INTERIM REPORT OF THE BIOHIT GROUP 1 JAN ? 30 JUNE 2005
BIOHIT OYJ STOCK EXCHANGE RELEASE 5 AUGUST 2005 AT 10:00 AM
INTERIM REPORT OF THE BIOHIT GROUP 1 JAN 30 JUNE 2005
The Biohit Group had total net sales of EUR 13.6 million during
the reporting period, the first two quarters of 2005 (EUR 13.5
million in 1Q-2Q/2004). The operating loss for the reporting
period came to EUR 0.6 million (operating profit EUR 0.4 million).
The loss for the reporting period was EUR 0.6 million (profit EUR
0.3 million). Biohit focused on the international marketing of
liquid handling and diagnostic products as well as on the
acquisition of evaluations and authority approvals for its
diagnostic products.
The interim financial 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 Group net sales remained at the same level as during
the corresponding period in 2004 and totalled EUR 13.6 million
(EUR 13.5 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 growth was lower than expected due to a decline in the growth
of liquid dispensing product sales and to a delay in the launch of
diagnostic product sales. The liquid handling business net sales
were EUR 13.0 million (EUR 13.1 million), the net sales for the
diagnostics business being EUR 0.6 million (EUR 0.4 million).
Result
The operating loss was EUR 0.6 million (operating profit EUR 0.4
million). The loss for the reporting period was EUR 0.6 million
(profit EUR 0.3 million).
The operating profit of the liquid handling business was EUR 0.7
million (EUR 1.5 million), the operating loss of the diagnostics
business being EUR 1.3 million (EUR 1.1 million). The decreased
profitability is due to the sales development for liquid handling
products being weaker than expected, as well as to an increase in
fixed expenses. The sale of diagnostics products increased clearly
but the growth 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.
In addition to the Groups current tax for the period, the change
in deferred tax liabilities and assets in respect of taxable
temporary differences has been taken into account.
Balance sheet
The balance sheet total was EUR 23.3 million (EUR 23.5 million)
and the equity ratio was 59.0% (62.6%) on 30 June 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.
Liquidity
During the reporting period, the operating activities had a net
cash flow of EUR 0.4 million (EUR 1.0 million). The net increase
in interest-bearing liabilities amounted to EUR 0.2 million in the
reporting period. At the end of the reporting period, the liquid
assets of the Group totalled EUR 1.2 million (EUR 1.4 million).
Investments
Gross investments in the reporting period totalled EUR 0.8 million
(EUR 0.8 million). The investments consisted mainly of machinery
and equipment acquired for the automation of liquid handling
product manufacture at the Kajaani plant and also included the
acquisition of injection moulding tools used in the manufacture of
liquid handling products.
Personnel
The average number of personnel in the reporting period was 296
(295), with 161 (168) persons being employed by the parent company
and 135 (127) by the subsidiaries.
Personnel negotiations
As part of the measures to improve operational efficiency, and in
order to streamline personnel-related costs, the company started
personnel negotiations in the end of June 2005. According to
preliminary plans, a maximum of 17 employees in Helsinki may be
temporarily dismissed; alternatively, the working hours of a
maximum of 25 employees may be shortened, if other measures to
improve operational efficiency, reduce costs and increase the net
profit are insufficient.
Main events of the first quarter of 2005
Liquid handling business area
Biohits liquid handling business includes mechanical (the mLINE
and Proline product ranges) and electronic (the eLINE, Proline,
ePET, rLINE, Midi, and XL product ranges) 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 (such as GastroSoft),
forming comprehensive analysing systems for research and clinical
diagnostics.
During the reporting period, Biohit began supplying multichannel
electronic pipettors based on the eLINE electronic pipettor model
as well as pipettor tips for the international group bioMérieux.
bioMérieux will integrate these products in its globally marketed
DNA analyzer. In addition to these, bioMérieux uses several other
OEM (Original Equipment Manufacture) and private label (PL)
products manufactured by Biohit in connection with its systems,
e.g. a single-channel electronic OEM-pipettor produced by Biohit
with an analysing system, as well as mechanical private label
pipettors produced by Biohit with diagnostic test applications.
During the reporting period, Biohit launched certified DNase,
RNase and endotoxin free pipettor tips. DNase, RNase and endotoxin
free tips are especially important in medical and bioscientific
research, where sample contamination can have a detrimental impact
or even result in completely wrong results.
The certified pipettor tips are manufactured in a protected
environment with cleanroom production methods. The entire
manufacturing process has been automated in order to avoid
contamination by human contact. Biohit has multiple samples from
each batch of tips tested in an independent laboratory.
VWR International Inc. awarded Biohit Inc., a US-based subsidiary
by Biohit, for being a Consumable or Chemicals supplier who best
differentiated VWR International through dedicated marketing
programs for VWRs customers and sales organisation. The award was
given at the VWR International Sales Meeting in January 2005 in
San Diego CA. VWR International is one of the worlds leading
organisations in the distribution and sales of laboratory devices,
diagnostic products, reagents and instruments.
The growth of the total liquid handling product market has abated
in many western countries. Due to this, Biohit will focus on the
following business areas, among others:
- Strengthening of its operations in Asia, particularly in China
- Development of new OEM technologies and products
- Development of maintenance services
For the liquid handling business the intensified business
activities in China means that the company will increase the
assembly capabilities and sourcing of materials and services on a
local level for these products. The main objective is to configure
the products to the Asian market, in particular China, in a more
efficient manner. The collaboration between the operations in
China and Finland also allows for more cost-efficient production
on a Group level.
Biohit is the global market leader in the manufacture of
electronic, tailor-made OEM pipettors. The most significant change
in customer demand is the greater integration between pipettors
and analysis systems. Biohit has developed two new technology
platforms to meet these needs. The company has already started to
deliver products based on these new technologies to a Canadian
instrument supplier, and several other customer projects are
ongoing.
Pipettor calibration and maintenance services are the fastest
growing sector of the liquid handling business. In some
subsidiaries, this important business area already accounts for
more than a quarter of the total net sales. 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 antibodies), e.g. for the diagnosis of upper
abdominal complaints (dyspepsia), as well as biopsy specimen
quick tests for the diagnosis of lactose intolerance and
Helicobacter pylori infection. The companys diagnostic tests are
combined with pipettors, instruments and related software (such as
GastroSoft) to provide comprehensive analysing systems for
research and clinical diagnostics.
In July, after the end of the reporting period, 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 (Biohit stock
exchange release, published on 29 July 2005).
During the reporting period, the company has signed a contract
with Da An Gene Co., Ltd., owned by the Sun Yat-sen (Zhongshan)
University (www.daangene.com), for the marketing and sales of
GastroPanel in China. Da An Gene is the second largest
organisation for the development and sales of diagnostics products
in China.
After the end of the reporting period, on 26 July 2005, Biohit
made an agreement with Panbio Ltd (www.panbio.com.au) on the
distribution of diagnostic products in Australia and New Zealand.
During the first quarter of 2005, the lactose intolerance and H.
pylori quick tests patented by Biohit were cleared for marketing
and distribution in the Russian market. Biohit aims to make these
unique quick tests a part of every carefully performed gastroscopy
and biopsy specimen examination.
After thorough testing, the worlds largest service laboratory
Quest Diagnostics has approved and introduced the GastroPanel
examination in its own UK programme. Quest now offers the
GastroPanel examination in its own laboratory services in the UK
market area.
Biohits diagnostics comply with EU standards and regulations,
allowing EU-wide marketing and distribution of all its diagnostics
products. In addition to the recently granted marketing
authorization for China, GastroPanel has also been cleared for
marketing in India, Canada and Russia. The GastroPanel tests for
pepsinogen I and II are still being evaluated by the US Food and
Drug Administration (FDA). In Japan, the clinical research data
required for a similar approval is currently being collected.
A total of 23 evaluations (with approximately 17,000 patients) and
clinical research utilising GastroPanel have been conducted in
Europe, North America and Asia, and another 35 studies comprising
35,000 patients are still ongoing (for results, see articles:
www.biohit.com / Diagnostics / Literature).
In the light of current research data, the GastroPanel examination
promotes evidence-based medicine as follows:
1) In the diagnosis and treatment of functional and organic
dyspepsia, Helicobacter pylori infection, atrophic gastritis and
the associated risks (gastric cancer, peptic ulcer and vitamin B12
deficiency).
2) In monitoring the success of treatment for Helicobacter pylori
infection and atrophic gastritis.
3) In monitoring the status of mildly symptomatic or often
asymptomatic atrophic gastritis and the related risks, associated
with Helicobacter pylori infections and autoimmune disease.
Monitoring the incidence of atrophic gastritis and a possible
increase or decrease in its severity promotes targeted, safe
treatment and decreases the costs and adverse effects of
medication. If the patient has not been diagnosed with peptic
ulcer disease, the Helicobacter pylori infection only needs to be
treated if the patient is developing atrophic gastritis or the
patient and doctor agree on eradication treatment for other
reasons (e.g., close relatives have been diagnosed with gastric
cancer; in some cases the Helicobacter pylori infection may lead
to a risk of gastric cancer and peptic ulcer not associated with
atrophic gastritis).
4) In assessing the risk of gastroesophageal reflux disease.
In Western countries, 20-40% of the population suffer from
dyspeptic problems (upper abdominal complaints and pain). Over 50%
of the global population (e.g., in Russia, China and many other
Asian countries 60-90%) has Helicobacter pylori infection. Almost
50% of this population will develop atrophic gastritis atrophy and
dysfunction of the mucosa of the stomach) and related risks
(gastric cancer, peptic ulcer and vitamin B12 deficiency). The
prevalence of gastroesophageal reflux disease is over 20% in
Western countries, with almost 50% occasionally suffering from
symptoms of the disease.
Biohit intensifies its business activities in China
In order to meet the demand of Biohit products in China and some
other Asian countries in an efficient and economic manner, Biohit
Oyj is currently preparing to begin the assembly and manufacture
of liquid handling, diagnostics and other products in China in
2006. This will also involve local sourcing of materials and
services. 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 (Biohit Stock
Exchange Release, July 29th 2005). Another factor speeding up the
preparations is the great need and growing demand for GastroPanel,
other Biohit products and functional entities consisting of all
Biohit products (analysis systems), particularly in China.
Equity Turnover and Price Development
During the reporting period, the total turnover of Biohits B-
shares on the Helsinki Exchange NM list amounted to EUR 1,831,607,
and the number of shares traded was 883,736. The highest share
price was EUR 2.55 and the lowest EUR 1.75, the average price
being EUR 2.07. The closing price at the end of the reporting
period was EUR 1.80. On 30 June 2005, the market capitalisation
value for the B shares totalled EUR 16,311,829.
Prospects for 2005
The company expects the decline in net sales growth during the
first half of the year to be overcome during the second half. The
opening of new distribution channels in places such as China is
expected to boost net sales of both liquid handling and diagnostic
products.
The recovery in net sales growth, coupled with the ongoing
programme to increase operational efficiency, is expected to have
a positive impact on profits.
Group income statement
1-6 1-6 1-12
2005 2004 Change Change 2004
MEUR MEUR MEUR % MEUR
Net sales 13,6 13,5 0,1 1 26,7
Other operating income 0,1 0,1 0,0 20 0,2
Change in inventories of
finished goods and work in
progress 0,1 -0,3 0,4 -139 -0,5
Raw materials and
consumables -2,3 -2,0 -0,3 14 -4,4
External services -0,5 -0,3 -0,2 61 -0,7
Personnel expenses -6,2 -5,6 -0,5 9 -10,7
Depreciation -0,8 -0,8 0,0 9 -1,5
Other operating expenses -4,6 -4,1 -0,5 -11 -8,9
Operating profit / loss -0,6 0,4 -1,0 -237 0,2
Finance costs (net) -0,0 0,0 -0,0 75 -0,2
Profit / loss before tax -0,6 0,4 -1,0 -250 0,0
Direct taxes 0,0 -0,1 0,1 -72 -0,2
Profit / loss for the period -0,6 0,3 -0,9 -342 -0,2
4-6 4-6
2005 2004 Change Change
MEUR MEUR MEUR %
Net sales 7,3 6,9 0,4 5
Other operating income 0,1 0,0 0,1 224
Change in inventories of
finished goods and work in
progress -0,2 -0,3 0,1 -32
Raw materials and consumables -1,0 -0,9 -0,1 3
External services -0,3 -0,2 -0,1 66
Personnel expenses -3,2 -2,9 -0,3 10
Depreciation -0,4 -0,4 0,0 9
Other operating expenses -2,2 -2,0 -0,2 11
Operating profit / loss 0,1 0,2 -0,1 -70
Finance costs (net) -0,1 0,0 -0,1 374
Profit / loss before tax 0,0 0,2 -0,2 -70
Direct taxes 0,0 0,0 0,0 -40
Profit / loss for the period 0,0 0,1 -0,1 -82
Group net sales by business segment
1-6 1-6
2005 2004 Change Change
MEUR MEUR MEUR %
Liquid handling 13,0 13,1 -0,1 -1
Diagnostics 0,6 0,4 0,2 68
Group operating profit / loss by business segment
1-6 1-6
2005 2004 Change Change
MEUR MEUR MEUR %
Liquid handling 0,7 1,5 -0,8 -54
Diagnostics -1,3 -1,1 -0,2 -15
Group balance sheet
30.6.2005 30.6.2004 31.12.2004
Assets MEUR % MEUR % MEUR %
Non-current assets
Property, plant and
equipment 6,6 28 6,4 27 6,8 30
Goodwill 2,6 11 2,6 11 2,6 12
Other intangible
assets 1,4 6 0,9 4 1,2 5
Deferred income tax
assets 1,9 8 2,1 9 1,9 8
12,5 53 12,0 51 12,6 55
Current assets
Inventories 4,1 18 4,0 17 3,6 16
Trade and other
receivables 5,5 24 6,1 26 5,3 23
Cash and cash
equivalents 1,2 5 1,4 6 1,3 6
10,8 47 11,5 49 10,2 45
Total assets 23,3 100 23,5 100 22,8 100
Equity and
liabilities
Share capital 2,2 10 2,2 10 2,2 10
Share premium fund 12,8 55 13,1 56 13,1 57
Retained earnings -1,4 -6 -0,7 -3 -1,2 -5
Total equity 13,6 59 14,6 63 14,1 62
Long-term
liabilities
Interest-bearing
debt 4,2 18 3,5 15 3,8 17
Deferred income tax
liabilities 0,1 0,1 0,1
Retirement benefit
obligations 0,1 0,2 0,1
Other long-term
liabilities 0,6 3 0,6 3 0,6 3
Total long-term
liabilities 5,0 21 4,4 18 4,6 20
Short-term
liabilities
Trade and other
payables 3,9 16 3,5 15 3,0 14
Short-term interest-
bearing debt 0,8 4 0,9 4 1,0 4
Total short-term
liabilities 4,7 20 4,4 19 4,1 18
Total liabilities 9,7 41 8,8 37 8,6 38
Total equity and
liabilities 23,3 100 23,5 100 22,8 100
Cash flow statement
1-6/2005 1-6/2004 1-12/2004
MEUR MEUR MEUR
Cash flow from operating
activities:
Profit / loss -0,6 0,4 0,2
Adjustments 1,1 0,9 1,3
Change in net working
capital 0,0 -0,2 0,8
Interest and other
financial items paid -0,2 -0,2 -0,2
Interest received 0,1 0,2 0,1
Income tax paid 0,0 -0,1
Net cash flow from
operating activities 0,4 1,0 2,2
Cash flow from investment
activities:
Investments in tangible
and intangible assets -0,7 -0,8 -2,1
Investments in
subsidiaries 0,0 0,0 -0,1
Net cash flow from
investment activities -0,7 -0,8 -2,2
Cash flow from financing
activities:
Proceeds from borrowings 0,8 0,4 0,8
Repayment of borrowings -0,6 -0,3 -0,6
Net cash flow from
financing activities 0,2 0,1 0,2
Increase (+) / decrease (-
) in cash equivalents -0,1 0,3 0,2
Cash and cash equivalents
at beginning of period 1,3 1,1 1,1
Cash and cash equivalents
at end of period 1,2 1,4 1,3
Statement of changes in equity 30 June 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
Translation differences 0,1 0,1
Profit / loss of the period -0,6 -0,6
Equity 30.6.2005 2,2 12,8 0,1 -1,5 13,6
Statement of changes in equity 30 June 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
Translation differences
Profit / loss of the period 0,3 0,3
Equity 30.6.2004 2,2 13,1 0,0 -0,7 14,6
1-6/05 1-6/04 Change Change-% 1-12/04
Investments, gross
MEUR 0,8 0,8 0,0 4 2,2
% of net sales 6,0 5,8 7,7
Average number of
employees 296 295 1 0 291
Reconciliation of equity 30.6.2004
MEUR 30.6.2004
Equity under FAS 15,5
IAS 19 Employee benefits -0,2
IAS 39 Capital loans -1,2
IAS 23 Interests on capital loans -0,6
IFRS 3 Goodwill amortization 0,1
IAS 17 Financial leasing 0,0
IAS 12 Deferred taxes 1,0
Equity under IFRS 14,6
Reconciliation of profit or loss for the period 1.1-30.6.2004
MEUR 30.6.2004
Profit / loss under FAS 0,1
IAS 19 Employee benefits 0,0
IAS 23 Interests on capital loans 0,0
IFRS 3 Goodwill amortization 0,1
IAS 17 Financial leasing 0,0
IAS 12 Deferred taxes 0,1
Profit / loss under IFRS 0,3
Mortgages and assets pledged for liabilities and leasing
commitments
30.6.2005 30.6.2004 31.12.2004
MEUR MEUR MEUR
Mortgages and
pledged assets
Loans from financial
institutions 2,5 2,4 2,4
Corporate mortgages 1,6 3,4 1,6
Mortgages on real estate 1,4 1,5 1,4
Other long-term liabilities 0,6 0,8 0,6
Mortgages on real estate 0,8 0,8 0,8
Leasing commitments 3,9 3,8 4,2
30.6.2005 30.6.2004 31.12.2004
Key ratios
Equity ratio % 59,0 62,6 62,3
Earnings per share, EUR -0,05 0,02 -0,01
Shareholders equity per
share 1,06 1,13 1,09
Average number of shares 12.937.627 12.937.627 12.937.627
Number of shares at the end
of the period 12.937.627 12.937.627 12.937.627
Derivative contracts
The Group does not have any off-balance-sheet financial
instruments.
The figures in the Interim Report are not audited.
Helsinki, 5 August 2005
Board of Directors of Biohit Oyj
Additional information: Osmo Suovaniemi, M.D., Ph.D.
Professor
President & CEO
Tel: 09-773 861, GSM: 040-745 5605
Email: osmo.suovaniemi@biohit.com
http://www.biohit.com
Distribution: Helsinki Exchanges
Financial Supervisory Authority
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