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Probi — Interim / Quarterly Report 2018
Feb 13, 2019
3099_10-k_2019-02-13_a62eb8ad-f278-4f96-a6ff-7035b00e167c.pdf
Interim / Quarterly Report
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Year-end report January-December 2018
Growth in fourth quarter closes the year
Significant events in the fourth quarter
- Fourth-quarter net sales rose to MSEK 163, up 36%, or MSEK 43 compared with the year-on-year period, due to continued recovery from a customer-specific destocking programme
- First commercial order after the introduction of Probi's product to improve bone health in postmenopausal women – Probi® Osteo
- Promising initial results from clinical trials to evaluate the effects of Probi's strains on physical performance and acute stress
- Tom Rönnlund appointed new CEO as of January 1, 2019 and Henrik Lundkvist new CFO as of January 7, 2019
- Board of Directors propose that the 2019 Annual General Meeting resolves that no dividends will be paid for the 2018 financial year
| Full-year | Full-year | ||||
|---|---|---|---|---|---|
| MSEK | 2018 | 2017 | |||
| Net sales | 604.1 | 612.2 | |||
| Net sales growth, constant currency, % | -2.2% | 38.2% | |||
| Gross margin, % | 46.0% | 45.4% | |||
| EBITDA | 154.9 | 157.3 | |||
| EBITDA margin, % | 25.6% | 25.7% | |||
| Operating profit (EBIT) | 101.1 | 104.1 | |||
| Net income | 76.3 | 69.1 | |||
| Earnings per share before and after dilution, SEK | 6.69 | 6.06 | |||
| Share price on closing day, SEK | 360.00 | 340.00 | |||
| Market cap on closing day | 4,101.9 | 3,874.0 |
Financial overview
See note 5 for definitions of ratios not defined according to IFRS
Invitation to teleconference Contact
Date: 13 February 2019 Tom Rönnlund, CEO: Time: 10:00 a.m. Phone: +46 8 56 64 27 07 Participants from Probi: Tom Rönnlund, CEO: Henrik Lundkvist, CFO
Phone: +46 (0)46 286 89 40 E-mail: [email protected] Henrik Lundkvist, CFO: Phone: +46 (0)46 286 89 41 E-mail: [email protected]
The presentation is available at www.probi.se and www.financialhearings.com
About Probi
Probi AB is a Swedish publicly traded bioengineering company. Probi's vision is to help people live healthier lives by delivering effective and well-documented probiotics, with proven health benefits based on scientific research.
Founded by scientists in Sweden in 1991, Probi is a multinational company, active in more than 40 markets around the world and holding over 400 patents worldwide. In 2018, Probi had net sales of MSEK 604. The Probi share is listed on Nasdaq Stockholm, Mid Cap. Probi had about 4,000 shareholders on December 31, 2018.
probi.com
This information is information that Probi 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 13 February 2019 at 8:00 a.m. CET. This a translation of the Swedish version of the interim report. When in doubt, the Swedish wording prevails.
Probi's customers
CEO comments
Sales growth of 36% in the fourth quarter was driven by recovery from a customer's destocking programme
In line with expectations, Probi ended the year on a high note with profitable year-on-year growth in the fourth quarter. During the quarter, the company generated net sales of MSEK 163, up 36% (31% adjusted for currency effects) year-on-year, and EBITDA of 27%. 2018 was a year of transition for Probi, but we are confident that the expansion of our global sales organisation, new product launches and promising research findings have made us well-positioned for the future. Our goal is to position Probi as a growth company and to grow faster than the global probiotics market. The company's profitability remains favourable and the full-year EBITDA margin of 26% is in line with the year-on-year period, and well above our long-term objective.
New management with a focus on profitable growth and Probi's position as a researchdriven innovation leader
Probi is well-positioned in its market segment in the probiotics industry with an innovative and well-documented product portfolio, global market coverage and a strong financial position. The company is equipped for continued expansion – through both organic growth and strategic partnerships and acquisitions – in the growing global probiotics market. Based on our product portfolio built on innovative research and a continued focus on our customers' needs, we intend to review our strategy for the future. Trends in the global probiotics market will determine the activities and plans that are introduced to further strengthen Probi's ability to continue delivering in keeping with our leading slogan: First in Probiotics.
I am convinced that the combination of our employees and our research is the key to realising Probi's potential as a global leader in the probiotics market.
Tom Rönnlund, CEO
Probi offers probiotic expertise and partnership including research & development, manufacturing, product concepts and supply of finished products for customers within the consumer healthcare and food industry. Probi's manufacturing is GMP-certified and produces proven and effective probiotics in custom-made formats with valueadding delivery technologies.
Key developments in the Group
The US probiotics market remains focused on launches of new innovative and improved products, combined with expansion outside the traditionally dominant area of digestive health. Probi continues to see rising demand for bulk and concentrate products, with a growing number of customers who want to expand their product portfolios. Probi's recently launched and innovative product concept Probi® Osteo received a very positive response from one of the largest industry trade shows in the US, SupplySide West, in Las Vegas last November. Probi® Osteo is Probi's concept for the prevention of bone loss and osteoporosis in postmenopausal women to meet the growing demand for women's healthcare products in the global market.
In the fourth quarter, a large number of new products were launched in various sales channels across the US, including products based on Probi FerroSorb® for increased iron uptake and Probi® Osteo. This was the first commercial order after the launch of Probi® Osteo. All of the new products launched in the fourth quarter contained bacterial strains from our product lines of either Probi Select™ or Probi Premium™, driven by a market trend towards the use of more well-documented probiotic products.
To capitalise on Probi's position in the North American market and the growing demand from our customers for innovative products, Probi expanded its sales organisation in the US. We see an opportunity to strengthen our geographic reach and position ourselves more clearly in various sales channels by establishing a sales team with greater geographic spread throughout the region.
The fast-growing Chinese and South-east Asian markets are a key strategic focus area for Probi. In 2018, the company's sales in this region rose 43% year-on-year. In the fourth quarter of 2018, Probi strengthened its sales organisation with additional employees in China and Singapore to increase the company's local presence and capture new business opportunities across the region.
In the fourth quarter, new products based on Probi Defendum® and Probi Select™ were launched in China by a leading Chinese company specialised in products for mothers and children under a recently established Scandinavian brand. Probi is a strategic partner and scientific adviser to the company. The collaboration is one example of the growing number of major Chinese companies that are establishing local offices in Europe with the aim of identifying European trends, technologies and partners with commercial potential for the Chinese and other Asian markets.
Business development activities aimed at expanding and diversifying the customer base in the EMEA region led to several new agreements in key markets. The market launch of Probi's products in digestive health and immune function was initiated in Turkey by a leading local pharmaceutical company in the fourth quarter. Probi also concluded a new agreement with a German distributor for the marketing of Probi Select™ and Probi LiveBac® to consumer product companies in key European markets. In 2018, the EMEA region grew 9% year-on-year.
In November, Probi participated in Food Matters Live in the UK, a cross-sector conference focused on the future of food, drink and sustainable nutrition. Love Your Inner Self, a probiotic yoghurt containing Probi's LP299V® was presented at the event. The product will be tested in selected regions across the UK in early 2019.
Research and development
Probi's ambitious research programme continues to generate promising results, which have strengthened our product offerings and benefited the launch of products in new areas of health. Several clinical trials completed during the year are expected to further contribute to a continued solid and innovative product portfolio.
Two clinical trials were completed in the fourth quarter. Both led to promising findings that support continued development for new indications. The first trial, conducted in partnership with a commercial partner, evaluated the effects of Probi's probiotic strains on physical performance. The second trial, conducted in partnership with researchers at Lund University, Sweden, studied the effects of Probi's probiotics on acute stress.
One of Probi's most important achievements in 2018 was the completion and successful outcome of the clinical trial in postmenopausal women, which confirmed that probiotics can reduce bone loss after menopause. The randomised, double-blind, placebo-controlled trial comprised 250 postmenopausal women who underwent therapy for a period of 12 months. The probiotics used in the trial contain a unique combination of three of Probi's proprietary strains. The findings show that the subjects in the placebo group exhibited a statistically significant decrease in bone density during the trial period, while the subjects treated with probiotics did not experience any decrease in bone density. The findings attracted a great deal of interest when they were presented at the Annual General Meeting of the American Society for Bone and Mineral Research (ASBMR) in Montreal.
Another important milestone in 2018 was the development of a new product concept based on the positive results for Probi's probiotics in children with a genetic susceptibility for celiac disease. The trial was completed in 2017, and the concept received a Nutraingredients Award in the Nutrition Research Project category at the VitaFoods Europe conference in May 2018. A follow-up trial to assess whether a gluten-free diet, or intake of probiotics, early in life can prevent celiac disease has now commenced in newborns at increased risk of developing the disease.
In line with Probi's focus on innovation and research, the company continuously invests in partnerships with prestigious academic research teams. The ongoing partnerships with Professor Michiel Kleerebezem from the Host-Microbe Interactomics Group at Wageningen University in the Netherlands, and with Dr Karen Scott from the Rowett Institute at the University of Aberdeen in Scotland, are proceeding as planned and will enter their next planned phases in 2019.
Probi is also collaborating with Diana, a division of the Symrise Group, on the launch of a research programme with Laval University in Québec, Canada, and the National Science and Engineering Research Council (NSERC) to study the effects of polyphenol and probiotic combinations on gastrointestinal bacterial flora (microbiota) and associated intestinal markers. The aim of this five-year programme is to develop synergistic blends of prebiotic polyphenols and probiotic bacteria in order to modulate the gut flora and contribute to positive intestinal development.
As part of Probi's investments in more exploratory research, potentially new areas of health for probiotics are being investigated in studies initiated by external researchers. As part of this process, collaborations were recently initiated with the Industrial Research Center of Personalized Medicine in Diabetes at Lund University in Sweden and the Children's Oncology Group in the US.
Sales development
Current quarter
In the fourth quarter of 2018, Probi's net sales totalled MSEK 162.9 (119.4), up MSEK 43.5 or 36% yearon-year, mainly attributable to the conclusion of a customer-specific destocking programme by one of Probi's major customers in 2017. Adjusted for changes in exchange rates in 2018, net sales for the fourth quarter were MSEK 37.0 higher year-on-year, corresponding to net sales of 31%.
Full-year
Probi's net sales for the full-year amounted to MSEK 604.1 (612.2). The total decline was MSEK 8.1 or 1% year-on-year. At the preceding year's exchange rates, net sales for the full-year would have been MSEK 13.6 lower year-on-year, corresponding to a 2% decline. In 2018, a destocking programme by one of Probi's largest customers in North America had a negative impact of MSEK 15.4 on net sales.
Net sales by segment
Probi's business operations are organised in two business segments: Consumer Healthcare (CHC) and Functional Food (FF). Consumer Healthcare develops, manufactures and markets Probi's probiotics to pharmaceutical and healthcare companies and customers specialised in probiotics and self-care products. Revenue is derived from sales of goods ranging from raw materials in bulk to finished products in consumer packaging. The Functional Food segment develops food containing Probi's probiotics. Development takes place in partnership with leading food companies. Revenue in Functional Food mainly consists of royalties based on partner-generated sales. No business transactions are conducted between the two segments.
| FY 2018 | FY 2017 | |||||
|---|---|---|---|---|---|---|
| KSEK | CHC | FF | Total | CHC | FF | Total |
| Net sales | 566,797 | 37,320 | 604,117 | 578,011 | 34,233 | 612,244 |
| Operating expenses | -479,276 | -23,725 | -503,001 | -484,775 | -23,382 | -508,157 |
| Operating profit (EBIT) | 87,521 | 13,595 | 101,116 | 93,236 | 10,851 | 104,087 |
| Financial net | — | — | -2,556 | — | — | -11,762 |
| Earnings before income taxes | — | — | 98,560 | — | — | 92,325 |
For the full-year, net sales for Consumer Healthcare declined MSEK 11.2 (-2%). The decline for full-year 2018 was partly due to the customer-specific destocking programme that began in 2017, which was not fully offset by growth in other areas during the year. Net sales in Functional Food rose MSEK 3.1 (9%). Sales in this segment mainly benefited from new initiatives in the APAC region and increased royalty revenue from existing customers.
Net sales by region
| KSEK | FY 2018 | FY 2017 |
|---|---|---|
| Sweden | 58,551 | 53,818 |
| EMEA, excluding Sweden | 41,800 | 37,961 |
| Americas | 444,315 | 478,979 |
| APAC | 59,451 | 41,486 |
| Total | 604,117 | 612,244 |
The Americas region (North and South America) accounted for 74% of Probi's total net sales. Annual sales in this region declined MSEK 34.7 (-7%), mainly due to a customer-specific destocking programme by one of Probi's largest customers and lower overall market growth for probiotics in the US. The APAC region accounted for Probi's strongest sales growth with a 43% increase in 2018, or MSEK 18.0 year-on-year. This was driven by the strong growth of new and existing customers in China, Australia and India. In 2018, sales in EMEA (excl. Sweden) rose 10% year-on-year to MSEK 41.8. The 9% increase in Sweden in 2018 was due to growth for Probi's key customers in both the Consumer Healthcare and Functional Food segments.
Earnings
Operating profit (EBIT)
Operating expenses for the full-year amounted to MSEK 503.0 (508.2). The gross margin improved slightly year-on-year to 46% (45) of net sales. Sales and marketing costs of MSEK 91.9 (79.9) increased in line with expanded commercial resources in the Americas and APAC regions. Administrative expenses amounted to MSEK 54.7 (58.6). Research and development costs amounted to MSEK 32.7 (36.6).
EBIT for the Consumer Healthcare segment totalled MSEK 87.5 (93.2) for the full-year, corresponding to an operating margin of 15% (16). EBIT for the Functional Food segment totalled MSEK 13.6 (10.9), corresponding to an operating margin of 36% (32). The decline in EBIT for Consumer Healthcare was mainly due to the previously announced customer-specific destocking programme.
Consolidated EBIT for the year totalled MSEK 101.1 (104.1). Adjusted for currency effects, EBIT totalled MSEK 100.8.
Financial results
The Group's financial results for the year amounted to MSEK -2.6 (-11.8). Interest expense of MSEK -4.5 (- 5.2) was charged to earnings. Gains and losses on the translation of loans in other currencies, and changes in the fair value and realisation of forward contracts, are recognised in exchange rate gains or losses from financing activities. A gain of MSEK 2.2 (loss: 6.0) arose during the reporting period.
Profit after tax
Profit after tax for the year totalled MSEK 76.3 (69.1). Tax expense was MSEK 22.3 (23.2).
Earnings per share
Earnings per share for the year amounted to SEK 6.69 (6.06).
Cash flow and financial position
Investments
During the year, investments in intangible assets amounted to MSEK 10.2 (18.1), of which MSEK 2.8 (2.7) pertained to patents and MSEK 7.4 (15.4) to capitalised development costs. During the year, capitalised development costs were mainly related to clinical trials in immune health and nutrient absorption. Investments in tangible assets amounted to MSEK 3.8 (8.2).
Change in cash and cash equivalents
During the year, cash and cash equivalents rose MSEK 43.8 to MSEK 199.3. This included a repayment of MSEK 70.2 (32.1) on bank loans, which is recognised in cash flow from financing activities. Cash flow from operating activities declined MSEK 17.8 year-on-year, partly attributable to a positive realisation of MSEK 30.9 on forward contracts related to currency risk in 2017.
Employees
At the end of the period, Probi had 167 (168) employees, of whom 47% (46) were women. The average number of employees for full-year 2018 was 163 (182).
Related-party transactions
During the year, Probi's principal owner, Symrise AG, was invoiced KSEK 104.4 (32.0) and Probi received invoices amounting to KSEK 246.8 (15.4) from Symrise AG. Board member Scott Bush invoiced fees amounting to KSEK 199.7 (165.1) for project-related consulting services by Probiotic Consulting LLC. The purchase and sale of goods and services to and from related parties is conducted on normal market terms. No other related-party transactions took place during the reporting period.
Proposed appropriation of profit
Based on an assessment of Probi's course of business and strategic investment decisions in 2018, the Board propose that the 2019 Annual General Meeting resolves that no dividends will be paid for the 2018 financial year.
Significant risks and uncertainties
The risks and uncertainties to which Probi's operations are exposed are described on pages 47-48 of the printed 2017 Annual Report. At 31 December 2018, no significant changes were considered to have occurred to these risks or uncertainties.
Parent Company
In 2018, the Parent Company's net sales declined to MSEK 302.8 (305.2). Profit after tax was MSEK 65.2 (71.1). Investments in tangible and intangible assets amounted to MSEK 10.8 (20.2). Otherwise, please refer to the information for the Group.
Financial calendar
| Interim report Q1, 2019 | 29 April 2019 |
|---|---|
| 2018 Annual General Meeting | 7 May 2019 |
| Interim report Q2, 2019 | 19 July 2019 |
| Interim report Q3, 2019 | 25 October 2019 |
| Year-end report, 2019 | 11 February 2020 |
Annual General Meeting
The 2018 Annual General Meeting will be held in Lund on Thursday, 7 May 2019 at 3:00 p.m. The venue will be announced later. Shareholders who wish to have a matter addressed at the AGM are requested to notify the Chairman of the Board by Friday, 19 March 2019. Such proposals should be e-mailed to [email protected], or posted to: Probi AB, General Meeting, Ideon Gamma 1, SE-223 70 Lund, Sweden.
The 2018 Annual Report is scheduled for publication on Probi's website www.probi.se on 12 April 2019.
Assurance by the Board of Directors
The Board of Directors and Chief Executive Officer assure that this interim report gives a true and fair view of the Parent Company and the Group's operations, financial position and results, and describes the significant risks and uncertainties facing the Parent Company and the Group.
Lund, 13 February 2019
Jean-Yves Parisot Anna Malm Bernsten Chairman of the Board Board member
Board member Board member
Irène Corthésy Malnoë Jan Nilsson Board member Board member
Jonny Olsson Tom Rönnlund Board member CEO
Scott Bush Charlotte Hansson
This report has not been audited.
Consolidated statement of comprehensive income
| KSEK | Notes | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|---|
| Net sales | 2 | 162,850 | 119,356 | 604,117 | 612,244 |
| Cos t of goods s old |
3 | -87,107 | -70,363 | -326,087 | -334,321 |
| Gross profit | 75,743 | 48,993 | 278,030 | 277,923 | |
| Sales and marketing expens es |
-28,307 | -19,376 | -91,854 | -79,899 | |
| R es earch and development expens es |
-6,643 | -8,932 | -32,728 | -36,606 | |
| Adminis tration expens es |
-11,283 | -13,063 | -54,700 | -58,554 | |
| Other operating income | 1,063 | 21 | 2,368 | 1,223 | |
| Operating Profit/EBIT | 30,573 | 7,643 | 101,116 | 104,087 | |
| Financial income | 603 | 400 | 1,565 | 612 | |
| Financial expens es |
-711 | -1,495 | -6,275 | -6,341 | |
| Exchange res ult financing activities |
4 | 420 | -171 | 2,154 | -6,033 |
| Financ ial result |
312 | -1,266 | -2,556 | -11,762 | |
| Earnings before income taxes | 30,885 | 6,377 | 98,560 | 92,325 | |
| Income taxes | -7,000 | -5,415 | -22,310 | -23,233 | |
| Net income | 23,885 | 962 | 76,250 | 69,092 | |
| Other comprehensive income | |||||
| Components to be reclas s ified to net income |
|||||
| Exchange rate differences res ulting from the trans lation of foreign operations |
11,644 | 10,525 | 67,003 | -64,460 | |
| Cas h flow hedge (currency hedges ) |
751 | -995 | 526 | -646 | |
| Income taxes payable on thes e components |
-165 | 219 | -116 | 76 | |
| Sum of other comprehensive income | 12,230 | 9,749 | 67,413 | -65,030 | |
| Total comprehensive income | 36,115 | 10,711 | 143,663 | 4,062 | |
| Number of outs tanding s hares at end of the reporting period |
11,394,125 | 11,394,125 | 11,394,125 | 11,394,125 | |
| Average number of s hares |
11,394,125 | 11,394,125 | 11,394,125 | 11,394,125 | |
| Earnings per s hare before and after dilution |
2.10 | 0.08 | 6.69 | 6.06 |
Profit for the period and comprehensive income are attributable in their entirety to the Parent Company's shareholders. The company has no outstanding convertible loans or warrants, so dilution does not occur.
In 2011, Probi bought back company shares and owned 250,000 treasury shares at the end of the reporting period, corresponding to 2.1% of the total number of shares. The quotient value per share is SEK 5.00.
Condensed consolidated statement of financial position
| KSEK | 31 December 2018 | 31 December 2017 |
|---|---|---|
| Capitalised Development Cost | 44,294 | 41,045 |
| Customer base | 311,177 | 307,946 |
| Technology and other intangible assets | 138,424 | 138,993 |
| Goodwill | 304,561 | 279,706 |
| Property, plant and equipment | 29,162 | 34,389 |
| Deferred tax assets | 1,530 | 4,620 |
| Non-current assets | 829,148 | 806,699 |
| Inventories | 68,676 | 69,140 |
| Trade receivables | 106,188 | 59,344 |
| Other assets and receivables | 6,119 | 20,003 |
| Cash and cash equivalents | 199,299 | 155,547 |
| Current assets | 380,282 | 304,034 |
| Total assets | 1,209,430 | 1,110,733 |
| Total equity | 1,028,398 | 884,735 |
| Other non-current liabilities | 6,772 | 5,781 |
| Non-current liabilities | 6,772 | 5,781 |
| Borrowings | 118,481 | 175,913 |
| Trade payables | 31,459 | 27,042 |
| Other current liabilities | 24,320 | 17,262 |
| Current liabilities | 174,260 | 220,217 |
| Total liabilities | 181,032 | 225,998 |
| Liabilities and equity | 1,209,430 | 1,110,733 |
Consolidated changes in equity
| KSEK | Share capital | Other contributions received |
Cumulative translation differences |
Other reserves | Accumulated profit |
Total equity |
|---|---|---|---|---|---|---|
| Opening balance, 1 January 2017 | 58,221 | 600,205 | 21,387 | 299 | 211,955 | 892,067 |
| Net income | — | — | — | — | 69,092 | 69,092 |
| Other comprehensive income | — | — | -64,460 | -570 | — | -65,030 |
| Total Comprehensive Income | — | — | -64,460 | -570 | 69,092 | 4,062 |
| Dividends | — | — | — | — | -11,394 | -11,394 |
| Total transactions with shareholders | — | — | — | — | -11,394 | -11,394 |
| Closing balance, 31 December 2017 | 58,221 | 600,205 | -43,073 | -271 | 269,653 | 884,735 |
| KSEK | Share capital | Other contributions received |
Cumulative translation differences |
Other reserves | Accumulated profit |
Total equity |
| Opening balance, 1 January 2018 | 58,221 | 600,205 | -43,073 | -271 | 269,653 | 884,735 |
| Net income | — | — | — | — | 76,250 | 76,250 |
| Other comprehensive income | — | — | 67,003 | 410 | — | 67,413 |
| Total Comprehensive Income | — | — | 67,003 | 410 | 76,250 | 143,663 |
| Closing balance, 31 December 2018 | 58,221 | 600,205 | 23,930 | 139 | 345,903 | 1,028,398 |
Consolidated statement of cash flows
| KSEK | FY 2018 | FY 2017 |
|---|---|---|
| Net income | 76,250 | 69,092 |
| Adjustments to reconcile net income to cash provided from operating activities | ||
| Income taxes | 22,310 | 23,233 |
| Interest result | 4,473 | 5,175 |
| Amortisation, depreciation and impairment of non-current assets | 53,821 | 53,231 |
| Other non-cash expenses and income | 2,995 | 30,901 |
| Cash flow before working capital changes | 159,849 | 181,632 |
| Change in trade receivables and other current assets | -29,363 | 27,373 |
| Change in inventories | 6,095 | -2,730 |
| Change in trade payables and other current liabilities | 11,290 | -31,655 |
| Income taxes paid | -20,005 | -28,932 |
| Cash flow from operating activities | 127,866 | 145,688 |
| Payments for investing in intangible assets | -10,237 | -18,135 |
| Payments for investing in property, plant and equipment | -3,802 | -8,171 |
| Divestments of tangible assets | — | 43 |
| Cash flow from investing activities | -14,039 | -26,263 |
| Interest paid | -5,478 | -5,200 |
| Interest received | 1,565 | 612 |
| Redemption of bank borrowings | -70,200 | -32,063 |
| Dividends paid | — | -11,394 |
| Cash flow from financing activities | -74,113 | -48,045 |
| Net change in cash and cash equivalents | 39,714 | 71,380 |
| Effects of changes in exchange rates | 4,038 | -18,969 |
| Total changes | 43,752 | 52,411 |
| Cash and cash equivalents at opening balance | 155,547 | 103,136 |
| Cash and cash equivalents at closing balance | 199,299 | 155,547 |
Condensed Parent Company financial statements
| KSEK | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Operating revenue | 90,832 | 34,261 | 302,846 | 305,241 |
| Operating costs | -31,783 | -12,233 | -101,167 | -102,613 |
| Gross profit | 59,049 | 22,028 | 201,679 | 202,628 |
| Operating profit/EBIT | 27,650 | -3,046 | 81,992 | 93,650 |
| Result from financial income and expenses | 54 | 153 | 2,139 | -2,679 |
| Income before tax | 27,704 | -2,421 | 84,131 | 91,442 |
| Net income | 21,403 | -1,976 | 65,172 | 71,148 |
| Other comprehensive income | ||||
| Other comprehensive income | 586 | -775 | 410 | -569 |
| Sum of other comprehensive income | 586 | -775 | 410 | -569 |
| Total comprehensive income | 21,989 | -2,751 | 65,582 | 70,579 |
| 31 December | 31 December | |||
| KSEK | 2018 | 2017 | ||
| Fixed assets | 968,122 | 1,011,899 | ||
| Current assets | 205,806 | 140,015 | ||
| Total assets | 1,173,928 | 1,151,914 | ||
| Equity | 1,006,539 | 940,955 | ||
| Untaxed reserves | — | — | ||
| Total long-term liabilities | 4,076 | 4,036 | ||
| Current liabilities | 163,313 | 206,923 | ||
| Total equity and liabilities | 1,173,928 | 1,151,914 |
Notes
1. Accounting and measurement policies
Group
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The condensed financial statements in the interim report encompass pages 9-16. Disclosures according to IAS 34 Interim Financial Reporting are provided both here and elsewhere in the interim report. ESMA's guidelines apply to alternative performance measures.
The accounting policies applied in the preparation of these consolidated financial statements have been applied consistently for all presented periods, unless otherwise stated. The complete accounting policies can be found on pages 61-64 of the printed 2017 Annual Report.
IFRS 15 and IFRS 9, which are effective for reporting periods starting on or after 1 January 2018, have no material impact on the presentations of the Group's results or on the financial instruments. For more information, refer to the 2017 Annual Report, page 61.
IFRS 16 Leases superseded IAS 17 on 1 January 2019. Operating leases will is recognised in the same way that finance leases are recognised at present. Probi has begun to prepare for implementation of the new standard but only identified a limited number of leases affected by the new standard. These leases are mainly related to rental fees for premises and company cars, but also for equipment. Probi has decided to apply that the simplified approach for transition to IFRS 16 and the estimated annual impact on EBITDA is MSEK +14 related to existing leases, while the impact on net profit is expected to be very limited. This will be presented in more detail in the 2018 Annual Report.
The Parent Company's functional currency is the Swedish krona (SEK), which is also the reporting currency for both the Parent Company and the Group. All amounts stated have been rounded to the nearest thousand kronor, unless otherwise stated.
Amounts and figures in parentheses pertain to comparative figures for the year-earlier period. Amounts are stated in Swedish kronor (SEK), thousands of Swedish kronor (KSEK) or millions of Swedish kronor (MSEK) according to that which is stated.
Parent Company
The Parent Company applies the same accounting policies as the Group, with the exceptions and supplements stipulated in RFR 2 Accounting for legal entities – January 2018. The interim report complies with the Swedish Annual Accounts Act.
2. Net sales from contracts with customers
A summary of the Group's net sales from contracts with customers is presented below:
| FY 2018 | FY 2017 | |||||
|---|---|---|---|---|---|---|
| KSEK | CHC | FF | Total | CHC | FF | Total |
| Type of goods or service | ||||||
| Goods | 561,763 | 3,918 | 565,681 | 565,995 | 1,956 | 567,951 |
| Royalty, licences, etc. | 5,034 | 33,402 | 38,436 | 12,016 | 32,277 | 44,293 |
| Total net sales from contracts with customers | 566,797 | 37,320 | 604,117 | 578,011 | 34,233 | 612,244 |
| Geographical markets | ||||||
| Sweden | 30,370 | 28,181 | 58,551 | 26,627 | 27,191 | 53,818 |
| EMEA, excluding Sweden | 41,782 | 18 | 41,800 | 37,961 | — | 37,961 |
| Americas | 437,426 | 6,889 | 444,315 | 472,711 | 6,268 | 478,979 |
| APAC | 57,219 | 2,232 | 59,451 | 40,712 | 774 | 41,486 |
| Total net sales from contracts with customers | 566,797 | 37,320 | 604,117 | 578,011 | 34,233 | 612,244 |
3. Currency translation from operating activities
The following table shows the exchange gains and losses from operating activities that are recognised under cost of goods sold:
| KSEK | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Exchange gains operating activities | 1,790 | 3,848 | 8,167 | 15,731 |
| Exchange losses operating activities | -1,394 | -3,335 | -5,362 | -17,465 |
| Exchange result operating activities | 396 | 513 | 2,805 | -1,734 |
4. Currency translation from financing activities
The following table shows the exchange gains and losses from financing activities that are recognised in the financial results:
| KSEK | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Exchange gains financing activities | 1,051 | 8,508 | 17,411 | 83,682 |
| Exchange losses financing activities | -631 | -8,679 | -15,257 | -89,715 |
| Exchange result financing activities | 420 | -171 | 2,154 | -6,033 |
5. Definition of the alternative performance measures not defined in IFRS
The company presents some financial measures in the interim report that are not defined in IFRS. The company believes that these measures provide valuable supplementary information to investors and company management. Since not all companies calculate alternative performance measures in the same way, they are not always comparable with the measures used by other companies. However, these non-IFRS measures should not be considered substitutes for financial reporting measures prepared in accordance with IFRS.
The following alternative performance measures are presented in the interim report:
Operating profit/EBIT
Operating profit/EBIT is defined as net income before financial income and expenses and tax for the period.
| KSEK | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Net income | 23,885 | 961 | 76,250 | 69,092 |
| Income taxes | 7,000 | 5,416 | 22,310 | 23,233 |
| Financial result | -312 | 1,266 | 2,556 | 11,762 |
| Operating Profit / EBIT | 30,573 | 7,643 | 101,116 | 104,087 |
EBITDA
EBITDA is defined as operating profit/EBIT before depreciation, amortisation and impairment.
| KSEK | Q4 2018 | Q4 2017 | FY 2018 | FY 2017 |
|---|---|---|---|---|
| Operating Profit / EBIT | 30,573 | 7,643 | 101,116 | 104,087 |
| Depreciation and amortisation | 13,609 | 13,160 | 53,821 | 53,231 |
| EBITDA | 44,182 | 20,803 | 154,937 | 157,318 |
Operating margin
The operating margin is defined as EBIT divided by net sales.
EBITDA margin
The EBITDA margin is defined as EBITDA divided by net sales.
Gross margin
The gross margin is defined as gross profit divided by net sales.
Market capitalisation on the closing date
Market capitalisation on the closing date is defined as the share price at the end of the period multiplied by the number of shares outstanding.
Net sales growth, constant currency
Net sales growth, constant currency, is defined as net sales for the year translated at the preceding year's exchange rates divided by the preceding year's net sales.
Operating expenses
Operating expenses are the sum of costs of goods sold, sales and marketing costs, research and development costs, administration expenses, other operating income and other operating expenses.