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Karo Pharma AB Interim / Quarterly Report 2020
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Interim / Quarterly Report
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Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden [email protected] karopharma.com
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Second-quarter report 2020
Q2, April - June
- Net sales amounted to MSEK 688.9 (387.4). This corresponds to an increase of 78% for the period. The organic growth during the second quarter was -10%, currency impact 0% and 88% relates to the acquisition of Trimb in 2019 and the acquired product portfolios Proct® from Leo Pharma and Pevaryl® from Johnson & Johnson (see below).
- EBIT (Operating Profit) amounted to MSEK 98.6 (20.3) corresponding to a 385% growth.
- Adjusted EBITDA* amounted to MSEK 213.7 (137.8) corresponding to a 55% growth. This excluding nonrecurring items related to a new valuation method of inventory (see note 1) totalling MSEK -12.4 (35.3).
- The gross margin was 60.8% (54.5%) for the quarter. The margin was affected by a positive product mix and a new valuation of inventory. The gross margin without this effect was 59,0%.
- Cash flow from operating activities amounted to MSEK 171.0 (111.8).
- Earnings per share was SEK 0.11 (-0.04).
- During the period Karo Pharma acquired Hygis SA, a Swiss distributing company with exclusive distribution rights to Karo's brands MultiGyn® and MultiMam® in Switzerland. The transaction closed on April 1, 2020
- During the period, the Pevaryl® portfolio was acquired from Johnson & Johnson with all related rights and assets. The transaction consolidates the ownership of the Pevaryl® brand portfolio in Europe with Karo Pharma. The transaction closed on May 8, 2020.
Summary of half-year result, January - June
- Net sales amounted to MSEK 1 482.5 (808.2). This corresponds to an increase of 83% for the period. The organic growth during the first half of the year was 7%, currency impact -1% and 77% relates to the acquisition of Trimb in 2019 and the acquired product portfolios Proct® from Leo Pharma and Pevaryl® from Johnson & Johnson (see below).
- EBIT (Operating Profit) amounted to MSEK 202.6 (107.7) corresponding to 88% growth.
- Adjusted EBITDA* amounted to MSEK 426.9 (290.8) corresponding to a 47% growth. This excluding nonrecurring items related to the acquisitions and the valuation of inventory (see note 1) totalling MSEK -8.5 (35.3).
- The gross margin was 57.1% (55.2%) for the period. The margin was affected by a positive product mix and a new valuation of inventory. The gross margin without this effect was 56,3%.
- Cash flow from operating activities amounted to MSEK 161.3 (203.6).
- Earnings per share was SEK 0.50 (0.21).
- During the period, the Proct® portfolio was acquired from Leo Pharma with all related rights and assets. The transaction closed on March 2, 2020.
- During the period Karo Pharma acquired Hygis SA, a Swiss distributing company with exclusive distribution rights to Karo's brands MultiGyn® and MultiMam® in Switzerland. The transaction closed on April 1, 2020
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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- During the period, the Pevaryl® portfolio was acquired from Johnson & Johnson with all related rights and assets. The transaction consolidates the ownership of the Pevaryl® brand portfolio in Europe with Karo Pharma.The transaction closed on May 8, 2020.
- At the end of the period, cash and cash equivalents and other current investments amounted to MSEK 390.4 (248.8 at December 31, 2019) and net debt to MSEK 5 536.4 (5028.9 at December 31, 2019).
* Alternative Financial Ratios (APM), note 4 for further information.
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden [email protected] karopharma.com
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Key financials development Jan-June, 2016 – 2020
Karo Pharma's 10 largest products Jan-June 2020 (MSEK)
| Products | 2020 | 2019 | Cha nge |
|---|---|---|---|
| Selexid | 105,1 | 89,9 | 17% |
| Paracet | 95,1 | 71,7 | 33% |
| Kaleorid | 74,9 | 66,3 | 13% |
| Locobase | 73,2 | 67,8 | 8% |
| Burinex | 72,2 | 67,7 | 7% |
| Flux 1) | 67,0 | 0,0 | n/ a |
| Pevaryl 1, 3) | 62,1 | 0,0 | n/ a |
| Multi-Gyn 1) | 59,5 | 0,0 | n/ a |
| Ibux | 52,6 | 45,5 | 16% |
| Scheriproct 2) | 48,4 | 0,0 | n/ a |
| Övriga produkter | 772,3 | 399,3 | 93% |
| Tota l försä ljning | 1 482,5 | 808,2 | 83% |
1) Sales of the Trimb portfolio started 2019-09-12
2) Sales of the Leo portfolio started 2020-03-02
3) Sales of the Pevaryl portfolio started 2020-05-08
Turnover by category Jan-June 2020
RX – Prescription drugs
OTC – Over the counter drugs (non-prescription)
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Comments by CEO Christoffer Lorenzen
Karo Pharma realized growth of 78% in Q2. The growth was driven by the acquisitions completed over the last 12 months: Trimb (September 2019), Proct® brand portfolio (March 2020) and the Pevaryl® brand portfolio (April 2020). Karo Pharma generated organic growth of 7% during H1 2020.
The Q2 performance was negatively impacted by the COVID-19 pandemic. As anticipated, and as communicated in the Q1 financial report, Q1 was positively impacted by a one-off build-up of inventories across the supply chain at the wholesaler, pharmacy, and consumer level. The Q1 build-up was partially rebalanced in Q2, particularly in the pain, cough & cold category and in the specialty Rx category. We expect to see further rebalancing in H2, but to a lesser extent than during Q2. Further normalization of inventories will of course depend on the development of COVID-19 across geographies.
Karo Pharma's business continues to prove robust and resilient despite the difficult market environment. In collaboration with our partners across contract manufacturing, logistics and distribution, we have been able to address the challenges as they have emerged. The supply chain has only been affected by minor disruption and thanks to a close dialogue with our suppliers, we have kept delivery performance at acceptable levels, in line with targets.
We continue to execute in accordance with our long-term strategy and vision for the business. In the beginning of Q2 we announced the acquisition of the remaining European rights to the Pevaryl® brand portfolio from Johnson & Johnson. The acquisition confirms our commitment to M&A driven growth and business building. The transaction was 100% debt financed by our partner banks, Swedbank, SEB and DNB NOR.
The Pevaryl® brand portfolio adds approximately 20 MEUR of sales to our business, consolidates European ownership of the Pevaryl® brand with Karo Pharma and expands Karo Pharma's European reach outside of the Nordic region, in particular in Italy. Additionally, the acquisition adds critical mass in two focus categories, intimate health, and foot care.
We are also continuing to streamline and optimize our business. The explorations of strategic alternatives for the Hospital Supply business, Swereco AB, which were previously announced are progressing to plan and we expect to conclude that evaluation during H2. Post transaction our business will be more streamlined and focused. We are also taking steps on a product portfolio level to optimize. In early July we divested three smaller brands - Suscard® , Digoxin® and Egazil® to Evolan AB. The brands generated 13 MSEK in revenues in 2019 and are not material to our results, but we believe the brands have found a better owner.
Christoffer Lorenzen
CEO
Key financial data (MSEK)
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| April - June | January - June | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Net Sales | 688,9 | 387,4 | 1 482,5 | 808,2 |
| Gross Profit | 419,1 | 210,9 | 846,8 | 445,8 |
| Operating Cost | -320,5 | -190,6 | -644,2 | -338,1 |
| EBITDA | 226,1 | 102,5 | 435,4 | 255,5 |
| EBITDA margin % | 32,8% | 26,5% | 29,4% | 31,6% |
| Profit before tax | 31,4 | -9,1 | 138,6 | 42,0 |
| EpS, SEK | 0,11 | -0,04 | 0,50 | 0,21 |
| Cash Flow from operating activities | 213,4 | 111,8 | 203,6 | 203,6 |
| Cash | 440,4 | 561,2 | 440,4 | 561,2 |
Sales and earnings
| April - June | January - June | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Net sales | 688,9 | 387,4 | 1 482,5 | 808,2 |
| Cost of goods sold | -269,9 | -176,5 | -635,7 | -362,4 |
| Gross Profit | 419,1 | 210,9 | 846,8 | 445,8 |
| Cost before amortization and depreciation | -193,0 | -108,4 | -411,4 | -190,3 |
| EBITDA | 226,1 | 102,5 | 435,4 | 255,5 |
| Non-recurring costs | -12,4 | 35,3 | -8,5 | 35,3 |
| Adjusted EBITDA | 213,7 | 137,8 | 426,9 | 290,8 |
| Amoritzation and depreciation related operating costs |
-127,5 | -82,2 | -232,7 | -147,8 |
| Adjusted EBIT | 86,2 | 55,6 | 194,1 | 143,0 |
Net sales for the period increased to MSEK 1 482.5 (808.2). This corresponds to an increase of 83% for the period. Net sales for the second quarter was MSEK 688.9 (387.4) corresponding to an increase with 78%.
Cost of goods sold amounted to MSEK 635.7 (362.4). The gross margin was 57.1% (55.2%) during the same period. The gross margin in the quarter was 60,8% (54.5%) and has been positively impacted by a changed product mix and a change of evaluation in inventory (see note 1).
Operating costs including depreciation, other operating income and other operating expenses amounted to MSEK 644.2 (338.1) during the period (increase of 91%). Sales costs doubled to MSEK 484.8 (240.2) driven by costs for taking over the product portfolios from LEO Pharma and Johnson & Johnson, the establishment of an own organization with, among other things, own subsidiaries in Denmark, Finland and Germany, and the acquisition of Trimb. Administration costs amounted to MSEK 152.4 (97.7). The increase (56%) is mainly due to cost related to the acquisition of Trimb, the acquired product portfolios and restructuring costs totaling MSEK 3.9.
The adjusted EBITDA amounted to MSEK 426.9 (290.8), equivalent to a 47% increase.
Earnings per share was 0.50 (0.21) SEK.
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Cash flow and financial position
Cash flow from operating activities during the period was MSEK 161.3 (203.6) and MSEK 171.0 (111.8) in the quarter. Group cash and cash equivalents amounted to MSEK 390.4 (MSEK 248.8 as of December 31, 2019) at the end of the period. As part of COVID-19 Karo Pharma has stress tested its financial position, including cash reserves, and have concluded that we have adequate reserves.
On June 30, total assets amounted to MSEK 12 451.9 (10 898.5 as of December 31, 2019), whereof intangible assets accounted for MSEK 10 410.8 (9 090.1 as of December 31, 2019).
Group equity amounted to MSEK 5 644.2 (5 641.9 as of December 31, 2019). The equity ratio was 45.3% (51.8% as of December 31, 2019).
Parent company
The Parent company's net sales for the period amounted to MSEK 542.3 (356.8). Profit after financial items amounted to MSEK 83.0 (-34.7). The parent company's cash, cash equivalents and other current investments amounted to MSEK 326.3 (61.6 as of December 31, 2019).
[email protected] karopharma.com
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Significant events
April 1, 2020 Karo Pharma acquired Hygis SA, a Swiss distributing company with exclusive distribution rights to Karo's brands MultiGyn® and MultiMam® . Hygis' operations are limited to the distribution of these brands and the acquisition gives Karo Pharma control over the direct sales of these brands. Karo Pharma expects to reach annual net sales related to the two brands of MEUR 1.3 in Switzerland.
May 8, 2020 the acquisition of the remaining European rights to the Pevaryl® brand portfolio from Cilag GmbH International, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, was closed for 58 MEUR.
The transaction consolidates the ownership of the Pevaryl® brand portfolio, comprised of Pevaryl® , Epi-Pevaryl® , Gyno-Pevaryl® and Pevisone® in Europe with Karo Pharma. The acquired portfolio generated net sales of around 20 MEUR in 2019.
Karo Pharma already owns and commercializes Pevaryl® , Gyno-Pevaryl® and Epi-Pevaryl® in certain European markets, as a result of a transaction between Karo Pharma's subsidiary, Trimb Healthcare AB, and Johnson & Johnson's consumer business in June 2017. This business generated net sales of approximately 10 MEUR in 2019 and the combined Pevaryl® brand portfolio will thereby reach net sales of around 30 MEUR.
Consolidating Pevaryl® provides benefits in terms of maintaining and developing a focused and clear brand offering across the European markets and provides economies of scale that can be leveraged across manufacturing, regulatory and commercial areas. The acquisition expands Karo Pharma's European reach outside of the Nordic region. In particular, the acquisition provides added scale in Italy, a market which accounted for approximately half of the added 20 MEUR sales in 2019. Additionally, the acquisition adds scale and scope to two of Karo Pharma's existing focus categories, intimate care and foot care.
The acquisition is a pure asset deal. No personnel or manufacturing sites are included in the agreement and the technology transfer risks are limited. Johnson & Johnson and Karo Pharma will collaborate to secure a seamless transfer of the portfolio, including relevant approvals. Karo Pharma expects that the products are fully transferred and operated by Karo Pharma by the end of Q1, 2021. Karo Pharma expects to add running costs over time by approx. 2-3 MEUR per year as a direct consequence of the transaction. This is primarily linked to further build-up of the organizational capabilities within sales, marketing, operations and regulatory.
The transaction is financed by a new loan facility.
COVID-19
During the first quarter Karo Pharma recorded significant revenue growth from certain product categories mainly through stock build up orders among distributors, pharmacies and households. At the same time, the company also experienced a slow-down in demand from other product categories, as a consequence of the spread of COVID-19 across Europe.
During the second quarter the brands and products which grew through stock build up has been normalized in demand as expected and as a result the organic growth has been negative as the consumption has caught up with demand.
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The impact on supply chain, productivity among employees and the business model has so far been limited. The long-term consequences of a general economic downturn in Europe may however have a negative impact on growth and profitability in the remaining quarters of 2020 as also mentioned in the previous interim report.
Karo Pharma management therefore monitors the situation and regularly update the stress test in collaboration with the Board of Directors in which sales, costs and cash items are evaluated. Karo Pharma is fully prepared to take further actions if the situation should change in any direction.
The COVID-19 outbreak has introduced uncertainty in the conduct of most businesses but until now no significant risk of material adjustment to the carrying amounts of assets and liabilities have arisen in Karo Pharma. In this assessment, all available information about the next twelve months have been considered, including the expected profitability and any restrictions to readily access financial resources.
The impact of COVID-19 on financial performance, financial position and cash-flows has also been limited and the outbreak has not triggered additional financial risks for Karo Pharma, like for example, debt renegotiations, new financial arrangements outside the recent acquisitions, and the breach of debt covenants.
Measures taken to address and mitigate potential future impacts and risks of COVID-19 on operations and performance are taken in applicable areas but has also been limited until now.
There are no indications that an asset should be impaired on the basis of a set of internal and external sources of information. In making this assessment, we have carefully considered the effects of the COVID-19 outbreak and concluded that there are no write-downs or value adjustments required as a consequence of COVID-19.
Risks and uncertainties
As an international group, Karo Pharma is exposed to various risks, which affect the opportunities to achieve the set goals. These are operational risks, such as the risk that competitive situations affect price levels and sales volumes and the risk that the economic development in the markets and in the segments where the Group operates is not stable. These include financial risks such as currency risks, interest rate risks and credit risks. Besides the COVID-19 crisis, which is covered above, no additional significant change in material risks or uncertainties has occurred during the period. Our assessment is thus unchanged compared to the account of Karo Pharma's risks, uncertainties, and the management of the same in the company's Annual Report for 2019. Readers who wish to consult the annual report can download this from Karo Pharma's website www.karopharma.com, or request it from Karo Pharma AB, PO Box 16 184, 103 24 Stockholm, Sweden.
Significant events after period end
July 1, 2020 Karo Pharma divested the three brands Digoxin, Egazil and Suscard to Evolan due to production challenges. From both a patient as well as a society perspective it is better to divest than to prune these products. The total turnover of the three brands 2019 was 13 MSEK.
[email protected] karopharma.com
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Auditors' review
The interim report has not been the subject to auditors' review.
Financial Calendar
Interim report Jan-Sep 2020 Oct 30, 2020
Year-end report 2020 Feb 18, 2021
The Annual Report 2019 was released April 1, 2020 and the Annual General Meeting was held May 25, 2020 at Näringslivets Hus, Stockholm.
karopharma.com
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Board's assurance
The Board of Directors and the CEO assure that the interim report provides a true and fair view of the company's and the Group's operations, position and results and describes significant risks and uncertainties that the company and the companies that are part of the Group face.
Stockholm July 21, 2020
Bo Jesper Hansen Erika Henriksson Uta Kemmerich-Keil Chairman of the Board Director Director
Vesa Koskinen Kristofer Tonström Håkan Åström Director Director Director
Director CEO
Flemming Örnskov Christoffer Lorenzen
For further information, please contact
Christoffer Lorenzen, CEO, +46 73-501 76 20, [email protected] Jon Johnsson, CFO, +46 73-507 88 61, [email protected]
About Karo Pharma
Karo Pharma offers "Smart choices for everyday healthcare". We own and commercialize reliable original brands within prescription drugs and over over-the-counter consumer products. Our products are available in over 60 countries with the core in Europe and the Nordics region. The headquarter of Karo Pharma is in Stockholm and the company is listed on Nasdaq Stockholm, Mid Cap.
This information is information that Karo Pharma AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, on July 21, 2020 at 08.00 CET.
Consolidated income statement summary (KSEK)
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| April - June | Ja nua ry - June | Full Yea r | ||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2019 | ||
| Net sales | 688 914 | 387 393 | 1 482 499 | 808 216 | 1 901 196 | |
| Cost of goods sold | -269 851 | -176 458 | -635 713 | -362 442 | -917 165 | |
| Gross Profit | 419 063 | 210 935 | 846 787 | 445 774 | 984 030 | |
| Operating cost | ||||||
| Distribution cost | -248 967 | -116 803 | -484 794 | -240 151 | -600 264 | |
| Administration | -79 300 | -73 254 | -152 382 | -97 753 | -188 361 | |
| Research and Development | 0 | 0 | 0 | 0 | 0 | |
| Other operating income/ expenses | 7 758 | -549 | -6 984 | -149 | -23 304 | |
| Total operating costs | -320 509 | -190 606 | -644 159 | -338 053 | -811 928 | |
| Operating Profit | 98 554 | 20 329 | 202 627 | 107 721 | 172 102 | |
| Financial Net | -67 118 | -29 390 | -64 064 | -65 745 | -155 512 | |
| Profit/ loss before tax | 31 436 | -9 061 | 138 563 | 41 975 | 16 590 | |
| Tax | -5 752 | 2 646 | -26 101 | -8 111 | -7 649 | |
| Net profit/ loss | 25 684 | -6 416 | 112 462 | 33 865 | 8 941 | |
| Net earnings attributable to: | ||||||
| Shareholders in the parent company | 25 395 | -6 415 | 112 064 | 33 866 | 8 890 | |
| Non-controlling interests | 288 | - 1 | 398 | - 1 | 51 | |
| Earnings per share (SEK) ¹ | 0,11 | -0,04 | 0,50 | 0,21 | 0,05 | |
| Number of shares issued (000) | 225 033 | 164 333 | 225 033 | 164 333 | 225 033 |
¹ Taking into account the bonus element in the rights issue
Consolidated statement of comprehensive income (KSEK)
| April - June | January - June | Full Year | ||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2019 | ||
| NET PROFIT FOR THE PERIOD | 25 684 | -6 416 | 112 462 | 33 865 | 8 941 | |
| Other comprehensive income for the period, net of tax |
||||||
| Exchange rate differences | 26 740 | 15 303 | -110 137 | 68 606 | 41 971 | |
| TOTAL COMPREHENSIVE INCOME | 52 424 | 8 888 | 2 325 | 102 471 | 50 912 | |
| Total comprehensive income attributable to: | ||||||
| Shareholders in the parent company | 52 135 | 8 889 | 1 927 | 102 472 | 50 861 | |
| Non-controlling interests | 288 | - 1 | 398 | - 1 | 51 |
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Consolidated report over financial position (KSEK)
| 30 June | 31 December | ||
|---|---|---|---|
| 2020 | 2019 | 2019 | |
| Assets | |||
| Intangible Assets | 10 410 756 | 5 374 651 | 9 090 094 |
| Equipment | 18 258 | 17 756 | 20 626 |
| Utlization rights* | 56 564 | 10 880 | 9 407 |
| Deferred tax claim | 569 718 | 531 176 | 600 598 |
| Other financial assets | 1 730 | 288 | 2 745 |
| Other current assets | 1 004 489 | 544 839 | 926 253 |
| Cash and cash equivalents | 390 406 | 561 207 | 248 806 |
| TOTAL ASSETS | 12 451 921 | 7 040 798 | 10 898 530 |
| Sha reholders' equity a nd Lia bilities | |||
| Equity | 5 644 234 | 3 713 472 | 5 641 908 |
| Deferred tax | 451 031 | 139 454 | 469 384 |
| Long term debt | 2 149 847 | 1 850 549 | 1 251 119 |
| Current Liabilities | 4 206 810 | 1 337 322 | 3 536 119 |
| TOTAL EQUITY AND LIABILITIES | 12 451 921 | 7 040 798 | 10 898 530 |
* Signing of a new rental contract for offices in April 2020
Consolidated statement of changes in equity (KSEK)
| Attributable to shareholders of the parent company |
Share capital |
Other contributed capital |
Retained earnings/ accumulated losses |
Non-controlling interests |
Total equity |
|---|---|---|---|---|---|
| Amount at 1 January 2019 | 65 733 | 4 056 078 | -510 866 | 56 | 3 611 002 |
| Total earnings | 102 472 | -1 | 102 471 | ||
| Amount at 30 June 2019 | 65 733 | 4 056 078 | -408 394 | 55 | 3 713 472 |
| Amount at 1 January 2020 | 90 013 | 6 010 261 | -460 005 | 1 639 | 5 641 908 |
| Total earnings | 1 927 | 398 | 2 325 | ||
| Amount at 30 June 2020 | 90 013 | 6 010 261 | -458 077 | 2 037 | 5 644 234 |
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Consolidated statement of cash flows (KSEK)
| April - June | Ja nua ry - June | Full Yea r | |||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2019 | |
| Operating activities | |||||
| Operating income/ loss before financial items | 98 554 | 20 329 | 202 627 | 107 721 | 172 102 |
| Depreciation | 126 432 | 82 202 | 231 658 | 147 776 | 319 755 |
| Other items not affecting liquid assets | -264 | 20 734 | 0 | 20 734 | -207 |
| 224 721 | 123 265 | 434 285 | 276 231 | 491 650 | |
| Financial items received and paid | -54 693 | -18 185 | -96 697 | -47 997 | -134 033 |
| Income taxes paid | -7 823 | -515 | -28 024 | -990 | -6 093 |
| Cash flow from operating activities before changes in working capital |
162 206 | 104 565 | 309 564 | 227 244 | 351 525 |
| Changes in working capital | 8 830 | 7 244 | -148 292 | -23 634 | -244 681 |
| Cash flow from operating activities | 171 036 | 111 809 | 161 272 | 203 609 | 106 844 |
| Investing activities | |||||
| Net investments in company acquisitions | 0 | 0 | 0 | 0 | -2 456 377 |
| Net investments in intangible assets | -673 649 | -7 498 | -1 650 764 | -14 414 | -31 896 |
| Net investments in financial assets | - 6 | -152 | -678 | -152 | -806 |
| Net investments in property, plant and equipment | -2 142 | -147 | -6 617 | -1 679 | -2 651 |
| Sale of intangible fixed assets | 0 | 0 | 0 | 0 | 50 000 |
| Sale of property, plant and equipment | 0 | 0 | 0 | 0 | 20 |
| Cash flow from investing activities | -675 698 | -7 796 | -1 657 960 | -16 245 | -2 441 710 |
| Financing activities | |||||
| Net proceeds from share issues | 0 | 0 | 0 | 0 | 2 003 114 |
| Tansaction costs share issue | 0 | 0 | 0 | 0 | -23 999 |
| Borrowings | 750 000 | 0 | 1 775 000 | 0 | 3 500 000 |
| Repayment of loans | -124 947 | -41 152 | -131 634 | -42 297 | -3 294 469 |
| Cash flow from financing activities | 625 053 | -41 152 | 1 643 366 | -42 297 | 2 184 646 |
| Cash flow from the period | 120 391 | 62 861 | 146 678 | 145 067 | -150 220 |
| Cash at the beginning of the period | 277 727 | 493 569 | 248 806 | 398 580 | 398 580 |
| Exchange rate differences in cash | -7 712 | 4 777 | -5 078 | 17 560 | 446 |
| Cash at the end of the period | 390 406 | 561 207 | 390 406 | 561 207 | 248 806 |
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Parent company income statement summary (KSEK)
| April - June | January - June | Full Year | |||
|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | 2019 | |
| Net sales | 319 844 | 167 897 | 542 337 | 356 843 | 701 042 |
| Cost of sales | -88 462 | -73 705 | -194 732 | -156 258 | -324 074 |
| Gross profit | 231 382 | 94 192 | 347 605 | 200 585 | 376 969 |
| Operating costs | |||||
| Sales costs | -90 339 | -50 652 | -150 625 | -106 098 | -247 492 |
| Administration | -46 962 | -57 498 | -72 222 | -67 511 | -94 246 |
| Research and development | 0 | 0 | 0 | 0 | 0 |
| Other operating income/ expenses | -5 022 | - 5 | -4 726 | 325 | -1 192 |
| Total operating costs | -142 323 | -108 155 | -227 572 | -173 284 | -342 929 |
| Operating profit/ loss | 89 059 | -13 963 | 120 033 | 27 301 | 34 039 |
| Financial net | -37 669 | -28 412 | -37 026 | -61 986 | -123 724 |
| Profit/ loss before tax | 51 389 | -42 375 | 83 007 | -34 685 | -89 685 |
| Group contributions paid | 0 | 0 | 0 | 0 | 157 380 |
| Tax | -17 100 | 1 183 | -17 100 | -656 | -15 799 |
| Net profit | 34 289 | -41 192 | 65 907 | -35 341 | 51 895 |
Parent company balance sheet summary (KSEK)
| 30 June | 31 December | ||
|---|---|---|---|
| 2020 | 2019 | 2019 | |
| Assets | |||
| Intangible assets | 3 980 054 | 2 529 534 | 2 453 690 |
| Equipment | 26 | 1 108 | 1 097 |
| Utilization rights | 477 615 | 481 814 | 494 715 |
| Other financial assets | 167 996 | 354 054 | 304 223 |
| Participation in group companies | 5 141 950 | 2 563 162 | 5 128 404 |
| Other current assets | 1 658 442 | 276 019 | 1 682 486 |
| Cash and cash equivalents | 326 250 | 321 260 | 61 557 |
| TOTAL ASSETS | 11 752 331 | 6 526 951 | 10 126 173 |
| Shareholders' equity and liabilities | |||
| Equity | 5 596 377 | 3 464 770 | 5 530 470 |
| Deferred tax | 21 989 | 0 | 21 989 |
| Long term debt | 2 014 161 | 1 856 357 | 1 141 190 |
| Current liabilities | 4 119 805 | 1 205 823 | 3 432 525 |
| TOTAL EQUITY AND LIABILITIES | 11 752 331 | 6 526 951 | 10 126 173 |
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden [email protected] karopharma.com
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Note 1
Accounting and valuation principles
This report has been prepared in accordance with International Accounting Standards 34 regarding interim reports and international accounting standards IFRS as adopted by the EU. The accounting and valuation principles that have been used are unchanged compared to those that were applied in 2019 with the complementary description of changes described below.
During the second quarter Karo Pharma has continued the progress to integrate Karo Pharma and Trimb into one ERP system. One of the steps completed during Q2 was the integration of Karo Pharma's inventory into the new ERP system. This led to the use of an updated valuation model for the standard cost estimate that had a positive impact on the inventory value (a reduction of cost of goods sold) in the quarter of 12.4 MSEK. The effect is adjusted for in the alternative performance measure 'Adjusted EBITDA'. Non-IFRS measures are also presented in the report since they are considered to be important supplemental measures of the company´s performance. For further information about these measures and how they have been calculated, please see Note 4 below.
Regarding the Parent Company, this annual report has been prepared in accordance with the Annual Accounts Act and RFR 2 Accounting for Legal Entities. The accounting principles applied for the Parent Company differ from those applied for the Group solely with respect to the accounting of leasing agreements.
Note 2
Loss carryforwards
As of the balance sheet date December 31, 2019, Karo Pharma AB has unutilized loss carryforwards of MSEK 2 402, Karo Pharma AS of MSEK 724 and Trimb Group of MSEK 304. In light of the Group's expected profit development, the deficits are fully valued in the balance sheet.
Note 3
Net Asset Acquisition
On March 2, 2020, a product portfolio was acquired from Leo Pharma and all related intellectual property rights and assets, including required licenses and permits and existing inventories.
On May 8, 2020, a product portfolio was acquired from Johnson & Johnson and all related intellectual property rights and assets, including required licenses and permits and existing inventories.
Both acquisitions are described more in details in the section, significant events.
Note 4
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Definitions
In the report, a number of financial performance measures are referred to which are not defined by IFRS. These measures are used to help investors, management, and other stakeholders to analyse the company's operations. These measures may differ from measures with similar names at other companies. See also table on page 5.
Below are a number of financial performance measures and how these are used to analyse the company's goals. For further definitions, see the Annual Report 2019 under the heading definitions.
| Financial performance measure | Definition | Purpose |
|---|---|---|
| Equity ratio | Equity as a percentage of Total assets |
The equity ratio is relevant for investors and other stakeholders who want to assess the |
| company's financial stability and ability to manage long term. |
||
| Gross margin | Gross earnings as a percentage of Net sales. |
Gross earnings is used to show the company's margin before the impact of costs such as sales and administration costs and R & D. |
| Adjusted EBITDA | Operating earnings before depreciation excluding items affecting comparability |
The financial performance measure provides a picture of earnings generated from ongoing operations. |
| Adjusted EBITDA margin | Adjusted EBITDA in relation to Net sales |
The ratio is used to measure the profitability of ongoing operations. |
| Adjusted EBIT | Operating earnings excluding items affecting comparability |
The financial performance measure provides a picture of earnings generated from ongoing operations. |
Note 5
Fair value of financial instruments
The Group holds no derivative instruments or other financial instruments valued at fair value.
The fair value of long- and short-term interest-bearing liabilities is not expected to deviate materially from the recognized amount. For financial instruments recognized at amortized cost; accounts receivables, other receivables, cash and cash equivalents, accounts payable and other interest-free liabilities, the fair value is assessed to be consistent with the recognized amount.