First Quarter 2011 Results


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First Quarter 2011 Results

  1. 1.   NEWS RELEASERECORDATI: SALES AND INCOME INCREASE IN THE FIRST QUARTER2011. THREE YEAR BUSINESS PLAN UPDATED.• Consolidated revenue € 197.8 million, + 6.4%.• Operating income € 44.3 million, + 2.9%.• Net income € 31.4 million, + 4.8%.• Net financial position*: net cash of € 37.5 million.• Procto-Glyvenol® acquired from Novartis Consumer Health• 2011-2013 Business Plan updated.Milan, 6 May 2011 – The Board of Directors of Recordati S.p.A. approved the Group’sconsolidated results for the first quarter 2011 prepared in accordance with International AccountingStandards and International Financial Reporting Standards (IAS/IFRS) and in particular as per IAS34 requirements for interim reporting. These financial statements are available at the company’soffices, at Borsa Italiana S.p.A. and on the company’s website: presents its First quarter 2011 results and its updated 2011-2013 Business Plan, whichwas approved by the Board of Directors, to the financial community and specialized press today at4.00 pm at Borsa Italiana. The complete presentation will be placed on the company’s website atthe following address: highlights• Consolidated revenue in the first quarter of 2011 is € 197.8 million, up by 6.4% compared to the same period of the preceding year, despite sales of lercanidipine down by 19.7% as a result of the entry of generics into the market following this product’s patent expiry in January 2010 .• Operating income, at 22.4% of sales, is € 44.3 million, an increase of 2.9% over the same period of the preceding year. Selling expenses increase by 8.5% mainly to support the launch of the new products.• Net income is € 31.4 million, an increase of 4.8%, higher than that recorded by operating income thanks to a lower tax rate.• Net financial position* at 31 March 2011 records net cash of € 37.5 million, a decrease of of € 8.5 million as compared to 31 December 2010 due to the acquisition of the new product Procto-Glyvenol® and the purchase of own shares. Shareholders’ equity increased to € 599.1 million.* Cash and short-term financial investments net of bank overdrafts and medium/long-term loans which include themeasurement at fair value of hedging derivatives (fair value hedge).Business development newsThe marketing authorizations, the brand and the rights to the product Procto-Glyvenol® wereacquired from Novartis Consumer Health for the following countries: Poland, Russia, Turkey,Romania, Czech Republic, Slovakia, Ukraine, Portugal, the Baltic countries and Cyprus. Procto- RECORDATI INDUSTRIA CHIMICA E FARMACEUTICA S.p.A. VIA M. CIVITALI, 1 - 20148 MILANO, ITALY - TEL (39) 0248787.1 - FAX (39) 0240073747 CAPITALE SOCIALE € 26.140.644,50 I.V. - REG. IMP. MILANO N. 00748210150 - R.E.A. MILANO N. 401832 - CODICE FISCALE/P.IVA 00748210150
  2. 2.  Glyvenol® is indicated for the localized treatment of internal and external hemorrhoids and iscurrently on the market in the countries included in the agreement.Business plan updateThe development of the Recordati group will continue to be focused on the Europeanpharmaceutical markets, both in Western and the emerging CEE countries. The group will developits business through the growth of its product portfolio, which includes the launch of its newapproved products, the acquisition of new product licenses, the enhancement of its pipeline ofproducts in development and by entering new markets.Excluding the contribution of further acquisitions which may be completed within the period underanalysis, our financial performance expectations for the 2011-2013 period are the following:• Expectations for the full year 2011 are confirmed: revenues of around € 750 million, operating income of around € 160 million and net income of around € 110 million.• Targets for 2012: revenues of around € 810 million, operating income of around € 170 million and net income of around € 120 million.• Targets for 2013: revenues of around € 875 million, operating income of around € 185 million and net income of around € 132 million.Management comments“The results of the first quarter and the Business Plan that we have just presented show that we arestarting a new growth cycle, thanks to the quality of our product portfolio and the development ofour business in the new emerging markets. Our new plan includes an acceleration of sales growthfrom 5% to 8% over the period and an increase of around 10% per year in the 2012 and 2013 netincome” declared Giovanni Recordati, Chairman and Chief Executive Officer. “Furthermore, wewill continue with our policy to acquire new products to develop as well as new geographicalpresence in order to enhance both sales and profits growth.”Conference CallA simultaneous translation into English of the proceedings, which will start at 4.00 pm, is availablevia conference call. Dial-in numbers for the call in English and access ID are:Italia +39 064 521 7063UK +44 (0) 20 7136 2058USA +1 718 247 0884Francia +33 (0) 1 70994301Germania +49 (0) 69 5007 1309ID to access the call in the English language: 3380664A set of slides which will be referred to during the call will be available on our website:  2
  3. 3.  Callers are invited to dial-in 10 minutes before conference time. If conference operator assistanceis required during the connection please digit * followed by 0 or call +353 23 8832493. A recordingof the conference call will be subsequently placed on the website:, established in 1926, is a European pharmaceutical group, listed on the Italian Stock Exchange (ReutersRECI.MI, Bloomberg REC IM, ISIN IT 0003828271),with a total staff of over 2,800, dedicated to the research,development, manufacturing and marketing of pharmaceuticals. It has headquarters in Milan, Italy, operations in themain European countries, and a growing presence in the new markets of Central and Eastern Europe. A Europeanfield force of around 1,400 medical representatives promotes a wide range of innovative pharmaceuticals, bothproprietary and under license, in a number of therapeutic areas including a specialized business dedicated totreatments for rare diseases. Recordati’s current and growing coverage of the European pharmaceutical market makesit a partner of choice for new product licenses from companies which do not have European marketing organizations.Recordati is committed to the research and development of new drug entities within the cardiovascular and urogenitaltherapeutic areas and of treatments for rare diseases. Consolidated revenue for 2010 was € 728.1 million, operatingincome was € 154.8 million and net income was € 108.6 million.For further information:Recordati website: www.recordati.comInvestor Relations Media RelationsMarianne Tatschke Claudio Rossetti (Echo Comunicazione d’Impresa)(39)0248787393 (39)02 62694736e-mail: e-mail: crossetti@echocom.itStatements contained in this release, other than historical facts, are "forward-looking statements" (as such term isdefined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently availableinformation, on current best estimates, and on assumptions believed to be reasonable. This information, these estimatesand assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond theCompany’s control. Hence, actual results may differ materially from those expressed or implied by such forward-looking statements. All mentions and descriptions of Recordati products are intended solely as information on thegeneral nature of the company’s activities and are not intended to indicate the advisability of administering anyproduct in any particular instance.  3
  4. 4.   RECORDATI GROUP Summary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IAS/IFRS) (thousands of €)INCOME STATEMENT First quarter First quarter Change % 2011 2010REVENUE 197,842 185,856 6.4 Cost of sales (66,910) (59,699) 12.1GROSS PROFIT 130,932 126,157 3.8 Selling expenses (60,024) (55,323) 8.5 Research and development expenses (15,627) (16,428) (4.9) General & administrative expenses (10,903) (10,433) 4.5 Other income (expenses), net (52) (898) (94.2)OPERATING INCOME 44,326 43,075 2.9 Financial income (expenses), net (1,015) (780) 30.1PRE-TAX INCOME 43,311 42,295 2.4 Provision for income taxes (11,888) (12,321) (3.5)NET INCOME 31,423 29,974 4.8Attributable to:Equity holders of the parent 31,420 29,974 4.8Minority interests 3 0 n.s.EARNINGS PER SHARE First quarter First quarter Change % 2011 2010Basic € 0.158 € 0.152 3.9Diluted € 0.150 € 0.144 4.2Earnings per share (EPS) are based on average shares outstanding during each year, 198.778.475 in 2011 and197.652.801 in 2010, net of average treasury stock which amounted to 10.346.681 shares in 2011 and to 11,472,355shares in 2010.Diluted earnings per share is calculated taking into account stock options granted to employees.COMPOSITION OF REVENUE First quarter First quarter Change % 2011 2010Pharmaceuticals 189,595 179,627 5.5Pharmaceutical chemicals 8,247 6,229 32.4TOTAL 197,842 185,856 6.4- of which International 135,936 129,419 5.0  4
  5. 5.   RECORDATI GROUP Summary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IAS/IFRS) (thousands of €)ASSETS 31.3.2011 31.12.2010Property, plant and equipment 51,376 53,017Intangible assets 143,327 113,512Goodwill 303,695 305,741Equity investments 1,930 1,930Non-current receivables 2,406 2,485Deferred tax assets 19,853 20,221TOTAL NON-CURRENT ASSETS 522,587 496,906Inventories 89,489 85,190Trade receivables 149,078 126,575Other receivables 21,557 26,734Other current assets 4,859 2,825Fair value of hedging derivatives (fair value hedge) 0 1,164Short-term financial investments, cash and cash equivalents 200,088 161,680TOTAL CURRENT ASSETS 465,071 404,168TOTAL ASSETS 987,658 901,074EQUITY AND LIABILITIES 31.3.2011 31.12.2010Share capital 26,141 26,141Capital in excess of par value 83,719 83,719Treasury stock (59,877) (52,579)Hedging reserve (3,386) (4,299)Translation reserve (3,564) (592)Other reserves 25,844 25,733Retained earnings 498,724 389,284Net income for the period 31,420 108,571GROUP SHAREHOLDERS’ EQUITY 599,021 575,978Minority interest 31 28SHAREHOLDERS’ EQUITY 599,052 576,006Loans due after one year 139,118 96,767Employees’ termination pay 19,078 19,259Deferred tax liabilities 5,740 5,699Other non-current liabilities 611 606TOTAL NON-CURRENT LIABILITIES 164,547 122,331Trade payables 103,397 93,068Other payables 58,048 53,536Tax liabilities 14,159 9,691Other current liabilities 596 620Provisions 21,009 21,413Fair value of hedging derivatives (cash flow hedge) 3,386 4,299Fair value of hedging derivatives (fair value hedge) 1,276 0Loans due within one year 16,327 16,604Bank overdrafts 5,861 3,506TOTAL CURRENT LIABILITIES 224,059 202,737TOTAL EQUITY AND LIABILITIES 987,658 901,074  5
  6. 6.  DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THECOMPANY’S FINANCIAL REPORTSThe manager responsible for preparing the company’s financial reports Fritz Squindo declares,pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accountinginformation contained in this press release corresponds to the document results, books andaccounting records.  6
  7. 7.  DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THECOMPANY’S FINANCIAL REPORTSThe manager responsible for preparing the company’s financial reports Fritz Squindo declares,pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accountinginformation contained in this press release corresponds to the document results, books andaccounting records.  7