Group performance April-June 2024
Net sales
Net sales for the period amounted to SEK 137.0 million (140.5), corresponding to a decrease of 2.5 percent. The negative organic growth of 3.6 percent was attributable to fewer 5-party instruments sold and fewer 3-party instruments sold in the US. Sales of the number of instruments decreased by 10.0 percent and affected instrument sales by -22 percent.
| Net sales by region, SEK million | Apr-Jun 2024 | Apr-Jun 2023 | change | Jan-Jun 2024 | Jan-Jun 2023 | change | Jul 23 - Jun 24 | Jul 22 - Jun 23 | change |
|---|---|---|---|---|---|---|---|---|---|
| USA | 50.6 | 50.1 | 1% | 96.9 | 98.7 | -2% | 201.2 | 198.4 | 1% |
| Asia | 31.3 | 40.5 | -23% | 80.5 | 85.4 | -6% | 155.7 | 160.7 | -3% |
| Eastern Europe | 16.2 | 9.5 | 70% | 31.0 | 18.3 | 69% | 46.0 | 50.3 | -9% |
| Latin America | 9.7 | 12.8 | -24% | 20.7 | 26.6 | -22% | 47.4 | 43.7 | 9% |
| Western Europe | 11.7 | 11.9 | -2% | 26.4 | 21.1 | 25% | 53.2 | 43.2 | 23% |
| Africa / Middle East | 17.5 | 15.7 | 12% | 29.3 | 33.5 | -13% | 61.7 | 62.1 | -1% |
| Total | 137.0 | 140.5 | -2% | 284.8 | 283.6 | 0% | 565.2 | 558.4 | 1% |
| Net sales by product, SEK million | |||||||||
| Instruments | 36.5 | 46.6 | -22% | 85.9 | 87.9 | -2% | 178.8 | 158.8 | 13% |
| Consumables, own instruments | 55.4 | 53.7 | 3% | 112.1 | 115.4 | -3% | 227.1 | 238.2 | -5% |
| Consumables, OEM and CDS Brand | 33.5 | 30.0 | 12% | 61.3 | 59.5 | 3% | 118.0 | 117.1 | 1% |
| Other | 11.5 | 10.2 | 13% | 25.5 | 20.9 | 22% | 41.3 | 44.3 | -7% |
| Total | 137.0 | 140.5 | -2% | 284.8 | 283.6 | 0% | 565.2 | 558.4 | 1% |
Gross profit
Gross profit for the period amounted to SEK 59.1 million (59.9), a decrease of SEK 0.9 million. The gross margin for the period was 43.1 percent (42.7). Non-recurring restructuring expenses were charged to gross profit by SEK 0.7 million.
The gross margin was positively impacted by increased sales of veterinary instruments and OEM sales. License revenues from reagent sales in India contributed to an improved gross margin.
Expenses
Operating expenses for the period, excluding other operating income and expenses, amounted to SEK 55.8 million (52.2). Operating expenses decreased by 5.0 percent, adjusted for non-recurring expenses of SEK 6.2 million attributable to the change of CEO and to the restructuring of the sales organization.
Selling expenses amounted to SEK 34.1 million (31.4), of which the increase is mainly attributable to the restructuring.
Administrative expenses amounted to SEK 9.7 million (9.0).
Research and development expenses, including costs for the quality organization, amounted to SEK 12.1 million (11.8), corresponding to 8.8 percent (8.4) of net sales. Total development expenses have increased by SEK 5.7 million, which is due to increased expenses for prototype materials and personnel. Expenses for product development were capitalized by SEK 23.5 million (18.3). Total research and development expenses correspond to 26.0 percent (21.4) of net sales.
Net of other operating income and other operating expenses amounted to SEK -1.9 million (1.0), of which SEK 1.6 million relates to the increase in taxation of employer's contributions and tax surcharges in accordance with the ruling of Förvaltningsrätten on 7 May 2024 regarding previous employee stock option programs.
Operating profit
Adjusted for non-recurring expenses, operating profit amounted to SEK 9.9 million (8.7), and corresponded to an operating margin of 7.2 percent (6.2).
Operating profit, including non-recurring expenses, amounted to SEK 1.4 million (8.7), corresponding to an operating margin of 1.0 percent (6.2). The non-recurring expense are attributable to the change of CEO, the restructuring of the sales organization and costs for employer's contributions and tax surcharges following a decision by Förvaltningsrätten regarding previous employee stock option programs.
Net financial items
Net financial items amounted to SEK -2.6 million (-3.5), mainly relating to interest expenses of SEK -3.3 million (-3.6).
Earnings
Profit before tax amounted to SEK -1.2 million (5.2). Profit for the period amounted to SEK -1.6 million (4.1). Tax expense amounted to SEK -0.4 million (-1.1).
Financing and cash flow
Cash flow from operating activities during the quarter amounted to SEK 13.8 million (3.4). Working capital was positively impacted by lower operating receivables of SEK 9.4 million and the increase in operating liabilities of SEK 9.6 million.
The Swedish Export Credit Agency (EKN) guarantees a portion of Boule's trade receivables to 75–95 per cent of the total amount of the total amount. Receivables can be pledged and the liabilities are then reported as interest-bearing liabilities. The change in trade receivables guaranteed by EKN is included in the cash flow from operating activities, while the change in other interest-bearing liabilities is reported under financing activities.
Cash flow from financing activities during the quarter amounted to SEK 4.8 million (1.2). Financial liabilities (EKN financing) decreased by SEK -3.4 million, and SEK 11.3 million of the overdraft facility was utilized.
Cash flow for the quarter amounted to SEK -6.7 million (-17.7) and cash and cash equivalents as of June 30 amounted to SEK 34.7 million (45.9). The Group's available cash and cash equivalents, including unutilised overdraft facilities, amounted to SEK 82.4 million (105.1) as of June 30.
Investments
Total investments in the quarter amounted to SEK 25.3 million (22.3), of which capitalized development of new technology and product platform amounted to SEK 23.5 million (18.3).
Equity and liabilities
As of June 30, the equity amounted to SEK 496.2 million (480.9) and the equity/assets ratio was 61.8 percent (61.8).
Interest-bearing liabilities, excluding leases, relate to pledged trade receivables guaranteed by EKN as well as external bank loans. As of 30 June, these liabilities amounted to a total of SEK 165.0 million (154.3). Of these, SEK 63.6 million (60.6) were non-current and SEK 101.4 million (93.7) were current. As of June 30, external bank loans totalled SEK 43.3 million (38.7). Of these, SEK 19.5 million (26.2) were non-current and SEK 23.8 million (12.5) current. As of June 30, the overdraft facility was utilized in the amount of SEK 11.3 million (0) and other current non-interest-bearing liabilities and trade payables amounted to SEK 115.4 million (102.3). Lease liabilities as of June 30 amounted to SEK 18.3 million (32.4), of which SEK 5.7 million (19.2) refer to non-current liabilities and SEK 12.6 million (13.2) to current liabilities. Net debt as of June 30 amounted to SEK 1.2 million (9.8).
Deferred tax liabilities as of June 30 amounted to SEK 4.5 million (7.9). Non-current provisions relate to direct pensions of SEK 3.4 million (3.1).
Installed base of instruments
During the quarter, 883 instruments were sold, compared to 981 instruments in the same quarter last year. The estimated lifetime of instruments is 7.5 years for instruments produced from 2021 onwards. At the end of the quarter, the active installed base is estimated at 31,197 instruments.
¹ Estimated active installed base is based on an expected lifetime of 7.5 years.
² Accumulated number of instruments sold since 2006 amount to 55,009 as of June 30, 2024.
³ Number of instruments sold in 2024 refers to sales per rolling 12 month.
Significant risks and uncertainties
Boule's operations are global, which entails exposure to various forms of both strategic risks, operational risks and financial risks. Strategic risks mainly represent changes in the company's environment that can therefore have a significant impact on the business, for example, the ongoing unrest in the Middle East can affect sales in the region. Operational risks relate to the business as such and may have a potential impact on the Group's earnings. The financial risks consist mainly of financing risk, currency risk, interest rate risk and credit risk.
Boule works continuously to manage the risks and uncertainties that exist, as well as with the risk inventory that forms the basis for discovering new risks and uncertainties. The work is carried out systematically with the aim of making risks visible and limiting risk exposure and any impact if a risk arises.
For a more detailed description, see the section Risks and opportunities on page 40 of the Annual Report for 2023.
Uncertainties due to the war in Ukraine
Boule continues to operate in Russia. Immediately after Russia's attack on Ukraine in the spring of 2022, Boule put in place processes to ensure that all sales and transactions comply with all sanctions. Boule are regularly taking advantage of legal expertise to ensure knowledge of sanctions and their interpretation. Healthcare products are normally not subject to sanctions. Boule is making no new investments but maintaining current business.
However, purchases, transportation and financial transactions are limited by various practical problems, which is why Boule uses third country partners to carry out its activities. All such transactions are signed off by our legal experts to ensure that Boule is in no way in breach of sanctions. Sanctions are constantly changing, so this is a work in progress.
For the full year 2023, Boule’s sales to Russia amounted to 7 percent (10) of net sales. During the second quarter of 2024, the corresponding share was 8.5 percent of net sales. The Group has employees in Russia and a production facility for consumables distributed to the Russian market.
The market in Eastern Europe is very uncertain, given the war in Ukraine and the current sanctions against Russia. A discontinuation or confiscation of the operations in Russia could have a significant negative impact on the Group’s future earning capacity and profitability and entail a negative effect on earnings if the value of assets attributable to the Russian operations have to be written down in whole or in part. The consolidated net assets totaled approximately SEK 24 million, of which approximately SEK 8 million were cash and cash equivalents at June 30, 2024. It is estimated that any discontinuation would result in additional costs being incurred.
Tax audit
As of May 7, 2024, the Administrative Court ("Förvaltningsrätten") decided in accordance with the Swedish tax authorities's decision, which means that Boule will be charged increased employer contributions and tax surcharges of approximately SEK 1.6 million regarding incorrectly valued warrants issued to senior executives. Boule does not intend to appeal the judgment and has therefore booked an expense of SEK 1.6 million in the second quarter of 2024.
Related-party transactions
Other than remuneration of the Board and senior executives, no related-party transactions have taken place during the period.
Events during the interim period
Torben Nielsen took office on April 16 as CEO and Group President of Boule Diagnostics AB.
Events after the end of the interim period
There are no significant events to report after the end of the reporting period.
Parent Company
Boule Diagnostics AB (publ), corporate ID 556535-0252, is a Swedish limited liability company with its registered office in Stockholm. The address of the head office is Domnarvsgatan 4, SE-163 53 Spånga, Sweden.
The Parent Company's revenue is derived from Group-wide services. Risks and uncertainties for the Parent Company indirectly correspond with those for the Group.
Employees
The average number of employees in the Group during the quarter was 230 (227), of which 8 (9) were in the Parent Company. Distributed by country, the average number in Sweden was 123 (124), the USA 95 (89), Mexico 2 (2), Russia 10 (12). The average number of women in the Group was 101 (97) and the average number of men was 129 (129). Employees in countries where Boule does not have a legal entity are not included in the number of employees as they are employed through external companies and are instead included as consulting expenses.
Number of shares
The total number of shares and votes in Boule Diagnostics AB is 38,833,104.
| Shareholders, Jun 30, 2024 (accord. to Euroclear) | Number of shares, Jun 30 |
Share of capital/votes |
|---|---|---|
| AB Grenspecialisten | 4,887,268 | 12.6% |
| Svolder AB | 4,289,159 | 11.0% |
| Thomas Eklund incl. company | 4,038,728 | 10.4% |
| Swedbank Robur Fonder AB | 3,432,230 | 8.8% |
| Tredje AP-fonden | 3,251,542 | 8.4% |
| Nordea Investment Funds | 3,026,301 | 7.8% |
| Skandinaviska Enskilda Banken AB | 1,653,712 | 4.3% |
| Andra AP-Fonden | 1,369,948 | 3.5% |
| Tomas Wedel | 1,099,494 | 2.8% |
| Sijoitusrahasto Aktia Nordic | 992,540 | 2.6% |
| JP Morgan Chase Bank NA | 872,338 | 2.2% |
| Avanza Pension | 696,669 | 1.8% |
| Other shareholders (2,496) | 9,223,175 | 23.8% |
| Total number of shares | 38,833,104 | 100.0% |
The Board of Directors and the CEO certify that this interim report provides a true and fair view of the operations, financial position and earnings of the Parent Company and the Group and describes the material risks and uncertainties faced by the Parent Company and the other Group companies.
Stockholm, July 22, 2024
Boule Diagnostics AB
|
Torben Jørgensen |
Thomas Eklund |
Karin Dahllöf |
|
|
Yvonne Mårtensson |
Emil Hjalmarsson |
Rikke Rytter |
Torben Nielsen |
Auditor review
This interim report has not been subject to review of the Group's auditor.