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Karo Pharma AB Interim / Quarterly Report 2020
6166_10-k_2021-02-18_2ee9879a-0c81-42cb-b8f7-c4683775a30e.pdf
Interim / Quarterly Report
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[email protected] karopharma.com
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Year-end report 2020
Q4, October - December
- Net sales amounted to MSEK 721.2 (649.3). This corresponds to an increase of 11% for the period.
- The organic growth* during the fourth quarter was +1%. The currency impact in the quarter was -1% while the acquisitions of the product portfolios Proct® from Leo Pharma and Pevaryl® from Johnson & Johnson generated growth of 11%.
- EBIT (Operating Profit) amounted to MSEK -19.4 (8.2).
- Adjusted EBITDA* amounted to MSEK 164.8 (151.4) corresponding to growth of 9% excluding nonrecurring items related to acquired product portfolios totalling MSEK -53.4 (-43.7).
- The gross margin, defined as gross profit divided by net sales, was 49.3% (46.8%) for the quarter. The margin was affected positively by the acquired product portfolios.
- Cash flow from operating activities amounted to MSEK 104.8 (-10.8).
- Earnings per share was SEK -0.12 (-0.11), before and after dilution.
- During the period Karo Pharma divested the Hospital Supply business to J2L. The transaction closed on December 1, 2020. The net gain of the divestment was MSEK 5.2 and the cash flow effect MSEK 151.0.
* Alternative Financial Ratios (APM), note 4 for further information.
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Summary, January - December
- Net sales amounted to MSEK 2 882.9 (1 901.2). This corresponds to an increase of 52% for the period.
- The organic growth* for the year was 1%, currency impact -1% while 52% relates to the acquisition of Trimb in 2019 and the acquired product portfolios Proct® from Leo Pharma and Pevaryl® from Johnson & Johnson.
- EBIT (Operating Profit) amounted to MSEK 227.0 (172.1) corresponding to 32% growth.
- Adjusted EBITDA* amounted to MSEK 784.8 (599.1) corresponding to a 31% growth, excluding nonrecurring items of -63.1 MSEK (-107.2) related to the acquisitions.
- The gross margin, defined as gross profit divided by net sales, was 55.3% (51.8%) for the period. The margin was positively affected by product mix from the acquired portfolios and tech transfer projects related hereto where benefits from economy of scale has been achieved.
- Cash flow from operating activities amounted to MSEK 329.2 (106.8).
- Earnings per share was SEK 0.37 (0.05), before and after dilution.
- 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.
- 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.
- During the period Karo Pharma divested the three brands Suscard, Egazil and Digoxin to Evolan Pharma. The transaction closed on July 1, 2020 but the effect on the result for the period is not significant.
- During the period Karo Pharma divested the Hospital Supply business to J2L. The transaction closed on December 1, 2020. The net gain of the divestment was MSEK 5.2.
- Based on the authorization from the Annual General Meeting, Karo Pharma has in 2020 sold 525.301 own shares during the year to expand the company's financial flexibility at Nasdaq Stockholm.
- The Board of Directors proposes that no dividend is to be paid for 2020.
- At the end of the period, cash and cash equivalents and other current investments amounted to MSEK 570.4 (248.8) and net debt to MSEK 5 235.4 (5 028.9).
* 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-Dec, 2016 – 2020
Karo Pharma's 10 largest products Jan-Dec 2020 (MSEK)
| Products | 2020 | 2019 | Change |
|---|---|---|---|
| Selexid | 200,4 | 185,7 | 8% |
| Pevaryl 1, 3) | 161,8 | 18,8 | 762% |
| Paracet | 157,2 | 155,8 | 1% |
| Flux 1) | 147,9 | 38,8 | 281% |
| Burinex | 137,0 | 130,1 | 5% |
| Kaleorid | 135,2 | 126,3 | 7% |
| Locobase | 132,8 | 130,7 | 2% |
| Multi-Gyn 1) | 121,6 | 17,5 | 596% |
| Scheriproct 2) | 120,0 | 0,0 | n/ a |
| Decubal 1) | 88,3 | 24,7 | 258% |
| Other Products | 1 483,6 | 1 072,7 | 38% |
| Total Sales | 2 882,9 | 1 901,2 | 52% |
1) Sales of prdoucts from the Trimb portfolio started 2019-09-12 2) Sales of products from the Leo portfolio started 2020-03-02 3) Sales of products from the Pevaryl portfolio started 2020-05-08 Turnover by category Jan-Dec 2020
RX – Prescription drugs OTC – Over the counter products (non-prescription)
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden [email protected] karopharma.com
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Comments by CEO Christoffer Lorenzen
Karo Pharma realized net sales growth of 11% in Q4, which was mainly driven by the acquisitions of the product portfolios Proct® (March 2020) and Pevaryl® (May 2020). The business saw a 1% organic growth in the quarter, which indicates that the Q1 stock-building among wholesales, pharmacies and consumers largely reversed in Q2 and Q3 and that underlying business momentum is improving.
For the full year, net sales grew 52%, mainly driven by acquisitions. The business saw 1% organic growth for the full year. Performance was strong in new markets where we repatriated sales in 2020, whereas core markets such as Sweden saw weaker performance.
In terms of profitability, the EBITDA margin in Q4 was 15.4%, which was lower than the earlier quarters in 2020 but follows the pattern observed in 2019. For the full year, the EBITDA margin was 25.0% (27.2% when excluding non-recurring items), implying an EBITDA growth of 47% versus 2019. The EBITDA margin was slightly lower than the previous year due to investments into our commercial organization and our scalable operating platform, which we will leverage as we continue our expansion journey.
Karo Pharma continues to demonstrate resilience and robustness. In terms of our commercial operations, we have increased our investments into the country sales teams as well to strengthen our digital capabilities. We expect to see pay-back from these investments in 2021. We have a large portfolio of brands but are prioritizing our efforts and investments towards 10-15 brands with the strongest market position and best growth outlook.
Supply chain performance is also solid, and we have strengthened the dialogue and interaction with our key partners over the year. We are consolidating our supplier base to reduce complexity, leverage scale benefits and build best-in-class relationships. We continue to progress the tech transfer projects related to our acquisitions and are running gross margin improvement programs across the entire portfolio. These initiatives will help us improve gross margins and will also yield improvements in our inventory management in the year to come.
Finally, we have made progress regarding business simplification and business integrations. The sale of the hospital supplies business streamlines our organization and focuses our attention on pharmacy and retail channels. Further, we completed the integration of Trimb and ensuring alignment of systems and structures. Similarly, the Proct® portfolio is fully integrated and we are progressing to plan concerning the Pevaryl® business.
A few weeks ago, we announced the acquisition of a portfolio of OTC products from Teva Pharmaceuticals. The transaction strengthens our commercial position simplifies our day-to-day execution and provides us control over an exciting primarily Nordic group of brands. We plan to fund the transaction entirely from existing means, including the cash generated from the sell-down of Karo treasury shares, which illustrates the power of Karo's expansion model.
Christoffer Lorenzen, CEO
Key financial data (MSEK)
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| Oct ober - December | Ja nua ry - December | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Net Sales | 721,2 | 649,3 | 2 882,9 | 1 901,2 |
| Gross Profit | 355,8 | 304,1 | 1 595,4 | 984,0 |
| Operating Cost | -375,2 | -295,9 | -1 368,3 | -811,9 |
| EBITDA | 111,4 | 107,6 | 721,7 | 491,9 |
| EBITDA margin % | 15,4% | 16,6% | 25,0% | 25,9% |
| Profit before tax | -78,4 | -28,9 | 57,2 | 16,6 |
| EpS, SEK | -0,12 | -0,11 | 0,37 | 0,05 |
| Cash Flow from operating | 104,8 | -10,8 | 329,2 | 106,8 |
| Cash | 570,4 | 248,8 | 570,4 | 248,8 |
Sales and earnings
| Oct ober - December | Ja nua ry - December | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Net sales | 721,2 | 649,3 | 2 882,9 | 1 901,2 |
| Cost of goods sold | -365,4 | -345,2 | -1 287,5 | -917,2 |
| Gross Profit | 355,8 | 304,1 | 1 595,4 | 984,0 |
| Cost before amortization and depreciation |
-244,4 | -196,4 | -873,7 | -492,2 |
| EBITDA | 111,4 | 107,6 | 721,7 | 491,9 |
| Non-recurring costs Adjusted EBITDA |
53,4 164,8 |
43,7 151,4 |
63,1 784,8 |
107,2 599,1 |
| Amoritzation and depreciation related operating costs |
-130,8 | -99,5 | -494,6 | -319,8 |
| Adjusted EBIT | 34,0 | 51,9 | 290,1 | 279,3 |
Net sales for 2020 increased to MSEK 2 882.9 (1 901.2). This corresponds to an increase of 52% for the period. Net sales for the fourth quarter were MSEK 721.2 (649.3) corresponding to an increase of 11%.
Cost of goods sold amounted to MSEK 1 287.5 (917.2) January-December 2020. The gross margin was 55.3% (51.8%) during the same period. The gross margin for the fourth quarter was 49.3% (46.8%) and has been positively impacted by a changed product mix from acquisitions as well as strategic tech transfer projects and resulting reduction of the cost of goods.
Operating costs including depreciation and amortization, other operating income and other operating expenses amounted to MSEK 1 368.3 (811.9) during the year, an increase of 69%. Sales costs increased to MSEK 955.2 (600.3) 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, Germany and Italy, and the cost related to the acquisition of Trimb. Administration costs amounted to MSEK 395.9 (188.4). The increase is mainly due to cost related to the acquisition of Trimb and non-recurring costs to consultants and external advisors related to the acquired product portfolios totaling MSEK 63.
The adjusted EBITDA amounted to MSEK 784.8 (599.1) for the year, equivalent to a 31% increase.
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Earnings per share was 0.37 (0.05) SEK before and after dilution for the period January-December.
Cash flow and financial position
Cash flow from operating activities during the year was MSEK 329.2 (106.8) and MSEK 104.8 (-10.8) in the quarter. Group cash and cash equivalents amounted to MSEK 570.4 (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 reserves are adequate.
On December 31, total assets amounted to MSEK 12 517.5 (10 898.5 as of December 31, 2019), whereof intangible assets accounted for MSEK 10 029.5 (9 090.1 as of December 31, 2019).
Group equity amounted to MSEK 5 638.5 (5 641.9 as of December 31, 2019). The equity ratio was 45.0% (51.8% as of December 31, 2019).
Parent company
The Parent company's net sales for the year amounted to MSEK 1 149.4 (701.0). Profit after financial items amounted to MSEK 40.3 (-89.7). The growth comes from acquired product portfolios. The parent company's cash, cash equivalents and other current investments amounted to MSEK 103.4 at the end of the period (61.6 as of December 31, 2019).
Auditors review
The year-end report has not been subject to auditor's review.
Board proposal for dividend
The Board of Directors proposes that no dividend is to be paid for 2020.
Significant events during the reporting period
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 for MEUR 90. The expected annual turnover is around MSEK 300.
April 1, 2020 Karo Pharma acquired Hygis SA, a Swiss distributing company with exclusive distribution rights to Karo's brands MultiGyn® and MultiMam® in the Swiss market. The acquisition gives Karo Pharma control over
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[email protected] karopharma.com
the direct sales of these brands and Karo Pharma expects to reach annual net sales related to the two brands of MSEK 14 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 MEUR 58. 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 expected annual turnover is around MSEK 200.
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 MSEK 13.
December 1, 2020 Karo Pharma AB divested its Hospital Supply business, Swereco AB, to J2L Holding AB. Karo Pharma's commercial focus is on consumer healthcare and its range of brands within over-the-counter medicines, self-care products and prescription medicines, which are sold in pharmacy and mass-market channels. Consequently, the Hospital Supply business, which provides products for rehabilitation, intensive care, diabetes treatment and surgery under the Swereco® brand and several in-licensed brands directly to hospitals and regions, was outside of the core business. The Hospital Supply business generated MSEK 118 in revenues in 2019 and J2L has acquired all shares in Swereco for MSEK 150 on a cash and debt free basis. The net gain on the divestment amounted to MSEK 5 and the cash flow effect was MSEK 151.
Significant events after period end
Karo Pharma Aktiebolag ("Karo") announced February 3, 2021 the acquisition of an OTC brand portfolio from Teva Pharmaceuticals (Teva) for a total consideration of MEUR 84 and is expected to close on April 1, 2021.
The transaction transfers ownership of the brand portfolio, comprised of Flux®, Decubal®, Lactocare®, Apobase®, Dailycare® and Fludent® from Teva to Karo. The brands generated sales just short of MSEK 350 in 2020 on a global basis. The majority is generated in the Nordic markets, including Scandinavia, where the brands already are distributed and marketed by Karo under a 7-year license agreement that was signed in the spring of 2019.
The transaction adds around MSEK 40 in net sales from new markets outside of Scandinavia of which approx. 80% is in Finland. The transaction simplifies the business set-up and provides Karo with control of the assets, thereby paving the way for long-term optimization of the brands and the value chain.
In terms of financial impact Karo will realize direct savings in year 1 of just under MSEK 50 as costs to Teva are eliminated. Karo already commercializes the products in Scandinavia and has active relationships with the contract manufacturers that supply the brands. Hence, limited added costs and personnel are required as a direct result of the transaction.
The acquisition is a pure asset deal. No personnel or manufacturing sites are included, which limits commercial as well as the technology transfer risks. The transaction is financed with existing cash and requires no additional credit facilities outside the already existing such.
COVID-19
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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During the first quarter of 2020 Karo Pharma recorded significant revenue growth from certain product categories mainly as a result of stock build up 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 rest of the year the brands and products, which were impacted positively by stock build up during the first quarter have been normalized in line with expectations. This negatively impacted organic growth for Q2-Q4. Brands and products that were not impacted by stock fluctuations saw different impact. Some brands have been positively impacted (such as DAX and Viruseptin) whilst others have been negatively impacted (such as Mabs and Mollipect). We see negative impact from reduced traffic in physical stores notably amongst the 65+ age segment. We also see negative impact from reduced activity at hospitals and in elderly care net of COVID-19 efforts. Finally, we see a reduced demand for cold and cough medicines as non-COVID-19 infection rates have been low compared to other years.
We see a shift in consumption patterns and more activity and sales running through online channels, including specialty e-pharmacies, the e-business share of omni-channel pharmacies and e-commerce platforms. We are also observing growth in OTC and CHC sales in food retailers and convenience channels.
The impact on supply chain and delivery performance has been limited. For some brands and products, we have faced out-of-stocks as our supply chain was unable to adjust fast enough to an increase in demand and changed consumption patterns. However, we have taken steps to strengthen our supply situation and are better positioned for the second wave of COVID-19 than the first.
The impact on employee productivity has so far been limited and we have been able to run integration programs and efficiency projects roughly in line with pre-COVID-19 plans and timelines.
The long-term consequences of a general economic downturn in Europe may have a negative impact on growth and profitability into Q1 and Q2 of 2021.
Karo Pharma management therefore monitors the situation and regularly updates 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 Karo Pharma's assets should be impaired. We have carefully considered the effects of the COVID-19 outbreak and concluded that there are no write-downs or value adjustments required due to COVID-19.
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden [email protected] karopharma.com
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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.
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Financial Calendar
| Interim report Jan-Mar 2021 | Apr 21, 2021 | |
|---|---|---|
| Interim report Jan-Jun 2021 | Jul 22, 2021 | |
| Interim report Jan-Sep 2021 | Oct 28, 2021 |
The annual report for 2020 is planned to be published in week 13, 2021 and the Annual General Meeting takes place on April 21, 2021.
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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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 February 18, 2021
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. The information was submitted for publication, through the agency of the contact person set out above, on February 18, 2021 at 14.00 CET.
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Consolidated income statement summary (KSEK)
| October - December | Ja nua ry - December | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Net sales | 721 230 | 649 259 | 2 882 867 | 1 901 196 |
| Cost of goods sold | -365 418 | -345 162 | -1 287 516 | -917 165 |
| Gross Profit | 355 812 | 304 097 | 1 595 351 | 984 030 |
| Operating cost | ||||
| Distribution cost | -238 546 | -229 491 | -955 235 | -600 264 |
| Administration | -127 187 | -72 971 | -395 889 | -188 361 |
| Other operating income/ expenses | -9 431 | 6 520 | -17 209 | -23 304 |
| Total operating costs | -375 164 | -295 941 | -1 368 333 | -811 928 |
| Operating Profit | -19 352 | 8 156 | 227 018 | 172 102 |
| Financial Net | -58 973 | -37 057 | -169 863 | -155 512 |
| Profit/ loss before tax | -78 325 | -28 901 | 57 154 | 16 590 |
| Tax | 51 064 | 5 785 | 25 751 | -7 649 |
| Net profit/ loss | -27 260 | -23 116 | 82 905 | 8 941 |
| Net earnings attributable to: | ||||
| Shareholders in the parent company | -27 260 | -23 172 | 82 049 | 8 890 |
| Non-controlling interests | 0 | 55 | 856 | 51 |
| Earnings per share (SEK) ¹ | -0,12 | -0,11 | 0,37 | 0,05 |
| Number of shares issued (000) | 223 094 | 222 568 | 223 094 | 222 568 |
| Number of shares in own custody (000) | 1 940 | 2 465 | 1 940 | 2 465 |
¹ Taking into account the bonus element in the rights issue
Consolidated statement of comprehensive income (KSEK)
| October - December | Ja nua ry - December | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| NET PROFIT FOR THE PERIOD | -27 260 | -23 116 | 82 905 | 8 941 |
| Other comprehensive income for the period, | ||||
| net of tax | ||||
| Exchange rate differences | 4 370 | -13 084 | -117 256 | 41 971 |
| TOTAL COMPREHENSIVE INCOME | -22 890 | -36 201 | -34 351 | 50 912 |
| Total comprehensive income attributable | ||||
| to: | ||||
| Shareholders in the parent company | -22 889 | -36 311 | -35 207 | 50 861 |
| Non-controlling interests | 0 | 55 | 856 | 51 |
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Consolidated report over financial position summary (KSEK)
| 31 December | |||
|---|---|---|---|
| 2020 | 2019 | ||
| Assets | |||
| Intangible Assets | 10 029 478 | 9 090 094 | |
| Equipment | 19 041 | 20 626 | |
| Utlization rights* | 50 423 | 9 407 | |
| Deferred tax claim | 685 323 | 600 598 | |
| Other financial assets | 2 185 | 2 745 | |
| Other current assets | 1 160 657 | 926 253 | |
| Cash and cash equivalents | 570 391 | 248 806 | |
| TOTAL ASSETS | 12 517 499 | 10 898 530 | |
| Sha reholders' equity a nd Lia bilities | |||
| Equity | 5 638 490 | 5 641 908 | |
| Deferred tax | 527 192 | 469 384 | |
| Long term debt | 1 130 350 | 1 251 119 | |
| Current Liabilities | 5 221 467 | 3 536 119 | |
| TOTAL EQUITY AND LIABILITIES | 12 517 499 | 10 898 530 |
* Signing of a new rental contract for offices in April 2020
Consolidated statement of changes in equity (KSEK)
| O ther | Retained earnings/ |
||||
|---|---|---|---|---|---|
| Attributable to shareholders of the parent | Share | contributed | accumulated | Non-controlling | |
| company Amount at 1 January 2019 |
capital 65 733 |
capital 4 056 078 |
losses -510 866 |
interests 56 |
Total equity 3 611 002 |
| Total earnings Share buy-backs |
50 861 | 51 1 531 |
50 912 1 531 |
||
| Rights issue after transaction costs and deferred taxes |
24 280 | 1 954 183 | 1 978 463 | ||
| Amount at 31 December 2019 | 90 013 | 6 010 261 | -460 005 | 1 639 | 5 641 908 |
| Amount at 1 January 2020 | 90 013 | 6 010 261 | -460 005 | 1 639 | 5 641 908 |
| Total earnings | -35 207 | 856 | -34 351 | ||
| Shareholder changes in the group | -65 | -54 | -118 | ||
| Share sell-out | 31 051 | 31 051 | |||
| Amount at 31 December 2020 | 90 013 | 6 010 261 | -464 225 | 2 442 | 5 638 490 |
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Consolidated statement of cash flows summary (KSEK)
| O ctober - December | January - December | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Operating activities | ||||
| Operating income/ loss before financial items | -19 352 | 8 156 | 227 018 | 172 102 |
| Depreciation | 131 755 | 99 493 | 494 528 | 319 755 |
| Other items not affecting liquid assets | 0 | -16 332 | 0 | -207 |
| 112 404 | 91 318 | 721 546 | 491 650 | |
| Financial items received and paid | -38 796 | -35 749 | -181 089 | -134 033 |
| Income taxes paid | -8 193 | -4 698 | -44 513 | -6 093 |
| Cash flow from operating activities before changes in working capital |
65 415 | 50 871 | 495 945 | 351 525 |
| Changes in working capital | 39 349 | -61 720 | -166 722 | -244 681 |
| Cash flow from operating activities | 104 764 | -10 850 | 329 223 | 106 844 |
| Investing activities | ||||
| Net investments in company acquisitions | 0 | 0 | 0 | -2 456 377 |
| Net investments in intangible assets | -25 862 | -10 324 | -1 685 255 | -31 896 |
| Net investments in financial assets | 0 | -223 | -1 199 | -806 |
| Other changes in financial assets | 269 | -37 | 90 | 0 |
| Net investments in property, plant and equipment | -5 473 | -710 | -21 421 | -2 651 |
| Divestment of company | 150 969 | 0 | 150 969 | 0 |
| Sale of intangible fixed assets | 0 | 50 000 | 12 500 | 50 000 |
| Sale of property, plant and equipment | 0 | 0 | 0 | 20 |
| Cash flow from investing activities | 119 903 | 38 706 | -1 544 317 | -2 441 710 |
| Financing activities | ||||
| Net proceeds from share issues | 0 | 2 003 114 | 0 | 2 003 114 |
| Tansaction costs share issue | 0 | -23 999 | 0 | -23 999 |
| Sale of own shares | 31 051 | 0 | 31 051 | 0 |
| Borrowings | 0 | 0 | 1 775 000 | 3 500 000 |
| Repayment of loans | -46 995 | -1 978 425 | -262 415 | -3 294 469 |
| Minority transactions | -118 | 0 | -118 | 0 |
| Cash flow from financing activities | -16 063 | 690 | 1 543 517 | 2 184 646 |
| Cash flow from the period | 208 604 | 28 546 | 328 424 | -150 220 |
| Cash at the beginning of the period | 365 330 | 225 017 | 248 806 | 398 580 |
| Exchange rate differences in cash | -3 543 | -4 757 | -6 839 | 446 |
| Cash at the end of the period | 570 391 | 248 806 | 570 391 | 248 806 |
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Parent company income statement summary (KSEK)
| Oct ober - December | Ja nua ry - December | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| Net sales | 343 727 | 177 191 | 1 149 409 | 701 042 |
| Cost of sales | -143 272 | -95 576 | -426 642 | -324 074 |
| Gross profit | 200 455 | 81 615 | 722 768 | 376 969 |
| Operating costs | ||||
| Sales costs | -86 005 | -91 098 | -322 564 | -247 492 |
| Administration | -109 430 | -26 795 | -236 736 | -94 246 |
| Research and development | 0 | 0 | 0 | 0 |
| Other operating income/ expenses | -10 900 | -1 779 | -16 080 | -1 192 |
| Total operating costs | -206 335 | -119 672 | -575 381 | -342 929 |
| Operating profit/ loss | -5 880 | -38 057 | 147 387 | 34 039 |
| Financial net | -28 820 | -20 500 | -107 087 | -123 724 |
| Profit/ loss before tax | -34 699 | -58 556 | 40 300 | -89 685 |
| Group contributions paid | 0 | 129 110 | 0 | 157 380 |
| Tax | 8 845 | -15 471 | -6 655 | -15 799 |
| Net profit | -25 855 | 55 083 | 33 645 | 51 895 |
Parent company statement of comprehensive income (KSEK)
| October - December | January - December | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| NET PROFIT FOR THE PERIOD | -25 855 | 55 083 | 33 645 | 51 895 |
| Other comprehensive income for the | ||||
| period, net of tax | 0 | 0 | 0 | 0 |
| Exchange rate differences | 0 | 0 | 0 | 0 |
| TOTAL COMPREHENSIVE INCOME | -6 407 | 32 154 | 59 500 | -3 187 |
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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Parent company balance sheet summary (KSEK)
| 31 December | |||
|---|---|---|---|
| 2020 | 2019 | ||
| Asset s | |||
| Intangible assets | 3 853 638 | 2 453 690 | |
| Equipment | 8 293 | 1 097 | |
| Utilization rights | 488 060 | 494 715 | |
| Other financial assets | 1 139 428 | 304 223 | |
| Participation in group companies | 5 231 948 | 5 128 404 | |
| Other current assets | 716 233 | 1 682 486 | |
| Cash and cash equivalents | 103 410 | 61 557 | |
| TOTAL ASSETS | 11 541 010 | 10 126 173 | |
| Sha rehold ers' eq uit y a nd lia b ilit ies | |||
| Equity | 5 595 166 | 5 530 470 | |
| Deferred tax | 21 989 | 21 989 | |
| Long term debt | 1 010 712 | 1 141 190 | |
| Current liabilities | 4 913 143 | 3 432 525 | |
| TOTAL EQUITY AN D LIABILITIES | 11 541 010 | 10 126 174 |
[email protected] karopharma.com
Visiting address: Klara Norra Kyrkogata 33 111 22 Stockholm, Sweden
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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 the annual report 2019 with the complementary description of changes described below.
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 interim 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.
The definition of business combinations in IFRS 3 'Business Combinations' has been changed and applies from January 1, 2020. The amendments clarify that to be considered a business, an integrated set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. It also makes clear that this must be based on what has been acquired in its current state and condition and not what could be replaced by a market participant. Further, the amendments introduced an optional concentration test to perform a simplified assessment, to determine whether an acquired asset is or is not a business combination. The changes have not impacted the interim report.
Note 2
Loss carryforwards
As of the balance sheet date December 31, 2020, Karo Pharma AB has unutilized loss carryforwards of MSEK 2 369, Trimb Sweden MSEK 263, Karo Pharma AS MSEK 574, Trimb Norway MSEK 4 and Trimb Netherlands MSEK 74 with a total for the group of MSEK 3 283. In light of the Group's expected profit development, the deficits are fully valued in the balance sheet (MSEK 685).
Note 3
Net Asset Acquisition
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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 April 1, 2020, Hygis SA a Swiss distributor with exclusive rights to Karo's brands MultiGyn and MultiMam was acquired.
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.
On July 1, 2020 three brands were divested to Evolan (Digoxin, Egazil and Suscard).
On December 1, 2020, the Hospital Supply business was divested to J2L Holding AB.
Note 4
Definitions
During 2020 Karo Pharma has continued the progress to integrate the acquisitions in Karo Pharma. The legal fees, cost for re-organization and cost of external advisor related to acquisitions and divestments are adjusted for in the alternative performance measures like 'Adjusted EBITDA'.
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.
| Fina ncia l performa nce mea sure | Definition | Purpose |
|---|---|---|
| Orga nic growth | Growth in Net Sales coming from Volume, price and mix effects presented without structural effects from M&A |
The organic growth shows underlying business performance without acquired or divested business and currency impact. |
| Equity ra tio | 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 ma rgin | 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 shows the underlying earnings from operations, adjusted for effect of depreciation and items that affect comparisons over time. It provides a picture of earnings generated from ongoing operations. |
| Adjusted EBITDA ma rgin | Adjusted EBITDA in relation to Net sales |
The ratio is used to measure the profitability of ongoing operations. |
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[email protected] karopharma.com
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.
Note 6
Related party transactions
Apart from transactions such as remuneration and salary to the Board of Directors and senior executives, there have been no related party transactions.