Perbio Science AB, Interim Report January - June 2002

Perbio Science AB Interim report January-June 2002 Continued strong growth · Net sales up 24% to SEK 1,108 (896) million · Operating profit before amortisation of goodwill up 28% to SEK 210 (164) million · Profit after financial items up 25% to SEK 190 (152) million after exchange losses of SEK 2 million (gains of SEK 15 million) and up 40% excluding exchange rate effects · Net profit up 26% to SEK 116 (92) million · Strong interest in the innovative production technology at the new media factory in Logan, USA · New raw materials base for serum production established in Canada · Summary: January-June 2002 Perbio Science has continued to cement its position in the market. There was strong growth at the Cell Culture and Medical Device divisions and the Bioresearch division's protein business. Lower sales from the plant in Milwaukee during the second quarter brought down the Bioresearch division's overall growth. Sales for the period climbed 24% to SEK 1,108 (896) million. The Cell Culture and Medical Device divisions posted growth of 46% and 24% respectively, while the Bioresearch division's sales were a marginal 1% up on last year. The protein research business, which is the largest and most important part of Bioresearch, reported growth of 15%, which we believe to be above the market average. Sales at the molecular biology business in Milwaukee were down SEK 31 million on last year's figure. Compared to the same quarter last year it is important to note that in June 2001 the only order for BSE tests was delivered, worth SEK 10 million. Relative to last year, the USD was an average of 1.4% up against the SEK during the first half but 4.4% down during the second quarter. The group's gross margin is 1.1% lower than last year due to low amidite prices and an increase in the Cell Culture division's share of the group's overall sales. Profit before amortisation of goodwill increased by 28% to SEK 210 (164) million. Net profit climbed 26% to SEK 116 (92) million. Research and development expenses increased by 31% to SEK 67 (51) million and now account for 6.0% (5.7%) of the group's sales. The main benefactors have been the Bioresearch division and the Cell Culture division's BioProcess Container (BPC) and serum-free/protein-free cell culture media businesses. The weaker USD has also affected net financial items and the balance sheet. The USD exchange rate of SEK 9.16 on 30 June 2002 was down 16% from SEK 10.85 and compared to 31 December 2001 down 14% from SEK 10.67. The weaker USD has had a positive impact on the return on both equity and capital employed. The second quarter saw the new plant for the production of cell culture media based on BPC technology entering the final stage of the validation and sales are planned for Q4. The divisions: January-June 2002 Bioresearch Sales totalled SEK 417 (412) million. Relative to last year, the division's strategically most important business - products for protein analysis - grew by 15% during the first half and 22% during the second quarter in the local currency (USD). Sales from the plant in Milwaukee were down around 24% on the same period last year. The division has won back the amidite customers lost during the autumn and volumes at the end of the period were up on last year. However, prices have fallen by around 27%. In USD terms, amidite sales during the second quarter were 22% up on the first quarter. The continuing strong order situation underlines Perbio Science's strong position as an amidite manufacturer. Price levels are expected to improve gradually and steps have been taken to increase margins in other ways. The figure for the second quarter of 2001 includes sales of BSE (mad cow disease) tests worth around SEK 10 million, which is equivalent to 5% of that quarter's sales. The division's gross margin narrowed slightly relative to the same period last year because of the 27% drop in amidite prices. Margins on other products increased, due partly to a higher proportion of sales being channelled through subsidiaries directly to end-customers in Europe and partly to new products accounting for a higher proportion of sales. Cell Culture Sales rose by 46% to SEK 602 (412) million. Both sales and margins continued to improve in all three product areas: Serum, Cell Culture Media and BioProcess Containers (BPCs). The fastest growth was in serum-free/protein-free cell culture media. This high rate of growth is attributable to increased market share and growing demand for BPCs and cell culture media. Prices for high-quality serum have also increased somewhat, with the average price up 9% on the second quarter last year. The division started up an operation in Canada during the second quarter to further safeguard access to raw materials for serum production. The division has continued to step up its investment in research and development in BPCs and special cell culture media. The second quarter saw the new plant for the production of cell culture media based on BPC technology entering the final stage of the validation and sales are planned for Q4. The new technology offers a strong alternative to traditional production plants and enables customers to rationalise their own production. Interest among customers in the new single-use production system based on BPC technology has been growing rapidly. The second quarter also brought the annual Williamsburg BioProcessing Conference in Salt Lake City, which gave 120 prospective customers an opportunity to see the new production plant. Discussions are currently under way with a number of important customers on the BPC technology. Medical Device Sales climbed 24% to SEK 89 (72) million. The division reported rapid growth in two areas during the period: voice prostheses/heat & moisture exchangers (HMEs) and contract production of obesity products. HMEs were the fastest-growing product group. A decision has been taken to set up a sales subsidiary in Germany, which is the largest market in Europe. This will result in better sales margins. Sales Net sales Perbio Science recorded net sales for the period of SEK 1,108 (896) million, an increase of 24% relative to the same period last year. Of this increase, 1.1 percentage points are attributable to the 1.4% appreciation of the USD relative to the same period last year from an average of SEK 10.07 to an average of SEK 10.22. During the second quarter the USD was an average of 4.4% down on last year, so reducing second-quarter sales by around 3.5%. Earnings Operating profit before amortisation of goodwill Operating profit before amortisation of goodwill rose 28% to SEK 210 (164) million, corresponding to a margin of 19.0% (18.3%). Exchange rate effects boosted operating profit in the same way as net sales. Research and development expenses increased by SEK 16 million to SEK 67 (51) million, equivalent to 6.0% (5.7%) of net sales. Profit after financial items Profit after financial items was SEK 190 (152) million, an increase of 25%. The net financial items figure of SEK -10 (-2) million includes exchange rate losses of SEK 2 million (gains of SEK 15 million). Net profit The net profit for the period was SEK 116 (92) million, an increase of 26%. Tax The tax rate for the period was an estimated 38.5%, which is currently also expected to be the group's tax rate for the 2002 financial year as a whole. Other information Accounting policies The accounting policies applied are unchanged from the latest annual report and comply with the Swedish Annual Accounts Act and the recommendations of the Swedish Financial Accounting Standards Council. Investments Investments in fixed assets, excluding acquisitions, totalled SEK 64 (30) million. Of this, around SEK 47 million was attributable to new construction in progress and buildings. Depreciation totalled SEK 36 (35) million. Cash flow Perbio Science generated net cash flow of SEK -8 (124) million and cash flow from operations of SEK 103 (165) million during the period. Liquidity The group had liquid assets of SEK 78 (177) million and unused credit facilities of SEK 309 million at the end of the period. Net interest- bearing debt totalled SEK 391 (481) million. Equity Shareholders' equity decreased by SEK 22 million to SEK 1,071 (1,093) million during the period. This breaks down into a reduction of SEK 151 million due to translation differences offset by an increase of SEK 13 million from the exercise of warrants and the net profit for the period of SEK 116 million. The equity/assets ratio was 59% at the end of the period. Personnel The group had 1,181 (1,017) employees at the end of the period. Acquisitions during the period brought in 30 new employees. Parent company The parent company generated net sales of SEK 9 (8) million and a loss after financial items of SEK 4 million (profit of SEK 12 million). It had liquid assets of SEK 60 (118) million and unused credit facilities of SEK 295 (52) million at the end of the period. The company made no investments in equipment during the period and had five employees. Extraordinary general meeting The board has decided to call an extraordinary general meeting on 27 August 2002 to recommend an incentive scheme for senior officers in the USA involving the issue of 210,000 warrants, equivalent to maximum dilution of 0.6%. Financial information and extraordinary general meeting 27 August Extraordinary general meeting 23 October Third-quarter interim report February 2003 Year-end report 2002 Helsingborg, 7 August 2002 The board of Perbio Science AB Information on Perbio Science CEO Mats Fischier tel +46 42 26 90 91 or +46 70 595 18 21 CFO Claes Wenthzel tel +46 42 26 90 92 or +46 70 862 01 22 More information on Perbio Science can be found on the company's website at www.perbio.com. This interim report has not been reviewed by the company's auditors. Perbio Science AB is a listed Swedish biotechnology company with research institutes, pharmaceutical companies and diagnostics companies as its customers. The USA accounts for the bulk of its business. Perbio Science develops products in the Bioresearch, Cell Culture and Medical Device fields. The group has 1 181 employees and offices in Sweden, the USA and a number of other countries. Its head office is in Helsingborg, Sweden. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/08/07/20020807BIT00130/wkr0001.doc The full report http://www.waymaker.net/bitonline/2002/08/07/20020807BIT00130/wkr0002.pdf The full report