Olainfarm Group’s financial performance in the first half reached new highs – sales were 66.4 million EUR; net profit jumps to 12.2 million EUR

• Group sales in the first half 2019 were 66.4 million EUR, which is 7% higher than a year earlier
• EBITDA margin for the first six month 2019 was 26%, up from 17% year ago
• Strong liquidity and decrease in leverage support further investment needs

“Looking at the six months of Olainfarm’s financial year and its good financial position, three things should be noted: 1) the high profitability of the company; 2) a significant increase in the company’s liquidity to historically high levels; and 3) active negotiations with banks and to provide new loans. These are also key factors that provide a solid foundation for a new development stage for organising drug dossiers and conducting clinical trials for medicines,” says Lauris Macijevskis, Chairman of the Management Board of JSC Olainfarm.

During the 2^nd quarter of 2019, consolidated sales of the Olainfarm Group reached 31 647 thousand EUR which is an increase by 592 thousand EUR euros or 2% if compared to similar period of 2018. In the 2nd quarter EBITDA was 6 422 thousand EUR that surpassed the figure of the 2nd quarter of 2018 by 1 497 thousand EUR or 30%. Profit for this year’s second quarter was 3 984 thousand EUR, which is an increase by 49% or 1 312 thousand EUR in comparison with the second quarter of 2018.

During the first six months of this year Group’s sales reached 66 392 thousand EUR, which is an increase by 7% or 4 548 thousand EUR comparing to the same period of 2018. Group’s EBITDA during this year’s first six months was 16 928 thousand EUR, which is by 64% or 6 589 thousand EUR more than the half year results of the last year. Group’s reporting period profit for the six month 2019 was 12 244 thousand EUR and it increased by 112% or 6 458 thousand EUR in comparison with half year of 2018. Half-year 2019 sales, EBITDA and net profit mark new record levels for the first six months period.

Reporting period profit was positively influenced by gross margin increase, selling expense decrease, income from currency rate fluctuations but negatively impacted by increase of administrative expenses. Administrative expenses rose due to investments in medicine registration dossiers and such costs may not always be possible to capitalize as well as with review of salaries and bonus payments to personnel (excluding the Supervisory Council and the Management Board).

In accordance with the approved plans for 2019 Group’s sales target is fulfilled by 50% and profit figure by 96%.

During the first six months of this year sales volumes of the main Olainfarm products continued to increase. The share of the leading product Noofen is 19%, which is by one percentage point more than a year before. The share of the three largest products (Noofen, Neiromidin and Furamag/Furasol) comprise 52% that is by one percentage point higher than a year before (51%).

In April this year JSC Olainfarm signed agreement with a unit of UN (UN Office for Project Services) about deliveries of PASS in the amount of 3 million EUR during 2019-2020, which will keep this medicine among top products also in the future.

Group introduced two new alternative performance indicators - Net debt to EBITDA ratio and Debt – Service Coverage Ratio (DSCR). Net debt to EBITDA improved from 1.4 to 0.6 and DSCR from 1.8 to 2.5.

The first half of 2019 was also significant due to rapid improvements in cash position from 2 689 thousand EUR at the beginning of the year to 10 623 thousand EUR, which allows to continue investments in updating medicine dossiers in the coming years.

During the second quarter of 2019, more than 731 thousand shares of JSC Olainfarm, with total value of 4.5 million euros, were traded on Nasdaq Riga. Compared to the same period in 2018, the number of traded shares was by 726% more, while traded value was higher by 511%.

Consolidated statement of comprehensive income	Group	Group
	Q2 2019	Q2 2018	M6 2019	M6 2018
	EUR '000	EUR '000	EUR '000	EUR '000
Revenue	31 647	31 055	66 392	61 844
Cost of goods sold	(11 818)	(12 117)	(25 309)	(24 895)
Gross Profit	19 829	18 938	41 083	36 949
Selling expense	(8 740)	(9 510)	(17 021)	(18 181)
Administrative expense	(7 299)	(5 790)	(13 632)	(11 431)
Other operating income	672	687	1 134	1 405
Other operating expense	(449)	(1 093)	(704)	(1 804)
Share of profit of an associate	25	7	103	75
Financial income	279	19	1 842	39
Financial expense	(327)	(501)	(488)	(1 091)
Profit Before Tax	3 990	2 757	12 317	5 961
Corporate income tax	(5)	(87)	(72)	(177)
Deferred corporate income tax	(1)	2	(1)	2
PROFIT FOR THE REPORTING PERIOD	3 984	2 672	12 244	5 786
Other comprehensive income for the reporting period	62	41	217	36
Total comprehensive income for the reporting period	4 046	2 713	12 461	5 822
Total comprehensive income attributable to:
The equity holders of the Parent Company	4 046	2 713	12 461	5 822
Non-controlling interests	-	-	-	-
Basic and diluted earnings per share, EUR	0.28	0.19	0.87	0.41

Condensed Consolidated Statement of  Financial Position	Group
		30.06.2019	31.12.2018
		EUR '000	EUR '000
	ASSETS
NON-CURRENT ASSETS
Intangible assets	36 388	36 619
Property, plant and equipment	44 832	43 697
Right-of-use assets	7 230	-
Investment properties	3 510	3 492
Other non-current assets	868	983
	TOTAL NON-CURRENT ASSETS	92 828	84 791
CURRENT ASSETS
Inventories	29 744	25 794
Receivables	29 785	34 637
Cash	10 623	2 689
	TOTAL CURRENT ASSETS	70 152	63 120
TOTAL ASSETS	162 980	147 911
	EQUITY AND LIABILITIES
EQUITY
Share capital	19 719	19 719
Share premium	2 504	2 504
Reserves	(7)	(224)
Retained earnings	93 914	83 079
	TOTAL EQUITY	116 130	105 078
LIABILITIES
Non-current liabilities
Borrowings and lease liabilities	6 590	1 793
Deferred income	3 418	2 878
	Total Non-Current Liabilities	10 008	4 671
Current liabilities
Borrowings and lease liabilities	19 015	23 236
Trade payables and other liabilities	16 047	14 540
Dividends payable	1 409	-
Deferred income	371	386
	Total Current Liabilities	36 842	38 162
	TOTAL LIABILITIES	46 850	42 833
TOTAL EQUITY AND LIABILITIES	162 980	147 911

JSC Olainfarm is one of the biggest pharmaceutical companies in Latvia with more than 45 years of experience in production of medication and chemical and pharmaceutical products. A basic principle of company's operations is to produce reliable and effective top -quality products for Latvia and the rest of the world. Products made by the Group are being exported to more than 60 countries of the world, including the Baltics, Russia, other CIS, Europe, Asia, North America and Australia.

Additional information:
       
Jānis Dubrovskis
Investor Relations Advisor of JSC Olainfarm
Ph.: +371 29178878
E-mail: janis.dubrovskis@olainfarm.com

Attachment

• Olainfarm_ll_2019_consolidated FS_ENG

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