Interim report January - June 2013

JANUARY – JUNE 2013
- Net sales amounted to SEK 89.9 million (80.8)
- EBITDA was SEK -10.0 million (-20.2)
- Earnings per share totaled SEK -0.36 (-0.71) before dilution

APRIL – JUNE 2013
- Net sales amounted to SEK 43.9 million (38.6)
- EBITDA was SEK -8.5 million (-13.4)
- Earnings per share totaled SEK -0.23 (-0.42) before dilution

HIGHLIGHTS
Focus on inventory efficiency
- Cash flow from change in working capital amounted to SEK 21.3 million during the first six months
- Stabilization of inventory level

New share issue provides SEK 41 million
- Improved liquidity to support continued investments in development projects
- Strengthened capital structure through new share issue and conversion of debt to equity

Outlook 2013
- Focus on profitable growth 
- Maintained inventory efficiency

BUSINESS UPDATE
During the first six months of 2013, business has been characterized by continued efforts to streamline product flows and to reduce inventory. These efforts have been successful and as a result, the company has been able to release a considerable amount tied in working capital. Cash flow from change in working capital amounted to SEK 21.3 million (-9.1) during the first six months of 2013. However, to avoid stock-out situations, the reduction in inventory has to be balanced with expected product demand. Therefore, during the second quarter, we have seen an increase in new purchase orders and as a result, the company expects inventory to stabilize during the remainder of the year.

Bluefish net sales during the first half of 2013 amounted to SEK 89.9 million (80.8), corresponding to an increase of 11% compared to the same period in 2012. Net sales during the second quarter amounted to SEK 43.9 million (38.6), indicating an increase of 14% compared to the same period last year. Since 1 January 2013, Bluefish applies a new accounting principle for distribution costs. Prior to 1 January 2013, distribution costs were included in COGS, whereas they are now included in Selling expenses. Reflecting the new accounting principle, gross profit, excluding distribution costs, amounted to SEK 32.3 million (21.9) for the first half 2013, corresponding to a margin of 35.9% (27.2). For the second quarter, gross profit, excluding distribution costs, amounted to SEK 14.2 million (7.5), corresponding to a gross margin of 32.4% (19.4). During the first six months of the year, operating costs remained at a similar level compared to the same period last year. Total operating costs, excluding amortization and depreciation, but including distribution costs amounted to SEK 42.6 million (42.1) for the first half, indicating an increase of 1% compared to the first half of 2012. During the second quarter, total operating costs, excluding amortization and depreciation, but including distribution costs amounted to SEK 22.8 million (20.8), corresponding to an increase of 9% compared to the same period last year. The increase during the second quarter is partly explained by currencies but also increased R&D costs related to the company’s greater focus on its development projects. During the first six months of 2013, EBITDA amounted to SEK -10.0 million compared to SEK -20.2 in the same period 2012. During the second quarter EBITDA amounted to SEK -8.5 million (-13.4). Currencies have reduced EBITDA with SEK 0.8 million (-0.2) and with SEK 1.2 (-0.4) million for the first six months and second quarter, respectively.

Improved inventory turnover
During the second quarter 2013, inventory declined further. As per 30 June 2013, inventory amounted to SEK 84.8 million, compared to SEK 99.7 million as of 31 December 2012. Also, inventory turnover has improved significantly. At the current inventory level, volumes cover approximately 250 days of sales, which is a reduction in number of days of sales by approximately 33% compared to 30 June 2012 and by approximately 13% compared to 31 December 2012. For the second half of 2013, the company expects a stabilization of the inventory level in absolute terms. The further decline in inventory has, together with an increase in current liabilities which are associated with reserves for sales deductions, had a positive impact on the company’s cash flow. Cash flow from change in working capital during the first six months amounted to SEK 21.3 million (-9.1) and to SEK 3.5 million (-11.2) during the second quarter. Cash flow from operating activities amounted to SEK 9.1 million (-34.9) during the first six months and to SEK -6.9 million (-29.0) during the second quarter.

Outlook
The company continues the efforts to gradually balance the product portfolio with more niche and unique molecules that offer stable sales with higher margins. During the second half of 2013, we anticipate two bioequivalent studies to be initiated for our own development projects. In addition, we continue the search for interesting product opportunities. Following the operational efficiencies implemented during 2012, Bluefish expects an improvement in gross margins. Also, the existing organizational structure is well prepared for the expected increase in volumes during the year and operating costs should therefore increase only moderately.

For more information, contact

Karl Karlsson, President & CEO Bluefish Pharmaceuticals
Tel. 46 8 519 116 00
Email: karl.karlsson@bluefishpharma.com

Susanna Urdmark, CFO Bluefish Pharmaceuticals
Tel. 46 8 519 116 00
Email: susanna.urdmark@bluefishpharma.com

About Bluefish Pharmaceuticals
Bluefish has undergone significant international expansion since the company was founded in 2005. Bluefish focuses on the development, manufacture and sale of generic pharmaceuticals. The company conducts marketing operations in a large number of European markets and has a technology center in Bangalore, India. The product portfolio consists of a total of 80 products and is growing.

www.bluefishpharma.com