15th Apr 2015 08:42
LONDON (Alliance News) - Cyprotex PLC Wednesday reported its first annual operating loss in seven years in 2014 as investments in an acquisition and bolstering its existing offerings proved more difficult than it had expected, but revenue grew strongly and it predicted that it would return to profit in 2015.
The drug research services company reported a pretax loss of GBP4.0 million for 2014, wider than the GBP1.2 million loss it made in 2013, as costs rose by more than GBP2 million and it also booked a GBP3.0 million goodwill impairment related to its US operations. It swung to an operating loss of GBP3.7 million, compared with a profit of GBP613,146 in 2013.
The increased costs and the writedown more than offset an 18% revenue increase to GBP11.6 million, from GBP9.8 million.
The company had warned back in November that its sales growth was below expectations, and this would feed through into profitability, blaming unforeseen delays in its development projects. It had predicted revenue growth of about 20% at that time.
"Our work on developing a suite of transporter assays was more time consuming than originally anticipated with their launch delayed until October 2014. Pleasingly, we saw immediate uptake of this service offering and this continues into 2015," it said Wednesday.
Cyprotex had been seeking to reduce its reliance in the US on one large customer and one large government agency, and said it had successfully achieved that. The company, which has operations in the UK and US, said it won 171 new customers in total in 2014, up from 136 new customer wins in 2013, while its largest customer contributed 8.1% of its total revenue, down from 9.8% a year earlier.
The company had also been seeking to diversify outside the pharmaceutical research sector, and in January last year it bought CeeTox, which gave it access to new assays and a way into the cosmetic, personal care and household chemicals markets. It said CeeTox contributed GBP1.1 million of its total 2014 revenue, with revenue up 7.0% excluding the acquisition.
"2014 was a year of considerable investment for the company. In addition to the CeeTox acquisition which brought access to a range of new assays and customers, particularly in the cosmetic and personal care space, we have invested heavily in several significant new technical projects which considerably widens the company's potential service offerings to its current and to new customers," Chairman Ian Johnson said in a statement.
"However, the CeeTox acquisition experienced operational issues before it ran effectively and the new technical projects took longer to validate than we anticipated," he added.
Still, he said the investments will contribute to "significant" revenue growth and a return to profitability in 2015.
The company had cash of GBP2.9 million at the end of 2014, down from GBP7.1 million a year earlier, as it reported a cash outflow of GBP1.3 million compared with an inflow of GBP1.5 million in 2013.
It said cashflow was hit by "frustrating delays" in fully novating a significant contract with the US Environmental Protection Agency, which led to delays in invoicing work performed in the US in 2014 of GBP0.9 million. It said the novation was finally completed in March.
Cyprotex shares were down 4.4% at 55.00 pence Wednesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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