UCB Pharma GmbH
SCHWARZ PHARMA AG: Full Year Report 2008
SCHWARZ PHARMA AG / Release of an announcement according to Article 37x of the WpHG [the German Securities Trading Act] Interim report according to Article 37x of the WpHG, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. ---------------------------------------------------------------------- 3 March 2009 Full Year Report 2008 - The SCHWARZ PHARMA group generated revenues of EUR424.9 million in fiscal year 2008, against a figure of EUR362.1 million in the previous year (+17.3%). - The operating result amounted to -EUR30.9 million and the net result came to -EUR11.2 million. - Shareholders who did not accept the cash settlement offer made by UCB SP GmbH in the domination and profit transfer agreement, amounting to EUR104.60 per share, will receive a guaranteed dividend per share of EUR3.43 gross / EUR3.28 net. - The Annual General Meeting, at the request of UCB SP GmbH, is to decide on the 'squeeze-out' of minority shareholders of SCHWARZ PHARMA AG. - SCHWARZ PHARMA expects sales of approximately EUR340 million and a positive net result in fiscal year 2009. The presented business figures (preliminary and unaudited) show the results of the continuing operations of the remaining consolidated companies. Sales Trend January to December 2008: Revenues: EUR424.9 million, +17.3%; sales: EUR353.1 million, +18.3% The SCHWARZ PHARMA group generated revenues of EUR424.9 million in fiscal year 2008, marking a year-on-year increase of 17.3%. This figure comprises sales amounting to EUR353.1 million (previous year: EUR298.5 million), EUR12.4 million in royalties (2007: EUR16.0 million), and EUR59.4 million in other revenues (2007: EUR47.6 million). Since milestone payments are now posted in revenues, the figures from the previous year were correspondingly adjusted by EUR47.6 million. German sales declined by 8.9% to EUR154.0 million in 2008. One of the top-selling products was the antiasthmatic drug Atmadisc(R) (fluticasone/salmeterol) with sales of EUR58.7 million (+22.8%). Neupro(R) (rotigotine transdermal patch) for treating Parkinson's disease recorded a rise in sales of 38.8% to EUR22.9 million, despite a change in means of storage (introduction of a cold chain). The CIS countries increased their sales by 32.0% to EUR40.1 million. Sales in the segment 'Rest of Europe' reached EUR93.2 million, so doubling the figure of the previous year, stemming from a marked growth in business transacted with former SCHWARZ PHARMA companies. The group's licensing business with other countries (Rest of the World) amounted to EUR39.3 million (-3.4%). The sales of SCHWARZ PHARMA's Asian affiliates declined slightly year-on-year to a level of EUR26.5 million (-3.0%). Earnings trend January to December 2008: Operating result: -EUR30.9 million; net result: -EUR11.2 million SCHWARZ PHARMA achieved gross earnings of EUR241.0 million in 2008, marking a year-over-year decline of -1.6%. The company's gross margin fell from 67.6% to 56.7%, mainly due to the Neupro(R) recall and the impact due to sold products. Selling, general, and administrative expenses declined by 11.2% to EUR126.3 million. This was caused, among other things, by a reduction in human resources expenses. R&D expenses declined by 15.6% to EUR74.9 million, thanks to the progress made in the development pipeline. A number of new drugs received marketing approval in the previous fiscal year (e.g. Vimpat(R) (lacosamide)/Epilepsy, Neupro(R)/Restless-Legs-Syndrome). The amortization of intangible assets came to EUR14.8 million, so remaining level with last year's figure. Fiscal year 2008 saw impairments of assets reach EUR9.7 million (previous year: EUR0.6 million), mainly stemming from the impairment loss recorded on a building belonging to the Company's Irish subsidiary. Measures undertaken within the scope of 'SHAPE', a program for focusing on the Company's core business segments and improving both its competitiveness and profitability led to restructuring expenses of EUR47.4 million. After Other income of EUR9.6 million in fiscal year 2007, Other income amounted to EUR1.2 million in 2008. The operating result in the past fiscal year thus came to -EUR30.9 million against a figure of -EUR7.2 million in the previous year. The financial result rose to EUR7.5 million, compared to a figure of -EUR3.3 million in the previous year. Income from investments improved slightly from EUR0.1 million in the previous year to EUR0.2 million in the year under review. The pre-tax result amounted to -EUR23.2 million against a figure of -EUR10.4 million in 2007. Taxes on income amounted to +EUR8.2 million, compared to -EUR63.1 million last year. SCHWARZ PHARMA hence achieved a result after taxes of -EUR15.0 million from continuing operations in fiscal year 2008, compared to a figure of -EUR73.5 million in the previous year. After minority interests of EUR0.9 million (2007: EUR1.1 million), the group's net result comes to -EUR11.2 million. The contribution to earnings made by discontinued operations, presented separately in the company's income statement, amounted to EUR4.7 million in the past fiscal year compared to EUR943.8 million in 2007, mainly due to deconsolidation effects stemming from Korean and Greek affiliated companies that have left the Group. Revenues from discontinued operations came to EUR9.3 million. Overall, expenses of EUR10.5 million and taxes on income of +EUR0.2 million are attributable to discontinued operations. Balance Sheet and Employees Equity Ratio 18.3% Cash outflows for investments for the group as a whole totaled EUR52.6 million against a figure of EUR187.1 million in 2007. The major share of investments was made in property plant and equipment, with EUR35.5 million mainly spent on expanding the fine chemicals production facilities in Shannon/Ireland and the plant in Zwickau/Germany. The balance sheet total was significant reduced due to the offset of part of the vendor loan (originally EUR1,519.0 million), granted to UCB SP GmbH by SCHWARZ PHARMA in connection with the transfer of 13 SCHWARZ PHARMA affiliated companies at the end of 2007, against profit transfer liabilities of EUR1,327.5 million. The equity ratio correspondingly amounted to approximately 18.3% (2007: 10.9%) at the balance sheet date. In keeping with the ruling issued by Germany's Federal Financial Supervisory Authority (BaFin), according to which SCHWARZ PHARMA erroneously recorded a one-time payment of EUR63.3 million as an R&D expense in the group's income statement instead of capitalizing it as an intangible asset pursuant to IAS 38.18, SCHWARZ PHARMA has corrected the consolidated financial statements for the year ended 31 December 2008. Correspondingly, the balance sheet total after regular depreciation rose by EUR52.5 million (2007: EUR54.5 million). The SCHWARZ PHARMA group had an average worldwide workforce of 2,126 employees in fiscal year 2008 (2007: 3,714; -42.8%). Squeeze-Out Request Made At the start of February 2009, UCB SP GmbH, Monheim, submitted its first formal request to the executive board of SCHWARZ PHARMA AG under Section 327a of the German Stock Corporation Act (AktG), asking for the annual general meeting of the company to pass a resolution transferring the shares of the remaining shareholders (minority shareholders) to UCB SP GmbH as the principal shareholder in return for an appropriate cash settlement (so-called 'squeeze-out'). UCB SP GmbH holds a 99.59% interest in the common stock of SCHWARZ PHARMA AG (after deducting Treasury stock) and is thus the principal shareholder for the purpose of Section 327a (1) 1 of the German Stock Corporation Act (AktG). The resolution is to be passed at the next annual general meeting of SCHWARZ PHARMA AG for the fiscal year 2008, due to be held on 8 July 2009. UCB SP GmbH has not yet fixed the amount of the cash settlement. Outlook for 2009 In 2009, the reported external sales of the group will include, in addition to the current third-party sales of SCHWARZ PHARMA AG and its affiliates, the sales achieved through dealings with UCB companies outside the SCHWARZ PHARMA group. We expect sales to show a slight decline to approximately EUR340 million. Given the improvements targeted by 'SHAPE', a positive Group net result is expected for 2009. This outlook does not include effects stemming from the divestment of products or from partnerships and other transactions. SCHWARZ PHARMA AG and Affiliates* (Fiscal year Jan. 1 to Dec. 31)EUR million 2008 2007 Continued business operations Revenues 424.9 362.1 Cost of goods sold 183.9 117.2 Gross profit on sales 241.0 244.9 Selling and marketing expenses 87.0 102.9 General and administrative expenses 39.3 39.4 Research and development expenses 74.9 88.8 Amortization of intangible assets 14.8 15.2 Impairment of assets pursuant to IAS 36 9.7 0.6 Restructuring costs 47.4 14.8 Other income/expenses 1.2 9.6 Operating result -30.9 -7.2 Interest result 7.5 -3.3 Income from investments 0.2 0.1 Pre-tax result -23.2 -10.4 Taxes on income 8.2 -63.1 Result after taxes -15.0 -73.5 Discontinued business operations Result from discontinued operations 4.7 943.8 Net profit (loss) for the year -10.3 870.3 Minority interests 0.9 1.1 Consolidated net income (loss) -11.2 869.1*Note: - Preliminary, unattested figures - Percentage rate changes are not shown due to their insignificance. SCHWARZ PHARMA AG (seated in Monheim, Germany) is a member of the UCB group, Brussels/Belgium (www.ucb.com). UCB is listed on the Euronext exchange in Brussels and holds over 99% of all SCHWARZ PHARMA shares. UCB is a global biopharmaceutical company whose focus is on researching, developing, and commercializing innovative pharmaceutical and biotechnological products in the fields Central Nervous System and Immunological and Inflammatory Diseases. UCB's 2008 sales target is over EUR3.3 billion and the company currently has a workforce of more than 10,000 employees in over 40 countries. Contact: Sylvia Heitzer,Tel: +49 2173 48 1238; Antje Witte, Tel.: +32 2 559 9414 Internet: www.schwarzpharma.com This press release contains assumptions, expectations, and forecasts on future sector trends, on future legal and commercial developments, and on the future development of the company. These assumptions, expectations, and forecasts are no guarantee for future performance and are subject to change at any time. Consequently, future reports and the factual circumstances of the company may deviate materially from the outlook presented by the above. The company assumes no responsibility for updating such assumptions, expectations, and forecasts on future sector trends, on future legal and commercial developments, and on the future development of the company. 03.03.2009 Financial News transmitted by DGAP ---------------------------------------------------------------------- Language: English Issuer: SCHWARZ PHARMA AG Alfred-Nobel-Str. 10 40789 Monheim Deutschland Internet: www.schwarzpharma.com End of News DGAP News-Service ---------------------------------------------------------------------------
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