TIDMCRYO
RNS Number : 0350Z
Cryo-Save Group NV
15 September 2009
15 September 2009
Cryo-Save Group NV
Revenues up 52%, profits up 17%
Cryo-Save Group N.V. (AIM: CRYO, "Cryo-Save" or the "Group"), Europe's leading
adult stem cell storage bank, has published interim results for the six months
ended 30 June 2009.
Financial highlights
* Revenue up 52% to EUR18.6 million (1HY 2008: EUR12.2 million), reflecting strong
organic and acquisitive growth
* Gross margin increased to 71.1% (1HY 2008: 68.0%)
* Underlying* EBITA up 123% to EUR2.9 million (1HY 2008: EUR1.3 million)
* Underlying profit before taxation up 17% to EUR2.1 million (1HY 2008: EUR1.8
million)
* Underlying earnings per share up 6% to 3.7 euro cents (1HY 2008: 3.5 cents)
* Strong cash generation from operating activities EUR2.6 million
* Net cash EUR4.5 million as at 30 June 2009 after substantial investment programme
(31 December 2008: EUR4.5 million)
* Financial sale and lease back of new Belgium building completed (EUR4.3 million)
Operational highlights
* As at 30 June 2009 around 108,000 samples stored
* Number of samples stored up 6% to 13,300 (1HY 2008: 12,500)
* Three samples released for medical treatment
* All time record with second quarter storage of 7,000 samples (Q2 2008: 6,600)
* Strong organic growth in Spain, Italy and South Eastern Europe
*Underlying excludes the one-off write down of receivables on associate
Cryo-Save Arabia (EUR0.9 million before taxation).
Marc Waeterschoot, Chief Executive, commented:
"Our investment and acquisition strategy, supported by increased prices over the
last two years, is now really beginning to show good returns despite the current
economic climate.
"Also notably we released three samples for use in medical treatments in the
first half of this year, highlighting that the use of stem cells continues to
widen.
"With the Q2 of this year showing our strongest sample storage numbers to date,
our widening international spread of businesses, new products coming available
plus our high operational gearing, means that we are well placed to continue to
grow strongly and generate cash"
For further details:
+----------------------------------------------+-------------------+
| Cryo-Save Group | + 31 (0) 575 |
| | 548998 |
+----------------------------------------------+-------------------+
| Marc Waeterschoot, Chief Executive | |
+----------------------------------------------+-------------------+
| Arnoud van Tulder, Chief Financial Officer | |
+----------------------------------------------+-------------------+
| | |
+----------------------------------------------+-------------------+
| Daniel Stewart & Company plc | + 44 (0) 20 |
| | 7776 6550 |
+----------------------------------------------+-------------------+
| Simon Leathers/Charlotte Stranner | |
+----------------------------------------------+-------------------+
| | |
+----------------------------------------------+-------------------+
| College Hill | + 44 (0) 20 7457 |
| | 2020 |
+----------------------------------------------+-------------------+
| Adrian Duffield/Rozi Morris | |
+----------------------------------------------+-------------------+
About Cryo-Save
With more than 100,000 samples saved, Cryo-Save is the leading stem cell bank in
Europe and one of the fastest growing in the world. Driven by its international
business strategy, Cryo-Save is now represented in 38 countries on three
continents and has state-of-the-art processing facilities in Belgium, Germany,
Dubai, India and France (under construction).
Cryo-Save sets the highest quality standards in stem cell storage, as it aims to
make an important contribution to conquer possible life-threatening diseases in
the future. As a service to the public, Cryo-Save offers a Cost-free Family
Donation Programme, free of charge, to families wishing to store their newborn's
umbilical cord blood stem cells for a family member diagnosed with a
life-threatening disease treatable by stem cells. The company is committed to
further improve stem cell cryopreservation techniques, by participating in
European Commission funded projects, in Universities and Hospitals.
Financial review
Revenue
Revenues for the six months ended 30 June 2009, excluding Output Pharma Services
GmbH the Group's non-core German logistics operation, increased by 59% to EUR18.0
million (1HY 2008: EUR11.3 million).
Reported revenues were EUR18.6 million (1HY 2008: EUR12.2 million), up 52% as a
result of a combination of the increase in storage volumes, and the full year
impact of acquisitions, especially CrioCord in Spain and Cryo-Save Balcanica,
and price increases in 2008.
The strong performance reported in the first quarter, which saw Q1 sales of
6,300 samples exceeding the sales in Q4 2008 (6,100 samples), continued in the
second quarter. Q2 sales were 7,000, marking an all time record quarter for the
Group (Q2 2008: 6,600 samples).
Overall, total sales volume for the first half year grew 6% to 13,300 samples,
in comparison to the 12,500 samples stored in the first half of 2008. All of
this growth was organic, achieved mainly in Spain, Italy, South Eastern European
and India.
The Group also benefited from the full year impact of the price increases
implemented during 2008, even though the key markets of Spain and Hungary only
increased their prices in Q4 2008.
Revenue by country:
+-------------------------------+-----------+------------+------------+----------+
| | 1HY 2009 | %2009 | 1HY 2008 | %2008 |
| | | revenue | EURmillion | revenue |
| | EURmillion | | | |
| | | | | |
+-------------------------------+-----------+------------+------------+----------+
| Spain | 8.4 | 47 | 3.0 | 27 |
+-------------------------------+-----------+------------+------------+----------+
| Hungary | 2.1 | 12 | 2.3 | 20 |
+-------------------------------+-----------+------------+------------+----------+
| Italy | 2.9 | 16 | 1.8 | 16 |
+-------------------------------+-----------+------------+------------+----------+
| South Eastern Europe | 1.7 | 10 | 1.7 | 15 |
| (including Greece) | | | | |
+-------------------------------+-----------+------------+------------+----------+
| Other countries | 2.9 | 15 | 2.5 | 22 |
+-------------------------------+-----------+------------+------------+----------+
| Sub-total revenue from | 18.0 | 100 | 11.3 | 100 |
| samples stored | | | | |
+-------------------------------+-----------+------------+------------+----------+
| Other revenue | 0.6 | | 0.9 | |
+-------------------------------+-----------+------------+------------+----------+
| Total revenue | 18.6 | | 12.2 | |
+-------------------------------+-----------+------------+------------+----------+
Other revenue relates to the sales from non-core German logistics operation,
Output Pharma Services GmbH, acquired in January 2008, that provides services to
pharmaceutical companies.
The significant growth in revenues of Spain was a result of a combination of
higher sales volumes, the price increase implemented in Q4 2008, and the impact
from the acquisition of CrioCord on 1 July 2008. Prior to this acquisition,
CrioCord was the Group's agent in Spain.
The decrease in revenues of Hungary was mainly caused by a weaker Hungarian
Forint in the first half of 2009 compared to the first half of 2008. The impact
of a slight decrease of the storage volume was offset by the impact of the
higher prices since Q4 2008.
Growth in sales volume triggered the significant growth in revenues of Italy.
Increase in revenues of the South Eastern European countries was offset by lower
revenues in Greece.
The growth of revenues of the other countries, from EUR2.5 million to EUR2.9
million, was mainly caused by growth in India.
Gross profit and gross margin
Gross profit, excluding the Group's non-core logistics operation, increased by
70% to EUR12.6 million (1HY 2008: EUR7.4 million). Reported gross margin increased
to 71.1% (1HY 2008: 68.0%).
Operating expenses
The Group maintained tight control of its operating expenses and despite a new
marketing campaign and a larger infrastructure following last year's investment
programme, only increased operating costs, excluding depreciation and
amortization, by 5% compared to 2HY 2008. Operating expenses, excluding
depreciation and amortization, were EUR9.9 million (1HY 2008: EUR6.8 million) and
EUR9.4 million in 2HY 2008.
In the first half year of 2009, the Group continued to invest in its India
operation, which is expected to be break even on a monthly basis by the end of
2009, and in France, where Cryo-Save France launched its sales activities in
September 2009.
The number of employees, expressed in full-time equivalents, increased to 219,
from 196 at 31 December 2008 (30 June 2008: 118), mainly as a result of growth
in India where 59 FTEs were employed as of 30 June 2009 (31 December 2008: 34).
Write down
The Group's associate Cryo-Save Arabia, which operates in the United Arab
Emirates, saw a significant decrease in sales during 1HY. As a result, the Board
has decided to write down EUR0.9 million of receivables due from Cryo-Save Arabia.
This relates to non-cash fees of EUR0.5 million for services regarding the
construction of the processing and storage facility, a non-cash royalty fee of
EUR0.2 million for samples processed and stored in Dubai, and a cash fee of EUR0.2
million for samples processed and stored in the Belgium processing and storage
facility from UAE customers. The receivables comprise of EUR0.5 million relating
to 2007, EUR0.3 million to 2008 and EUR0.1 million to the first half year of 2009.
Profitability
Underlying EBITA (excluding the EUR0.9 million write down) significantly
increased, up 123% to EUR2.9 million (1HY 2008: EUR1.3 million) as a result of
higher gross profit and tight cost control.
Underlying operating profit more than doubled, to EUR2.3 million (1HY 2008: EUR1.0
million) reflecting the Group's high operational gearing. Operating profit,
excluding the Group's non-core German logistics operation, was EUR1.3 million (1HY
2008: EUR0.9 million). Reported operating profit was EUR1.4 million (1HY 2008: EUR1.0
million).
Net finance costs of EUR0.2 million in 1HY 2009 were caused by the non-cash
IFRS-EU expenses of unwinding discounted earn out liabilities, which exceeded
interest income from cash deposits. The significant change compared to the net
finance income of EUR0.8 million in the first half year of 2008 was mainly caused
by the high interest income in the first half year of 2008 on cash deposits
which were spent on acquisitions in the second half of 2008.
Underlying profit before taxation was up 17% to EUR2.1 million (1HY 2008: EUR1.8
million). Reported profit before taxation was EUR1.2 million (1HY 2008: EUR1.8
million).
Taxation
The effective tax rate for the six months ended 30 June 2009 increased to 22%
compared to 9% in the first half of 2008. Interim period income tax expense is
accrued using the tax rate (22%) that would be applicable to expected total
annual profit before taxation. The increase is caused by the non-recurring
impact of the estimated costs regarding the listing on Euronext (see below),
which will be incurred in the second half of 2009 by the Dutch holding company,
that does not capitalise its losses carried forward. Furthermore, the effective
tax rate increased due to increased profits in countries with a relatively high
tax rate, like Spain, compared to the historically low effective tax rate of the
Group.
Earnings per share
Underlying earnings per share were up 6% at 3.7 euro cents (1HY 2008: 3.5
cents). Reported earnings per share were 2.0 euro cents (1HY 2008: 3.5 euro
cents). The Group is not paying an interim dividend.
Cash flow
Net cash from operating activities was EUR2.6 million (1HY 2008: EUR1.5 million).
The Group invested EUR2.3 million in property, plant and equipment, mainly related
to the new processing and storage facility in Niel, Belgium, which was financed
by the sale and lease back transaction with ING Lease Belgium N.V.
Operating review
Spain
Spain, where Cryo-Save operates with two subsidiaries CrioCord and Cryo-Save
Espana, continued to be the Group's main market. Revenues increased by 180% to
EUR8.4 million (1HY 2008 EUR3.0m), with an overall volume growth of 26%. CrioCord
further strengthened its market position and benefited from contracts it has
with several private insurance companies.
Hungary
The Hungarian subsidiary Sejtbank faced challenging circumstances. The country
has been hit very hard by the economic crisis and there is a strong competition
in the market. Despite this, revenues only slightly decreased to EUR2.1 million
from EUR2.3 million in the same period last year. With the strong marketing
campaign focused on potential customers, the Group is confident that it will
remain the market leader in Hungary.
Italy
Italy achieved a growth in revenues of 61% to EUR2.9 million (1HY 2008: EUR1.8
million), which is the result of a higher volume. Both Cryo-Save Italy and our
local partners significantly increased their sales during the first half
reflecting a growth of the market..
South Eastern European countries (including Greece)
Sales significantly increased in the South Eastern European countries (excluding
Greece), particularly in Serbia. Sales in Greece were in line with the second
half year of 2008, but below the first half year of 2008, as a result of the
previously reported termination of a major contract with a maternity hospital in
Athens as at 30 June 2008. Overall this region reported revenues of EUR1.7 million
(1HY 2008: EUR1.7 million).
Geographic expansion into new markets
Cryo-Save India has introduced its services successfully to the Indian market,
in six key metropolitan cities. The business signed contracts with several
leading hospitals that support Cryo-Save's services and high quality standards.
Cryo-Save India successfully obtained the ISO9001:2008 certificate, which
underlines the Group's commitment to rigorously adhere to the same high
standards and procedures in processing and storage facility in Bangalore, as in
the Belgium operation. Sales in the first half year of 2009 grew month over
month.
Cryo-Save France further developed its market opportunities. Although the formal
approval to start its processing and storage activities in Lyon is still
pending, the Group visited many stakeholders in this period, including
hospitals, clinics, and regional regulators. After being recruited and trained
in July and August this year, sales staff became operational as of September
2009.
In the first half year of 2009 the Group entered into partner agreements in
Latvia, Pakistan, Kosovo, Albania, and Bosnia Herzegovina without any material
investment.
Samples delivered for medical treatment
The importance of cord blood storage continues to be proven with recent
Cryo-Save samples being released in the first half of 2009 for medical
treatments of children in Spain, Switzerland and the United Kingdom. The
treatment of children affected by diseases such as leukemia or cerebral palsy,
provides a profound demonstration of both the benefits of storing cord blood and
the new advances in transplants and stem cell therapy. Cryo-Save continues to
play an increasing part in the healthcare of such families, and expects a
significant increase of samples released for medical treatment over time as the
average age of the children whose stem cells are stored with the Group will
increase. The average age of these children is currently around 3, where several
diseases that can be treated with stem cells only appear at a later age, e.g.
around 7 years of age.
Applied Research & Development of new products
The Group introduced a new added feature (previously called Cryo-Cord Gold or
Cryo-Cord+) to its Cryo-Cord service - the collection, processing, preservation
and storage of the umbilical cord tissue containing mesenchymal stem cells
(MSCs) -, in several countries, among them India, Greece and Hungary. During the
introduction period the added feature to the Cryo-Cord service was free of
costs, except for the Spanish market. A price increase is foreseen in Q4 2009.
Validation and development of Cryo-Lip, which the Group plans to introduce in
the first half year of 2010, is progressing well. Cryo-Lip involves the
collection and storage of fat tissue containing MSCs obtained via liposuction
from adults. In the first half of 2009 the Group further tested the collection
and processing procedures which are now all validated.
Euronext listing
As stated on 3 September 2009, the Group plans to seek an additional listing,
without issuing any additional shares, on Euronext Amsterdam in Q4 of the
current financial year. This will complement the Group's shares being traded on
AIM in London and will increase its visibility in the continental markets, where
it principally trades and is expected to enhance liquidity. The Group expects to
incur one off cost from the listing of around EUR0.8 million.
Current trading and outlook
The further roll out of the new added feature, storing stem cells from the
umbilical cord itself, in the second half of 2009, should further support the
growth of revenue, and will strengthen Cryo-Save's market leader position in
Europe.
Despite the current economic climate, the Group has completed the integration of
businesses acquired last year, continued to growth businesses organically and
maintained its investment program in France and India. With its geographic
spread and the new countries India and France coming on stream, the Group has a
strong basis for further growth.
Condensed consolidated interim financial statements
These condensed consolidated interim financial statements are unaudited.
Condensed consolidated statement of income
+--------------------------------------+---------+---------------+--------------+
| in thousands of euro | | | |
+--------------------------------------+---------+---------------+--------------+
| For the six months ended 30 June | | | |
+--------------------------------------+---------+---------------+--------------+
| | Notes | 2009 | 2008 |
+--------------------------------------+---------+---------------+--------------+
| Revenue | 7 | 18,622 | 12,235 |
+--------------------------------------+---------+---------------+--------------+
| Cost of sales | | (5,375) | (3,919) |
+--------------------------------------+---------+---------------+--------------+
| Gross profit | | 13,247 | 8,316 |
+--------------------------------------+---------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Marketing and sales expenses | | 4,880 | 3,059 |
+--------------------------------------+---------+---------------+--------------+
| Research and development expenses | | 170 | 59 |
+--------------------------------------+---------+---------------+--------------+
| General and administrative expenses | 8 | 6,772 | 4,207 |
+--------------------------------------+---------+---------------+--------------+
| Total operating expenses | | 11,822 | 7,325 |
+--------------------------------------+---------+---------------+--------------+
| Operating profit | | 1,425 | 991 |
+--------------------------------------+---------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Finance income | | 41 | 1,037 |
+--------------------------------------+---------+---------------+--------------+
| Finance costs | | (276) | (213) |
+--------------------------------------+---------+---------------+--------------+
| Net finance (costs)/income | | (235) | 824 |
+--------------------------------------+---------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Results relating to equity-accounted | | 0 | 0 |
| investees | | | |
+--------------------------------------+---------+---------------+--------------+
| Profit before taxation | | 1,190 | 1,815 |
+--------------------------------------+---------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Income tax expense | 9 | 262 | 159 |
+--------------------------------------+---------+---------------+--------------+
| Profit for the period | 928 | 1,656 |
+------------------------------------------------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Attributable to: | | | |
+--------------------------------------+---------+---------------+--------------+
| - Equity holders of the Company | | 928 | 1,656 |
+--------------------------------------+---------+---------------+--------------+
| - Non-controlling interest | | - | - |
+--------------------------------------+---------+---------------+--------------+
| Profit for the period | 928 | 1,656 |
+------------------------------------------------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Earnings per share (in euro cents) | 10 | | |
+--------------------------------------+---------+---------------+--------------+
| - Basic | | 2.0 | 3.5 |
+--------------------------------------+---------+---------------+--------------+
| - Diluted | | 2.0 | 3.5 |
+--------------------------------------+---------+---------------+--------------+
Condensed consolidated statement of comprehensive income
in thousands of euro
+--------------------------------------+---------+---------------+--------------+
| For the six months ended 30 June | | | |
+--------------------------------------+---------+---------------+--------------+
| | | 2009 | 2008 |
+--------------------------------------+---------+---------------+--------------+
| Profit for the period | | 928 | 1,656 |
+--------------------------------------+---------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Other comprehensive income | | | |
+--------------------------------------+---------+---------------+--------------+
| Foreign currency translation | | (76) | 27 |
| differences | | | |
+--------------------------------------+---------+---------------+--------------+
| Income tax on other comprehensive | | - | - |
| income | | | |
+--------------------------------------+---------+---------------+--------------+
| Other comprehensive income for the period | (76) | 27 |
+------------------------------------------------+---------------+--------------+
| Total comprehensive income for the | | 852 | 1,683 |
| period | | | |
+--------------------------------------+---------+---------------+--------------+
| | | | |
+--------------------------------------+---------+---------------+--------------+
| Attributable to: | | | |
+--------------------------------------+---------+---------------+--------------+
| - Equity holders of the Company | | 852 | 1,683 |
+--------------------------------------+---------+---------------+--------------+
| - Non-controlling interest | | - | - |
+--------------------------------------+---------+---------------+--------------+
| Total comprehensive income for the | | 852 | 1,683 |
| period | | | |
+--------------------------------------+---------+---------------+--------------+
Condensed consolidated statement of financial position
in thousands of euro
+--------------------------------------------+--------+---------+--------------+
| | Notes | 30 June | 30 December |
| | | 2009 | 2009 |
+--------------------------------------------+--------+---------+--------------+
| Assets | | | |
+--------------------------------------------+--------+---------+--------------+
| Intangible assets | | 39,078 | 37,438 |
+--------------------------------------------+--------+---------+--------------+
| Property, plant and equipment | | 12,190 | 10,421 |
+--------------------------------------------+--------+---------+--------------+
| Investments in equity accounted investees | | 0 | 0 |
+--------------------------------------------+--------+---------+--------------+
| Deferred tax assets | | 830 | 640 |
+--------------------------------------------+--------+---------+--------------+
| Trade and other receivables | | 956 | 1,304 |
+--------------------------------------------+--------+---------+--------------+
| Total non-current assets | | 53,054 | 49,803 |
+--------------------------------------------+--------+---------+--------------+
| | | | |
+--------------------------------------------+--------+---------+--------------+
| Inventories | | 318 | 287 |
+--------------------------------------------+--------+---------+--------------+
| Trade and other receivables | | 8,419 | 8,156 |
+--------------------------------------------+--------+---------+--------------+
| Current tax assets | | 770 | 1,205 |
+--------------------------------------------+--------+---------+--------------+
| Cash and cash equivalents | 11 | 8,953 | 4,697 |
+--------------------------------------------+--------+---------+--------------+
| Total current assets | | 18,460 | 14,345 |
+--------------------------------------------+--------+---------+--------------+
| | | | |
+--------------------------------------------+--------+---------+--------------+
| Total assets | | 71,514 | 64,148 |
+--------------------------------------------+--------+---------+--------------+
| | | | |
+--------------------------------------------+--------+---------+--------------+
| Equity | 12 | | |
+--------------------------------------------+--------+---------+--------------+
| Issued share capital | | 964 | 964 |
+--------------------------------------------+--------+---------+--------------+
| Share premium reserve | | 38,178 | 38,178 |
+--------------------------------------------+--------+---------+--------------+
| Revaluation reserve | | 719 | 769 |
+--------------------------------------------+--------+---------+--------------+
| Legal reserve | | 108 | 108 |
+--------------------------------------------+--------+---------+--------------+
| Translation reserve | | -524 | -448 |
+--------------------------------------------+--------+---------+--------------+
| Treasury shares | | -3,603 | -3,497 |
+--------------------------------------------+--------+---------+--------------+
| Retained earnings | | 7,622 | 6,979 |
+--------------------------------------------+--------+---------+--------------+
| Equity attributable to equity holders of the | 43,464 | 43,053 |
| Company | | |
+-----------------------------------------------------+---------+--------------+
| Non-controlling interest | | - | - |
+--------------------------------------------+--------+---------+--------------+
| Total equity | | 43,464 | 43,053 |
+--------------------------------------------+--------+---------+--------------+
| | | | |
+--------------------------------------------+--------+---------+--------------+
| Liabilities | | | |
+--------------------------------------------+--------+---------+--------------+
| Borrowings | | 3,862 | 111 |
+--------------------------------------------+--------+---------+--------------+
| Deferred revenue | | 5,160 | 4,885 |
+--------------------------------------------+--------+---------+--------------+
| Deferred tax liabilities | | 2,738 | 2,827 |
+--------------------------------------------+--------+---------+--------------+
| Other liabilities | | 6,738 | 5,830 |
+--------------------------------------------+--------+---------+--------------+
| Total non-current liabilities | | 18,498 | 13,653 |
+--------------------------------------------+--------+---------+--------------+
| | | | |
+--------------------------------------------+--------+---------+--------------+
| Borrowings | | 542 | 38 |
+--------------------------------------------+--------+---------+--------------+
| Deferred revenue | | 520 | 389 |
+--------------------------------------------+--------+---------+--------------+
| Trade and other payables | | 6,734 | 5,052 |
+--------------------------------------------+--------+---------+--------------+
| Current tax liabilities | | 1,756 | 1,963 |
+--------------------------------------------+--------+---------+--------------+
| Total current liabilities | | 9,552 | 7,442 |
+--------------------------------------------+--------+---------+--------------+
| | | | |
+--------------------------------------------+--------+---------+--------------+
| Total liabilities | | 28,050 | 21,095 |
+--------------------------------------------+--------+---------+--------------+
| Total equity and liabilities | | 71,514 | 64,148 |
+--------------------------------------------+--------+---------+--------------+
Condensed consolidated statement of changes in equity
in thousands of euro
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| For the six months ended 30 June 2008 | | | | |
+---------------------------------------------+--------------+----------------+-----------------+-------------------------+
| | Issued | Treasury | Other | Share-holders' | Non-controlling | Total |
| | share | shares | reserves | equity | interest | equity |
| | capital | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| 1 January 2008 | 964 | (435) | 42,392 | 42,921 | - | 42,921 |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| Exchange | - | - | 27 | 27 | - | 27 |
| differences on | | | | | | |
| translating | | | | | | |
| foreign | | | | | | |
| operations | | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| Net income | - | - | 27 | 27 | - | 27 |
| recognized | | | | | | |
| directly in | | | | | | |
| equity | | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| | | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| Profit for the | - | - | 1,656 | 1,656 | | 1,656 |
| period | | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| Total recognized | - | | 1,683 | 1,683 | - | 1,683 |
| income and | | | | | | |
| expense for the | | | | | | |
| period | | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| Share-based | - | - | 185 | 185 | - | 185 |
| payments | | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| Repurchased | - | (3,016) | - | (3,016) | - | (3,016) |
| shares | | | | | | |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
| 30 June 2008 | 964 | (3,451) | 44,260 | 41,773 | - | 41,773 |
+-------------------+-----------+-------------+--------------+----------------+-----------------+-------------------------+
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| For the six months ended 30 June 2009 | | | | |
+----------------------------------------------+-------------+----------+-------+-----------+
| | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| 1 January 2009 | 964 | (3,497) | 45,586 | 43,053 | - | 43,053 |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| Exchange | - | - | (76) | (76) | - | (76) |
| differences on | | | | | | |
| translating | | | | | | |
| foreign operations | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| Net income | - | - | (76) | (76) | - | (76) |
| recognised | | | | | | |
| directly in equity | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| Profit for the | - | - | 928 | 928 | | 928 |
| period | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| Total recognized | - | | 852 | 852 | - | 852 |
| income and expense | | | | | | |
| for the period | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| Share-based | - | - | 127 | 127 | - | 127 |
| payments | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| Dividend | - | - | (462) | (462) | - | (462) |
| distributed | | | | | | |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| Repurchased shares | - | (106) | - | (106) | - | (106) |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
| 30 June 2009 | 964 | (3,603) | 46,103 | 43,464 | - | 43,464 |
+--------------------+-----------+-------------+-------------+----------+-------+-----------+
Condensed consolidated statement of cash flows
in thousands of euro
+--+-----------------------------------------------+--------------+--------------+
| | | 2009 | 2008 |
+--+-----------------------------------------------+--------------+--------------+
| Cash flows from operating activities | | |
+--------------------------------------------------+--------------+--------------+
| Profit for the period | 928 | 1,656 |
+--------------------------------------------------+--------------+--------------+
| Adjustments for: | | |
+--------------------------------------------------+--------------+--------------+
| | Income tax expense | 262 | 159 |
+--+-----------------------------------------------+--------------+--------------+
| | Finance costs | 276 | 213 |
+--+-----------------------------------------------+--------------+--------------+
| | Finance income | (41) | (1,037) |
+--+-----------------------------------------------+--------------+--------------+
| | Depreciation and amortization | 1,051 | 478 |
+--+-----------------------------------------------+--------------+--------------+
| | Equity settled share-based payment | 127 | 69 |
| | transactions | | |
+--+-----------------------------------------------+--------------+--------------+
| | | 2,603 | 1,538 |
+--+-----------------------------------------------+--------------+--------------+
| Organic movements in working capital | | |
+--------------------------------------------------+--------------+--------------+
| (Increase)/decrease in (non)current trade and | 185 | (1,508) |
| other receivables | | |
+--------------------------------------------------+--------------+--------------+
| (Increase)/decrease in inventories | (31) | (99) |
+--------------------------------------------------+--------------+--------------+
| (Increase)/decrease (non)current tax assets | 408 | (166) |
+--------------------------------------------------+--------------+--------------+
| Increase/(decrease) in (non)current liabilities | 214 | 1,219 |
+--------------------------------------------------+--------------+--------------+
| Increase/(decrease) in current tax liabilities | (16) | (210) |
+--------------------------------------------------+--------------+--------------+
| Net cash from operations | 3,363 | 774 |
+--------------------------------------------------+--------------+--------------+
| Interest (paid)/received | (72) | 965 |
+--------------------------------------------------+--------------+--------------+
| Income taxes (paid)/received | (705) | (215) |
+--------------------------------------------------+--------------+--------------+
| Net cash from operating activities | 2,586 | 1,524 |
+--------------------------------------------------+--------------+--------------+
| | | | |
+--+-----------------------------------------------+--------------+--------------+
| Cash flows from investing activities | | |
+--------------------------------------------------+--------------+--------------+
| Purchase of property, plant and equipment | (2,296) | (2,865) |
+--------------------------------------------------+--------------+--------------+
| Purchase of intangible assets | (164) | (78) |
+--------------------------------------------------+--------------+--------------+
| Disposals of non-current assets | 81 | - |
+--------------------------------------------------+--------------+--------------+
| Acquisitions spending | - | (20,130) |
+--------------------------------------------------+--------------+--------------+
| Net cash (used in)/generated by investing | (2,379) | (23,073) |
| activities | | |
+--------------------------------------------------+--------------+--------------+
| | | | |
+--+-----------------------------------------------+--------------+--------------+
| Cash flows from financing activities | | |
+--------------------------------------------------+--------------+--------------+
| Repurchase of own shares | (106) | (3,016) |
+--------------------------------------------------+--------------+--------------+
| Redemption of borrowings | (58) | - |
+--------------------------------------------------+--------------+--------------+
| Proceeds from borrowings | 4,200 | - |
+--------------------------------------------------+--------------+--------------+
| Net cash generated by/(used in) financing | 4,036 | (3,016) |
| activities | | |
+--------------------------------------------------+--------------+--------------+
| | | | |
+--+-----------------------------------------------+--------------+--------------+
| Net increase/(decrease) in cash and cash | 4,243 | (24,565) |
| equivalents | | |
+--------------------------------------------------+--------------+--------------+
| Cash and cash equivalents at the beginning of | 4,697 | 39,465 |
| the period | | |
+--------------------------------------------------+--------------+--------------+
| Exchange differences | 13 | 8 |
+--------------------------------------------------+--------------+--------------+
| Cash and cash equivalents at the end of the | 8,953 | 14,908 |
| period | | |
+--+-----------------------------------------------+--------------+--------------+
Notes to the condensed consolidated interim financial statements
(in thousands of euro, unless indicated otherwise)
1. Company information
Cryo-Save Group N.V. (the "Company", or the "Group") is a limited company
domiciled in The Netherlands. The address of its registered office and principal
place of business is IJsselkade 8, 7201 HB Zutphen, The Netherlands.
2. Statement of compliance
The Group's condensed consolidated interim financial statements as at and for
the six months ended 30 June 2009 were approved for publication by the Board of
Directors on 14 September 2009.
The condensed consolidated interim financial statements of the Company as at and
for the six months ended 30 June 2009 have been prepared in accordance with IAS
34 Interim Financial Reporting. As permitted by IAS 34, these statements do not
include all of the information required for full annual financial statements,
and should be read in conjunction with the consolidated financial statements of
the Company as at and for the year ended 31 December 2008. In addition, the
notes to the condensed consolidated financial statements are presented in a
condensed format.
For further details on the principle accounting policies of the Company, we
refer to our website, www.cryo-savegroup.com, Investor Relations.
3. Significant accounting policies
The accounting policies applied by the Company in these condensed consolidated
interim financial statements are the same as those applied by the Company in its
consolidated financial statements as at and for the year ended 31 December 2008.
New standards and interpretations
The first time application of the amendments and interpretations that became
effective for the year ended 31 December 2009, as listed below did not result in
substantial changes to the Group's accounting policies:
* Revised IAS 23 Borrowing costs (effective 1 January 2009);
* Revised IAS 1 Presentation of Financial Statements (effective 1 January 2009);
* IAS 27 (Revised) Consolidated and Separate Financial Statements (effective 1
January 2009);
* IFRS 2 (Amendment) Share-based payments (effective 1 January 2009).
The impact of the above standards changes on the Group's equity and result is
not material.
IFRS 3 Business Combinations (Revised) (effective 1 July 2009)
This new standard will become mandatory for the Group's 2010 financial
statements, if the standard is EU endorsed. The Group has not opted for earlier
application. The following key changes within IFRS 3 Business Combinations
(Revised) could have a significant impact:
* Contingent purchase considerations initially measured at fair value, whereby any
re-measurement is recognized via the profit or loss; and
* Acquisition-related costs are to be expensed.
The Group opted for early application of IFRS 8 in the financial statements for
the year ended 31 December 2008.
4. Estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
applied to the consolidated financial statements as at and for the year ended 31
December 2008.
5. Seasonality
The interim operations of the Company are not impacted by seasonal or cyclical
purchase patterns.
6. Operating segments
Since the acquisition of Output Pharma Services GmbH ('Output') in January 2008,
the Group identified two operating segments: the extraction and storage of adult
human stem cells, and other types of products and services. The latter mainly
consists of Output.
Information about reportable segments
+------------------------------+---------+--------+-------+------+----------+----------+
| for the six months ended | Stem cell | Other | Total |
| 30 June | storage | | |
+------------------------------+------------------+--------------+---------------------+
| | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 |
+------------------------------+---------+--------+-------+------+----------+----------+
| Revenue | | | | | | |
+------------------------------+---------+--------+-------+------+----------+----------+
| Segment revenue | 18,012 | 11,338 | 610 | 897 | 18,622 | 12,235 |
+------------------------------+---------+--------+-------+------+----------+----------+
| Other segment information | | | | | | |
+------------------------------+---------+--------+-------+------+----------+----------+
| Finance income | 36 | 1,037 | 5 | 0 | 41 | 1,037 |
+------------------------------+---------+--------+-------+------+----------+----------+
| Finance expense | (276) | (213) | 0 | 0 | (276) | (213) |
+------------------------------+---------+--------+-------+------+----------+----------+
| Depreciation and | (1,041) | (469) | (10) | (9) | (1,051) | (478) |
| amortization | | | | | | |
+------------------------------+---------+--------+-------+------+----------+----------+
| Profit before taxation | 1,050 | 1,706 | 140 | 109 | 1,190 | 1,815 |
+------------------------------+---------+--------+-------+------+----------+----------+
| Segment assets | 70,891 | 66,179 | 623 | 587 | 71,514 | 66,766 |
+------------------------------+---------+--------+-------+------+----------+----------+
| Segment liabilities | 27,830 | 24,637 | 220 | 356 | 28,050 | 24,993 |
+------------------------------+---------+--------+-------+------+----------+----------+
| Capital expenditure | 2,457 | 2,932 | 3 | 11 | 2,460 | 2,943 |
+------------------------------+---------+--------+-------+------+----------+----------+
Revenue from external customers attributed to the Company's country of domicile,
The Netherlands, amounted to EUR0.2 million (1HY 2008: EUR0.2 million).
Revenue include EUR46,000 interest related to customer payment in instalments (1HY
2008: EUR30,000). Interest is charged against several interest rates applicable in
the countries.
7. Revenue
+---------------------------------------------------------+----------+----------+
| for the six months ended | 2009 | 2008 |
| 30 June | | |
| | | |
+---------------------------------------------------------+----------+----------+
| Stem cell extraction and storage | 18,012 | 11,338 |
+---------------------------------------------------------+----------+----------+
| Other products and services | 610 | 897 |
+---------------------------------------------------------+----------+----------+
| Total revenue | 18,622 | 12,235 |
+---------------------------------------------------------+----------+----------+
Revenue from stem cell extraction and storage also include the impact of the
change of the discount rate on the net present value of deferred revenue
amounting to EUR0.3 million additional revenue (1HY 2008: nil). The discount rate
is consistently based on the 20 years AAA-rated euro area government bonds
interest rate, which amounted 4.6% as at 30 June 2009 (31 December 2008: 4.0%),
plus a liquidity premium of 1%.
8. Depreciation and amortization expenses
+---------------------------------------------------------+----------+----------+
| for the six months ended | 2009 | 2008 |
| 30 June | | |
| | | |
+---------------------------------------------------------+----------+----------+
| Depreciation of property, plant and equipment | 424 | 212 |
+---------------------------------------------------------+----------+----------+
| Amortization of identified intangibles assets | 608 | 263 |
+---------------------------------------------------------+----------+----------+
| Amortization of other intangible assets | 19 | 3 |
+---------------------------------------------------------+----------+----------+
| Total depreciation and amortization expenses | 1,051 | 478 |
+---------------------------------------------------------+----------+----------+
The increase of amortization expenses is due to the full year impact of
amortization obtained through acquisitions, such as customer relationship, brand
name and contracts.
9. Taxation
Income tax expense reported for the six month period ended 30 June 2009 is
recognized based on management's best estimate of the weighted average annual
effective income tax rate for the full financial year, applied to the pre-tax
income of the interim period. The Group's applied consolidated effective tax
rate for the six months ended 30 June 2009 was 22% (for the year ended 31
December 2008: 10%; for the six months ended 30 June 2008: 9%).
The increase to 22% is caused by the non-recurring impact of the estimated costs
regarding the listing on Euronext (see below), which will be incurred in the
second half of 2009 by the Dutch holding company, that does not capitalise its
losses carried forward. Furthermore, the effective tax rate increased due to
increased profits in countries with a relatively high tax rate, like Spain,
compared to the historically low effective tax rate of the Group.
Estimates and judgement by management are required in determining the Group's
provisions for tax liabilities, amongst others corporate income tax and value
added tax (VAT). The calculation of the tax liabilities is based in part on the
interpretations of applicable tax laws in the jurisdictions in which the Group
operates. Although the Group believes the tax estimates are reasonable, there is
no assurance that the final determination of the tax liabilities will not be
materially different from what is reflected in the statement of income and
balance sheet. Should additional taxes be assessed these could have a material
effect on the Group's results of operation or financial condition.
10. Earnings per share
+---------------------------------------------------------+----------+----------+
| | 30 June | 30 June |
| | 2009 | 2008 |
+---------------------------------------------------------+----------+----------+
| Basic earnings per share (in euro cents) | 2.0 | 3.5 |
+---------------------------------------------------------+----------+----------+
| Diluted earnings per share (in euro cents) | 2.0 | 3.5 |
+---------------------------------------------------------+----------+----------+
Basic earnings per share (EPS) are calculated by dividing profit attributable to
ordinary equity holders of the Company by the weighted average number of
ordinary shares outstanding during the period.
Adjusted for the write-down of the receivables from its associate Cryo-Save
Arabia, pro forma EPS would have been 3.7 euro cents.
The calculation of diluted earnings per share is based on the calculation of the
basic earnings per share, adjusted to allow for the assumed conversion of all
dilutive share options.
The average market value of ordinary shares during the first half of 2009 did
not exceed the exercise price of the options (2007: 210 pence, 2008: 211 pence,
and 2009: 55.8 pence respectively), hence the options had no dilutive effect.
Reconciliation between number of shares and weighted average number of shares:
+-----------------------------------------------------+-------------+------------+
| | 30 | 30 June |
| | June | 2008 |
| | 2009 | |
+-----------------------------------------------------+-------------+------------+
| Issued ordinary shares at 1 January | 48,195,986 | 48,195,986 |
+-----------------------------------------------------+-------------+------------+
| Effect of share split | - | - |
+-----------------------------------------------------+-------------+------------+
| Shares held in treasury | (1,788,472) | (789,926) |
+-----------------------------------------------------+-------------+------------+
| Weighted average number of shares | 46,407,514 | 47,406,060 |
+-----------------------------------------------------+-------------+------------+
Reconciliation between weighted average number of shares and diluted weighted
average number
of shares:
+-----------------------------------------------------+-------------+------------+
| | 30 June | 30 June |
| | 2009 | 2008 |
+-----------------------------------------------------+-------------+------------+
| Weighted average number of shares | 46,407,514 | 47,406,060 |
+-----------------------------------------------------+-------------+------------+
| Share options | - | - |
+-----------------------------------------------------+-------------+------------+
| Diluted weighted average number of shares | 46,407,514 | 47,406,060 |
+-----------------------------------------------------+-------------+------------+
| Profit attributable to ordinary equity holders of | 928 | 1,656 |
| the Company | | |
+-----------------------------------------------------+-------------+------------+
11. Net cash
+---------------------------------------------------------+---------+-----------+
| | 30 | 31 |
| | June | December |
| | 2009 | 2008 |
+---------------------------------------------------------+---------+-----------+
| Cash and cash equivalents | 8,953 | 4,697 |
+---------------------------------------------------------+---------+-----------+
| Borrowings (current and non-current) | (4,404) | (149) |
+---------------------------------------------------------+---------+-----------+
| Net cash | 4,549 | 4,548 |
+---------------------------------------------------------+---------+-----------+
The net cash position of EUR4.5 million (31 December 2008: EUR4.5 million) was
positively impacted by the net cash from operating activities (EUR2.6 million),
offset by the investment in property, plant and equipment (EUR2.3 million). Cash
and cash equivalents increased to EUR9.0 million at 30 June 2009 from EUR4.7 million
at 31 December 2008 due to the completion of the sale and lease back agreement
with ING Lease Belgium N.V.
In March 2009 the Group entered into a sale and lease back agreement with ING
Lease Belgium N.V. in relation to the Group's processing and storage facility in
Niel, Belgium. Pursuant to the agreement, ING Lease Belgium N.V. purchased the
facility and agreed to finance its construction for an amount of EUR4.3 million,
resulting in a payment obligation of ING Lease Belgium N.V. to the Group of EUR4.3
million. Of this amount EUR4.2 million was received before 30 June 2009, whereas
the remaining amount of EUR0.1 million was received in August 2009. The Group has
leased the facility for a fixed period of 15 years. Lease instalments are paid
quarterly in advance commencing on 1 September 2009, and are computed on an
annuity basis. The interest is fixed for 15 years at 5.5%.
The first quarterly payment will be a down payment of EUR430,000 followed by
quarterly payments of EUR92,000. The lease obligation is recognized as financial
lease obligation (borrowings) and accounted for at a total amount of EUR4.3
million (EUR3.8 million non-current and EUR0.5 million current as per 30 June 2009).
After the initial 15-years lease period the Group has the right to purchase the
facility from ING Lease Belgium N.V. for 10% of the invested amount (EUR430,000).
12. Share options and treasury shares
Share options
At 23 April 2009, the Company has granted 335,000 ordinary shares to staff of
the Company, at an exercise price of 55.8pence per share.
The fair market value of each conditionally awarded share was 37.2pence, as
determined by an outside consulting firm. The fair value of services received in
return for share options granted is based on the fair value of share options
granted, measured using a binomial model.
Treasury shares
To cover the dilutive effect of the granted share options in 2007, 2008 and 2009
under the 2007 Share Option Scheme to staff and to fund acquisitions, the Group
started a share buyback programme in 2007. During the first half year of 2009
the Company acquired 250,000 own shares in treasury, resulting in 2,020,000 own
shares held in treasury at 30 June 2009. Treasury shares are recorded at cost,
representing the market price on the acquisition date.
13. Events after the reporting period
Distribution agreement signed with leading Iberian medical services provider
extends reach in Spain and Portugal
On 2 July 2009, the Group signed an exclusive distribution agreement for the
Iberian market with the Spanish subsidiary of Labco, a leading pan European
medical diagnostic labs network. As a result of this agreement, the Group will
further strengthen its leadership position in Spain and have an additional
channel to market in Portugal.
In Spain and Portugal, the laboratories of Labco will be used as a point of
contact and sale for the Group's potential customers. Labco, with around 1,000
laboratories in Spain and Portugal, will train medical staff to collect the cord
blood and on the Group's logistics procedures.
Cryo-Save will pay a fee for the samples successfully stored. The first samples
collected via the Labco laboratories are expected to be received in October
2009.
Acquisition
On 10 July 2009, Cryo-Save acquired Salus Futura Ltd, United Kingdom, which
holds all shares of Salus Futura Srl, Italy ("Salus Futura"), for an initial
consideration of EUR0.4 million payable in cash and a deferred performance related
payment, payable annually on the achievement of certain goals until 31 May 2012.
The Group expects the acquisition to be earnings enhancing on completion.
Salus Futura, established in 2007, is an Italian stem cell storage marketing and
distribution company. Processing and storage will be performed by Cryo-Save.
Salus Futura concentrates primarily on customer acquisition through diagnostic
centres and private clinics. All of Salus Futura's business comes from Italy. In
the first quarter of 2009, the number of samples stored increased by 280% over
the same period last year, and was 13% up on the fourth quarter of 2008.
Following completion, key staff of Salus Futura will remain with the Group,
allowing us to utilise its experience to further roll out this successful model
in Italy. The Salus Futura organisation will be integrated in Cryo-Save's
Italian organisation.
In the year to 31 December 2008 Salus Futura reported aggregated revenue of EUR0.5
million and a start up loss of EUR0.1 million.
Dividend
Following the resolution on 20 May 2009, the Company paid a maiden dividend of EUR
462,000 (EUR0.01 per share) for the year ended 31 December 2008 after the
reporting period.
Share buy back
In August, after the reporting date, the Company purchased 100,000 ordinary
shares of EUR0.02 in total for an average price of 52.5 pence per share, to be
held in treasury. Following the purchase of these shares, the Company holds
2,120,000 of its own ordinary shares in treasury, representing approximately
4.40% of the Company's issued share capital, and has 46,075,986 ordinary shares
in issue (excluding treasury shares).
+-----------------------+--------------------------------------------------+
| Contact details | For more information on Cryo-Save visit |
+-----------------------+--------------------------------------------------+
| Cryo-Save Group N.V. | www.cryo-savegroup.com, or contact Investor |
| | Relations |
+-----------------------+--------------------------------------------------+
| IJsselkade 8 | at ir@cryo-save.com |
+-----------------------+--------------------------------------------------+
| 7201 HB Zutphen | |
+-----------------------+--------------------------------------------------+
| The Netherlands | |
+-----------------------+--------------------------------------------------+
| Tel. +31 (0)575 54 89 | |
| 98 | |
+-----------------------+--------------------------------------------------+
| Fax +31 (0)575 50 91 | |
| 16 | |
+-----------------------+--------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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