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FARMACEUTICA REMEDIA SA - RMAH

Preliminary financial results 2017

Release Date: 2/15/2018 7:17:10 PM

IRIS Code: 7D92A

PRELIMINARY CONSOLIDATED ANNUAL REPORT 2017
Of the Board of Administrators of Farmaceutica REMEDIA SA

  

Company name:

Farmaceutica REMEDIA S.A.

 

 

Subscribed share capital:

RON 10.608.980

Paid-in share capital:

RON 10.608.980

Registered office:

330160, DEVA, 43, Dorobantilor Str

Telephone/ Fax:

+40 254 223 260/ +40 254 226 197

No. and date of registration with the Trade Registry Office:

J20/700/25.07.1991

Single tax registration code:

RO2115198

 

 

Securities:

RMAH shares
(Registration certificate no. 1470/04.05.2009)

Type:

Common Nominal

Registration date:

17.03.1997

Nominal value /share:

RON 0.10

Entry in NSC book:

1636

Total number of shares:

106.089.800

National Securities Commission code of shares:

16368

 

Registration

Date

Number of shares

Issue value - Lei            

 

1

10.11.1999

3.370.107

337.010.70

2

06.09.2001

1.500.000

150.000,00

3

23.07.2003

42.402

   4.240,20

4

05.01.2006

5.696.471

569.647,10

5

21.12.2007

87.905.969

8.790.596,90

6

08.04.2009

          7.574.851

757.485,10

 

TOTAL

    106.089.800

10.608.980,00

Organized market on which the securities are traded:

Bucharest Stock Exchange - Standard category

The total value on the market at the date of 15.02.2018 is 37.131.430 Lei (~Eur 8 mil)

The value of one RMAH share is 0,35 Lei (at the date of 15.02.2018)

 

1. Activity Analysis

 

1.1.          Overview

 

On 25 July 1991 Farmaceutica REMEDIA S.A. was established as a commercial company with fully state-owned capital by reorganisation of Oficiul Farmaceutic Deva since 1957.

On 13 October 2000, V.TARUS RoAgencies S.R.L. has purchased from FPS the majority shares package (55.802 %).

On 01 January 2006, Farmaceutica REMEDIA S.A. merged by absorption with V.TARUS RoAgencies S.R.L.

According to the law 95/2006 republished in August 2015, commercial companies can no longer carry out at the same time wholesale and retail activities of drugs. (Art. 800 paragraph 2).

On 01 January 2016, Farmaceutica REMEDIA S.A. finalized the transfer to Farmaceutica REMEDIA Distribution & Logistics S.R.L.,  company owned 100%, of the wholesale distribution activities of drugs (by a network of 8 warehouses) together with related activities (logistical services, recordings, promotion and marketing of drugs, etc.), keeping the operation of the chain of 100 pharmacies and local distribution offices.

Although this legal provision refering to the separation of the activities has been abolished, Farmaceutica REMEDIA SA has decided to keep the two legal entities.

On 31 December 2017 Farmaceutica REMEDIA S.A. holds majority participations (100%) with the Farmaceutica REMEDIA Distribution & Logistics S.R.L. Company and continues to work through the two companies.

Following the change of the main activity object imposed by the laws above mentioned, the company was forced to buy back from the market (in 2015) a number of 300100 shares at a price of 0.3753 lei/share, a price established by an authorised assessor.

During 2017, the companies Farmaceutica REMEDIA S.A. and Farmaceutica REMEDIA Distribution & Logistics S.R.L did not participate in mergers.

During the same period, the two companies have not alienated assets of significant value (buildings, lands, shares etc.).

Also, two pharmacies were sold (in Cluj Napoca and Tg. Mures), and the pharmacy in Valea Lunga (Alba County) the oficine in Ciofliceni (Ilfov County) and the druggist’s shops in Deva were close considering the efficiency conditions corelated to the operational targets.

 

1.2.          General Assessment Elements

 

Preliminary consolidated results of Farmaceutica REMEDIA S.A. for the financial year 2017 indicate:

 Lei     3.841.173 - net profit,

 Lei 351.225.291 - net turnover.

 

Other operating revenues were also recorded of:

Lei 1.872.988 - mainly assets sales

Lei    364.844 - financial revenues (mainly discounts received for the  payments in advance).

 

·         Lei 348.668.393– represents the total costs, out of which:

         Lei 348.423.831 - operating expenses, out of which:

         Lei 306.748.087 - the net cost of goods sold (including commercial discounts

                                    received)

·         Lei       244.563 - financial expenses, out of which:

Lei         33.784 - paid interests,

Lei       111.936 - exchange rate differences                    

Lei         98.843 - discounts received for the payments in advance

 

Considering the drugs and pharmaceutical products market of over EUR 3 billion (in 2017), we estimate the market share of the company Farmaceutica REMEDIA S.A. to approximately 2,5%.

Lei 10.042.684 were available on 31.12.2017 as company liquidities (in bank accounts and in cashiers). On the same date, the company had at its disposal a credit line of EUR 3.2 million, out of which used amounts (bank guarantee letters for the proper execution of contracts) amounting to EUR 2.277.385.

 

1.3.          Assessment of Company Revenues

 

 Lei 351.353.671– represents the revenues from the sales of goods (99,26 % of   the gross turnover) as follows:

- Lei 88.497.426 -  REMEDIA Pharmacies (25,19 % out of the total sales of goods) - Lei174.901.646 - Distribution                (49,78 %)                                                  

- Lei  87.954.599 - Hospital Distribution   (25,03 %)

 

   Lei 2.613.767 - operating revenues recorded from the value-added activities

                          (invoiced to third parties) and rents, out of which:

-  Lei 1.125.694 - logistical and warehousing services (0,32% out of the gross t.o)

-  Lei    511.437 - rents                                            (0,14%)

-  Lei    508.663 - shelf marketing                             (0,14%)

-  Lei    232.793 - RA activities, clinical studies monitoring(0,07%)

 

1.4. Assessment of Goods Procurement

         

The two companies have consolidated the procurement processes, the strategy for 2017 focusing on:

 

Ø  Improving performance during the contracts validity, optimizing contract effectiveness; monitoring the execution of contracts within the agreed parameters, in order to maximize the commercial benefits, reaching the target volume targets.

Ø  Maintaining a positive working capital in the relationship with the suppliers.

Ø  Expanding the product portfolio and order planning in relation to the existing monthly product forecast.

Ø  Implementation of the Supplier Selection Procedure, which ensures the identification of deviations from the performance standards established within the organization and the establishment, implementation and monitoring of appropriate corrective actions.

Ø  Planning and carrying out of the supply activity for the optimization of the gross commercial margin, accessing the higher discount volumes;

Ø  Efficiency of stock rotation; (implementation and monitoring of KPI stock: stock rotation duration, stock life and working capital at supplier level, critical validity term) 

Ø  Value stock reduction of the products with critical shelf life; (implementation of a Procedure and restriction to acquisition of products with shelf life less than 1 year)

 The suppliers classification based on the turnover in FRDL:

local producers 9%

international producers 73%

others distributors 18%

 The strategy and the development of the procurement activity for REMEDIA Pharmacies took into consideration the following aspects:


• Implementation and optimization of the supplier selection process, having as main criteria both economic evaluation (maximizing commercial conditions) as well as the operational one (order accomplishing, computer interface, delivery capacity at work point, time delivery, etc.).
• Extend the product portfolio to meet the most demanding market expectations  for all product categories in line with new business opportunities.
• Continuous inventory monitoring and optimization (optimisations based on the product category, stock validity, shelf life, etc.).
• Ensuring the continuity of products in stock, minimizing the loss caused by their lack.
• Reducing losses caused by short-term products through commercial strategies as well as by implementing and applying a specific procedure.

  •  49.050.811 Lei were the stocks recorded on 31.12.201, out of which 99.9% is represented by the goods.

 

1.5. Assessment of the Sale Activity

The company's distribution policy had as its main focus in 2017 a successful sales team setting in order to ensure the expected growth to reach the company's target and the efficiency of the logistics expenses. This led to a 39% increase in sales of goods, a trend that is in line with the company's medium-term strategy. A more important result is the doubling of the number of invoiced customers and the consolidation of the distributor Farmaceutica REMEDIA Distribution & Logistics (FRDL) on the independent pharma market. Although the pharmacy market faces a constant polarization, towards the formation of large pharmacies, the trend which will probably increase with the entry of international players on the local market, it still allows the development of an adequate distribution structure.

Farmaceutica REMEDIA Distribution & Logistics aims to be the distributor to cover the most efficient rural and small urban areas, thus providing access to an important population structure to medication. At the same time, REMEDIA offers personalized services to pharma producers in line with current legislation. The 8 (eight) current logistics centers cover the whole territory, and the 2017 results are positive in each of the 8 locations. Enhancing logistics costs by seeking and finding the best delivery options together with TMS ("Transport Management System") were the main logistics goals of 2017.

The development of logistics services is another important component, and for the future we also take into account obtaining GMP authorization for re-labeling / re-packaging, and implementing European Directive no. 2011/62 / EU on counterfeit medicines by establishing a Community code for medicinal products for human use.

The retail activities were strengthened during 2017, especially for REMEDIA Pharmacies located on the logistic routes of the company. Particular attention was paid to the pharmacies in Bucharest (acquired in the IV quarter 2015 and the first quarter of 2016), in order to make them more profitable, especially by relocating in areas with adequate commercial venues.

 A new sales monitoring system of the sales orients the pharmacies to focus with priority to effectiveness of the activities. In the same time, based on the marketing strategies implemented during 2017 the relationship with the patient has been consolidated through the efficient counseling, associated recommendations and health advises in partnership with health information and guidance medical centers, for the patient health benefit.

 

At consolidated level, there is no significant dependency of the companies towards a single client. The share of position 1 is of 4.64% - Fundeni Clinical Institute – followed closely by Hunedoara County Health House with a quota of 4,28%. The first 20 customers realise together a share of 35,69 % out of the total sales of goods.

           

2.                Financial-Accounting Situation

 

 

Farmaceutica Remedia

 

 

 

Income Statement

dec.-15

dec.-16

dec.-17

(RON)

consolidat

consolidat

           consolidat

Sales of goods

242.835.464

253.394.546

351.353.671

Discounts given

-5.761.012

-2.153.515

-2.742.148

Net Sales

237.074.452

251.241.031

348.611.523

 

 

 

 

COGS

213.208.313

224.141.318

314.538.321

Discounts Received

-7.546.112

-4.969.675

-7.790.234

Net COGS

205.662.201

219.171.643

306.748.087

 

 

 

 

Gross Margin

31.412.251

32.069.388

41.863.436

Gross Margin (%)

13,25%

12,76%

12,01%

 

 

 

 

Other Operating Revenues

3.419.815

4.525.708

4.486.755

 

 

 

 

Personnel

-19.224.203

-20.744.028

-25.346.354

Other Operating Expenses

-13.703.867

-13.531.480

-15.385.072

Total Operating Expenses

-32.928.070

-34.275.508

-40.731.426

 

 

 

 

EBITDA

1.903.996

2.319.588

5.618.765

EBITDA Margin

0,80%

0,92%

1,61%

 

 

 

 

Depreciation

-971.005

-702.805

-752.782

Provisions - net

4.462.117

221.716

507.830

Bad debts lost

-4.473.125

-207.183

-699.364

EBIT

921.983

1.631.316

4.674.449

EBIT Margin

0,39%

0,65%

1,34%

 

 

 

 

 

 

 

 

Financial Revenues

2.806.036

569.425

364.844

Financial Expenses

-2.917.502

-616.690

-244.563

Financial income

-111.466

-47.265

120.281

EBT

810.517

1.584.051

4.794.730

EBT Margin

0,34%

0,63%

1,38%

Tax on Profit

-19.515

-316.026

-953.557

Net Profit

791.002

1.268.025

3.841.173

Net Profit Margin

0,33%

0,50%

1,10%

 

 

Farmaceutica Remedia

 

 

 

Balance Sheet(RON)

dec.-15

dec.-16

dec.-17

 

consolidat

consolidat

        consolidat

Total Assets

139.884.308

165.837.428

203.053.352

 

20.048.844

18.815.551

10.042.684

Cash

55.299.880

69.284.808

104.236.602

A/R

24.754.163

36.923.931

49.050.811

Inventory

112.345

80.725

208.513

Expenses in advance

1.379.269

996.487

976.861

Other Current Assets

    101.594.501

   126.101.502

  164.515.471

Total Current Assets

 

 

 

 

30.672.230

30.758.758

30.465.667

Tangible Assets

6.902.806

8.222.526

7.355.141

Intangible Assets

714.771

754.642

717.073

Financial Investments

     38.289.807

     39.735.926

     38.537.881

Total Long-Term Assets

 

 

 

 

95.256.774

120.533.620

152.840.873

A/P

3.411.257

2.752.868

4.561.274

Other ST payables

217.459

205.414

214.756

Payables to shareholders

60.002

64.342

19.336

ST Loans*

     98.945.492

   123.556.244

   157.636.239

Current Liabilities

 

 

 

 

258.033

175.389

91.209

LT Loans*

1.209.566

1.273.137

1.273.137

Other LT liabilities

1.467.599

1.448.526

1.364.346

LT Liabilities

116.595

0

0

 

 

 

 

Provisions

10.608.980

10.608.980

10.608.980

 

27.954.640

28.955.653

29.602.614

Share capital

791.002

1.268.025

3.841.173

Reserves

     39.354.622

    40.832.658

    44.052.767

Profit

139.884.308

165.837.428

203.053.352

Equity

0

0

0

 

* including financial leasing

 

 

 

 Large amounts to be collected from customers (A/R) and to be paid to suppliers (A/P) are a characteristic of drug distribution, given that normally, during 2017, the collection of amounts due for the deliveries of goods was carried out within a deadline of cca. 3 months (as an annual average)

 

Bucharest, 15 February 2018                                              

                        Chairman of the Board of Administrators

 “TARUS” – Valentin Norbert TARUS e.U

 



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