In 2019, Olainfarm Group successfully started its transformation, which has already yielded significant results

• In 2019, Group’s sales reached EUR 137 219 thousand , which is an increase by 10% or EUR 12 963 thousand.
• Group’s audited net profit reached EUR 23 628 thousand, which is the largest profit amount in history.
• For 2019 the management proposed a dividend of EUR 0.32 per share.
• In 2020, Group forecasts a revenue of EUR 135 500 thousand and net profit of EUR 14 200 thousand.

The Group’s main achievements in 2019 were the following:

• Secured profitability of the entire Group, focusing on identifying growth opportunities;
• Maintained the competitive position of our products in the key markets;
• Strengthened the product portfolio through new product launches;
• DIversified and enhancing JSC Olainfarm presence in various markets through exporting products;
• Optimized financial control and cost containment measures;
• Optimized production processes and cost containment measures put in place;
• Expanded the management board by added two new members bringing international pharma experience to the Group.

During the entire 2019 the Group sales reached EUR 137 219 thousand, which is an increase by 10% or EUR 12 963 thousand compared to 2018. Gross profit, in turn, was EUR 84 807 thousand which shows an increase by 13% or EUR 9 951 thousand since 2018. Gross profit margin improved from 60% in 2018 to 62% in 2019.

Parent company sales in 2019 increased by 12% and reached EUR 104 363 thousand compared to the previous year. Gross profit grew by 17% and amounted to EUR 69 453 thousand. Parent company’s gross profit margin rose from 64% in 2018 to 67% in 2019.

The total annual revenue of the Group in 2019 exceeded planned sales figures (EUR 133 343  thousand) for the entire 2019 by 2.9% or EUR 3 876 thousand. Parent company’s revenue beat the forecasted (EUR 98 636 thousand) by 5.8% or EUR 5 727 thousand.

The Group’s main markets in 2019 were Russia with a 32% share (+2pp), Latvia with 28% (-1pp), Belarus with 11% (unchanged), the Ukraine with 8% (-1pp), Central Asian and EU countries have an 8% share (unchanged), Other countries with 3% (-1pp) and Caucasian countries with 2% (unchanged).

The main business segment is final dosage forms that are manufactured by the Parent company in Olaine. In 2019, pharmaceutical products worth EUR 80 993 thousand were sold, which is an increase by 14% or EUR 10 046 thousand if compared to 2018. This segment’s share in the Group’s total revenue in 2019 rose by 2 p.p. to 59%.

Throughout 2019, sales of JSC Olainfarm main final dosage forms continued to increase. The share of the best selling product Noofen increased to 20% that is by one percentage point more than the year before. The share of the three largest products: Noofen, Neiromidin and Furamag/Furasol comprised 56% that is also one percentage point higher than the year before.

Within the Group, Latvijas aptieka Ltd manages and develops pharmacies in Latvia where the Pharmacy segment in 2019 generated a revenue increase by 7% compared to 2018 and reached EUR 25 427 thousand. The company evaluates market trends and performance results of each pharmacy. There were 68 pharmacies at the end of 2019. This segment’s share in the Group’s total revenue during 2019 did not change and was 19%.

Group’s company Tonus Elast Ltd manufactures a wide range of compression materials and sells products in Latvia and abroad. Revenue of this segment in 2019 was EUR 8 794 thousand that is 7% or EUR 712 thousand less than the year before. This segment’s share in the Group’s total revenue in 2019 declined by 2 p.p. to 6%.

Within the Group, the Parent company JSC Olainfarm manages the wholesale of medical products as it has a medical wholesale license, which allows it to purchase products from other manufacturers and to deliver them to Latvijas aptieka Ltd as well as other cooperation partners. Revenue of this segment from external customers in 2019 was EUR 5 382 thousand, which is a decline by 2% or EUR 104 thousand. This segment’s share in the Group’s total revenue during 2019 did not change and was 4%.

In addition to final dosage forms, the Parent company manufactures chemical components that are sold to other pharmaceutical companies covering a wide geographical area. The segment’s income in 2019 was 16% higher than in 2018 and reached EUR 5 124 thousand. This segment’s share in the Group’s total revenue during 2019 did not change and was 4%.

The last segment combines Silvanols, Diamed and Olainmed medical facilities, the Belarussian manufacturing company Biotest and others, generating EUR 11 499 thousand in revenue in 2019, which is 14% more than in 2018. This segment’s share in the Group’s total revenue during 2019 did not change and was 8%.

Group’s EBITDA figure in 2019 was EUR 33 499 thousand, which is by 66% or EUR 13 271 thousand more than the results of 2018. The Parent company’s EBITDA in 2019 improved by 91% and reached EUR 29 256 thousand. In 2019, EBITDA margin of the Group and the Parent company was 24.4% and 28.0%, respectively.

Group’s net profit in 2019 was EUR 23 628 thousand, which is the largest net profit amount in the history of the Group. The profit increased by 120% or EUR 12 897 thousand in comparison to 2018. The Group’s net profit margin in 2019 was 17.2%, whereby in 2018 the ratio was 8.6%.

The Parent company’s net profit in 2019 was EUR 22 239 thousand, which is by EUR 13 353 thousand or 150% more than in 2018. The Parent company’s net profit margin in 2019 was 21.3%, whereby in 2018 the ratio was 9.6%.

The Group’s net profit target for 2019 initially was EUR 10 million but in May the management revised it to EUR 12.7 million. For the Parent company, the initial forecast of net profit was EUR 8.8 million and subsequently revised to EUR 11.5 million. Due to a number of positive events the actual results of the Group exceeded the Group’s revised target by 86% and the Parent’s target by 93%.

In 2019, the Parent company approved a Dividend policy. For 2019, the Management Board will recommend dividend payout of 20.27% of the Parent company’s audited net profit in the total amount of EUR 4 507 224.96 or EUR 0.32 per share.

According to the previous plan a set of pre-clinical and clinical trials was conducted in 2019. Throughout 2019, five phase 1 clinical trials (pharma kinetics and bioavailability) were started with the completion of trial planning, drafting of required documentation and issue of permits. Trials are set to close and final reports to be received in the 1st to 3rd quarters, 2020.

At the same time, in 2019, a planning and preparation phase took place for phase 3 clinical trials for two final dosage forms with a plan to start trials in 2020. Implementation of clinical trials for peripheral nervous system diseases is planned for the 1st quarter, 2020.

During 2020, substantial investments are arranged for the planning of clinical trials in order to start one phase 1 clinical trial and three phase 3 clinical trials in the 4th quarter of 2020 – 1st quarter of 2021.

Future oriented, in 2020, the Group will further build on the strategic directions for sustainable growth by focusing on innovation and leveraging synergies across the group. Second growth lever is to adapt the current and future portfolio and geographical scope to mid-term and long-term opportunities. At the same time, the Group is securing business by opening subsidiaries or representative offices in the main markets with the objective to work closer to the customer and key stakeholders, to have better control over promotional efforts and performances, and to anticipate for future growth.

For 2020, the Group estimates its revenue to be EUR 135.5 million and a net profit of EUR 14.3 million as well as EPS of 1 euro. JSC Olainfarm forecasta a revenue of EUR 97.3 million  and a net profit of EUR 13.4 million.

Condensed Consolidated Statement of  Financial Position

		Group		Parent company
		31.12.2019	31.12.2018	31.12.2019	31.12.2018
		EUR '000	EUR '000	EUR '000	EUR '000
	ASSETS
NON-CURRENT ASSETS
Intangible assets		38 422	36 619	4 181	1 977
Property, plant and equipment		42 442	43 697	36 327	37 380
Right-of-use assets		7 069	-	2 440	-
Investment property		253	3 492	253	289
Other long-term investments		782	983	43 752	46 967
	TOTAL NON-CURRENT ASSETS	88 968	84 791	86 953	86 613
CURRENT ASSETS
Inventories		28 247	25 794	19 765	17 945
Receivables		36 225	34 637	34 506	32 040
Cash		15 230	2 689	12 965	1 545
	TOTAL CURRENT ASSETS	79 702	63 120	67 236	51 530
TOTAL ASSETS		168 670	147 911	154 189	138 143
	EQUITY AND LIABILITIES
EQUITY
Share capital		19 719	19 719	19 719	19 719
Share premium		2 504	2 504	2 504	2 504
Reserves		(12)	(224)	40	40
Retained earnings		105 298	83 079	99 657	78 827
	TOTAL EQUITY	127 509	105 078	121 920	101 090
LIABILITIES
Non-current liabilities
Borrowings and lease liabilities		12 177	1 793	8 308	1 525
Deferred income		3 194	2 878	3 179	2 852
	Total Non-Current Liabilities	15 371	4 671	11 487	4 377
Current liabilities
Borrowings and lease liabilities		9 568	23 236	8 299	21 696
Trade payables and other liabilities		15 727	14 540	12 007	10 614
Deferred income		495	386	476	366
	Total Current Liabilities	25 790	38 162	20 782	32 676
	TOTAL LIABILITIES	41 161	42 833	32 269	37 053
TOTAL EQUITY AND LIABILITIES		168 670	147 911	154 189	138 143

Consolidated statement of comprehensive income

	Group		Parent company
	2019	2018	2019	2018
	EUR '000	EUR '000	EUR '000	EUR '000
Revenue	137 219	124 256	104 363	93 018
Cost of goods sold	(52 412)	(49 400)	(34 910)	(33 453)
Gross Profit	84 807	74 856	69 453	59 565
Selling expense	(30 188)	(37 291)	(20 936)	(28 449)
Administrative expense	(26 750)	(24 427)	(22 968)	(20 708)
Other operating income	2 363	2 559	2 479	1 524
Other operating expense	(7 684)	(1 726)	(7 495)	(1 278)
Share of profit of an associate	81	106	-	-
Dividend income from subsidiaries and associates	-	-	754	1 004
Financial income	2 260	76	2 065	126
Financial expense	(924)	(2 788)	(792)	(2 552)
Profit Before Tax	23 965	11 365	22 560	9 232
Corporate income tax	(387)	(630)	(321)	(346)
Deferred corporate income tax	50	(4)	-	-
PROFIT FOR THE REPORTING PERIOD	23 628	10 731	22 239	8 886
Other comprehensive income for the reporting period, net of tax	212	(150)	-	-
Total comprehensive income for the reporting period, net of tax	23 840	10 581	22 239	8 886
Total comprehensive income attributable to:
The equity holders of the Parent Company	23 840	10 581	22 239	8 886
Non-controlling interests	-	-	-	-
Basic and diluted earnings per share, EUR	1.68	0.76	1.58	0.63

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 effective top -quality products for Latvia and the rest of the world. Products made by the Group are being exported to more than 50 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
Phone: +371 29178878
Email: janis.dubrovskis@olainfarm.com

Attachments

• ESG_report_ENG
• Olainfarm_annual report_2019_ENG
• GCGPrinciplesfor2019

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