FINANCIAL STATEMENT REPORT OF BIOHIT GROUP 1 JANUARY TO 31 DECEMBER 2005
BIOHIT OYJ STOCK EXCHANGE RELEASE 17 FEB 2006 10:00 AM
FINANCIAL STATEMENT REPORT OF BIOHIT GROUP 1 JANUARY TO 31 DECEMBER 2005
- The Biohit Groups net sales for the 2005 financial year rose by 7 % to
EUR 28.7 million (EUR 26.7 million in Q1-Q4/2004). Growth during the
fourth quarter was 17 % compared to the corresponding period of the
previous year.
- The loss for the period amounted to EUR 0.2 million (EUR -0.2 million).
- The cash flow from operating activities was EUR 0.6 million (EUR 2.2
million).
The financial statement report has been prepared in accordance with the
International Financial Reporting Standards (IFRS). The Biohit Group has
adopted IFRS reporting since 1 January 2005. Further information on the
impact of the transition to IFRS can be found in the stock exchange
release published on 14 March 2005. The comparative figures presented in
this report are in accordance with the IFRS figures of 2004 published in
the above-mentioned release. The accounting principles are the same as in
the above-mentioned release.
Net sales
The Biohit Groups net sales increased 7 per cent compared with 2004 and
totalled EUR 28.7 million (EUR 26.7 million).
The Groups net sales during the reporting period were generated
primarily from the sale of liquid dispensers and disposable pipettor tips
and from maintenance services for liquid dispensers. The liquid handling
business net sales were EUR 27.2 million (EUR 25.6 million), the net
sales for the diagnostics business being EUR 1.5 million (EUR 1.1
million). The growth in sales of diagnostics products was slowed down due
to a delay in the acquisition of authority approvals and to a
prolongation in negotiations with importers in the diagnostics business.
The slump in sales during the first half of the year was reflected in the
unfavourable trend in net sales for the financial year as a whole. In
spite of increased price competition for liquid handling products, net
sales during the fourth quarter grew by 17 per cent compared to the
corresponding period of the previous year.
Result
The loss for the reporting period was EUR 0.2 million (EUR -0.2 million).
The operating profit was EUR 0.0 million (EUR 0.2 million).
The operating profit of the liquid handling business was EUR 2.3 million
(EUR 2.1 million), the operating loss of the diagnostics business being
EUR 2.3 million (EUR -1.9 million).
In spite of an increase in net sales, the loss remained at the same level
as in the previous year due to the rationalisation of the diagnostics
organisation, as well as non-recurring costs associated with the
changeover to a new Enterprise Resource Planning (ERP) system and other
restructuring of the organisation.
Earnings per share were EUR -0.02 (EUR -0.01).
Balance sheet
The balance sheet total was EUR 27.9 million (EUR 22.8 million) and the
equity ratio was 51.5 per cent (62.3 per cent). The balance sheet total
was increased and the equity ratio decreased by the issuance of a EUR
4.05 million convertible bond in November 2005. In accordance with a
decision made at the Annual General Meeting on 21 April 2005, the share
premium fund has been used to cover the parent companys EUR 0.3 million
losses for 2004.
Convertible bond
The Extraordinary General Meeting of Biohit Oyj that was held on 27
October 2005 resolved, in accordance with the proposal by the Board of
Directors, to issue a convertible bond. The objective of the transaction
is to strengthen the companys growth potential and broaden its investor
basis. The bond was offered to a limited group of professional domestic
investors, and 4,050,000 euros worth of subscriptions were entered
during the time the offer was open.
The annual fixed interest to be paid on the convertible bond is 6.5 per
cent. The convertible bond will have a five year maturity. Each EUR 4,050
note unit can be converted into 1,000 Biohit Oyj B-shares with a nominal
value of EUR 0.17. The conversion rate is EUR 4.50. The bond can be
converted to a total of maximum 900,000 Biohit Oyj B-shares. As a result
of the conversion the share capital of the company may be increased by a
maximum of EUR 153,000 and the number of B-shares by a maximum of 900,000
new shares. The share of stock converted on the basis of the convertible
bond is a maximum of 6.5 per cent of company shares, and 1.0 per cent of
the votes granted with this stock after a possible increase in share
capital.
The company is entitled to repay the entire share capital of the bond
providing that the mean rate weighted with the Biohit B-share (share)
conversion in the Helsinki Stock Exchange has been at least 10 euros
immediately before the decision date regarding the repayment on 20
exchange days of 30 consecutive exchange days.
Liquidity
The cash flow from operating activities for the financial year was EUR
0.6 million (EUR 2.2 million). The downswing in cash flow was due to the
increase in net working capital. Current ratio was 1.25 (1.20). Interest-
bearing liabilities rose to EUR 8.2 million (EUR 4.2 million), resulting
from the issuance of a EUR 4.050 million convertible bond. Investments in
funds and deposits include EUR 3.4 million.
Research and development
Research and development expenditures amounted to EUR 1.6 million in 2005
(EUR 1.3 million), representing 6 per cent of net sales (5 per cent). In
accordance with IFRS 38, EUR 112 thousand in development expenditure was
capitalised during the financial year (EUR 187 thousand).
Investments
Gross investments for the financial year totalled EUR 2.0 million (EUR
2.3 million). The majority of these investments was aimed to increase
capacity at the Kajaani and Helsinki plants, and it consisted of
machinery and equipment for the automation of liquid handling product
manufacture, as well as injection moulds used in the manufacture of new
liquid handling products.
During the review period, Biohit Oyj acquired a 5 per cent minority
interest in Biohit Inc.
Personnel
The average number of personnel in the reporting period was 295 (291),
with 162 (164) persons being employed by the parent company and 133 (127)
by the subsidiaries.
Main events of the reporting period and focus points in the near future
Liquid handling business area
Biohits liquid handling business includes mechanical and electronic
liquid dispensers as well as disposable tips. In addition, the company
offers services related to the maintenance and calibration of liquid
handling products as well as training services on these products. The
companys liquid handling products are combined with diagnostic products,
instruments and related software, forming comprehensive analysing systems
for research and clinical diagnostics.
At the end of the financial year, Biohit signed a co-operation agreement
with bioMérieux S.A. concerning the delivery and maintenance of liquid
handling products. The new agreement enables the global sale of Biohits
products to bioMérieux and also expands co-operation to cover pipettor
maintenance. (See Biohits stock exchange release published on 9 February
2006.)
Companies belonging to the Biohit Group have previously engaged in local
co-operation with bioMérieux. bioMérieux has been incorporating Biohit
pipettors in its own analysis systems and diagnostic test applications
for almost ten years. In 2005, Biohit began delivery of multichannel
electronic eLINE pipettors and pipettor tips to bioMérieux, which
integrates them into its own, globally-marketed DNA analyser.
Biohit has also signed a worldwide OEM agreement with another global
manufacturer of diagnostic systems. Biohit is also continuing close co-
operation with its other OEM customers, such as 3M and three companies
belonging to the Johnson & Johnson Group. The company believes that the
recently signed agreements will strengthen the OEM business share of
Biohits sales of liquid handling products and also pave the way for new
projects and a steady increase in business operations.
The most significant trend is the greater integration between pipettors
and analysis systems. Biohit has developed two new technology platforms
to meet these needs and several customer projects are ongoing.
In order to better meet quality requirements and demand for liquid
handling products, Biohit began upgrading the efficiency of the
production and warehousing of pipettors and disposable tips at its
Helsinki and Kajaani plants during the financial year. Thanks to a fully-
automated production process, in 2005 Biohit has brought to market clean
and certified DNase, RNase and endotoxin free pipettor tips. These are
mostly used in medical science and bioscience.
Focus points of the liquid handling business in the near future
The growth of the total liquid handling product market has abated in many
western countries. Tightening price competition is characteristic of the
liquid handling business. Due to this, Biohit will focus on the following
business areas, among others: increasingly cost-efficient manufacture;
strengthening of its operations in Asia, particularly in China;
development of new OEM technologies and products; and development of
maintenance services.
For the cost-efficient manufacturing of liquid handling products, Biohit
is establishing a production facility in China in 2006. The intensified
business activities in China involve assembly capabilities and sourcing
of materials and services on a local level for liquid handling products.
The main objective is to configure certain products to the Asian
market, China in particular, in a more efficient manner. Production in
Finland will continue. The collaboration between the operations in China
and Finland also allows for more cost-efficient production on a Group
level.
Pipettor calibration and maintenance services are a fast growing sector
of the liquid handling business. Biohit has started to develop and
homogenise its global maintenance service concept which aims to achieve a
holistic control of the pipettor life cycle and to increase customer
satisfaction. The after-sales marketing including maintenance services
also help increase pipettor sales. The concept will first be introduced
in the subsidiaries and gradually extended to cover all main business
areas.
Diagnostics
In the diagnostics business, Biohit focuses on the research, development,
production, and marketing of products for the screening, prevention, and
diagnosis of diseases of the gastrointestinal tract. The companys
diagnostic products include the GastroPanel examination performed on a
blood sample (biomarkers: Pepsinogen-I, Pepsinogen-II, Gastrin-17, and
Helicobacter pylori antibodies), for the diagnosis of upper abdominal
complaints (dyspepsia), H. pylori infection, atrophic gastritis and
associated risks (gastric cancer, vitamin B12 deficiency and peptic ulcer
disease). In addition, GastroPanel reveals the risk of gastroesophageal
reflux disease. The company also provides biopsy specimen quick tests
for the diagnosis of lactose intolerance and H. pylori infection. The
companys diagnostic products are combined with pipettors, globally used
analysis instruments featuring vertical photometry technology and related
software to offer comprehensive analysis systems for research and
clinical diagnostics. (www.biohit.com -> Company -> History -> Read more
about Biohit´s history from here)
During the financial year, Biohit has continued its negotiations with
importers and signed agreements concerning the sale and marketing of
diagnostics products with, for example, Panbio Ltd in Australia and New
Zealand, as well as the Chinese company Da An Gene Co. Ltd, which is
owned by Sun Yat-sen (Zhongshan) University. (See Biohits stock exchange
release published on 29 July 2005.) Da An Gene is the second largest
organisation for the development and sales of diagnostics products in
China.
During the reporting period, Biohit and Luminex Corporation, a US-based
company, have signed an agreement to combine their knowledge for the
development and commercialisation of a diagnostic test system in a new
market segment. (See Biohits stock exchange release, published on 27
September 2005)
In July, China´s State Food and Drug Administration (SFDA) granted Biohit
a marketing authorization for the Pepsinogen I, Pepsinogen II and Gastrin-
17 tests included in the GastroPanel examination (See Biohits stock
exchange release, published on 29 July 2005).
The lactose intolerance quick test patented by Biohit as well as the H.
pylori quick test were granted market authorisation in Russia in early
2005. In the United States, the Food and Drug Administration (FDA) has
already approved the GastroPanel tests for Gastrin-17 and H. pylori
antibodies, but the tests for Pepsinogen I and II are still being
evaluated and additional research required by the FDA is being conducted.
Registration processes are likewise underway in Ukraine, South Korea and
Brazil. In addition, GastroPanel has previously been granted market
authorisation in India, Canada and Russia. All of the companys
diagnostics products can be sold in the EU.
In the United Kingdom, GastroPanel analyses are offered by, for example,
the world's largest service laboratory Quest Diagnostics, which approved
the GastroPanel and included it in its programme during the reporting
period.
The connection between Helicobacter pylori infection and peptic ulcer
disease has only recently got widely known. The 2005 Nobel Prize for
Medicine was awarded in October 2005 to researchers who proved more than
20 years ago that severe gastric diseases such as gastritis and peptic
ulcer disease are caused by the bacterium H. pylori
(http://nobelprize.org/medicine/laureates/2005/press.html). The
recognition is expected to increase the interest for H. pylori tests and
thus favourably affect the demand for Biohits GastroPanel and H. pylori
quick tests.
Focus points of the diagnostics business for the near future
As the evaluations and authority approvals are mainly completed, the most
significant investments relating to Biohit's diagnostic products in the
near future are focused on development of the sales and marketing
organisation and the distribution and co-operation network. In addition
to this, the company will invest in product development in its
diagnostics branch.
Biohit is currently preparing to begin local sourcing of materials and
services for its diagnostic products in China in 2006. These preparations
are speeded up by the fact that the Chinese authorities recently approved
Biohits GastroPanel tests, an approval which has been awaited for
several years. Another factor speeding up the preparations is the great
need for functional entities (analysis systems) consisting of Biohit
diagnostic and liquid handling products, particularly in China.
Administration
The Annual General Meeting 21.4.2005 resolved that the Board of Directors
shall have six members. Docent Arto Alanko, MD, Ph.D; Professor Reijo
Luostarinen; Professor Hannu Seristö; Professor Osmo Suovaniemi, MD,
Ph.D; Peter Tchernych, M.Sc. (Econ.), LLM; and Professor Mårten Wikström
were elected as members of the Board of Directors. In 2005, Reijo
Luostarinen was Chairman of the Board and Osmo Suovaniemi President and
CEO of Biohit Oyj.
The Annual General Meeting chose PricewaterhouseCoopers Oy, Authorised
Public Accountants, as auditor with Hannele Selesvuo, Authorised Public
Accountant, as chief auditor.
Risks
In accordance with the principles of good corporate governance, Biohit
has assessed the risks associated with the companys business operations.
The most significant risks stem from the international nature of the
companys business and the market and economic risks this brings, such as
those associated with currency exchange rates. The main responsibility
for risk management is held by the parent companys Board of Directors
and the Management Team.
Equity Turnover and Price Development
During the reporting period, the total turnover of Biohits B-shares on
the Helsinki Exchanges NM list amounted to EUR 4,651,741, and the number
of shares traded was 2,113,704. The highest share price was EUR 2.87 and
the lowest EUR 1.75, the average price being EUR 2.20. The closing price
at the end of the reporting period was EUR 2.15. On 31 December 2005, the
market capitalisation value for the B shares totalled EUR 19,483,573.
Outlook for 2006
The company estimates that competition in the liquid handling products
market will become more severe in 2006. The company is meeting this
challenge by both continuing and developing co-operation on innovations
and new technologies with international partners, and by ensuring the
cost-effectiveness of product manufacture with production facility
investments in China and Kajaani. The company expects that sales of
liquid handling products will continue to increase in 2006.
When it comes to growth in net sales of diagnostics products, the
challenges are not linked to the competitive situation per se, but
involve devoting greater efforts to marketing and increasing the
recognition of products. In this respect, the company expects that
development and organisation of the distribution network will ensure an
increase in sales of diagnostics products in 2006. However, sales growth
in the US and Japanese markets depends on whether the public authorities
grant products the necessary market authorisations.
The Groups total net sales are therefore predicted to grow favourably in
2006 and earnings before taxes to improve on the previous year.
Group income statement
1-12 1-12
2005 2004 Change Change
MEUR MEUR MEUR %
Net sales 28.7 26.7 2.0 7
Other operating income 0.1 0.2 -0.1 -62
Change in inventories of
finished goods and work in
progress 0.4 -0.5 0.9 192
Raw materials and consumables -5.1 -4.4 0.7 16
External services -1.0 -0.7 0.3 35
Personnel expenses -11.6 -10.7 0.9 9
Depreciation -1.7 -1.5 0.2 9
Other operating expenses -9.8 -8.9 0.9 11
Operating profit / loss 0.0 0.2 -0.2 -113
Finance costs (net) -0.2 -0.2 0.0 51
Profit / loss before tax -0.2 0.0 -0.2 -347
Direct taxes 0.0 -0.2 -0.2 -111
Profit / loss for the period -0.2 -0.2 0.0 34
10-12 10-12
2005 2004 Change Change
MEUR MEUR MEUR %
Net sales 8.3 7.1 1.2 17
Other operating income 0.0 0.1 -0.1 -64
Change in inventories of
finished goods and work in
progress -0.1 -0.1 0.0 36
Raw materials and consumables -1.5 -1.3 0.2 13
External services -0.3 -0.3 0.0 4
Personnel expenses -2.8 -2.4 0.4 20
Depreciation -0.4 -0.4 0.0 1
Other operating expenses -2.9 -2.8 0.1 4
Operating profit / loss 0.3 -0.1 0.4 358
Finance costs (net) -0.1 -0.1 0.0 145
Profit / loss before tax 0.2 -0.2 0.4 203
Direct taxes 0.0 0.0 0.0 3696
Profit / loss for the period 0.2 -0.2 0.4 254
Group net sales by business segment
1-12 1-12
2005 2004 Change Change
MEUR MEUR MEUR %
Liquid handling 27.2 25.6 1.6 6
Diagnostics 1.5 1.1 0.4 33
Group operating profit / loss by business segment
1-12 1-12
2005 2004 Change Change
MEUR MEUR MEUR %
Liquid handling 2.3 2.1 0.2 5
Diagnostics -2.3 -1.9 -0.4 -20
Group balance sheet
31.12.2005 31.12.2004
Assets MEUR % MEUR %
Non-current assets
Property, plant and
equipment 6.7 24 6.8 30
Goodwill 2.6 9 2.6 12
Other intangible
assets 1.6 6 1.2 5
Deferred income tax
assets 2.1 8 1.9 8
13.0 47 12.6 55
Current assets
Inventories 4.6 16 3.6 16
Trade and other
receivables 8.5 31 5.3 23
Cash and cash
equivalents 1.8 6 1.3 6
14.9 53 10.2 45
Total assets 27.9 100 22.8 100
Equity and
liabilities
Share capital 2.2 8 2.2 10
Share premium fund 13.0 47 13.1 57
Retained earnings -0.9 -4 -1.2 -5
Total equity 14.3 51 14.1 62
Long-term
liabilities
Interest-bearing
debt 7.7 28 3.8 17
Deferred income tax
liabilities 0.1 0 0.1 0
Retirement benefit
obligations 0.1 0 0.1 0
Other long-term
liabilities 0.6 3 0.6 3
Total long-term
liabilities 8.5 31 4.6 20
Short-term
liabilities
Trade and other
payables 4.2 15 3.0 14
Short-term interest-
bearing debt 0.9 3 1.0 4
Total short-term
liabilities 5.1 18 4.1 18
Total liabilities 13.6 49 8.6 38
Total equity and
liabilities 27.9 100 22.8 100
Cash flow statement
1-12/2005 1-12/2004
MEUR MEUR
Cash flow from operating
activities:
Profit / loss 0.0 0.2
Adjustments 1.7 1.3
Change in net working
capital -0.8 0.8
Interest and other
financial items paid -0.3 -0.2
Interest received 0.1 0.1
Income tax paid -0.1
Net cash flow from
operating activities 0.6 2.2
Cash flow from investment
activities:
Investments in tangible
and intangible assets -1.7 -2.1
Investments in funds and
deposits -3.4
Investments in
subsidiaries 0.0 -0.1
Net cash flow from
investment activities -5.1 -2.2
Cash flow from financing
activities:
Proceeds from borrowings 4.8 0.8
Repayment of borrowings -1.0 -0.6
Net cash flow from
financing activities 3.8 0.2
Increase (+) / decrease (-
) in cash equivalents -0.6 0.2
Cash and cash equivalents
at beginning of period 1.3 1.1
Cash and cash equivalents
at end of period 0.7 1.3
Statement of changes in equity on 31 December 2005
MEUR Share Share Trans- Earnings Equity
capital premium lation
fund diff.
Equity 1.1.2005 2.2 13.1 0.0 -1.2 14.1
Transfer from share
premium fund -0.3 0.3 0.0
Translation differences 0.2 0.2
Equity share of the
convertible bond 0.2 0.2
Profit / loss of the
period -0.2 -0.2
Equity 31.12.2005 2.2 13.0 0.2 -1.1 14.3
Statement of changes in equity on 31 December 2004
MEUR Share Share Trans- Earnings Equity
capital premium lation
fund diff.
Equity 1.1.2004 2.2 15.4 0.0 -3.3 14.3
Transfer from share premium
fund -2.3 2.3 0.0
Translation differences 0.0 0.0
Profit / loss of the period -0.2 -0.2
Equity 31.12.2004 2.2 13.1 0.0 -1.2 14.1
1-12 1-12 Change Change-%
2005 2004
Investments, gross, MEUR 2.0 2.3 -0.3 -12
% of net sales 7.0 8.5
Average number of
employees 295 291 4 1
Reconciliation of equity 31 December 2004
MEUR 31.12.2004
Equity under FAS 14.7
IAS 19 Employee benefits -0.1
IAS 39 Capital loans -1.2
IAS 23 Interests on capital loans -0.6
IFRS 3 Goodwill amortization 0.3
IAS 17 Financial leasing 0.0
IAS 12 Deferred taxes 1.0
Equity under IFRS 14.1
Reconciliation of profit or loss for the period 1 Jan to 31 Dec 2004
MEUR 31.12.2004
Profit / loss under FAS -0.6
IAS 19 Employee benefits 0.1
IAS 23 Interests on capital loans -0.1
IFRS 3 Goodwill amortization 0.3
IAS 17 Financial leasing 0.0
IAS 12 Deferred taxes 0.1
Profit / loss under IFRS -0.2
Mortgages and assets pledged for liabilities and leasing commitments
31.12.2005 31.12.2004
MEUR MEUR
Mortgages and pledged assets
Loans from financial
institutions 2.3 2.4
Corporate mortgages 1.6 1.6
Mortgages on real estate 1.4 1.4
Other long-term liabilities 0.5 0.6
Mortgages on real estate 0.8 0.8
Leasing commitments 3.8 4.2
31.12.2005 31.12.2004
Key ratios
Equity ratio % 51.5 62.3
Earnings per share, EUR -0.02 -0.01
Shareholders equity per
share 1.10 1.09
Average number of shares 12,937,627 12,937,627
Number of shares at the end
of the period 12,937,627 12,937,627
Derivative contracts
The Group does not have any off-balance-sheet financial instruments.
The figures in the Financial Statement Report are not audited.
Helsinki, 17 February 2006
Board of Directors of Biohit Oyj
Additional information:
Osmo Suovaniemi, M.D., Ph.D., Professor
President & CEO
Tel: +358-9-773 861
GSM: +358-40-745 5605
Email: osmo.suovaniemi@biohit.com
Distribution:
Helsinki Exchanges
Financial Supervisory Authority
Press
http://www.biohit.com
