two industry leaders, one solution provider

Size: px

Start display at page:

Download "two industry leaders, one solution provider"

Philippa McKinney
6 years ago
Views:

1 two industry leaders, one solution provider Sartorius Stedim Biotech Group Six-Month Report January to June 2007

Material Events The Sartorius Stedim Biotech Group (SSB) resulted from the combination of Stedim S.A. with the carved-out Biotechnology Division of the Sartorius Group.

2 Material Events The Sartorius Stedim Biotech Group (SSB) resulted from the combination of Stedim S.A. with the carved-out Biotechnology Division of the Sartorius Group. The combination was effected on June 29, 2007, as contribution in kind for increasing capital by contributing the Sartorius Biotech subgroup into Stedim S.A. against the issue of new Stedim shares. Immediately before that, Sartorius AG had already acquired 49.8% of Stedim S.A. shares at a price of per share from the founders of the company. As expected, none of the minority shareholders responded to the tender offer subsequently made. Following the completion of the entire transaction, Sartorius AG became the majority shareholder with a controlling stake in the company registered under the new name Sartorius Stedim Biotech S.A. Sartorius AG holds 69.8% of the shares and 73.0% of the voting rights in Sartorius Stedim Biotech S.A. Additional shareholders following their re-investment are the two Stedim founders, who together hold a 9.0% stake. Shares in free float are 21.3%. Sartorius AG Executive Board Chairman and CEO Joachim Kreuzburg was elected Chairman of the newly constituted Board and appointed Chief Executive Officer (CEO). Further executive members on the Board are Liliane de Lassus, Volker Niebel and Reinhard Vogt. The nonexecutive Board members are Bernard Lemaître, Arnold Picot and Henri Riey. Under economical aspects, the combination of Stedim S.A. with the Sartorius Biotech subgroup on June 29, 2007, must be interpreted as an acquisition of Stedim S.A. by the Sartorius Biotech subgroup. As a result, this yields the corresponding consequences for accounting and reporting the income statement of the new Sartorius Stedim Biotech Group. Thus, the SSB profit and loss account is identical with the income statement of the Sartorius Biotech subgroup up to the time of its combination with Stedim. From a formal standpoint, this subgroup was created by the carve-out of the Biotechnology Division of the Sartorius Group effective April 1, Therefore, in the actual figures given in the SSB income statement for the reporting period, only the corresponding figures of the Sartorius Biotech subgroup from April 1, 2007 to June 30, 2007, have to be taken into account. To provide a comprehensive and informative picture of the business development and financial situation of the Sartorius Stedim Biotech Group, we will additionally provide pro forma figures for order intake, sales revenue and earnings for the reporting period and the corresponding year-earlier period. To ensure the best possible comparability of the figures for the first half of 2007 with those of the previous period, the pro forma figures were compiled under the technical assumption that the transaction had already been completed on January 1, Irrespective of this, the balance sheet of June 30, 2007, provides the corresponding figures of the combined company Sartorius Stedim Biotech, as the combination was completed on June 29, At the time this report was published, the limited review of the first-half financial statements by the auditors had not yet been finalized. However, we assume that after completion of this limited review, the figures will not differ essentially from their current presentation. For further details on the transaction, see the comments on page 11. 2

3 Economic Report Business Development Sales Revenue and Order Intake In the first half of 2007, we received orders worth a pro forma total of million. Compared to the yearearlier pro forma figure ( million), this corresponds to a double-digit growth rate of 10.1% and of 13.1% adjusted for currency effects. Here, in particular, growth was fueled by the substantial double-digit growth rates in our disposables business with products such as filters and single-use bags and by a large order in our equipment business in Europe. Pro forma sales revenue rose 2.7% (currency-adjusted: 5.3%) to million from million a year ago and thus grew at a more moderate pace than did order intake, in line with the delivery expectations of our customers. In all regions, we posted significant growth rates for business with disposables. Despite weak sales revenue development in the equipment business, our business in North America showed highly encouraging progress, attaining a currency-adjusted pro forma growth rate of 11.7%. In the Asia Pacific region as well, we achieved a double-digit currency-adjusted pro forma growth rate of 12.0%, whereas pro forma sales revenue in Europe (currency-adjusted: 1.3%) showed moderate development. Here, the strong order situation in the equipment business did not yet have an impact on sales revenue so that the positive development of our disposables business was temporarily diluted. According to the accounting and consolidation principles to be applied (please refer to page 2) actual order intake of the Sartorius Stedim Biotech Group was 83.4 million in the reporting period; sales revenue was 77.6 million. Earnings The Sartorius Stedim Biotech Group uses earnings before interest, taxes and amortization (EBITA) as the key figure for measuring earnings. Here, amortization refers to goodwill and to the purchase price allocation (PPA) to intangible assets according to IFRS 3. Pro forma EBITA adjusted for extraordinary expenses (underlying EBITA) was 21.3 million for the reporting period; this corresponds to a pro forma underlying EBITA margin of 11.4%. Relative to the year-earlier period, the pro forma underlying EBITA margin dropped by 0.9% points. This was essentially due to the unfavorable development of the exchange rates during the past months and the targeted reduction of stock levels in the former Stedim group. In the first half of 2007, pro forma extraordinary expenses of 3.2 million were incurred, related partly to preclosing measures for restructuring within the former Stedim Group, and partly to the transaction and integration. According to the accounting and consolidation principles to be applied (please refer to page 2) the non-adjusted actual EBITA for the first half of 2007 was 8.6 million (EBITA margin: 11.1%). Operational Pro Forma Key Figures pro forma 1st half st half 2006 estimated in mn in mn financial data Order intake Sales revenue Underlying EBITA As a % of sales revenue 11.4% 12.3% 3

Capital Expenditures In the reporting period, actual capital expenditures for property, plant and equipment and for intangible assets were 5.7 million, which corresponds to an investment ratio of 7.

4 Capital Expenditures In the reporting period, actual capital expenditures for property, plant and equipment and for intangible assets were 5.7 million, which corresponds to an investment ratio of 7.3%. 4 Employees As of June 30, 2007, following the combination, the workforce numbered 2,272 employees at the Sartorius Stedim Biotech Group, 1,443 of whom worked in Europe, 436 in North America, 308 in Asia Pacific and 85 in other markets. Cash Flow The actual net cash flow of the Sartorius Stedim Biotech Group for the first half was 12.8 million. Essentially, this resulted from the cash earnings of 10.0 million and a cash flow from working capital of 5.7 million, as well as from cash flows from investing activities of 2.5 million. On the reporting date, gross debt was million. With cash and cash equivalents at 14.9 million, net debt was million. Research and Development Actual spending on research and development was 5.9 million and thus corresponds to 7.6% of sales revenue. The combined company focuses the majority of its research and development activities on Goettingen, Germany, where we increased our laboratory capacity by approx. 60% by constructing a new laboratory building complex that we officially opened on May 21, Further locations with research and development activities are in Aubagne, France and in North America, in particular. Net Worth and Financial Position Consolidated Balance Sheet As of June 30, 2007, the balance sheet total of the Sartorius Stedim Biotech Group was million. With equity capital of million and an equity ratio of 55.3%, the Group has very comfortable capitalization. As of June 30, 2007, bank liabilities totaling million. We aim to refinance these by a long-term financial package until the end of March 2008 with which the time pattern of the liabilities structure will also be optimized accordingly. A significant component of the noncurrent assets of million is constituted by the assets that were acquired and recognized as part of the transaction and the resulting goodwill.

5 Forecast Report Future Business Development Integration Process After the corresponding binding agreements had been signed at the end of February 2007, we began with extensive and detailed integration planning. As a result, immediately after the closing of the transaction, we were able to implement an integrated, group-wide organizational structure and to launch the new unified branding of Sartorius Stedim Biotech on the market. Thus, we promptly laid two essential fundamentals right from the start to ensure rapid and successful integration of the two businesses. As one result of the analysis done during the integration planning process we identified further potential synergies especially in the area of engineering, manufacturing and supply chain management in the equipment business. We intend to implement respective measures of integration and synergy utilization during the second half of the year. Future Business Development of the Group Based on the strong order intake development in the first half of 2007, we confirm our pro forma operating sales forecast to date. However, due to the unfavorable development of the exchange rates during the last months, we have adjusted our pro forma sales forecast in the reporting currency to million (previously million). On a pro forma basis, for fiscal 2007 we expect an underlying EBITA margin of approx. 14%. For the full year, we anticipate that the extraordinary expenses related to the transaction and integration to be approx. 10 million. In the first half of the year, extraordinary expenses of 3.2 million were incurred, related partly to pre-closing measures for restructuring within the former Stedim Group, and partly to transaction and integration. For the business years 2007 to 2011, we expect to achieve a compound annual growth rate of 14% to 15%. On the basis of our growth expectation we aim to double the underlying EBITA euro figure by fiscal 2011 compared to the pro forma underlying EBITA of With a strong underlying trend towards single-use technologies, growth anticipated for the coming years will be fueled particularly by our business with disposables. In addition to our highgrowth products already established on the market, such as filters and singleuse bags, a significant portion of our growth will be achieved through innovative products that we have recently launched or which are in our product pipeline. Examples of recently introduced products are single-use aseptic transfer systems and single-use purification products. Moreover, with respect to key customers, especially in the USA, our substantially strengthened positioning that resulted from the combination of Sartorius Biotech and Stedim will further drive the growth of our company. As a supplier to the biopharmaceutical industry we face to a certain extent the typical risks of this market. In particular, the approval or non-approval of new drugs and other decisions of the regulatory authorities have an impact on our customers investment and purchase decisions as well as the timing of these decisions. For Sartorius Stedim Biotech, these influential factors may affect sales revenue and profits of particular financial years, but not our mid-term growth and profitability evolution. 5

6 Balance Sheet Assets June 2007 Estimated financial data in mn % 6 Non-current assets Intangible assets % Property, plant and equipment % Financial assets 2.0 0% % Non-current trade and other receivables 0.2 0% Assets from future tax relief Deferred tax assets 7.2 1% % Current assets Inventories % Current trade and other receivables % Liquid funds % Prepaid expenses 1.9 0% % Total assets % Equity and Liabilities June 2007 Estimated financial data in mn % Equity Issued capital % Capital reserves % Earnings reserves and retained profits % Minority interest 0.3 0% % Non-current liabilities Pension provisions % Deferred tax provisions % Other non-current provisions 3.0 0% Liabilities to banks % Other non-current liabilities 0.4 0% % Current liabilities Current provisions 2.8 0% Liabilities to banks % Trade payables % Other current liabilities % % Total equity and liabilities %

7 Income Statement 1st half 2007 Estimated financial data in mn % 7 Sales revenue % Cost of sales % Gross profit on sales % Selling and distribution costs % Research and development costs 5.9 8% General administrative expenses 4.1 5% Other operating income and expenses 0.1 0% EBITA % Amortization 1) 0.1 0% EBIT % Interest and similar income 0.0 0% Interest and similar expenses 1.6 2% Profit before tax 7.0 9% Income tax expenses % Other taxes % Deferred taxes % Net profit for the period 4.4 6% Minority interest 0.0 0% Net profit after minority interest 4.4 6% 1) Amortization refers to goodwill and to the purchase price allocation (PPA) to intangible assets according to IFRS 3.

8 Cash Flow Statement 1st half 2007 Estimated financial data in mn 8 Profit before income taxes (after deferred taxes) 6.4 Portion of minority interest in the net profit 0.0 Depreciation and amortization of fixed assets 3.0 Change in non-current assets 0.6 Changes in non-current provisions 0.0 Other material non-cash income and expenses 0.0 Cash earnings 10.0 Changes in the current provisions 0.6 Change in inventories -1.6 Change in trade and other receivables including prepaid expenses -5.1 Change in liabilities (excl. bank liabilities) 11.9 Cash flow from working capital 5.7 Interest income 0.0 Interest expenses 1.6 Income taxes paid -2.0 Cash flows from operating activities 15.2 Proceeds from fixed asset disposals 0.2 Payments for intangible assets -1.0 Payment for property, plant and equipment -4.7 Payments for financial assets -0.2 Cash and cash equivalents acquired in business combination 3.2 Cash flows from investing activities -2.5 Net cash flow 12.8 Capital increase 0.0 Dividend payments 0.0 Interest income 0.0 Interest expenses -1.6 Change in minority interest 0.0 Repayment of financial liabilities 0.4 Cash flows from financing activities -1.1 Change due to currency translation 0.3 Change in cash and cash equivalents 12.0 Cash and cash equivalents at the beginning of the period 2.9 Cash and cash equivalents 14.9 Gross debt owed to banks Net debt owed to banks 141.2

9 Segment Report Segment Report by Division 9 Biopharma Group Estimated financial data 1st half 1st half in mn Order intake Sales revenue as a total % 100.0% 100.0% EBITDA as a % of sales revenue 14.9% 14.9% EBITA as a % of sales revenue 11.1% 11.1% EBIT as a % of sales revenue 11.0% 11.0% R&D costs No. of employees at June 30 2,272 2,272 Segment Report by Region Europe North America Asia Pacific Other markets Group Estimated financial data 1st half 1st half 1st half 1st half 1st half in mn Sales revenue acc. to customers' location as a total % 56% 24% 17% 3% 100% acc. to company location EBITA as a % of sales revenues 10.5% 10.4% 17.4% 11.1% No. of employees at June 30 1, ,272

10 Statement of Changes in Equity Earnings Difference reserves and resulting from Estimated financial data Issued Capital Pension retained currency Minority Total in mn capital reserves reserves profits translation Total interests equity 10 Balance at April 1, Actuarial losses from pension provision Currency translation differences Net income recognized directly in equity Net profit for the period Total recognized income and expense for the period Reallocation Capital increase Capital decrease Equity issuance costs Change in minority interest Dividends Balance at June 30,

11 Comments on the Financial Statements of Sartorius Stedim Biotech Under economical aspects, the combination of Stedim S.A. with the Sartorius Biotech subgroup on June 29, 2007, must be interpreted as an acquisition of Stedim S.A. by the Sartorius Biotech subgroup. Therefore, according to IFRS 3, the accounting rules of reverse acquisitions are applied. Thus, the SSB income statement is identical with the respective figures of the Sartorius Biotech subgroup. From a formal standpoint this subgroup was created by the carve-out of the Biotechnology Division of the Sartorius Group effective April 1, Therefore, in the actual figures given in the SSB income statement for the reporting period, only the corresponding figures of the Sartorius Biotech subgroup from April 1, 2007, to June 30, 2007 have to be taken into account. The balance sheet of June 30, 2007, reflects the combination of the Sartorius Biotech subgroup with Stedim S.A. Regarding the determination of the cost of the combination and the assessment of the fair values of Stedim s identifiable assets and liabilities, this presentation is still provisional. For recognition of the cost of the combination, a valuation of the Sartorius Biotech subgroup was used. This yields a cost of acquisition of 319 million. Within the scope of purchase price allocation (PPA), a provisional sum of 80 million was allotted for intangible assets, which results in a goodwill of 225 million, taking into account the corresponding tax impact. This goodwill amount is also disclosed in the intangible assets. IFRS 3.62 allows the option of adjusting the provisional values of the initial balance sheet within twelve months. We assume that the final recognition of the cost of acquisition to be disclosed on the balance sheet and final measurement of fair values will have been completed by the time the consolidated financial statements are prepared for the year ended on December 31, According to IAS 14, segment reporting must be done according to primary and secondary reporting formats. The dominant source and the type of risk and rate of return (earnings) govern which reporting format is to be used as the primary one. For the Sartorius Stedim Biotech Group, the primary reporting format is the Biopharma operating business segment. This covers both the former Single-Use Products and Equipment segments of the former Stedim Group as well as the carvedout Biotechnology segment of the Sartorius Group. Accordingly, the secondary reporting format is used for the geographical segments Europe, North America, Asia Pacific and Other Markets. At the time this report was published, the limited review of the first-half financial statements by the auditors had not yet been finalized. However, we assume that after completion of this limited review, the figures will not differ essentially from their current presentation. 11

12 Contacts Financial Schedule Sartorius Stedim Biotech S.A. Z.I. des Paluds Avenue de Jouques B.P Aubagne, France Phone: Fax: Investor Relations Heiko Imoehl Vice President Phone Andreas Wiederhold Phone August 22, 2007 SFAF meeting Paris, France End of September 2007 Half Year Financial Statements 2007 due to be published October 31, 2007* Nine-month order intake sales revenue report 2007 (BALO) due to be published October 31, 2007* Nine-month report 2007 due to be published * Tentative date scheduled 12 Corporate Communications Petra Kirchhoff Vice President Phone petra.kirchhoff@sartorius.com Dominic Grone Phone dominic.grone@sartorius.com Elke Schild Phone elke.schild@sartorius.com Forward-looking Statements Contain Risks This interim report contains various statements concerning the Sartorius Stedim Biotech Group s future performance. These statements are based on assumptions and estimates. Although we are convinced that these forwardlooking statements are realistic, we cannot guarantee that they will actually apply. This is because our assumptions harbor risks and uncertainties that could lead to actual results diverging substantially from the expected ones. It is not planned to update our forward-looking statements. Throughout the entire report, differences may be apparent as a result of rounding during addition.

Sartorius Stedim Biotech Group Nine-Month Report from January to September 2011

Sartorius Stedim Biotech Group Nine-Month Report from January to September 2011 Business Development and Outlook Double-digit increase in sales revenue Underlying EBITA soared 22.0% Guidance for fiscal