Press Release 24 April, 2007 (6 pages) BioGaia AB Interim report 1 January - 31 March 2007 (Figures in brackets refer to the previous year) Net sales amounted to SEK 26.4 million (20.9), an increase of 5.5 million (26%) compared to the same period of last year. The operating result was SEK 2.3 million (-0.1), an improvement of SEK 2.4 million over the same period of last year. The result after tax was SEK 2.6 million (0.1), an improvement of SEK 2.5 million compared to the same period of last year. Earnings per share were SEK 0.15 (0.01). The period's cash flow from operating activities before change in working capital was SEK 4.1 million (1.5). Total cash flow for the period was SEK -1.1 million (1.7). Cash and cash equivalents at 31 March 2007 amounted to SEK 38.6 million. Key events in the first quarter of 2007 Agreement with Semper for the sale of BioGaia's probiotic drops in Sweden and Norway and baby formula containing Reuteri in the Nordic countries. Study showing Reuteri's powerful effect on colic was published and is attracting considerable attention from the media. Agreement with Delta Medical for the sale of BioGaia's Probiotic drops under the BioGaia brand in Ukraine and Russia. Agreement with Everidis for the sale of BioGaia's Probiotic tablets, drops and straws under the BioGaia brand in the USA. Key events after the end of the first quarter Agreement with Sunstar granting an exclusive option to sell BioGaia's oral health products in a large number of countries worldwide. Latest press releases from BioGaia: BioGaia signs agreement with Sunstar BioGaia signs agreement in the USA BioGaia signs agreement with Semper For additional information contact: Peter Rothschild, Managing Director, telephone: +46 8 -555 293 00, Jan Annwall, Deputy Managing Director telephone: +46 8 - 555 293 00 -------------------------------------------------------------------------------- ----------------------------------------------------------------- BioGaia is a biotechnology company that develops, markets and sells probiotic products with documented health benefits. The products are primarily based on the lactic acid bacterium Lactobacillus reuteri (Reuteri), which has probiotic, health-enhancing effects. The class B share of the Parent Company BioGaia AB is quoted on the Small Cap list of the Nordic Stock Exchange in Stockholm. www.biogaia.se BioGaia AB (publ) Interim report 1 January - 31 March 2007 Figures in brackets refer to the same period of last year. The Managing Director of BioGaia AB (publ) hereby presents the interim report for the period 1 January - 31 March 2007. BIOGAIA AB BioGaia is a biotechnology company that develops, markets and sells probiotic products with documented health benefits. The products are primarily based on the lactic acid bacterium Lactobacillus reuteri (Reuteri) which has health-enhancing effects. BioGaia has also developed unique delivery systems, such as straws and caps containing probiotics, that make it possible to create probiotic products with a long shelf life. BioGaia's research is focused on selection of different probiotics for gut health, the immune system and oral health. Extensive clinical studies have shown that BioGaia's probiotic products: - stimulate the human immune system, - protect against gastrointestinal and respiratory infections, - alleviate the side effects of antibiotic treatment, - reduce the level of H. pylori infection, - relieve infantile colic, - reduce gum inflammation and the risk for dental caries and - reduce the risk for infection in premature infants. BioGaia primarily sells finished probiotic products such as tablets, drops, oral health products (chewing gum and lozenges) and probiotic-containing straws and caps, but also sells license rights for the use of Reuteri cultures in customer's own products, such as dairy products and baby formula. BioGaia's products are sold through nutrition, food, natural health, pharmaceutical and animal feed companies in close to 30 countries worldwide. BioGaia holds patents for the use of Reuteri in all major markets. BioGaia has 37 employees, of whom 16 are based in Stockholm, 15 in Lund, 2 in Raleigh, USA, and 4 in Hiroshima, Japan. The class B share of the Parent Company BioGaia AB is quoted on the Small Cap list of the Nordic Stock Exchange in Stockholm. KEY EVENTS IN THE FIRST QUARTER OF 2007 Two agreements with Semper In January 2007 BioGaia signed an agreement with Semper AB giving Semper the right to sell BioGaia's probiotic drops in Sweden and Norway under the name “Semper Magdroppar”. The launch in Swedish pharmacies is planned for 2007. In March, BioGaia signed an additional agreement giving Semper the right to use Reuteri in baby formula products for the Nordic market. The launch is expected to take place in the first half of 2007. Colic study published At the beginning of 2007, the clinical study on the effects of Reuteri on colic was published in the scientific journal Pediatrics and attracted considerable attention from the media, including coverage by the American TV broadcasting company ABC and Swedish Science Radio P1. The results of the study demonstrate Reuteri's powerful efficacy in treating colic. This study, together with the study carried out on premature infants and numerous safety studies performed by BioGaia, has further strengthened BioGaia's position in the paediatric area. Agreement with Delta Medical In February, BioGaia signed a distribution agreement with Delta Medical Promotions AG, Switzerland, that gives Delta Medical exclusive rights to sell BioGaia's probiotic drops in Ukraine and non-exclusive rights in Russia. The drops will be sold under the BioGaia brand. The registration process has started and the launch is scheduled for the end of the year. Agreement with Everidis In March, BioGaia signed an agreement with Everidis Health Sciences LLC which gives Everidis the right to sell BioGaia's probiotic drops, tablets and straws in the USA. The products will be sold under the BioGaia brand to pharmacies and doctors throughout the USA. The launch is expected to begin in the second half of 2007. Product launches in the first quarter Sunstar launched oral health products at a trade show in Germany. Kalbe launched BioGaia's probiotic tablets in Indonesia. KEY EVENTS AFTER THE END OF THE FIRST QUARTER Agreement with Sunstar In April, BioGaia signed an additional agreement with Sunstar Suisse SA giving Sunstar exclusive rights to distribute BioGaia's oral health products in a large number of countries worldwide within 12 months. The first launch under the new agreement is expected to take place in the USA during 2008. Sunstar will pay continuous compensation to BioGaia during the option period. Under an earlier agreement, Sunstar has the right to sell BioGaia's oral health products in Germany, France, Italy and Spain. The launch in these countries will start in April 2007 under the GUM PerioBalance brand. The products, which are effective in treating gingivitis and reducing plaque, will be sold through pharmacies and dental clinics. FINANCIAL PERFORMANCE IN THE FIRST QUARTER OF 2007 The Group's net sales reached SEK 26.4 million (20.9), an increase of 26% compared with the same period of last year. BioGaia's probiotic drops accounted for most of the period's sales growth. Sales improved mainly in Europe. Gross profit was SEK 17.6 million, representing a year-on-year increase of SEK 3.1 million. Selling expenses rose by SEK 1 million over the same period of last year, due to costs arising after the start-up of the Japanese subsidiary in September 2006. Administrative and R&D expenses were largely unchanged. The operating result was SEK 2.3 million (-0.1), an improvement of SEK 2.4 million over the same period of last year. The result after tax was SEK 2.6 million (0.1), an improvement of SEK 2.5 million compared to same period of last year. The Group's cash and cash equivalents on 31 March 2007 totalled SEK 38.6 million. Cash flow for the period amounted to SEK -1.1 million, a year-on-year decrease of SEK 2.9 million that is mainly attributable to a SEK 4 million rise in working capital. Cash flow from operating activities before change in working capital amounted to SEK 4.1 million, an improvement of 2.6 million compared to the same period of last year. Consolidated equity amounted to SEK 77.1 million. The Group's equity/assets ratio was 84% (78%). Capital expenditure on tangible assets totalled SEK 1.2 million (0.1). Capital expenditure on intangible assets amounted to SEK 0 million (0). Amortisation of capitalized development expenses totalled SEK 0.9 million (0.9). The Parent Company reported net sales of 26.9 million (20.8) and a result after net financial items of SEK 5.2 million (0.3). EMPLOYEES The total number of employees on 31 March 2007 was 37 (33). FUTURE OUTLOOK By maintaining a largely stable cost level, increasing sales to existing customers and developing business with new customers, BioGaia's objective is to attain solid and sustainable profitability. In view of the Company's strong portfolio of innovative products, successful clinical trials and growing distribution network covering a large share of the key markets, BioGaia's future outlook is bright. -------------------------------------------------------------------------------- | INCOME STATEMENTS | | | | | | -------------------------------------------------------------------------------- | (Amounts in SEK 000s) | Jan-Mar | | Jan-Mar | | Jan-Dec | -------------------------------------------------------------------------------- | | 2007 | | 2006 | | 2006 | -------------------------------------------------------------------------------- | Net sales | 26,437 | | 20,873 | | 86,792 | -------------------------------------------------------------------------------- | Cost of goods sold | -8,822 | | -6,390 | | -27,636 | -------------------------------------------------------------------------------- | Gross profit | 17,615 | | 14,483 | | 59,156 | -------------------------------------------------------------------------------- | Other operating income | 26 | | - | | 166 | -------------------------------------------------------------------------------- | Selling expenses | -8,546 | | -7,571 | | -30,886 | -------------------------------------------------------------------------------- | Administrative expenses | -1,960 | | -1,922 | | -6,847 | -------------------------------------------------------------------------------- | Research and development | -4,339 | | -4,554 | | -18,755 | | expenses | | | | | | -------------------------------------------------------------------------------- | Other operating expenses | -28 | | -267 | | -433 | -------------------------------------------------------------------------------- | Share in result of associated | -467 | | -270 | | -685 | | company | | | | | | -------------------------------------------------------------------------------- | Operating result | 2,301 | | -101 | | 1,716 | -------------------------------------------------------------------------------- | Financial income and expenses | 323 | | 190 | | 1,039 | -------------------------------------------------------------------------------- | Tax expense for the period | - | | - | | -35 | -------------------------------------------------------------------------------- | RESULT FOR THE PERIOD | 2,624 | | 89 | | 2,720 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share | | | | | | -------------------------------------------------------------------------------- | Earnings per share (average | 0.15 | | 0.01 | | 0.16 | | number of shares), SEK | | | | | | -------------------------------------------------------------------------------- | Earnings per share after | 0.15 | | 0.01 | | 0.16 | | dilution, SEK | | | | | | -------------------------------------------------------------------------------- | Number of shares, thousands | 17,208 | | 17,208 | | 17,208 | -------------------------------------------------------------------------------- | Average number of shares, | 17,208 | | 17,208 | | 17,208 | | thousands | | | | | | -------------------------------------------------------------------------------- | Average number of shares | 17,208 | | 17,208 | | 17,208 | | after dilution, thousands | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | BALANCE SHEETS | 31 Mar | | 31 Dec | | 31 Mar | -------------------------------------------------------------------------------- | (Amounts in SEK 000s) | 2007 | | 2006 | | 2006 | -------------------------------------------------------------------------------- | ASSETS | | | | | | -------------------------------------------------------------------------------- | Intangible assets | 10,545 | | 11,416 | | 14,173 | -------------------------------------------------------------------------------- | Tangible assets | 2,466 | | 1,389 | | 1,006 | -------------------------------------------------------------------------------- | Participations in associated | 4,721 | | 5,188 | | 3,303 | | company | | | | | | -------------------------------------------------------------------------------- | Long-term receivables | 5,419 | | 5,418 | | 5,421 | -------------------------------------------------------------------------------- | Current assets excl. cash and | 30,062 | | 27,633 | | 18,223 | | cash equivalents | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 38,626 | | 39,719 | | 50,034 | -------------------------------------------------------------------------------- | TOTAL ASSETS | 91,839 | | 90,763 | | 92,160 | -------------------------------------------------------------------------------- | | | | | | | -------------------------------------------------------------------------------- | EQUITY AND LIABILITIES | | | | | | -------------------------------------------------------------------------------- | Shareholders' equity | 77,112 | | 74,530 | | 71,849 | -------------------------------------------------------------------------------- | Interest-bearing current | - | | - | | 2,984 | | liabilities | | | | | | -------------------------------------------------------------------------------- | Interest-free current | 14,727 | | 16,233 | | 17,327 | | liabilities | | | | | | -------------------------------------------------------------------------------- | TOTAL EQUITY AND LIABILITIES | 91,839 | | 90,763 | | 92,160 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW STATEMENTS | Jan-Mar | | Jan-Mar | | Jan-Dec | -------------------------------------------------------------------------------- | (Amounts in SEK 000s) | 2007 | | 2006 | | 2006 | -------------------------------------------------------------------------------- | Operating activities | | | | | | -------------------------------------------------------------------------------- | Operating result | 2,301 | | -101 | | 1,716 | -------------------------------------------------------------------------------- | Depreciation/amortisation | 1,023 | | 1,065 | | 4,314 | -------------------------------------------------------------------------------- | Capital gains/losses on the | - | | - | | -147 | | sale of fixed assets | | | | | | -------------------------------------------------------------------------------- | Share in result of associated | 467 | | 270 | | 685 | | company | | | | | | -------------------------------------------------------------------------------- | Other non-cash items | -35 | | 27 | | 143 | -------------------------------------------------------------------------------- | Interest received and paid | 323 | | 190 | | 1,039 | -------------------------------------------------------------------------------- | Cash flow from operating | 4,079 | | 1,451 | | 7,750 | | activities before changes in | | | | | | | working capital | | | | | | -------------------------------------------------------------------------------- | Changes in working capital | -4,002 | | 955 | | -8,581 | -------------------------------------------------------------------------------- | Cash flow from operating | 77 | | 2,406 | | -831 | | activities | | | | | | -------------------------------------------------------------------------------- | Cash flow from investing | -1,226 | | -680 | | -4,566 | | activities | | | | | | -------------------------------------------------------------------------------- | Cash flow from financing | - | | - | | -2,984 | | activities | | | | | | -------------------------------------------------------------------------------- | Cash flow for the period | -1,149 | | 1,726 | | -8,381 | -------------------------------------------------------------------------------- | Cash and cash equivalents at | 39,719 | | 48,349 | | 48,349 | | beginning of period | | | | | | -------------------------------------------------------------------------------- | Exchange differences in cash | 56 | | -41 | | -249 | | and cash equivalents | | | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents at | 38,626 | | 50,034 | | 39,719 | | end of period | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | STATEMENT OF CHANGES IN | | | | | | | EQUITY | | | | | | -------------------------------------------------------------------------------- | (Amounts in SEK 000s) | Jan-Mar | | Jan-Mar | | Jan-Dec | -------------------------------------------------------------------------------- | | 2007 | | 2006 | | 2006 | -------------------------------------------------------------------------------- | At beginning of period | 74,530 | | 71,779 | | 71,779 | -------------------------------------------------------------------------------- | The period's translation | -42 | | -19 | | 31 | | difference | | | | | | -------------------------------------------------------------------------------- | Result for the period | 2,624 | | 89 | | 2,720 | -------------------------------------------------------------------------------- | At end of period | 77,112 | | 71,849 | | 74,530 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SEGMENT REPORTING | | | | | | -------------------------------------------------------------------------------- | (Amounts in SEK 000s) | Jan-Mar | | Jan-Mar | | Jan-Dec | -------------------------------------------------------------------------------- | Sales | 2007 | | 2006 | | 2006 | -------------------------------------------------------------------------------- | Europe | 16,048 | | 7,538 | | 37,290 | -------------------------------------------------------------------------------- | USA | 1,377 | | 1,484 | | 6,888 | -------------------------------------------------------------------------------- | Asia | 7,048 | | 9,655 | | 32,027 | -------------------------------------------------------------------------------- | Rest of world | 1,964 | | 2,196 | | 10,587 | -------------------------------------------------------------------------------- | | 26,437 | | 20,873 | | 86,792 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | KEY RATIOS 1) | Jan-Mar | | Jan-Mar | | Jan-Dec | -------------------------------------------------------------------------------- | | 2007 | | 2006 | | 2006 | -------------------------------------------------------------------------------- | Return on | | | | | | -------------------------------------------------------------------------------- | - average shareholders' | 3.5% | | 0.1% | | 4.0% | | equity | | | | | | -------------------------------------------------------------------------------- | - average capital employed | 3.4% | | 0.2% | | 4.0% | -------------------------------------------------------------------------------- | Capital employed, SEK 000s | 77,112 | | 74,833 | | 74,530 | -------------------------------------------------------------------------------- | Number of shares, thousands | 17,208 | | 17,208 | | 17,208 | -------------------------------------------------------------------------------- | Average number of shares, | 17,208 | | 17,208 | | 17,208 | | thousands | | | | | | -------------------------------------------------------------------------------- | Number of outstanding | - | | - | | - | | warrants, thousands | | | | | | -------------------------------------------------------------------------------- | Number of outstanding | - | | - | | - | | warrants with a dilutive | | | | | | | effect, thousands | | | | | | -------------------------------------------------------------------------------- | Average number of shares | 17,208 | | 17,208 | | 17,208 | | after dilution, thousands | | | | | | -------------------------------------------------------------------------------- | Earnings per share, SEK | 0.15 | | 0.01 | | 0.16 | -------------------------------------------------------------------------------- | Earnings per share after | 0.15 | | 0.01 | | 0.16 | | dilution, SEK | | | | | | -------------------------------------------------------------------------------- | Equity per share, SEK | 4.48 | | 4.18 | | 4.33 | -------------------------------------------------------------------------------- | Equity per share after | 4.48 | | 4.18 | | 4.33 | | dilution, SEK | | | | | | -------------------------------------------------------------------------------- | Equity/assets ratio | 84% | | 78% | | 82% | -------------------------------------------------------------------------------- | Average number of employees | 36 | | 33 | | 34 | -------------------------------------------------------------------------------- 1) The definitions of key ratios correspond to those used in the annual report. ACCOUNTING POLICIES The consolidated financial statements have been prepared in compliance with the International Financial Reporting Standards (IFRS) established by the International Accounting Standards Board (IASB) and the interpretations published by the International Financial Reporting Interpretations Committee (IFRIC) that have been endorsed by the European Commission for application in the EU. This consolidated interim report has been prepared in accordance with IAS 34, Interim Financial Reporting, which is consistent with the requirements stated in the Swedish Financial Accounting Standards Council's recommendation RR 31, Interim Financial Reporting for Groups. The Group applies the same accounting and valuation principles as in the 2006 annual report. Financial calendar: 23 August 2007 Interim report 1 January - 30 June 2007 25 October 2007 Interim report 1 January - 30 September 2007 Stockholm, 24 April 2007 Peter Rothschild Managing Director This report has not been examined by the Company's auditors. BioGaia AB Box 3242 SE-103 64 STOCKHOLM Telephone: +46 (0)8 555 293 00 www.biogaia.se Corp. reg. no. 556380-8723 For additional information contact: Peter Rothschild, Managing Director, telephone: +46 (0)8 - 555 293 00, Jan Annwall, Deputy Managing Director, telephone: +46 (0)8 - 555 293 00