) 4% 10% 20%
DEFINITION OF KEY RATIOS, CONTINUED
(Amounts in SEK 000s) 31 Mar 31 Mar 31 Dec
Equity/assets ratio 2021 2020 2020
Equity (A) 1,797,640
546,764 1,746,245
Total assets (B) 1,946,148 717,404 1,913,282
Equity/assets ratio (A/B) 92% 76% 91%
Operating margin
Operating profit (A) 64,245 55,619 228,150
Net sales (B) 201,975 182,808 747,077
Operating margin (A/B) 32% 30% 30%
Profit margin
Profit before tax (A) 64,048 55,433 227,583
Net sales (B) 201,975 182,808 747,077
Equity per share
Equity attributable to owners of the Parent Company (A) 1,797,638 546,762 1,746,243
Average number of shares (B) 20,196 17,474 17,855
Equity per share (A/B), SEK 89.01 31.29 97.80

CHANGE IN SALES BY SEGMENT (INCLUDING AND EXCLUDING FOREIGN EXCHANGE EFFECTS)

(Amounts in SEK 000s) Paediatrics
Jan-Mar
2021
Adult
Health
Jan-Mar
2021
Other
Jan-Mar
2021
Total
Jan-Mar
2021
A Description
Previous year's net sales according to the average
rate
142,491 40,181 137 182,808
B Net sales for the year according to the average rate 161,609 38,720 1,646 201,975
C Recognised change (B-A) 19,118 -1,461 1,509 19,167
Percentage change (C/A) 13% -4% 1101% 10%
D Net sales for the year according to the previous
year's average rate (D)
177,240 42,428 1,646 221,313
E Foreign exchange effects (C-F) -15,631 -3,707 0 -19,338
Percentage change (E/A) -11% -9% 0% -11%
F Organic change (D-A) 34,749 2,247 1,509 38,505
Organic change per cent (F/A) 24% 6% 1 101% 21%
Average key exchange rates Jan-Mar
2021
Jan-Mar
2020
Jan-Dec
2020
EUR 10.10 10.66 10.54
USD 8.32 9.67 9.27
JPY 0.0792 0.0888 0.0862
Closing date key exchange rates 31 Mar
2021
31 Mar
2020
31 Dec
2020
EUR 10.24 11.08 10.04
USD 8.72 10.08 8.19
JPY 0.0788 0.0929 0.0792
Pledged assets and contingent liabilities
(Amounts in SEK 000s)
GROUP
31 Mar
2021
31 Dec
2020
Floating charges 0 0
Contingent liabilities None None

Financial calendar

Q1

2021

09:30 Teleconference with CEO Isabelle Ducellier and CFO Alexander Kotsinas. To participate in the teleconference, please see Financialhearings.com for telephone numbers. The teleconference can also be followed here.

06 MAY BioGaia Annual General Meeting.

21 OCT

08:00 Interim Report 1 January – 30 June 2021. 08:00 Interim Management Statement 1 January – 30 September 2021.

Stockholm, 6 May 2021

Isabelle Ducellier CEO

This interim management statement has not been reviewed by the company's auditors.

BIOGAIA AB

THE COMPANY

Q1

2021

BioGaia is a world-leading, Swedish probiotics company and has been at the frontline of microbiome research for more than 30 years. BioGaia develops, markets and sells probiotic products with documented health benefits. The company operates throughout the value chain both under its own auspices and through a global network of leading, independent researchers and specialists, experts within production and local distribution partners.

BioGaia's products contain different strains of the lactic acid bacterium L. reuteri (Limosilactobacillus reuteri, previously called Lactobacillus reuteri). Results from clinical studies with BioGaia's probiotic strains have been published in more than 200 articles in scientific journals, which show that they are effective and safe for children and adults. By developing and offering clinically-proven and user-friendly probiotic products, BioGaia wants to contribute to improved global health.

BioGaia has 160 employees, of whom 131 are based in Sweden (Stockholm, Lund, Eslöv and Gothenburg), two in the USA, three in Singapore and 24 in Japan. The class B shares of the Parent Company BioGaia AB are quoted on the Mid Cap list of Nasdaq OMX Nordic Exchange Stockholm.

BUSINESS MODEL

BioGaia's business model is based on long-term collaboration with international networks within research, production and distribution.

BioGaia's revenue comes mainly from the sale to distributors of drops, tablets and capsules for gut health, oral rehydration solution (ORS), lozenges for oral health and capsules for bone health. Revenue is also earned from the sale of bacterial cultures to be used in licensee products (such as infant formula and dairy products), as well as royalties for the use of L. reuteri in licensee products.

The products are sold through pharmaceutical and nutrition companies in over 100 countries.

BioGaia has patent protection for the use of specific strains of L. reuteri and certain packaging solutions in all significant markets.

THE BIOGAIA BRAND

BioGaia launched its own consumer brand at the beginning of 2006. Today a number of distribution partners sell finished products under the BioGaia brand in a large number of markets. One key part of BioGaia's strategy is to increase the share of sales consisting of BioGaiabranded products. Of products (drops, tablets for gut and oral health, oral rehydration, etc.) sold in 2020, 77% (71%) were sold under the BioGaia brand including co-branding.

Some of BioGaia's distributors sell finished consumer products under their own brand names. On these products, the BioGaia brand is shown on the consumer package since BioGaia is both the manufacturer and licensor.

BioGaia's licensees add L. reuteri culture to their products and sell these under their own brand names. On these products, the BioGaia brand is most often shown on the package as the licensor/patent holder.

RESEARCH AND CLINICAL STUDIES

BioGaia's strains of L. reuteri are some of the world's most well-researched probiotics, especially in studies involving young children.

Studies have been performed on:

• Infantile colic

.

  • Antibiotic-associated diarrhoea (AAD)
  • Acute diarrhoea
  • Gingivitis (inflammation of the gums)
  • Periodontal disease
  • Helicobacter pylori (the gastric ulcer bacterium)
  • Low bone density
  • Functional abdominal pain
  • Tonsillitis and pharyngitis (upper respiratory tract infection)

BioGaia AB Box 3242 SE-103 64 STOCKHOLM Street address: Kungsbroplan 3, Stockholm Telephone: +46 8 555 293 00, Corporate identity number 556380-8723, www.biogaia.com

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