Year-end report January - December 2018
Continued strong growth and increased operating profit
Fourth quarter October – December 2018
- Net sales amounted to 234.6 MSEK (188.9), an increase by 24.2 percent compared to the corresponding quarter last year. At comparable exchange rates1) and adjusted for acquisitions sales increased by 7.9 percent.
- Operating profit increased by 11 percent to 35.7 MSEK (32.3).
- Result after tax amounted to 27.3 MSEK (34.6). The decrease is explained by the fact that reported tax increases by 10.5 MSEK to -8.1 MSEK (2.4). Reported tax includes changes in book value of deferred tax relating to activated fiscal deficits amounting to -5.1 MSEK (3.5).
- Earnings per share amounted to 0.42 SEK (0.54) before and after dilution.
- The cash flow from operating activities amounted to 51.6 MSEK (66.2).
- Net cash1) at December 31 was 67.6 MSEK (174.3). Cash and cash equivalents amounted to 177.0 MSEK (174.3). Interest-bearing liabilities amounted to 109.4 MSEK (-) relating to loans under a credit facility taken out in January 2018 in connection with the acquisition of Horizon Technology Inc. (Horizon).
- On December 4 Biotage entered into an agreement concerning the acquisition of all shares in the privately held company PhyNexus, Inc. (PhyNexus) in California, USA.
- On December 18 the Board of Directors in Biotage announced its intention to initiate negotiations regarding an acquisition of the Danish company Chreto ApS (Chreto) following a resolution not to exercise the existing call option to acquire all shares in Chreto.
Full year January – December 2018
- Net sales amounted to 910.9 MSEK (748.1), an increase by 21.8 percent compared to the corresponding period last year. At comparable exchange rates net sales increased by 8.0 percent.
- Operating profit increased by 29 percent to 172.5 MSEK (133.6).
- Result after tax increased by 21 percent to 167.6 MSEK (138.7).
- Earnings per share increased to 2.59 SEK (2.14) before and after dilution
- The cash flow from operating activities amounted to 155.0 MSEK (168.9).
- Dividends to the shareholders were paid in May to the amount of 90.6 MSEK (80.9).
- The Board of Directors intends to propose to the AGM that dividends to the shareholders relating to 2018 are paid to the amount of 1.50 SEK (1.40) per share. According to the dividend policy Biotage shall distribute at least 50 percent of the net profit.
Major events after the end of the financial year
- On January 2 the Board of Directors announced that a recruitment process has been initiated to hire a new CEO. The current CEO Torben Jørgensen has declared that he intends to continue as CEO until a replacement has been hired.
- On January 15 Biotage took possession of PhyNexus. The purchase price amounted to approx. 21.4 MUSD, corresponding to approx. 191.3 MSEK2), of this sum approx. 4.8 MUSD (approx. 43.3 MSEK) in cash payment and approx. 6.6 MUSD (approx. 58.6 MSEK) in newly issued shares were paid in connection with taking possession, and the remaining approx. 10.0 MUSD (approx. 89.3 MSEK) in expected future additional purchase price payments based on future results.
- On January 15 the Board of Directors decided to issue consideration shares for the acquisition of PhyNexus. The share issue will increase the number of shares of Biotage from 64,714,447 to 65,201,784, which will result in a dilution of 0.7 percent for existing shareholders.
1) See definition on pp. 17-18
2) Based on an exchange rate SEK/USD of 8.93
Comments by CEO Torben Jörgensen
It is with great pride that I look back on what Biotage achieved in 2018. Biotage sets a new sales record with sales exceeding 900 MSEK for the full-year. Once again we grow with profitability and the operating profit (EBIT) increases by more than 25 percent in 2018. The operating margin for the full-year improves by 1 percent to 18.9 percent, to be compared with Biotage’s new profitability target of an average of 20 percent over a three-year period. Biotage reaches the second financial target, a sales growth of 8 percent.
In the last quarter of the year as well as in the full-year Asia accounts for the strongest percentage growth rate. It is still the systems sales in organic chemistry that are driving the sales increase in this region. During 2018 we have initiated marketing activities for analytical chemistry in Asia and we will intensify these initiatives in 2019. The two more mature and single biggest markets for Biotage’s products, the Americas and Europe, continue to grow. These markets are not growing at the same expansive rate as Asia, but is satisfying that they both grow faster on a full-year basis than the global market for our products.
On October 1, 2018 Biotage launched a completely new technology platform in our biggest product area, Purification. The new flash purification system Biotage® Selekt together with the associated consumables Biotage® Sfär constitutes a significant investment in more efficient and more environment friendly purification. The launch has been well received by the market and we are looking forward with confidence to the continued sales of these products. In other parts of organic chemistry Biotage has worked successfully with selling in solutions for complete workflows to the customers. Also the sales development of Biotage’s industrial products has been healthy during 2018 and they accounted for no less than 10 percent of Biotage’s total sales at the end of the year. The analytical chemistry products had a somewhat lean year with lower growth than we expected.
The work with integrating Horizon Technology, Inc., which was acquired in January 2018, has progressed well. We have also worked on improving the margins in the acquired business and they are now on the same level as Biotage’s profitability in general. During the fourth quarter a production transfer was also started from our current contract manufacturer of the evaporation system V10 to Horizon. With these activities we bring the integration of Horizon a step further at the same time as we further increase capacity utilization and profitability in the acquired business.
In early December 2018 Biotage signed an agreement concerning the acquisition of another American company, PhyNexus, Inc. and we took over the operations on January 15 2019. With this acquisition we broaden our separation business to small-scale purification of biomolecules – an area which we for a long time have had ambitions to become a part of. The sales organization is now being strengthened in order to fully utilize the opportunities of the acquired business. We are also evaluating a transfer of PhyNexus’ instrument manufacturing to Horizon.
Biotage’s investment in a minority holding in Chreto A/S was also made with the intention of bringing Biotage further into the biomolecular area, and with opportunity to acquire all shares in Chreto at the end of 2018 at a predetermined price. We did however consider the predetermined price too high in relation to how far Chreto had progressed in the development and the future investments we believe to be necessary in order to commercialize the technology. Biotage therefore declined this opportunity, but at the same time opened up for a discussion of an acquisition at another valuation.
All in all 2018 was a fantastic year and we have created opportunities for 2019 to become equally exciting. We are looking forward with confidence to taking on PhyNexus’ products and technologies, and to establishing Biotage on the map for purification of biomolecules.
Coming financial reports
The Annual General Meeting 2019 will be held on April 24, 2019.
The interim report for the first quarter 2019 will be published on April 24, 2019.
The interim report for the second quarter 2019 will be published on July 16, 2019
The interim report for the third quarter 2019 will be published on November 5, 2019.
The year-end report for 2019 will be published on February 7, 2020.
The Annual Report for 2018 is planned to be made public in week 14 2019.
All reports are available at Biotage’s website from the above dates.
This report has not been reviewed by the company’s auditors.
Uppsala February 7, 2019
President and CEO
This information is information that Biotage AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 08.30 CET on February 7, 2019.
Biotage offers efficient separation technologies from analysis to industrial scale and high quality solutions for analytical chemistry from research to commercial analysis laboratories. Biotage’s products are used by government authorities, academic institutions, pharmaceutical and food companies, among others. The company is headquartered in Uppsala and has offices in the US, UK, China, Japan, South Korea and India. Biotage has approx. 405 employees and had sales of 911 MSEK in 2018. Biotage is listed on NASDAQ Stockholm. Website: www.biotage.com