STOCKHOLM, Sweden — Annual accounts for 2006
* The Group’s net sales reached SEK 5,256.0 million (2,869.9)
* Operating profit rose to SEK 1,433.9 million (349.0)
* Profit after tax soared to SEK 788.4 million (143.5)
* Profit per share rose to SEK 7.25 (1.19)
* Proposed dividend per share is SEK 1.00 (0.45 (1))
* 2-for-1 share split proposal
Highlights * Acquisition of 3M’s pharma division in Europe completed; integration is proceeding as planned
* New share issue over-subscribed
* New indication for Aldara approved by the European Commission
* Long-term licence agreement in the cardiovascular area with Recordati
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SALES Meda Group’s (STO:MEDAA) net sales for January-December totalled SEK 5,256.0 million (2,869.9). In the asthma therapy area (TA), Novolizer system sales remained robust; launch of Novopulmon 400ug in several European markets played a key role in this growth. The planned Formatris launch in France was postponed to H1 2007 due to authorities’ delays. Betadine (infection prevention) performed well, with a high market share in southern Europe. Tramadol (pain treatment) retained its strong position despite tougher competition in the segment.
Marketing companies in the Nordics, Belgium, Spain, and Portugal grew strongly in 2006. In Germany, market share for most prioritised products also improved. Of Meda’s new marketing companies in central Europe, performance of those in the Czech Republic and Slovakia is now picking up speed.
The Group’s sales during Q4 totalled SEK 1,351.4 million (1,256.2). Meda’s Spanish marketing organisation successfully re-launched Relifex. Relifex was also launched in the German market in Q4.
PROFIT Operating profit The Group’s operating profit for January-December rose to SEK 1,433.9 million (349.0).
As stated previously, operating profit includes non-recurring effects due to capital gain. The total effect of the disposal of a production plant in the Netherlands in Q1 and the partnership contract in Q2 with Almirall, a Spanish pharma company, resulted in capital gain of SEK 321.9 million.
Operating expenses for the period were SEK 1,965.2 million (1,326.7). Depreciation accounted for SEK 379.4 million (240.7) of these expenses. Operating expenses in Q4 totalled SEK 476.7 million (701.5). Restructuring costs of SEK 176 million (due to the Viatris acquisition) had an impact on Q4 in 2005. So the actual cost level for Q4 in 2006 was about SEK 50 million lower than for the same period in 2005. Consequently, Meda achieved significant efficiency improvements and rationalisation of its operations in a very short time - after the Viatris acquisition. In 2006, Meda’s profitability goal could be exceeded by a wide margin and earlier than expected because of successful integration and the Almirall collaboration. In 2006, earnings before interest, taxes, depreciation and amortisation (EBITDA) were SEK 1,813.3 million (589.7). Excluding non-recurring effects from disposals, EBITDA were SEK 1,491.4 million. For Q4, EBITDA were SEK 418.4 million (91.4), yielding a 28.4% EBITDA margin (excluding non-recurring effects) for 2006 and 31.0% for Q4.
Financial items Strong cash flow helped Meda reduce its interest-bearing net debt in 2006 by SEK 748.7 million to SEK 4,512.1 million. The Group’s net financial items for the period stood at SEK -243.4 million (-207.4). Group profit after net financial items for 2006 totalled SEK 1,190.5 million (141.6).
Net profit Group tax expense for January-December amounted to SEK 402.1 million (39.9), equivalent to a 33.8% tax rate (28.2). Net profit from retained operations rose to SEK 788.4 million (101.7), so profit per share before dilution climbed to SEK 7.25 (1.19) in 2006.
FINANCIAL POSITION Meda’s financial position was reinforced in 2006 thanks to strong cash flow from operating activities. For full-year 2006, cash flow from business activities (before changes in working capital) rose to SEK 1,061.3 million (445.0). sibutramine. Implemented restructuring measures affected cash flow by SEK -125.1 million. Changes in working capital for the period stood at SEK -297.5 million (-51.1). Total cash flow from operating activities was SEK 763.8 million (393.9).
Cash flow from investing activities amounted to SEK -211.0 million (-6,314.7). Besides ongoing investments - in the Group’s production plants, for example, these important events occurred in 2006: In Q1, Meda acquired the Parlodel product for SEK 375.2 million and sold a production plant in the Netherlands resulting in a cash inflow of SEK 83.0 million. During Q2, Meda entered into a partnership contract with Almirall, which generated SEK 280.0 million. In August, Meda signed an exclusive licence agreement with BioDelivery Sciences International (a US development company) for BEMATM Fentanyl for all European countries; SEK 18.2 million (USD 2.5 million) was paid when the contract was signed.
Cash flow from financing activities in 2006 was SEK -756.3 million (6,188.9). During the period, net amortisation of bank loans totalled SEK 700.3 million. Dividend of SEK 52.2 million was paid to Meda’s shareholders in Q2.