Financial results

In 2015, Sanquin achieved revenue growth of € 11.7 million. The Plasma Products Division also experienced a significant increase in revenue in 2015, offset partially by the Blood Bank’s further decline in turnover. During 2015, the operating result recovered; by the end of 2015 the result was a positive amount of € 11.5 million compared to a negative amount of € 23.0 million in 2014. This was due primarily to a combination of increased turnover and lower costs for raw materials and consumables. Despite the savings on expenditure implemented through the efficiency programme, other operating costs rose in 2015 (€ 138.3 million in 2015, compared to € 133.4 million in 2014). This was due to the significant expenditure required in 2015 to implement the quality measures in the Plasma Products Division in response to the FDA’s warning letter. Although, these additional expenses were covered largely by contributions from our CMO partners. In part due to these circumstances, net profits increased to € 6.6 million in 2015 (2014: a negative amount of € 16.6 million).

In summary, the profit and loss account was as follows:

 

2015

2014

Movement

(x € million)

%

Revenues

487.7

460.2

27.5

6.0%

Costs of raw materials and consumables

-123.5

-138.3

14.8

-10.7%

Staff costs

-183.1

-184.2

1.1

-0.6%

Gross margin

181.1

137.7

43.4

31.5%

Other operating expenses

-138.3

-133.4

-4.9

3.7%

EBITDA

42.8

4.3

38.5

894.5%

Depreciation

-31.3

-27.4

-3.9

14.1%

Operating result

11.5

-23.0

34.5

-150.0%

Financial income and expenses

-1.8

-1.7

-0.1

6.3%

Taxes

-3.2

7.3

-10.5

-143.9%

Share of minority interests

0.1

0.8

-0.7

-90.6%

Net profit

6.6

-16.6

23.2

-139.5%

Key financial developments in 2015

Total revenue rose to € 487.7 million in 2015 (2014: € 460.2 million). In addition to product turnover, which increased by € 11.7 million, (from € 418.7 million in 2014 to € 430.4 million in 2015), this included other revenue (an increase of € 15.4 million, due primarily to contributions from partners for one-off additional quality expenses) and movements in inventory (an increase of € 0.4 million).

Product turnover, with a net increase of 3%, may be specified as follows:

 

2015

2014

Movement

(x € million)

%

Turnover per product

    

Blood Bank

126.3

136.3

-10.0

-7%

Plasma Products

263.8

240.7

23.1

10%

Diagnostic services

19.7

19.1

0.6

3%

Reagents

11.8

12.2

-0.4

-3%

Research

7.8

9.0

-1.2

-13%

Other activities

0.9

1.4

-0.5

-38%

Total

430.4

418.7

  
 

2015

2014

Movement

(x € million)

%

Geographic

    

Netherlands

217.1

227.7

-10.6

-5%

Abroad

213.3

191.0

22.3

12%

Total

430.4

418.7

  

The growth in the turnover of Plasma Products (both in SPP BV and CAF-DCF) was visible across the board. The turnover of Plasma Products sold under our own label increased, due primarily to further marketing of Omniplasma in the Netherlands. Contract manufacturing turnover also increased due to Cinryze scaling-up manufacturing and the initiation of new contract manufacturing activities. The persistent drop in Blood Bank turnover was attributable to a decrease in the sale of short shelf-life blood products to hospitals. The main reason for the fall in revenue from Research was the decline in revenue from contract research and external subsidies. Other activities remained virtually unchanged.

The drop in staff costs (by 0.6% to € 183.1 million) was due to rising costs in Plasma Product activities on the one hand, and a drop in Blood Bank activities on the other. The decrease in raw material costs (by 10.7% to €123.5 million) was most visible in the Blood Bank, and was related to lower sales of short shelf-life blood products. As a result of these developments, the 2015 gross margin (revenue minus cost of materials and staff) as a percentage of turnover increased to 37.1% (2014: 29.9%).

Despite the savings on expenditure implemented due to the efficiency programme, other operating costs rose in 2015, from € 133.4 million in 2014 to € 138.3 million in 2015 (representing a 3.7% increase). Investments in the Plasma Products quality organisation were mainly responsible for this growth. However, the majority of these additional costs were covered by extra contributions from our CMO partners. On balance, this resulted in a rise in the EBITDA margin from 0.9% in 2014 to 8.8% in 2015.

In 2015, depreciation rose by 14.1% to € 31.3 million resulting from the commissioning of the new Plasma Products manufacturing facilities. On balance, the total operating expenses decreased by 1.5% to € 476.2 million (2014: € 483.3 million) in 2015. However, as the revenue increased by 6.0%, the operating results improved from a negative amount of € 23.0 million in 2014 to a positive amount of € 11.5 million in 2015.

The financial expenses, including the result of participating interests, in the amount of € 1.8 million, were almost the same as the financial expenses for 2014 (€ 1.7 million).

A tax charge of € 3.2 million was accounted for in 2015. This consisted of a tax charge of € 2.9 million for results achieved in 2015, and a € 0.3 million correction over previous fiscal years.

All the revenue mentioned above resulted in a net profit over the 2015 financial year of € 6.6 million (2014: a negative amount of € 16.6 million).

In summary, Sanquin’s balance sheet was as follows:

 

2015

2014

(x € million)

Fixed assets

198.2

208.7

Inventory

183.1

160.9

Receivables

102.8

90.3

Cash and cash equivalents

32.7

35.8

Total assets

516.8

495.7

Provisions

8.2

13.8

Long term liabilities

55.5

38.0

Short term liabilities

147.1

126.1

Group equity

306.0

317.8

Total liabilities

516.8

495.7

The balance sheet total was € 516.8 million, an increase of 4.3% over 2014 (€ 495.7 million). Total working capital amounted to € 171.5 million (2014: € 161.0 million). Within the working capital, inventory (+13.8%), receivables (+13.8%) and short term liabilities (+16.7%) all displayed an increase. The cash and cash equivalents decreased slightly from € 35.8 million to € 32.7 million. The inventory and liabilities increased in 2015 as a result of purchasing residual plasma from one of Sanquin’s CMO partners. Receivables were temporarily high as at the balance date due to the high turnover achieved in the final months of the year. As a percentage of revenue, the working capital (excluding cash and cash equivalents) was 28.4% (2014: 27.2%).

At € 375.8 million, the capital employed remained stable compared with the previous year
(2014: €375.4 million). As at the end of the financial year, the return on the capital employed, based on operating results, was 3.1% (2014: 6.1% negative). This ratio therefore displayed good growth.

At the end of the financial year, the group equity was € 306.0 million (2014: € 299.5 million).

The solvency was 59.2% (2014: 60.4%) at the end of the financial year. Thanks to this relatively stable ratio, the solvency requirements of the bank were fulfilled amply.

In summary, Sanquin’s cash flow statement was as follows:

 

2015

2014

(x € million)

Operating result

11,504

-23,021

Depreciation and change in provisions

25,601

26,150

Movements in capital (inventory, receivables and short term liabilities)

-13,558

-12,672

Cash flow from business operations

23,547

-9,543

Other operating movements

-4,938

5,633

Cash flow from operating activities

18,609

-3,910

Cash flow from investments in intangible fixed assets

-616

0

Cash flow from investments in tangible fixed assets

-20,935

-36,960

Cash flow from investments in financial fixed assets

-17,622

0

Cash flow from financing activities

17,521

2,713

Net cash flow

-3,043

-38,157

The net cash flow from operating activities was € 18.6 million (2014: a negative amount of € 3.9 million). The operating cash flow for working capital was € 34.0 million higher, amounting to € 37.1 million (2014: € 3.1 million). The cash flow including movements in the working capital (excluding liquid assets) was € 23.5 million (2014: a negative amount of € 9.5 million). The free cash flow was a negative amount of € 20.6 million (2014: a negative amount of € 40.9 million) as the available cash flow was insufficient to finance all the investments.

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