INTERIM REPORT OF BIOHIT 1.1.-31.3.2000
BIOHIT PLC. STOCK EXCHANGE RELEASE 16.05.2000 at 12:00 1 (11)
INTERIM REPORT OF BIOHIT 1.1.-31.3.2000
The net sales of the Biohit Group for the first quarter totalled to
MFIM 32,1 (MFIM 30,1 in 1999). Biohit listed on the New Market -list
of the Helsinki Exchanges in June with the intention of using the
capital raised by the directed issue to activities supporting the
growth strategy of the Company. The profit before extraordinary items
for the period totalled to MFIM 0,5 (MFIM 2,6 in 1999). As a result of
the said strategy followed, the profit was burdened by the investments
made especially to the development of the biotechnology business.
Net Sales
The net sales were generated primarily by liquid handling products and
their disposable tips. Since the test panel as a whole belonging to
the business area of diagnostics is undergoing clinical evaluations,
it has not so far generated any sales revenue.
Profit
The operating profit totalled to MFIM 0,5 (MFIM 2,9 in 1999). The
profit was burdened especially by the development expenses of
diagnostic products and costs related with the preparations of
commencing production and marketing of the said products. For the part
of the costs related with diagnostic products the growth resulted
primarily from the recruitment of additional R&D and production
personnel. Moreover, the personnel resources of liquid handling and
instrument product development were reinforced during the reporting
period. All in all, the strong development of the Company's business,
including preparations for the acquisitions carried out and the
construction of the new production premises require additional
efforts, which, for their part, burdened the profit for the first
quarter. The MFIM 0,5 social security fees related with the rights of
option of the personnel were also expensed during the reporting
period.
The MFIM 0,7 income taxes have been accounted for on the basis of the
profit of the period.
Financial Situation
The financial position of the Biohit Group is strong and liquidity
good. The equity ratio increased from 66,0% at year-end 1999 to 66,2%.
Investments
The gross investments for the period were MFIM 3,0 (MFIM 1,8), of
which investments to machines and equipment totalled to MFIM 1,8. The
construction of the new production premises began during the reporting
period and its share of the investments was MFIM 1,2. The total cost
of the project including machinery is approx. MFIM 20 of which the
support provided by The Ministry of Trade and Industry is approx. MFIM
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5,0. The rent for the plot to be paid to the City of Kajaani will be
FIM 11.500 per year, and Biohit has the right to redeem the plot after
10 years for a nominal price of FIM 1.000. According to the agreement
signed, the City of Kajaani returned to Biohit the MFIM 2,4 Biohit has
paid as fees for the former premises, which were affected by damages
caused by humidity, and the rental security totalling to approx. MFIM
1,2. In addition, the City of Kajaani will pay Biohit a MFIM 2,0
compensation and grant a MFIM 4,5 loan for 10 years without interest.
Research and Development
In the area of diagnostics the development work of the test panel for
screening the risk of gastric cancer and peptic ulcer proceeded in
accordance with the targets set. The evaluation of the pepsinogen I
-test was finished, e.g., at United Clinical Laboratories. The
evaluation of the Helicobacter pylori -test was completed at the
University of Lund in Sweden. The evaluation of the quick test for
determining lactose intolerance and the test panel as a whole
continues at the Jorvi Hospital.
Production
Biohit concluded on February 4, 2000 a project management contract
with Palmgren-Rakennus Oy, a company belonging to the Lemminkäinen
Group concerning the construction of Biohit's new production premises
in Kajaani. As a result of the construction of the new premises Biohit
will renew and render more efficient the production of its liquid
handling devices (pipettors), their disposable tips as well as other
plastic products, which will have a positive impact on the
profitability of the Company. The new premises, totalling to 3.000 m2,
enable, at least, to triple the volume of pipettor and plastics
production. The Company estimates that the construction of the
premises will be finished in September-October 2000. The new premises
of Kajaani and the current production site in Helsinki enable the
production of diagnostic products of the value of FIM hundreds of
millions annually.
The calibration laboratory for liquid handling devices of Biohit Plc.
was accredited on March 20, 2000 as a result of the evaluation made by
FINAS, a body offering accreditation services under the Center for
Metrology and Accreditation. The accreditation of the calibration for
liquid handling products performed in the production plants in
Helsinki and Kajaani reinforces Biohit's market position as the
leading manufacturer of liquid handling devices. Biohit Plc. is able
to offer to its customers in Finland and abroad calibration
certificates for liquid handling devices, which are based on national
and international, traceable measurement standards. The traceable
calibration certificates form already now an important part of the
reliable analysis services provided by laboratories. As a result of
the accreditation, Biohit Plc. is able to fulfil the international
traceability requirements set for liquid handling devices.
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Acquisitions
Vangard International, Inc.
Biohit Systems, Inc., the U.S. subsidiary of Biohit Plc. acquired on
April 25, 2000 the entire share capital of the U.S. Vangard
International, Inc., which has acted as a distributor of Biohit's
products. As a result of the acquisition Biohit Plc. received all
business activities of Vangard International, Inc. including the sales
and marketing of Biohit products in the U.S. The purchase price for
the shares of Vangard International, Inc. was MFIM 8,5. The purchase
price was determined in accordance with an agreement concluded between
the parties, the purpose of which is to clarify and reinforce the
marketing and sales of Biohit products as well as maintenance and
calibration services in the U.S. The net sales of Vangard
International, Inc. for fiscal year having ended on July 31, 1999
totalled to MFIM 21,0 (net sales July 31, 1998 MFIM 20,0) and profit
MFIM 0,2 (profit July 31, 1998 MFIM 0,1). The financial position of
the company is stable.
Oy Finio Ab and Finnbio Ltd.
Biohit acquired on May 15, 2000 the entire share capital of the
Finnish company Oy Finio Ab and, as a result, 51 % of the Russian
Finnbio Ltd., which acts primarily as the distributor of Biohit
products in the Russia and other CIS-countries. Biohit Plc. has
previously owned 5% of the shares of Finnbio Ltd. As a result of the
acquisition the shares and votes of Biohit increased to 56%. The
business activities of Oy Finio Ab focus primarily on the
administration and organizing of subcontracts originating from Western
countries which are targeted to Finnbio Ltd. The purchase price of the
share capital of Oy Finio Ab totalled to MFIM 1,1. The net sales of Oy
Finio Ab for fiscal year having ended on August 31, 1999 totalled to
MFIM 3,7 (net sales August 31, 1998 MFIM 16,6) and the profit MFIM 0,2
(profit August 31, 1998 MFIM 0,3). The net sales of Finnbio Ltd. for
fiscal year having ended on December 31, 1999 totalled to MFIM 10,6
(net sales December 31, 1998 MFIM 5,9) and profit MFIM 1,0 (December
31, 1998 loss MFIM 0,6). Irrespective of the economic crisis facing
Russia, the financial situation of both companies can be considered
satisfactory.
Increases in Share Capital
The personnel of the Company subscribed during the first phase of the
option program, i.e., between 1.1.-1.4.2000 altogether 378.840 B-
shares of Biohit (400.000 shares issued in total). The subscription
price of the shares was FIM 12,5 per share. As a result of the
subscriptions, the total number of shares increased to 12.643.377
pieces and the share capital of the Company to EUR 2.149.374,09.
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Announcements Related to the Change of Ownership
Erja-kiinteistöt Oy announced on Jan. 10, 2000 that its ownership of
the share capital and number of votes had decreased so that its
ownership of the share capital and number of votes of Biohit Plc.
after the change was as follows:
Share Capital Votes
Erja-kiinteistöt Oy,
Trade register no. 243.973
A-Shares 1,63 % 4,66 %
B-Shares 3,21 % 0,46 %
Total 4,84 % 5,12 %
The change was caused by a normal transactions related with the sales
of shares. The effective date of the change was Jan. 7, 2000.
The same company announced on Jan. 25, 2000 that its ownership of the
share capital and number of votes had decreased so that its ownership
of the share capital and number of votes of Biohit Plc. was as
follows:
Share Capital Votes
A-Shares 1,63 % 4,66 %
B-Shares 0,00 % 0,00 %
Total 1,63 % 4,66 %
The change was caused by a normal transactions related with the sales
of shares. The effective date of the change was Jan. 24, 2000.
Annual General Meeting
The Annual General Meeting (AGM) of Biohit Plc. was held on April 6,
2000. THE AGM approved the 1999 financial statements and discharged
the members of the Board of Directors and the Managing Director from
liability. The AGM decided not to distribute dividends from the
financial year but instead to transfer the profit for the period of
FIM 7.536.673,68 to the retained profit/loss account of the previous
years.
The AGM appointed as members of the Board of Directors professor Reijo
Luostarinen, Osmo Suovaniemi, M.D., Ph.D. and professor Mårten
Wikström. SVH Pricewaterhouse Coopers Oy was appointed as the auditor
with Hannele Selesvuo, APA, as the principal auditor and Mikael
Österlund, APA, as the substitute auditor.
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Prospects for Year 2000
Biohit estimates that the Group net sales will increase according to
the targets set with approx. 20% compared with the previous year. As a
result of the increase in the sales volume and the relative growth in
the sales by subsidiaries, it is estimated that the profitability of
the sales of liquid handling products will to a certain extent
increase. The new production premises in Kajaani, which will be taken
into use in September-October 2000, will render production more
efficient and have a positive impact on profitability.
Investments in the area of biotechnology, diagnostics, instruments and
analyzing systems formed from them together with liquid handling
products as well as other development of the Group, e.g.,
acquisitions, will burden the profit of the year more than forecast.
As a result, the total profit for 2000 is estimated to be smaller than
in 1999.
Group Income Statement
1-3 2000 1-3 1999 Change Change 1-12 1999
MFIM MEUR MFIM MFIM % MFIM
Net sales 32,1 5,4 30,1 2,0 7 122,2
Operating expenses 31,6 5,3 27,2 4,4 16 114,3
Operating profit 0,5 0,1 2,9 -2,4 -83 7,9
Financial expenses
(net) 0,0 0,0 0,3 -0,3 -100 3,0
Profit before
extraordinary items 0,5 0,1 2,6 -2,1 81 4,9
Extraordinary items 0,0 0,0 0,0 0,0 2,0
Profit before taxes 0,5 0,1 2,6 -2,1 -81 6,9
Profit for the period -0,2 0,0 2,6 -2,8 -108 4,1
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Group Balance Sheet
31.3.2000 31.3.1999 31.12.1999
Assets MFIM MEUR % MFIM % MFIM %
Fixed assets 51,9 8,7 34 56,3 50 52,5 36
Inventories and
financial assets
Inventories 15,1 2,5 10 14,8 13 14,1 10
Receivables 36,5 6,1 24 31,3 28 37,3 25
Liquid funds 50,0 8,4 32 10,2 9 42,9 29
Total assets 153,5 25,7 100 112,6 100 146,8 100
Liabilities and
shareholders'
equity
Shareholders'
equity
Share capital 12,8 2,1 8 10,2 9 12,4 8
Share premium fund 88,6 14,9 58 61,2 54 84,2 58
Accumulated
Profits / losses -0,1 0,0 0 -26,6 -24 0,0 0
Capital loans 8,7 1,4 6 8,3 7 8,6 6
Minority interest 0,3 0,1 0 0,3 0 0,3 0
Provisions 0,0 0,0 0 2,7 2 0,1 0
Long-term
liabilities 15,4 2,6 10 27,6 24 17,0 12
Short-term
liabilities 27,8 4,6 18 28,9 26 24,2 16
Total liabilities
and shareholders'
equity 153,5 25,7 100 112,6 100 146,8 100
1-3/00 1-3/99 Change Change-% 1-12/99
Investments,
gross
Fixed assets MFIM 3,0 1,8 1,2 67 7,6
Staff, average 185 175 10 6 184
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31.3.2000 31.3.1999 31.12.1999
Mortgages and shares pledged
for liabilities, MFIM
Loans from financial
institutions 19,7 27,0 20,9
Corporate mortgages 20,1 20,1 20,1
Pledges given 0,0 0,3 0,4
Total 20,1 20,4 20,5
Other commitments, MFIM 0,0 1,1 1,2
Leasing commitments, MFIM 20,6 19,2 21,8
Ratios per share
Earnings per share, FIM -0,02 0,26 0,24
Shareholders' equity
per share, FIM 8,01 4,37 7,88
Derivative Contracts
The Group does not have any off balance sheet financial instruments.
Interest on Capital Loans
The unrecorded interest accrued on capital loans on March 31, 2000
totalled to MFIM 1,8 and on December 31, 1999 to MFIM 1,7.
The figures of the Interim Report are unaudited.
Biohit will publish the following Interim Reports for 2000 on August
15 and November 8.
Helsinki, May 16, 2000
Board of Directors of Biohit Plc.
Biohit Plc.
Helena Hentola
Information Management
Additional information: Osmo Suovaniemi, President & CEO, tel: +358-9-
773 861, direct: +358-9-773 86 250, mobile:
+358-50 556 5605, fax: +358-9-773 86 205
http://www.biohit.com
Distribution: Helsinki Exchanges
The Financial Supervisory Authority
Press
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Overview on Biohit
Biohit manufactures liquid handling products and accessories and
develops diagnostic test systems for use in research, health care and
industrial laboratories. Currently, the range of electronic and
mechanical liquid handling products of Biohit is the widest in the
world. Biohit is also the global market leader of electronic pipettors
with an approx. 70% share of world markets. In the area of diagnostics
Biohit develops, manufactures and markets monoclonal antibodies for
the detection of different types of cancer. The Company is also
developing a test panel, e.g., for the screening of gastric cancer,
peptic ulcer and lactose intolerance. It has been estimated that the
market potential for the diagnostic tests of the Company protected by
patents and patent applications totals to USD 5,0 billion. As a result
of the diagnostic tests, which together with the other product lines
of the Company will form analyzing systems, Biohit is developing into
a strongly growing biotechnology company.
The net sales of the Biohit Group in 1999 totalling to MFIM 122,2 was
22 % and the profit before extraordinary items (MFIM 4,9) 81 % higher
than in the previous year. As a result of the directed share issue
carried out in June 1999 the Company received approx. MEUR 9,0 in new
capital and listed on the New Market -list of Helsinki Exchanges.
Future Prospects of Biohit
Since its founding in 1988 Biohit has established itself on world
markets with its innovative, high technology liquid handling products.
The extensive patent protection of Biohit's existing and future
products both in Finland and abroad has formed a solid and safe basis
for the global co-operation and future growth of the Company.
Biohit possesses a strong international marketing network and co-
operates with many multinational companies such as bioMérieux, Johnson
& Johnson and 3M. Biohit is a high technology company offering liquid
handling devices and instruments, which is transforming with its
diagnostic tests and related devices also into a biotechnology
company. Through its subsidiary network the Company has successfully
penetrated its most important market areas. In 1999 already 62% of the
net sales was generated by the subsidiaries. The main users of
Biohit's products are different types of research, industrial and
health care laboratories. Moreover, the companies previously mentioned
as well as others complement with Biohit's products and technologies
their own product ranges and diagnostic analyzing systems.
Biohit's innovative products, which have been developed by utilizing
various fields of science and technologies, have a market potential of
USD billions.
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The value of the total market for mechanical and electronic liquid
handling devices (pipettors) and their disposable tips is approx. MUSD
500 annually. According to Biohit's estimate the market potential may
even exceed MUSD 1500 when taking into consideration Biohit's new
technologies and innovations as well as the new market segments for
the future products. Moreover, the maintenance and accredited
calibration services offered by the Company as well as software
increase the market potential and the size of the traditional markets.
The value of the total market for liquid handling instruments
developed around microplates and microplates (8x12, 16x24 or 32x4 -
well cuvette matrix tray, which has become a global standard),
measurement instruments as well as automates performing liquid
handling and measurement is of the magnitude of over MUSD 1000
annually. These markets are based on the invention of vertical
photometry made by Dr. Osmo Suovaniemi at the turn of 1960-1970 and
its numerous microplate and other applications. Since at that time the
persons involved were only learning the skills of patenting the
invention of vertical photometry as well as the pipette inventions
made by Dr. Suovaniemi in the 1960-1970s were copied and adopted in
many different ways by numerous companies. As a result these two
inventions have become global standards for laboratory work. Biohit's
invention of electronic pipettors can be considered a new global
standard, the copying of which is not possible due to patent
protection by the Company.
Today the experience and knowledge of Biohit's management and patent
attorneys are at the level, which ensures that the Company's
immaterial assets and products can be protected reliably. By using its
patented liquid handling technology Biohit develops at the first
stage, in addition to the electronic pipettors mentioned earlier,
different types of liquid handling instruments for microplates. In
order to enhance the market entry of the microplate measurement
instruments and the deliveries of complete analyzing systems Biohit
will acquire in co-operation with certain companies different types of
instruments for microplates, which employ the vertical measurement
principle.
The aforementioned inventions by Suovaniemi, i.e., the single- and
multichannel adjustable pipettors and the principle of vertical
measurement together with its microplate instrument applications have
in an epochal way enhanced laboratory work. Today, these inventions
are utilized in practically all laboratories where liquid handling
products and measurement instruments are used and especially in the
development of new laboratory procedures related with diagnostics and
other forms of biotechnology. These inventions have contributed to the
worldwide development of safe, reliable and economical microplate-
based immunodiagnostic tests, e.g., for the detection of infectious
and cancer diseases. Today the size of the global markets for these
immunodiagnostic tests is annually of the magnitude of USD billions.
Biohit's immunodiagnostic tests are based on the use of the Company's
microplate, liquid handling products as well as the microplate liquid
handling and measurement instruments.
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It has been estimated that the market potential for Biohit's
diagnostic products is USD 5,0 billion. Biohit's test panel
(pepsinogen I- and II-, gastrin-17 and helicobacter pylori -tests) for
screening the risk of gastric cancer and peptic ulcer together with
the tests for diagnosing lactose intolerance and celiac disease are
evaluated clinically. The evaluations produce research results
required, e.g., for the approval and registration purposes for the
products. Prior to receiving approvals these tests, which are
protected by patents and patent applications, can be sold for research
use without approvals and after receiving the approvals also for
clinical use through the different marketing channels (see Biohit's
annual report 1999, end note 1).
The marketing and sales of Biohit's diagnostic products will be
organized as follows:
1. Biohit's subsidiaries in France, Germany, Italy, Japan, Russia, the
U.K. and the U.S. will supply products directly to end users. Each of
these marketing & sales units has regional distributors, which are
specialized in diagnostic products.
2. Many of Biohit's 50 distributors and their subdistibutors totalling
altogether to over 200 are specialized also in the marketing and sales
of diagnostic tests and analyzing systems. The liquid handling
products and diagnostic tests form together with the liquid handling
and measurement instruments complete analyzing systems.
3. Two companies belonging to the Johnson & Johnson Group, Beckman
Coulter, Becton Dickinson, bioMérieux and 3M are Biohit's OEM-
customers (see end note 2) and their product ranges include, e.g.,
different cancer tests. Biohit's diagnostic can complement, e.g., the
test panels of the analyzing systems of many companies. The automatic
diagnostic test systems of the companies are closed ones so that no
other tests except those manufactured by the companies themselves fit
the systems without making individual adjustments. One company has
delivered to its customers already 10 000 analyzing systems, e.g., for
different types of cancer diagnosis tests. If Biohit adjusts its
diagnostic tests to fit the closed systems and delivers, e.g., 5 test
panel packages for one system annually, this will, in theory, result
in nearly MUSD 20 in the sales of Biohit's tests per annum.
Prospects for Growth and Profit for Year 2000 and Onwards
The net sales for 2000 will continue to be primarily generated by the
sales of liquid handling products. The management believes that, as a
result of the new liquid handling products and market segments, the
net sales and profit of the Company will grow both in the short and
long run.
In order to realize the strong growth in net sales and profit in the
following years the Company has invested more than anticipated in the
clinical evaluations, manufacturing and marketing of the diagnostic
products. This will naturally burden the result for 2000. In 2000
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diagnostic products will primarily be sold for research use and as of
2001 also for clinical use. If the Company succeeds in taking
advantage of even a small part of the market potential for the
diagnostic products, it can be anticipated that the growth and
development of the profit of the Company will be very strong.
Likewise, the Company has invested in the development of liquid
handling and measurement instruments as well as in their co-operative
ventures. In 2000 Biohit will begin delivering also instruments with
its liquid handling and diagnostic products. As a result, the customer
will receive a complete analyzing system especially for determining
the risk for gastric cancer and peptic ulcer from blood samples. The
Company expects that the launch of different kinds of instruments
together with their accessories and supporting services will for their
part contribute to the strong growth and favorable profit development
in the years to come.
The management of Biohit believes that the investments made with the
funds received from the directed issue in June 1999 in the development
of the Company, including acquisitions in the U.S. and Russia, will
contribute, as of 2001, to the strong growth and favorable development
of the profit. This view is supported by the considerable market
potential for Biohit's liquid handling products, diagnostics and
instruments as well as analyzing systems formed from them and by the
growth of this potential resulting from the Company's new innovations
and market segments. Various technological choices and innovations
protected by patents and patent applications of Biohit have already
been tested on world markets and approved by both customers and co-
operation partners. Biohit has established an extensive distributor
network on international markets and engages in co-operation with
multinational companies. The company has also established six
subsidiaries on its most important market areas. This has resulted in
high-margin sales directly to end users and the reinforcement of
Biohit's brand and image worldwide. The option program and ownership
of shares motivate the entire personnel both in Finland and abroad.
The management of Biohit Plc. and its subsidiaries possess long-term
experience and in-depth know-how of the field and prior proof of
international success.
End notes:
1. Biohit's Annual Report 1999, http://www.biohit.com/news.htm
2. OEM, Original Equipment Manufacturer: Biohit has tailored its
electronic pipettors and their microprocessor-controlled programs so
that the pipettors and disposable tips used in connection with the
pipettors complement the diagnostic analyzing systems of Beckman
Coulter, Becton Dickinson, bioMérieux, Johnson & Johnson and 3M. For
its German competitor Eppendorf Biohit has tailor-made three different
electronic pipettors and licensed worldwide a patent for the
development of Eppendorf's new generation of mechanical pipettors.
