Boule Diagnostics AB Year-end report 2015

Business model and market strategy – our strength in weaker markets

Quarter, October-December 2015

• Net sales amounted to SEK 88.4 million (90.1), down 1.8 percent. Adjusted for changes in the USD and EUR exchange rates, this represents a decrease of 12.1 percent.
• Cash flow from operating activities amounted to SEK 12.2 million (12.2).
• Operating profit was SEK 0.6 million (7.1).
• Net profit amounted to SEK 1.3 million (14.8).
• Earnings per share before dilution amounted to SEK 0.28 (3.14) and after dilution to SEK 0.27 (3.14).

Interim period, January – December 2015

• Net sales amounted to SEK 331.4 million (306.7), up 8.1 percent. Adjusted for changes in the USD and EUR exchange rates, this represents a decrease of 3.8 percent.
• Cash flow from operating activities amounted to SEK 22.1 million (31.0).
• Operating profit was SEK 21.6 million (26.6).
• Net profit amounted to SEK 15.4 million (30.3).
• Earnings per share before dilution amounted to SEK 3.26 (6.44) and after dilution to SEK 3.23 (6.44).
• The Board of Directors proposes a dividend of SEK 0.60 per share for 2015 (0.60).

Significant events during the quarter

• Increased sales in Mexico. October saw the final delivery of 65 Quintus and Swelab blood cell counting instruments to 35 primary care laboratories (medical care facilities) in Mexico.
• Three new owners. Svolder AB, Nordea Fonder and AB Grenspecialisten have acquired 11.6 percent, 11.6 percent and 10.2 percent respectively of shares in the company. These shares were sold by Siem Capital AB, which has divested its complete shareholding, equivalent to 33.4 percent of the capital and votes.
• Exclusive US market distribution agreement for CPR diagnostics. An agreement has been reached with Finnish company Orion Diagnostica Oy to launch and sell a CRP analysis system in the US. The product, QuikRead® go CRP, will be sold exclusively by Boule.

Significant events after the period

• Agreement on the sale of a clinical chemistry system in the US. An agreement has been reached with American company Medica Corporation Inc. to market and sell their EasyRA® product in the US. The product has been approved for marketing and sale by the FDA. Boule will start to market the product during first quarter of 2016.
• New chairman of the board. At the Board of Directors meeting held on January 25, Board Member Peter von Ehrenheim was elected as Chairman, a post he will retain until the Annual General Meeting. He succeeds Lars-Olof Gustavsson, who left the Board after the company he represented, Siem Capital AB, sold its stock.

Comments from the CEO

During 2015, many of our most important markets suffered from weak development, resulting in sales levels not reaching the targets we had set. This was offset by increased sales activity in other markets, for example Mexico and Asia. Unfortunately, this was still not enough. Full year sales increased by 8 percent, amounting to SEK 331 (307) million. In local currency, this corresponds to a reduction of 4 percent. Sales development for the fourth quarter was also unsatis-factory, amounting to SEK 88 (90) million. In local currency, this corresponds to a sales drop-off of 12 percent.

Gross margin during the quarter amounted to 42 (44) percent. This reduction can be attributed to increased sales to countries with lower margins, which, to a certain extent, compensated for the loss of sales on our major, problematic markets. Gross margin for the entire year amounted to 45 (44) percent. This increase can, at least in part, be attributed to the higher USD exchange rate, but is also the result of us increasing the proportion consumables sold.

Full-year operating profit for 2015 amounted to SEK 22 million, which is SEK 5 million lower than for the previous year. The result was impacted negatively by a number of factors, including the costs associated with the development of a new product area – clinical chemistry. In addition, there was no activation of R&D costs during the second quarter of 2015. This resulted in written-off R&D costs rising sharply. Another reason for the increase in operating costs was the higher USD exchange rate as a significant proportion of the company’s costs are borne by its US subsidiary. The weak 2015 results mean that work on efficiency improvements during 2016 will be intensified.

For more information, please contact:
Ernst Westman, President and CEO, Boule Diagnostics AB, tel +46 708-60 88 63

About Boule Diagnostics AB (publ)
Boule Diagnostics AB is a rapidly growing diagnostics company that develops, manufactures and markets systems and consumables for hematology diagnostics. The company is primarily oriented to small and medium sized hospitals, clinics and laboratories and to diagnostics companies within both human and veterinary hematology. The company operates via subsidiary companies in Sweden, USA and China. Boule Diagnostics shares have been listed on the Nasdaq Stockholm Exchange since 2011. http://www.boule.se

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