18th Mar 2014 07:00
18 March 2014
Source BioScience plc
("Source BioScience" or "the Group")
Preliminary results for the year ended 31 December 2013
Transformational year for the Group; strong underlying growth combined with acquisitions
Source BioScience plc (LSE: SBS), the international laboratory services and products business announces its unaudited preliminary results for the year ended 31 December 2013.
Financial highlights
· Revenue increased by 19% to £19.5 million (2012: £16.4 million)
· Adjusted operating profit* increased by 23% to £1.4 million (2012: £1.2 million)
· Adjusted EBITDA* increased by 23% to £3.3 million (2012: £2.7 million)
· Loss before tax of £1.1 million (2012: profit of £1.0 million)
· Cash generated from operating activities of £2.1 million (2012: £3.3 million)
· Successful placing and open offer raising £10.3 million of new equity funding
· Cash balance of £4.2 million (2012: £2.2 million) and net debt of £5.0 million (2012: £0.9 million)
*Adjusted results are stated after eliminating the aggregate £1.2 million acquisition costs for Vindon Healthcare plc ('Vindon') and Inverclyde Biologicals Limited ('Inverclyde Biologicals') in addition to post-acquisition restructuring costs of £1.1 million. The adjusted results have been included to present a fair comparison of the progress in the underlying business.
Operational highlights
· Transformational acquisitions of Vindon and Inverclyde Biologicals, broadening the Group's product and service offering, and geographical reach
· Acquisition of Vindon for £12.2 million funded by means of a successful firm placing and open offer to raise £10.3 million in conjunction with new banking facilities
· Competitive tenders won for Kent County and Medway Councils and other commissioning groups under the National Chlamydia Screening Programme ('NCSP'); contracts worth in excess of £1.0 million over three years
· New DNA sequencing facilities opened in Bellshill and Rochdale, enabling access to the Overnight Service™ in Scotland and North West England
Post-period events
· Competitive tenders won for Worcester County Council and other commissioning groups for chlamydia screening; chlamydia screening contracts now worth in excess of £2.0 million in aggregate over three years
· Commercial launch of the enhanced Source BioScience portfolio in the USA
· Opening of a new DNA sequencing facility in Tramore, Ireland
Laurie Turnbull, Chairman of Source BioScience, said:
"2013 has been a transformational year for Source BioScience both through organic and acquisitive growth.
"The underlying business generated good revenue and profitability growth, validating the Company's organic growth model. At the same time, the Board reinforced its strategic aim of accelerated growth through acquisition with the purchase of Inverclyde Biologicals and Vindon. Both of these businesses provide significant growth opportunities by enhancing the products and services portfolio, extending the Group's geographic reach and bringing a complementary customer base to the Group.
"We are working to ensure that these newly acquired businesses are integrated quickly and efficiently, and to date the integration is going to plan. We look forward to updating shareholders on the commercial initiatives planned for the enlarged Group."
- Ends -
For further information, please contact:
Source BioScience plcNick AshChief Executive OfficerTel: +44 (0)115 973 9010www.sourcebioscience.com
For investor and media enquiries:
N+1 Singer (Financial Advisor, Sponsor and Broker)Aubrey Powell/Joe StroudTel: +44 (0)207 496 3000www.nplus1singer.com
Instinctif Partners (PR Agency)Melanie Toyne-Sewell/Donia Al SaffarTel: +44 (0)207 457 2020Email: [email protected]
Cautionary statement
This Business Review contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Source BioScience plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Nothing in this Business Review should be construed as a profit forecast.
Chairman's Statement
Overview
2013 has been a year of major transformation for the Group. Whilst the Board's focus has remained on delivering continued organic improvement in the financial and operational performance, 2013 has also been a significant year in the acquisitive growth of the business. Two strategically important transactions have been concluded in the year: the acquisition of Inverclyde Biologicals in April and the acquisition of Vindon in September. The transactions have been distinctly different with respect to scale and complexity, but both represent key steps in accelerating the growth and expansion of the Group.
The acquisition of Inverclyde Biologicals has enabled the Group to add high quality, high margin clinical grade serology products to the Healthcare portfolio and leverage existing commercial channels to increase sales volumes.
The acquisition of Vindon will accelerate the business penetration of the very substantial US life sciences and biopharma market. This will be initiated from existing facilities in Atlanta and Los Angeles, thereby significantly reducing the risks to the Group. The acquisition also brings a range of products and services which, while new to Source BioScience, address a customer base complementary with the existing biopharma business. The combination of the acquired controlled storage expertise and the existing laboratory services expertise will enable the enlarged Group to offer a "one stop" storage and downstream analysis service.
Looking at the underlying business, the Directors are again pleased to report that operating profit and operating cash generation have increased during the year, after adjusting for the costs associated with the acquisitions and restructuring exercise undertaken during the year.
The cohesion and commonality of the operational infrastructure, expertise and enhanced geographic reach is critical to driving the growth of the business. This represents a "joined up" business built on common technology platforms and infrastructure, laboratory processes and intellectual capital.
Summary results
| 2013£'000 | 2012£'000 | % change |
Revenue | 19,525 | 16,431 | 19% |
Gross profit | 8,990 | 7,418 | 21% |
Adjusted operating profit* | 1,420 | 1,150 | 23% |
Adjusted profit before tax* | 1,182 | 963 | 23% |
Adjusted EBITDA* | 3,295 | 2,669 | 23% |
*Adjusted results are stated after eliminating the aggregate £1.2 million acquisition costs for Vindon and Inverclyde Biologicals in addition to post-acquisition restructuring costs of £1.1 million. The adjusted results have been included to present a fair comparison of the progress in the underlying business.
Divisional performance
There is a summary of the activities and performance of the Healthcare and LifeSciences divisions presented below. More detail is provided in the Business Review. The activities of the acquired Inverclyde Biologicals business are included within Healthcare and the activities of the acquired Vindon business are presented in the new Stability and Bio Storage division of the Group.
Healthcare
Healthcare revenue was £9.4 million (2012: £8.6 million), an increase of 10%, and divisional operating profit increased by 8% to £3.0 million (2012: £2.8 million).
The Diagnostic activities continued the impressive performance reported at the half year and the aggregate number of diagnostics tests delivered increased by over 130% compared with 2012.
A significant component of this increase resulted from the launch of a sexually transmitted infection ('STI') testing service and the subsequent winning of the Kent County and Medway Councils' chlamydia screening tender. This contract commenced in August 2013 for the delivery of over 40,000 tests per annum and is worth more than £1.0 million over three years. Source BioScience's expertise in diagnostic testing and significant experience of supporting the UK Cervical Cancer Screening Programme was central to the winning of this tender under the National Chlamydia Screening Programme.
During 2013 the Group also saw demand increase by 20% for gene-based companion diagnostic testing for cancer. A leading capability in DNA analysis, couple with core pathology expertise, mean that Source BioScience is well placed to exploit the growing demand for companion diagnostic testing to meet the increasing requirement for gene-based testing for cancer and other diseases.
As anticipated during 2013 revenue from the Healthcare products business, including Cytology, was consistent with that achieved in 2012. This reflects the on-going three year cycle in cervical cancer screening which resulted in exceptionally high demand for testing experienced in 2009 and, subsequently, in 2012. However, it is pleasing to report that the cyclical softening in Cytology volumes has been more than compensated for by the portfolio expansion and geographic coverage that the acquisition of Inverclyde Biologicals has delivered. The cross-selling opportunities are being crystallised and the run rate for serology products revenue is significantly ahead of where it was pre-acquisition.
LifeSciences
LifeSciences delivered revenue of £7.6 million (2012: £7.0 million), an increase of 8%, and divisional operating profit increased by 25% to £1.2 million (2012: £0.9 million).
Source BioScience's ambition is to become Europe's leading commercial provider of DNA sequencing and the Overnight Service™ is instrumental in achieving this. The Group's market share in the UK continues to increase and DNA sequencing volumes during 2013 were over 70% greater than last year, driving both revenue and margin growth. The momentum in sequencing volumes is being sustained by the introduction of new services and the expansion of Source BioScience's laboratory network. During the year the Overnight Service™ was launched from the Group's newly acquired facilities in Bellshill and Rochdale.
As reported previously, a major element of the long term growth strategy is the own-branding of the Group's products under the reSource™ label and expansion of the product portfolio, supported by the GenomeCube® search engine and e-commerce platform. These initiatives are progressing to plan and will ultimately enable the globalisation of the products business, providing distributors, and customers, fast and ready access to the enhanced product portfolio.
As highlighted above, during December Overnight Service™ for DNA sequencing was launched to customers in Manchester, Liverpool and Leeds from the facilities in Rochdale, which extends the Group's ability to cover the majority of major UK academic research centres.
Stability and Bio Storage
The new Stability and Bio Storage division comprises the market-leading activities of the acquired Vindon business combined with the existing Source BioScience laboratory services for biomarker discovery and clinical trials, in support of the drug discovery programmes of biopharma customers. Revenue was £2.5 million (2012: £0.8 million) and the divisional operating profit was £0.3 million (2012: £0.2 million) which includes three months results from the acquired business.
Integration of Vindon
The integration is progressing to plan. The first tranche of operational initiatives has been concluded with consolidation of the Group's two Irish facilities onto a single site, completed by the year end, and the consolidation of the Group-wide warehousing and logistics infrastructure into Rochdale, completed in February 2014. The operational efficiencies gained from these changes will benefit the Group immediately.
The first tranche of commercial initiatives has also been launched. Subsequent to the year end, the Group has commenced the marketing of the enlarged Group's activities in the USA. The initial focus is on rolling out the Overnight Service™ to customers in Los Angeles and providing a next day sequencing service for other key locations in the US. Alongside this, the clone products and serology products business has been launched from the facility in Atlanta. This will enable customers to access these products within a timeframe, and at a price, that cannot be matched by distributing the products from the UK.
Staff
Source BioScience's staff are fundamental to the success of the business and 2013 was another year of significant change and continued improvement in its performance. On behalf of the Board, I would like to thank everyone for their hard work and dedication and also welcome all of the new employees to the Source BioScience team.
Outlook
We believe we have a very strong business model and opportunities for growth are apparent across all three divisions. The Board's strategy is to expand the service and product offering, enabling greater market penetration, with the objective of delivering increasing returns for shareholders. The aim is to achieve this through continued organic growth from the enlarged infrastructure base in addition to further, carefully selected acquisitions when the opportunities arise, building on the strong foundations now inherent in the business.
Laurie Turnbull
Chairman
18 March 2014
Business Review
Overview
Source BioScience is an international laboratory services and products business supplying the healthcare, life science research and biopharma markets. The commercial activities of the Group are organised into three divisions; Healthcare, LifeSciences and Stability and Bio Storage. The business activities and performance during 2013 and expectations for 2014 are described below.
Healthcare
The Healthcare division comprises the Diagnostics services, including diagnostic testing for cancer and other diseases and Cytology and Serology products, including cervical cancer screening and blood banking serology reagents.
The division has performed strongly in the year; revenue was £9.4 million (2012: £8.6 million), an increase of 10%, and divisional operating profit increased by 8% to £3.0 million (2012: £2.8 million).
Services
The Diagnostics operations provide expert histopathology (tissue analysis), molecular diagnostics (genetic analysis) and companion diagnostic testing services to public and private healthcare providers. These services have traditionally been applied to cancer diagnostics but are increasingly being applied to other disease areas, such as sexually transmitted infection.
Source BioScience is one of only a limited number of accredited laboratories in Europe with the capability to deliver this combination of tissue-based analysis and complex molecular testing, providing the Group with a distinct competitive advantage.
Diagnostics has delivered good growth in 2013 with revenue up more than 40% compared with last year and is expected to drive growth in the longer term.
A significant component of the increase in testing volumes resulted from the launch of the sexually transmitted infection ('STI') testing service during the year. This service enables web-based access to chlamydia testing for 16 to 24 years olds, under the National Chlamydia Screening Programme. In addition to providing laboratory testing, a complete patient care pathway was also provided to support individuals after they have accessed their results and received their diagnosis. This end to end service offering was instrumental in winning the Kent and Medway Councils' chlamydia screening tender. This contract commenced in August 2013 for the delivery of over 40,000 tests per annum and is worth more than £1.0 million over three years.
Increasing demand from the NHS for gene-based companion diagnostic testing for cancer has also been a driver for growth. Companion diagnostics are useful for stratifying patients into groups which are known to respond in a particular way to a drug, enabling clinicians to make better informed treatment decisions. During the year, the number of patient samples received has risen by more than 20%, demonstrating the increasing clinical importance of this type of diagnostic testing and the role it will play in personalised medicine.
The Diagnostics offering is constantly monitored and reviewed to ensure that it meets existing and anticipated demand from customers. The portfolio has been further enhanced during 2013, including the development and validation of proprietary assays for the most important genetic tests for disease. These proprietary assays improve laboratory efficiency, reduce costs and provide a competitive advantage. Further growth in this area is expected during 2014.
Products
The Cytology (cell analysis) operation provides essential systems to the NHS for the preparation and analysis of cervical smear samples as part of the NHS Cervical Cancer Screening Programme and underpins approximately 50% of the cervical cancer screening programme in England and Wales. The Serology operation provides diagnostic products and other clinical grade reagents, including phosphate buffered saline solutions, to laboratories undertaking blood typing and tissue analysis.
Implementation of the BD FocalPoint™ automated imaging solution for cervical cancer screening continues. This is the only automated cervical screening technology which has been approved for use by the NHS in England and Wales and is the only one of its kind available. The technology can analyse and identify up to 25% of screening samples that require no primary manual examination, representing a significant reduction in laboratory workload and improved turnaround times for reporting to patients.
In February the Group announced the renewal of the York Teaching Hospital NHS Foundation Trust liquid based cytology contract, together with the installation of the seventh BD FocalPoint™ platform. The contract is worth £1.3 million over three years.
In April, the Group acquired Inverclyde Biologicals, a market leading manufacturer of high quality diagnostic kits and blood group serology reagents. This product portfolio is complementary with the existing Source BioScience products business and has resulted in cross-selling opportunities during the year. Consequently, the run rate for serology product revenue is significantly ahead of where it was prior to acquisition.
LifeSciences
The LifeSciences division provides ultra-fast DNA sequencing services and related products, delivered by Source BioScience's international network of laboratories and distributors to academic research groups, biotechnology and pharmaceutical companies.
LifeSciences delivered an 8% increase in revenue to £7.6 million (2012: £7.0 million) and a divisional operating profit up by 25% to £1.2 million (2012: £0.9 million).
Services
The Overnight Service™ has enabled this division to significantly increase its market share for outsourced DNA sequencing. Source BioScience is the only company offering a UK-based sequencing service and it has taken a leading position as an outsourced provider of DNA sequencing in Europe. The Overnight Service™ continues to power the growth of the sequencing business. The number of sequencing reads delivered to customers increased by more than 70% compared with last year and this has been sustained into 2014.
During the year LifeSciences launched the Overnight Service™ from the facilities in Bellshill and Rochdale, consistent with the Group's strategy of operating a network of laboratories situated close to major life science research centres. This increased the number of sequencing laboratories in the Source BioScience network from five to seven across the UK and Europe.
Products
Alongside the DNA sequencing services, Source BioScience also offers a portfolio of more than 26 million cDNA clones and 120,000 antibodies which customers can access via GenomeCube®, the Group's proprietary e-commerce platform, database and search engine. Historically, Source BioScience has acted as a distributor of antibodies and other products, limiting the geographies into which they could be marketed, constraining growth.
In March, the reSource™ range of own branded products was launched, initially focused on the critical life science research work flow requirements for DNA extraction and preparation. It is the Group's intention to migrate the majority of the product portfolio across to the reSource™ branding, which will eliminate existing geographical commercial restrictions and expand the addressable market.
Enhancements to GenomeCube®, the proprietary search engine and bioinformatics tool for the clone and antibody portfolio, to improve search speeds and presentation of search results have been successfully rolled out during the year. In the Director's opinion, GenomeCube® is a major element of the growth strategy for the medium to longer term and all of the Group's products, including the reSource™ range, will be available through GenomeCube®. This will enable the accelerated globalisation of the products business, enabling distributors, and customers, fast and ready access to the enhanced product portfolio.
Stability and Bio Storage
The Stability and Bio Storage division largely comprises the acquired Vindon business and provides support for drug discovery, from biomarker discovery and clinical trial services through to stability storage and sample archiving under environmentally controlled conditions.
The division delivered revenue of £2.5 million (2012: £0.8 million) and an operating profit of £0.3 million (2012: £0.2 million) including three months results from the acquired business.
Services
The Stability and Bio Storage activities are delivered from five sites in Nottingham and Rochdale (UK), Tramore (Ireland) and Atlanta and Los Angeles (USA). At these sites, customers in the biopharma and life science research markets are offered stability storage, minus 80 Celsius and ultra-low (liquid nitrogen) storage. The Ireland facilities are accredited to Good Manufacturing Practice ('GMP') standards and the UK facilities are licensed by the Human Tissue Authority ('HTA') for the secure storage of biological samples.
Products
The Group also designs, manufactures and installs a range of high quality standard and bespoke controlled environment reach-in and walk-in room systems that provide the climatic conditions specified to the customers' requirements. These include meeting the ICH Tripartite guidelines for stability storage testing for biotechnology and pharmaceutical customers, simulating the conditions of all four global climatic zones for long term, intermediate and accelerated stability testing. Products include environmental rooms and cabinets, photostability cabinets, blood banks and plasma freezers.
Service and maintenance of the installed equipment is tailored to suit individual customer requirements and supported by qualified service engineers. The services include validation, maintenance and repair in addition to disaster recovery management.
Integration of Vindon
The integration of the Vindon business is progressing well and to plan. The first phase of operational initiatives has been concluded with the consolidation of the Group's facilities in Ireland onto a single site in Tramore. In addition, the Group's warehousing and logistics infrastructure has been consolidated onto the Rochdale site. The operational efficiencies gained from these changes are benefiting the Group with immediate effect.
During December there was the launch of the Overnight Service™ for DNA sequencing for customers in Manchester, Liverpool and Leeds from the newly commissioned laboratory based in the Rochdale facility.
Subsequent to the year end, the launch of the enlarged Group's activities in the USA has commenced. The initial focus is on rolling out the Overnight Service™ to customers in Los Angeles and providing a next day sequencing service for other key locations in the US. Alongside this, the clone products and serology products business will be launched from the facility in Atlanta. This will enable customers to access these products within a timeframe, and at a price, that cannot be matched by distributing the products from the UK.
Financial Review
Financial performance
Group revenue increased by 19% to £19.5 million (2012: £16.4 million), including the acquired businesses. Owing to the operational gearing generated within the laboratory and production infrastructure, coupled with close management of the cost base, gross margins improved to 46% (2012: 45%). In the current economic environment with constant pressure on prices and rising input costs, the Board believes this represents a satisfactory performance.
Normal administrative expenses decreased as a proportion of revenue to 27% (2012: 28%) and ongoing administrative expenses are largely fixed and appropriate to the revised scale of the business.
Adjusted operating profit* for the year was £1.4 million (2012: £1.2 million) after adjusting for aggregate acquisition costs of £1.2 million and post-acquisition restructuring costs of £1.1 million. If these non-recurring costs were not adjusted for, then the reported operating result for the year was a loss of £0.9 million (2012: £1.2 million profit).
Adjusted profit before tax* was £1.2 million (2012: £1.0 million), in line with expectations.
Included in the Consolidated Statement of Comprehensive Income are non-cash items, including depreciation and amortisation, of £1.9 million (2012: £1.5 million). After accounting for these non-cash items, non-recurring acquisition and restructuring costs, net finance expense and taxation, EBITDA were £3.3 million (2012: £2.7 million) an increase of 23%.
Financial position
At 31 December 2013 the Group net assets were £24.4 million (2012: £16.2 million).
Non-current assets increased by a net £13.9 million to £31.1 million at 31 December 2013 (2012: £17.2 million). The significant elements of this increase comprise £7.7 million in aggregate of goodwill arising from the acquisitions; £5.2 million of acquired property, plant and equipment and intangible assets arising on the acquisitions of £2.3 million in aggregate (see note 3 below).
Further capital investment totalling £0.8 million was made in the BD FocalPoint™ technology, in addition to the recently developed BD Totalys™ automated sample management system. In combination, these platforms will enable NHS cytology laboratories to increase sample throughput at the same time as preparing for the introduction of HPV testing into the cervical cancer screening programme. Installation of these platforms with NHS trusts is planned for 2014.
At 31 December 2013 the Group had aggregate debt of £9.2 million (2012: £3.1 million). This debt represents the banking facility secured to part fund the acquisition of Vindon.
Cash flows and liquidity
Cash generated from operating activities was £2.1 million (2012: £3.3 million) and, after financing and investing activities, net cash inflow was £1.9 million (2012: £1.1 million).
The acquisition of Vindon was part funded by a firm placing which raised £9.9 million, after equity issue costs, in conjunction with new bank facilities of £9.5 million. Of the bank funding, £3.7 million was used to repay the existing bank debt of Vindon and Source BioScience as the new lending was secured at preferential interest rates compared with the prior arrangements. The surplus from debt and equity funding, including the proceeds of £0.8 million raised from the open offer, will be used to fund additional organic and acquisitive growth opportunities.
The Group's cash balance was £4.2 million as at 31 December 2013 (2012: £2.2 million) and net debt was £5.0 million (2012: £0.9 million).
Current trading and opportunities
There is growth across all three divisions, which is in line with the strategic plan implemented for the Group.
Healthcare
The acquisition of Inverclyde Biologicals has delivered enhanced financial performance and added blood banking and serology products to the Healthcare portfolio. This acquisition has provided the opportunity to cross-sell into existing customers as well as exploit the Group's international distribution network for the new product portfolio. The resulting run rate for serology product revenue at the year end was significantly ahead of where it was pre-acquisition.
The ability to provide many of the new and anticipated genetic tests is outside the capability of all but a few hospital and commercial laboratories. The Directors see significant opportunity within Diagnostics to provide a broader and more cost effective diagnostic service to a wider customer base and across a greater range of disease types including infectious disease, cardiovascular and metabolic disease, in addition to oncology.
LifeSciences
In LifeSciences Source BioScience has forged a leading position in Europe for the provision of DNA sequencing services and genomic products. With its international network of laboratories, the Group is ideally placed to meet the growing demand for genetic analysis. Its share of the UK market for DNA sequencing has continued to grow during 2013 and the Overnight Service™ has been launched from the new facilities in Bellshill (Scotland), Rochdale and Tramore (Ireland).
The launch of the reSource™ range of products in March has eliminated many of the geographical commercial restrictions on the product portfolio and significantly expands the addressable market. Utilising the power of the GenomeCube® platform, the aim is to accelerate the globalisation of the products business enabling distributors and customers fast and ready access to the enhanced product portfolio.
The acquisition of Vindon has provided the Group with a footprint from which to accelerate the roll out of the LifeSciences services and products into the US market. The imminent launch of the Overnight Service™ for DNA sequencing from the facility in Los Angeles will enable the Group to address the extensive local academic and biopharma market in and around Los Angeles. In addition, the distribution of the genomic, antibody and serology products from the facility in Atlanta will enable the penetration of the US market with competitively priced products and shortened lead times for delivery.
Stability and Bio Storage
The acquisition of Vindon is transformational for the Group. It adds additional depth and breadth to the existing products and services portfolio, considerably strengthening the Group's proposition to current and prospective customers as well as extending the geographic reach of the business. The acquisition has significantly strengthened the Group's business model and will underpin growth objectives through increased levels of cash generation.
The acquisition has delivered US facilities and operational infrastructure allied to an existing commercial network of customers and partners, providing the opportunity to exploit the expertise of the combined Group. In the Board's view, there are significant opportunities to align expertise in diagnostics and genetic testing with storage service customers, particularly biopharma and regenerative medicine customers. Bringing the latest tissue and-gene-based analysis services and technologies to storage customers, will enable the Group to perform downstream analysis at single site, accredited facilities. This significantly de-risks the process for the customer as many of the samples stored with the Group often represent unique and invaluable biological resources.
The integration of the acquired business has progressed to plan and the first phase of the integration has been completed. The costs of the restructuring in 2013 amounted to £1.1 million and the changes will benefit the Group immediately, generating annualised cost savings in the region of £1.0 million.
Outlook and conclusion
The acquisitions of Vindon and Inverclyde Biologicals have brought significant opportunities to the Group, both from the addition of new products and services and the extension of the Group's geographic reach. The Group now has access to new markets and customers and there is a platform for international growth across Europe as well as the East and West coasts of the USA. All of these factors are expected to contribute to the continued progress of the Group in 2014 and beyond.
Dr Nick Ash
Chief Executive Officer
18 March 2014
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2013
Year ended31 December2013 | Year ended31 December2012 | ||
Note | £'000 | £'000 | |
Revenue | 19,525 | 16,431 | |
Cost of sales | (10,535) | (9,013) | |
Gross profit | 8,990 | 7,418 | |
Selling and distribution expenses | (1,889) | (1,324) | |
Research and development | (48) | (154) | |
Administrative expenses: | |||
- normal | (5,265) | (4,599) | |
- amortisation of intangibles arising from acquisitions | (368) | (191) | |
- restructuring costs | 4 | (1,104) | - |
- acquisition costs | 3 | (1,215) | - |
Administrative expenses | (7,952) | (4,790) | |
Operating (loss)/profit | (899) | 1,150 | |
Finance income | 12 | 8 | |
Finance costs | (250) | (195) | |
(Loss)/profit on ordinary activities before tax | (1,137) | 963 | |
Taxation | (621) | 2,508 | |
(Loss)/profit attributable to equity holders of the Company | (1,758) | 3,471 | |
Other comprehensive (expense)/income | |||
Items that are, or may subsequently be, recycled to profit or loss: | |||
- exchange differences on translation of foreign operations | (38) | 19 | |
Total comprehensive (expense)/income attributable to equity holders of the Company | (1,796) | 3,490 | |
Earnings per share: | |||
Basic (loss)/profit per ordinary share | 5 | (0.74)p | 1.70p |
Diluted (loss)/profit per ordinary share | 5 | (0.74)p | 1.68p |
Consolidated Statement of Changes in Shareholders' Equity
For the year ended 31 December 2013
Attributable to equity holders of the parent company | |||||||
Sharecapital | Sharepremium | Mergerand otherreserves | Specialreserve | Translationreserve | Profitand lossreserve | Totalequity | |
Group | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 1 January 2012 | 4,075 | - | 2,408 | 10,788 | 17 | (4,657) | 12,631 |
Currency translation adjustments | - | - | - | - | 19 | - | 19 |
Profit for the year | - | - | - | - | - | 3,471 | 3,471 |
Total comprehensive incomefor the year | - | - | - | - | 19 | 3,471 | 3,490 |
Transactions with owners, recordeddirectly in equity | |||||||
Employee share option scheme: | |||||||
- value of services provided | - | - | - | - | - | 26 | 26 |
- taxation in respect of share based payments | - | - | - | - | - | 28 | 28 |
- proceeds from shares issued | 21 | 39 | - | - | - | - | 60 |
Balance at 31 December 2012 | 4,096 | 39 | 2,408 | 10,788 | 36 | (1,132) | 16,235 |
Balance at 1 January 2013 | 4,096 | 39 | 2,408 | 10,788 | 36 | (1,132) | 16,235 |
Currency translation adjustments | - | - | - | - | (38) | - | (38) |
Loss for the year | - | - | - | - | - | (1,758) | (1,758) |
Total comprehensive expense for the year | - | - | - | - | (38) | (1,758) | (1,796) |
Transactions with owners, recordeddirectly in equity | |||||||
Employee share option scheme: | |||||||
- value of services provided | - | - | - | - | - | 30 | 30 |
- taxation in respect of share based payments | - | - | - | - | - | 35 | 35 |
- proceeds from shares issued | 8 | 11 | - | - | - | - | 19 |
Proceeds from shares issued | 2,161 | 7,718 | - | - | - | - | 9,879 |
Balance at 31 December 2013 | 6,265 | 7,768 | 2,408 | 10,788 | (2) | (2,825) | 24,402 |
Consolidated Statement of Financial Position
As at 31 December 2013
As at31 December2013 | As at31 December2012 | ||
£'000 | £'000 | ||
Non-current assets | |||
Goodwill | 15,996 | 8,343 | |
Other intangible assets | 2,737 | 884 | |
Financial assets | 47 | 50 | |
Property, plant and equipment | 10,772 | 5,309 | |
Deferred tax | 1,542 | 2,564 | |
31,094 | 17,150 | ||
Current assets | |||
Inventories | 1,063 | 644 | |
Trade and other receivables | 4,763 | 2,558 | |
Cash and cash equivalents | 4,158 | 2,217 | |
9,984 | 5,419 | ||
Current liabilities | |||
Trade and other payables | 6,724 | 3,214 | |
Financial liabilities | |||
- borrowings | 2,338 | 754 | |
Deferred consideration | 200 | - | |
9,262 | 3,968 | ||
Net current assets | 722 | 1,451 | |
Total assets less current liabilities | 31,816 | 18,601 | |
Non-current liabilities | |||
Trade and other payables | 575 | - | |
Financial liabilities | |||
- borrowings | 6,818 | 2,316 | |
- derivative financial instruments | 21 | 50 | |
7,414 | 2,366 | ||
Net assets | 24,402 | 16,235 | |
Equity | |||
Issued share capital | 6,265 | 4,096 | |
Share premium | 7,768 | 39 | |
Special reserve | 10,788 | 10,788 | |
Other reserves | 2,406 | 2,444 | |
Profit and loss reserve | (2,825) | (1,132) | |
Total equity | 24,402 | 16,235 |
Consolidated Statement of Cash Flows
For the year ended 31 December 2013
Year ended31 December2013 | Year ended31 December2012 | ||
£'000 | £'000 | ||
Cash flows from operating activities | |||
(Loss)/profit for the year | (1,758) | 3,471 | |
Adjustments for: | |||
Depreciation of tangible fixed assets | 1,227 | 1,098 | |
Recognition of grant income | (9) | (13) | |
Amortisation of capitalised development costs | 250 | 204 | |
Amortisation of other intangibles | 368 | 191 | |
Loss/(profit) on sale of property, plant and equipment | 29 | (36) | |
Fair value gain on investments | (60) | (12) | |
Finance costs | 250 | 195 | |
Finance income | (12) | (8) | |
Taxation | 621 | (2,508) | |
Share based payments - value of employee service | 30 | 26 | |
Decrease in inventories | 444 | 65 | |
(Increase)/decrease in trade and other receivables | (643) | 605 | |
Increase in creditors | 1,709 | 198 | |
Cash generated from operations | 2,446 | 3,476 | |
Interest paid | (232) | (146) | |
Tax received | 2 | - | |
Tax paid | (92) | - | |
Net cash generated from operating activities | 2,124 | 3,330 | |
Cash flows from investing activities | |||
Acquisition of subsidiaries | (13,606) | - | |
Cash acquired with subsidiaries | 288 | - | |
Share purchases | (34) | (52) | |
Purchases of property, plant and equipment | (1,540) | (2,257) | |
Proceeds from sale of property, plant and equipment | 11 | 450 | |
Proceeds from sale of investments | 96 | 54 | |
Purchases of intangible assets | (131) | (222) | |
Interest received | 12 | 8 | |
Net cash used in investing activities | (14,904) | (2,019) | |
Cash flows from financing activities | |||
Proceeds from issue of shares | 9,898 | 60 | |
Repayment of borrowings | (4,241) | (492) | |
Proceeds from borrowings | 9,333 | - | |
Proceeds from finance leases | - | 414 | |
Finance lease principal repayments | (264) | (169) | |
Net cash generated from/(used in) financing activities | 14,726 | (187) | |
Net increase in cash and cash equivalents | 1,946 | 1,124 | |
Cash and cash equivalents at beginning of year | 2,217 | 1,094 | |
Exchange losses on cash and cash equivalents | (5) | (1) | |
Cash and cash equivalents at end of year | 4,158 | 2,217 |
Notes to the Consolidated Preliminary Financial Statements
For the year ended 31 December 2013
1. Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') adopted for use in the EU ('Adopted IFRS') in accordance with EU law (IAS Regulation EC 1606/2002).
The financial information contained in this announcement of preliminary financial statements does not constitute the Company's statutory financial statements for the years ended 31 December 2013 or 2012. Neither the Directors of the Company, nor our auditor, have as yet approved the statutory financial statements for the financial year ended 31 December 2013. These financial statements are therefore unaudited. The financial information for 2012 is derived from the statutory financial statements for 2012 which have been delivered to the Registrar of Companies. The auditor has reported on the 2012 accounts and that report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The statutory financial statements for 2013 will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies in due course.
No revisions to Adopted IFRS that became applicable in 2013 have a significant impact on the Group's financial statements.
2. Operating segments
Information about reporting segments
For the purposes of management reporting to the chief operating decision maker, the commercial activities of the Group are now organised into three divisions:
· Healthcare
· LifeSciences
· Stability and Bio Storage
This represents a change from 2012 when the Group's commercial activities were organised into the two divisions of Healthcare and LifeSciences. For the purposes of comparability, the 2012 segmental analysis has been re-presented to show the comparative information for the new Stability and Bio Storage division.
Financial information for each operating division is also available in a disaggregated form in line with the identified cash generating units.
During the year there were immaterial sales between business segments (2012: immaterial) and where these do occur they are at arm's length pricing.
Unallocated costs represent corporate expenses and common operating costs. Segment assets include intangible assets including goodwill, plant and equipment, stocks and debtors. Unallocated assets include property, central debtors and prepayments and operating cash. Segment liabilities comprise operating liabilities and exclude borrowings. Segment capital expenditure comprises additions to plant and equipment and capitalised development costs.
2. Operating segments (continued)
Healthcare | LifeSciences | Stability andBio Storage | Unallocated | Group | ||
Year ended 31 December 2013 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Continuing operations | ||||||
Revenue | 9,398 | 7,629 | 2,498 | - | 19,525 | |
Segment result | 2,985 | 1,174 | 258 | (5,316) | (899) | |
Finance income | 12 | 12 | ||||
Finance costs | (250) | (250) | ||||
Loss before tax | (5,554) | (1,137) | ||||
Taxation | (621) | (621) | ||||
Profit/(loss) for the year | 2,985 | 1,174 | 258 | (6,175) | (1,758) | |
Segment assets | 5,400 | 10,787 | 15,688 | - | 31,875 | |
Unallocated assets | ||||||
- property, plant and equipment | 2,647 | 2,647 | ||||
- financial assets | 47 | 47 | ||||
- deferred tax asset | 1,542 | 1,542 | ||||
- debtors and prepayments | 809 | 809 | ||||
- cash and cash equivalents | 4,158 | 4,158 | ||||
Total assets | 5,400 | 10,787 | 15,688 | 9,203 | 41,078 | |
Segment liabilities | 1,115 | 2,050 | 1,679 | - | 4,844 | |
Unallocated liabilities | ||||||
- borrowings | 9,156 | 9,156 | ||||
- derivative financial instruments | 21 | 21 | ||||
- creditors and accruals | 2,455 | 2,455 | ||||
- deferred consideration | 200 | 200 | ||||
Total liabilities | 1,115 | 2,050 | 1,679 | 11,832 | 16,676 | |
Other segment items | ||||||
Capital expenditure | ||||||
- tangible assets | 471 | 340 | 518 | 211 | 1,540 | |
- intangible assets | 1,395 | 131 | 8,590 | - | 10,116 | |
Depreciation | 264 | 425 | 162 | 376 | 1,227 | |
Amortisation of intangible assets | 142 | 345 | 131 | - | 618 | |
Other non-cash expenses | ||||||
- share option scheme | - | - | - | 30 | 30 |
2. Operating segments (continued)
Year ended 31 December 2012 | Healthcare | LifeSciences | Stability andBio Storage | Unallocated | Group | |
(re-presented) | £'000 | £'000 | £'000 | £'000 | £'000 | |
Continuing operations | ||||||
Revenue | 8,564 | 7,041 | 826 | - | 16,431 | |
Segment result | 2,752 | 939 | 228 | (2,769) | 1,150 | |
Finance income | 8 | 8 | ||||
Finance costs | (195) | (195) | ||||
Profit before tax | (2,956) | 963 | ||||
Taxation | 2,508 | 2,508 | ||||
Profit/(loss) for the year | 2,752 | 939 | 228 | (448) | 3,471 | |
Segment assets | 3,578 | 10,889 | 140 | - | 14,607 | |
Unallocated assets | ||||||
- property, plant and equipment | 2,706 | 2,706 | ||||
- financial assets | 50 | 50 | ||||
- deferred tax asset | 2,564 | 2,564 | ||||
- debtors and prepayments | 425 | 425 | ||||
- cash and cash equivalents | 2,217 | 2,217 | ||||
Total assets | 3,578 | 10,889 | 140 | 7,962 | 22,569 | |
Segment liabilities | 836 | 1,308 | 50 | - | 2,194 | |
Unallocated liabilities | ||||||
- borrowings | 3,070 | 3,070 | ||||
- derivative financial instruments | 50 | 50 | ||||
- creditors and accruals | 1,020 | 1,020 | ||||
Total liabilities | 836 | 1,308 | 50 | 4,140 | 6,334 | |
Other segment items | ||||||
Capital expenditure | ||||||
- tangible assets | 1,143 | 538 | - | 524 | 2,205 | |
- intangible assets | 31 | 191 | - | - | 222 | |
Depreciation | 283 | 537 | 8 | 270 | 1,098 | |
Amortisation of intangible assets | 60 | 335 | - | - | 395 | |
Other non-cash expenses | ||||||
- share option scheme | - | - | - | 26 | 26 |
3. Acquisitions of subsidiaries
(a) Inverclyde Biologicals Limited
On 26 April 2013 Source BioScience plc completed the acquisition of the entire ordinary share capital of Inverclyde Biologicals Limited for total consideration of £1.6 million, excluding transaction costs of £0.1 million. The principal activities of Inverclyde Biologicals are the manufacture and distribution of high quality diagnostic kits and blood group serology reagents.
The acquired business contributed revenue of £0.5 million and profit before tax of £0.1 million to the Group for the period from 26 April 2013 to 31 December 2013. The profit before tax is after charging £0.1 million of amortisation resulting from the uplift to the fair valuation of intangible assets acquired with the business.
If the acquisition had occurred on 1 January 2013, Group revenue would have been £0.3 million higher and the profit before tax would have increased by £45,000 on a pro forma basis. These amounts have been calculated by adjusting the results of the subsidiary to reflect the additional amortisation that would have been charged assuming the fair value adjustments to intangible assets required by IFRS had been applied from 1 January 2013.
The book and fair values of the assets and liabilities acquired were as follows;
Acquiree's carrying amount | Fair value | ||
£'000 | £'000 | ||
Tangible assets - property, plant and equipment | 24 | 24 | |
Intangible assets - customer contracts | - | 547 | |
Inventories | 34 | 34 | |
Other current assets | 109 | 98 | |
Cash and cash equivalents | 313 | 313 | |
Current financial liabilities | (110) | (121) | |
Deferred tax | - | (109) | |
Value of net assets acquired | 370 | 786 | |
Goodwill arising on acquisition | 848 | ||
Consideration | 1,634 | ||
Consideration is made up as follows: | |||
Initial cash consideration | 1,434 | ||
Deferred consideration | 200 | ||
1,634 |
The goodwill represents future economic benefits arising from assets that are not capable of being identified individually nor recognised as separate assets. This will include acquirer specific synergies that arise in the post-acquisition period such as cross-selling opportunities and the enhancement of technologies and processes between existing and acquired sites; the technical skills and customer support provided by the business and attributable to the workforce and access to Inverclyde Biologicals' product portfolio.
The fair value adjustments relate primarily to the recognition of acquired intangibles and the deferred taxation in respect of these intangible assets.
The deferred consideration of £0.2 million is payable on the first anniversary following acquisition on 26 April 2014. For the purpose of the acquisition accounting and calculation of goodwill above it has been assumed that the deferred consideration will be payable in full.
3. Acquisitions of subsidiaries (continued)
(b) Vindon Healthcare plc
On 17 September 2013 Source BioScience plc completed the acquisition of the entire ordinary share capital of Vindon Healthcare plc for total consideration of £12.2 million, excluding transaction costs of £1.1 million. The principal activities of Vindon are the provision of controlled environment services and products to the biopharma and life sciences industries.
The acquired business contributed revenue of £1.5 million and an adjusted loss before tax of £0.1 million to the Group for the period from 17 September 2013 to 31 December 2013. The adjusted loss before tax is after charging £0.1 million of amortisation resulting from the uplift to the fair valuation of intangible assets acquired with the business but after adjusting for £0.4 million of restructuring costs.
If the acquisition had occurred on 1 January 2013, Group revenue would have been £4.5 million higher and the loss before tax would have increased by £0.3 million on a pro forma basis. These amounts have been calculated by adjusting the results of the subsidiary to reflect the additional amortisation that would have been charged assuming the fair value adjustments to intangible assets required by IFRS had applied from 1 January 2013.
The book and fair values of the assets and liabilities acquired were as follows;
Acquiree's carrying amount | Fair value | ||
£'000 | £'000 | ||
Tangible assets - property, plant and equipment | 6,088 | 5,159 | |
Intangible assets - existing goodwill | 2,760 | - | |
Intangible assets - customer contracts | - | 1,785 | |
Inventories | 1,109 | 829 | |
Other current assets | 1,612 | 1,545 | |
Cash and cash equivalents | (25) | (25) | |
Current financial liabilities | (2,305) | (2,303) | |
Borrowings | (1,211) | (1,211) | |
Deferred tax | 168 | (412) | |
Value of net assets acquired | 8,196 | 5,367 | |
Goodwill arising on acquisition | 6,805 | ||
Consideration | 12,172 | ||
Consideration is made up as follows: | |||
Initial cash consideration | 12,172 | ||
12,172 |
The goodwill represents future economic benefits arising from assets that are not capable of being identified individually nor recognised as separate assets. This will include acquirer specific synergies that arise in the post-acquisition period such as cross-selling opportunities and the enhancement of technologies and processes between existing and acquired sites; the technical skills and customer support provided by the business and attributable to the workforce and access to Vindon's service and product portfolio.
The fair value adjustments can be summarised as follows:
· adjustment to tangible assets to reflect the valuation of freehold land and buildings held for resale; certain assets at the Atlanta facility in the USA and alignment of depreciation policies
· elimination of goodwill arising from historic Vindon acquisitions and
· the recognition of acquired intangibles associated with customer contracts along with the deferred taxation in respect of these intangible assets
4. Restructuring costs
The integration of the acquired businesses was progressed as planned during the year. This entailed significant operational changes to the acquired businesses, in addition to infrastructure modifications to support the enlarged Group, which will benefit the efficiency of operations immediately. The one-off costs associated with the integration amounted to £1.1 million which will generate annualised costs savings in the region of £1.0 million.
5. Earnings per share
Basic earnings per share are calculated by dividing the result for the year attributable to ordinary equity shareholders of the Company by the weighted average number of shares in issue during the year. Diluted earnings per share are calculated by dividing the result for the year attributable to ordinary equity shareholders by the weighted average number of ordinary shares in issue during the year adjusted for the effects of dilutive options.
The calculation of basic earnings per share for the year was based on the loss attributable to ordinary shareholders of £1,758,000 (2012: £3,471,000 profit) and 237,826,331 ordinary shares (2012: 203,973,846 ordinary shares) being the weighted average number of ordinary shares in issue.
The calculation of diluted earnings per share for the year is based on the loss attributable to ordinary shareholders of £1,758,000 (2012: £3,471,000 profit) and the weighted average number of ordinary shares in issue, adjusted for nil dilutive options (2012: 2,899,581 dilutive options) of 237,826,331 (2012: 206,873,427).
IAS 33 Earnings per share requires presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. In accordance with IAS 33 there are no dilutive potential ordinary shares in 2013.
Reconciliation of the earnings and weighted average number of shares used in the calculations is set out below:
2013 | 2012 | ||||||
(Loss)/earnings | Weightedaveragenumber ofshares | Pershareamount | Earnings | Weightedaveragenumber ofshares | Pershareamount | ||
£'000 | 000's | (pence) | £'000 | 000's | (pence) | ||
Basic EPS | |||||||
(Loss)/earnings attributable toordinary shareholders | (1,758) | 237,826 | (0.74) | 3,471 | 203,974 | 1.70 | |
Diluted EPS | |||||||
(Loss)/earnings attributable toordinary shareholders | (1,758) | 237,826 | (0.74) | 3,471 | 206,873 | 1.68 | |
Adjusted basic EPS* | |||||||
Earnings attributable toordinary shareholders | 561 | 237,826 | 0.24 | 3,471 | 203,974 | 1.70 | |
Adjusted diluted EPS* | |||||||
Earnings attributable toordinary shareholders | 561 | 241,771 | 0.23 | 3,471 | 206,873 | 1.68 | |
*Adjusted results are stated after eliminating aggregated acquisition costs of £1.2 million in addition to post-acquisition restructuring costs of £1.1 million. The total number of dilutive options was 3,944,953 for 2013 for the purpose of calculating the adjusted diluted earnings per share.
About Source BioScience
Source BioScience plc (LSE: SBS) is an international laboratory services and products business serving the healthcare and life science research markets. The Healthcare operations provide screening and reference laboratory diagnostic testing for cancer and other diseases in addition to complementary products for serology, diagnostics and sample storage. The LifeSciences division provides gene-based laboratory research support from conceptualisation to implementation, calling upon a wide range of innovative technology platforms and an online catalogue of biomolecular tools including cDNA clones and antibodies. The Stability and Bio Storage division provides support for drug discovery, from biomarker discovery and clinical trial services through to stability storage and sample archiving under environmentally controlled conditions. A superior quality management system, including GLP, GCP, GMP and CPA accreditations, make the services very attractive for applications in regulatory studies or in a clinical and diagnostic setting. Source BioScience has its headquarters in Nottingham, UK. For more information, see www.sourcebioscience.com.
Glossary | |
Antibodies | Proteins that are found in blood or other bodily fluids; they are naturally used by the immune system to identify and neutralise foreign objects, such as bacteria and viruses. Experimentally, antibodies are also used as highly specific probes for detecting proteins of interest in tissues. A wide range of antibodies with a large variety of cellular targets is available to research scientists through distributors such as Source BioScience. |
BD FocalPoint™ ('FP') | An automated imaging system for screening BD SurePath™ liquid based cytology slides. Using complex algorithms it interprets the images of each slide using the same morphologic features used during screening with the human eye. It can archive up to 25% of cases as requiring "no further review" ('NFR') which then do not need to be manually primary screened. |
BRAF | The BRAF gene encodes a signalling protein. Mutations of the BRAF gene are quite common in melanoma and colorectal cancer. In colorectal cancer, such mutations make a tumour resistant to inhibitors of the EGFR signalling pathway. |
Bioinformatics | The application of information technology, and computer science, to the field of molecular biology. Common activities in bioinformatics include mapping and analysing DNA and protein sequences, aligning different DNA sequences to compare them and handling and analysing huge data sets generated by the latest genomic technologies. |
Biomarkers | Biomarkers often refer to substances found in blood, urine or tissue, changes in which may be used to indicate presence of disease or response to treatment. More generally the term biomarker refers to any molecule that can be used to monitor a particular cellular process and may be a protein, DNA or RNA molecule. |
Bio-repository | A biological materials repository that collects, processes, stores and distributes bio-specimens to support future scientific investigation. |
Blood Bank | A cache or bank of blood components, gathered as a result of blood donation or collection, stored and preserved for later use. |
Blood group serology reagents | A group of reagents which are used to test for the presence or absence of antigens in the blood and determine the blood group. |
CYP2D6 | Breast cancer patients with certain genetic variations in the CYP2D6 gene may be slow metabolisers of the drug tamoxifen to its active metabolite endoxifen. In this case changes to the treatment regime may be indicated because the efficacy of the drug is reduced. |
Capillary Electrophoresis DNA Sequencing (also known as Sanger sequencing or conventional sequencing) | DNA sequences are determined using a chemical reaction that results in an array of products that terminate in a different fluorescent coloured dye, which vary in size by one nucleotide. The products are separated, like the rungs of a ladder, by passing them through a capillary with an electric current and determining the order in which they emerge. This method remains the best way of inexpensively analysing large numbers of small sets of samples (see also Next Generation DNA Sequencing below). |
Care Quality Commission ('CQC') | As a provider of healthcare laboratory and pathology services to the NHS, which is a regulated activity under the Health and Social Care Act 2008, we are required to be registered with the CQC, a government body established to regulate and inspect health and social care services in England, and ensure organisations maintain good standards and follow appropriate procedures. |
Circulating Tumour Cells ('CTC') | The identification of small numbers of cancer cells circulating in the blood has been shown to be of potential prognostic significance in breast cancer, colorectal or prostate cancer, and useful for monitoring response to drug therapy. |
Clinical Pathology Accreditation('CPA') | CPA is the accreditation body for clinical pathology services in the UK. Accreditation involves audit of the ability of a laboratory to provide a service of high and consistent quality by declaring a defined standard of practice, which is performed by the CPA accreditation body. |
Clone | A section of DNA sequence, such as a gene, that is isolated from an organism and can be endlessly replicated by genetic engineering techniques. |
Clone libraries | A clone library is a collection of clones containing complementary DNA ('cDNA') (see below) and is often intended to represent the genes that are expressed within a given cell or tissue type at a given period. |
Companion Diagnostic | A test based on a biomarker (which might be a protein, DNA or RNA molecule), the presence or absence of which is associated with the likely efficacy of a drug or other treatment. Companion diagnostics are useful in stratifying patients into groups which are known to respond in a particular way to a drug. A good example of such a test from the Source BioScience breast cancer portfolio is the HER2 test, which assesses levels of the HER2 protein, expression of which is correlated with response to Herceptin™. |
Cryobank | A bank of cells or whole tissues which are stored at sub-zero temperatures to reduce the amount of chemical reactivity in order to preserve them. |
Deoxyribo Nucleic Acid (DNA) and complementary DNA (cDNA) | DNA is a large, complex molecule which, by virtue of a unique sequence of building blocks, contains all the genetic information required to create a cell or organism. cDNA can be made from all the genes in a genome, from a single gene, or from part of a gene. cDNA is DNA that has been synthesised artificially using an RNA template (see below) from the gene(s) selected. |
Duty of Care Review | An audit of a specific pathologist's practice. Pathology departments have a duty of care to patients whose treatment or clinical management may need to be changed in the light of revised opinions arising from a review of a pathologist's or team's work. Where good practice is suspected to have broken down it may be necessary to arrange a systematic review of cases to fulfil a department's duty of care to their patients. Source BioScience offers a full duty of care review service to pathology departments that need specialist second opinion in these circumstances. |
EGFR mutation testing | Human EGFR is a cellular transmembrane receptor found on the surface of cells. Clinicians wishing to prescribe gefitinib (Iressa™) for lung cancer patients are required to confirm the presence of a number of y mutations found in the tyrosine kinase domain on the EGFR gene. |
Fluorescence in situ Hybridisation('FISH') | In situ hybridisation ('ISH') is a powerful technique, not unlike immunohistochemistry (below), for visualising the presence of specific sequences of DNA or RNA in cells. The technique uses short synthetic sequences of DNA or RNA which will bind, or hybridise, to the tissue with high specificity for the DNA or RNA of interest within the issue. Fluorescent 'tags' are attached to these synthetic sequences, allowing them to be visualised with a special microscope, even when present at very low levels (FISH). |
GenomeCube® | Source BioScience's proprietary database, search engine and e-commerce tool for Life Science products. GenomeCube® contains over 26 million clones and over 120,000 antibodies all of which contain downloadable annotation. GenomeCube® is available in foreign language and foreign currency versions. |
Genomics | The study of an organism's genome, where the genome of an organism is its whole hereditary information and is encoded in the DNA (see above) and RNA (see below). This includes both the genes and the non-coding sequences of the DNA. |
Genomic products and reagents | In this instance, DNA or RNA extracted and purified from a range of species and provided in a variety of forms for research purposes. |
Genotyping and sequencing | DNA sequencing is the process of precisely determining the order of the building blocks, or nucleotides, of an organism's DNA. The method can be used to determine short sequences of DNA or, in larger experiments, to sequence the entire genome of an organism. Genotyping, in turn, is the process whereby DNA is characterised and then compared to reference data or, if large numbers of samples are genotyped, the data can be examined for patterns which might lead to discoveries of the fundamental causes of inherited diseases. Genotyping is commonly performed by PCR (below) or DNA sequencing. |
Good Clinical Practice ('GCP') | GCP is an international ethical and scientific quality standard for designing, conducting, recording and reporting clinical trials that involve the participation of human subjects. Compliance with this standard provides public assurance that the rights, safety and well-being of trial subjects are protected, consistent with principles that have their origin in the Declaration of Helsinki. Compliance with the principles of GCP is assured via monitoring by a governmental agency, the Medicines and Healthcare products Regulatory Agency ('MHRA'). |
Good Laboratory Practice ('GLP') | GLP is a set of principles that provides a framework within which laboratory studies are planned, performed, monitored, recorded, reported and archived. These studies are undertaken to generate data by which the hazards and risks to users can be assessed for pharmaceuticals (only preclinical studies). GLP helps assure regulatory authorities that data submitted is a true reflection of the results obtained during the study and can therefore be relied upon when making risk/safety assessments. Compliance with the principles of GLP is assured via monitoring by the Medicines and Healthcare products Regulatory Agency ('MHRA'). |
Good Manufacturing Practice ('GMP') | GMP is that part of Quality Management which ensures that products are consistently produced and controlled to the quality standards appropriate to their intended use and as required by the Marketing Authorisation, Clinical Trial Authorisation or product specification. GMP ensures that medicinal products do not place patients at risk due to inadequate safety, quality or efficacy. Compliance with the principle of GMP is assured via monitoring by the appropriate regulatory agency, e.g. Medicines and Healthcare products Regulatory Agency ('MHRA'). |
Human Epidermal Growth Factor Receptor 2 (HER2) | HER2 is a protein the over-expression of which within a breast or gastric/gastro-oesophageal tumour sample may indicate a patient is suitable for treatment with Herceptin™. A test for such over-expression is carried out on all new breast cancer patients or patients with advanced stomach cancer. |
Human Papilloma Virus ('HPV') | HPV is a family of viruses that commonly infect human tissues. Several members of this family in particular genotype 16 & 18 are sexually transmitted and persistent infection with these subtypes plays a key role in the development of cervical intraepithelial neoplasia (CIN) and invasive cancer of the cervix. HPV infection is also associated with other cancers, including those of the head and neck. |
Histopathology | The study of changes in tissues and cells as a consequence of some disease or toxic processes. |
Human Tissue Authority ('HTA') | The HTA licenses organisations that store and use human tissue for purposes such as research, patient treatment, post-mortem examination, teaching and public exhibitions. The HTA also inspect organisations to check that they maintain good standards and follow appropriate procedures against the legislation of the Human Tissue Act 2004. |
ICH Tripartite Guidelines | Guidelines created by the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use ('ICH') to promote good clinical practice. |
Immunohistochemistry ('IHC') | IHC is a technique for visualising proteins and other molecules in thin sections of tissue. This technique uses antibodies raised in other species against the protein of interest as a tool, and exploits their exquisite sensitivity and specificity for binding to that protein. |
K-RAS | K-RAS is a gene that produces an important cell signalling protein responsible for cell growth. The presence of a mutated form of the K-RAS gene in colorectal cancer may indicate that a patient is unsuitable for new anti-EGFR drugs such as Erbitux™ and Vectibix™. |
Liquid based cytology ('LBC') | LBC is a process for collecting and processing cervical cytology samples from epithelial tissues. It produces a cleaner preparation of cells, without the other materials which frequently contaminate the sample such as blood or mucus. |
Microarray | Microarrays are a microscopic series of nucleic acid spots of known sequence which are deposited in a regular array typically onto a glass slide. A DNA or RNA probe can then be hybridised to the slide which results in a DNA or RNA fingerprint of the sample in the probe enabling scientists to determine genotypes or gene expressions levels. |
Next Generation DNA Sequencing ('NGS'), Illumina HiSeq2000™and Illumina MiSeq™ | NGS refers generically to a set of recent technologies, in our case Illumina HiSeq2000™ and Illumina MiSeq™, in which extremely large numbers of short sequences can be determined in a single experiment; for example the Illumina HiSeq2000™ selected by Source BioScience can sequence two human genomes in ten days. |
No further review ('NFR') | A unique feature of the BD FocalPoint™ automated cytology imaging platform that can identify up to 25% of cytology slides that are considered to be negative. These slides do not require further primary manual review, thereby improving the turnaround time and efficiency in the laboratory operations, saving time and cost for the NHS. |
Phosphate Buffered Serology Saline ('PBSS') | A standardised solution used as a wash solution for human red blood cells prior to blood grouping and serological antibody investigation. |
Polymerase Chain Reaction ('PCR') | PCR is a laboratory technique which specifically and exponentially amplifies a single or a few copies of a segment of DNA. The resulting product is an indicator of the presence of the original segment of DNA or the product can be used as the material for further experiments, for example genotyping or DNA sequencing. |
Proteomics | The study of specific amino acids, proteins or the entire proteome (a complete translated genome, see above) of an organism. Proteomic techniques include, for example, surveying complex biological samples for protein content, or determining the level of specific proteins in tissues using techniques like immunohistochemistry (IHC, see above). |
reSourceTM | Brand name carried by the Source BioScience LifeSciences product portfolio. |
RiboNucleic Acid ('RNA') | RNA is a molecule similar to DNA, but is an intermediate product between the DNA of the gene, and the ultimate protein product of that gene. The level of expression of a gene can be gauged by the amount of RNA synthesised from that gene, a process usually measured by quantitative real-time polymerase chain reaction ('Q-PCR'). |
RNA expression analysis | A process to measure the activity of a number of genes simultaneously, generating a global picture of cellular function. The expression analyses, or profiles, can distinguish between cells that are actively dividing, for example, or show how the cells react to a particular treatment. Testing of genome-wide RNA expression levels has historically been performed by microarray analysis but the experiments are now as likely to be performed by NGS. |
Serology | The study of general antigen-antibody reactions in a laboratory setting and the specific blood test conducted to test for the presence of antibodies. A serology test is performed to determine a patient's blood type and to test for and identify an infection. |
Stability storage services | The provision of validated ICH standard environmental facilities which vary in environmental factors, such as temperature, humidity and light. The purpose of stability testing is to provide evidence on how the quality of a substance or product varies with time in different environments and to establish a shelf life for the substance or product and recommend appropriate storage conditions |
Stability storage products | A range of modular walk-in and reach-in rooms and cabinets sold, serviced and validated by Source BioScience which are used by customers to achieve ICH standard environments in their own facilities for their own internal stability storage projects. |
Validation | Installation Qualification (IQ), Calibration Qualification (CQ), Operational Qualification (OQ) and Performance Qualification (PQ) and all elements of equipment validation used in laboratory processes. Validation of equipment and environments, and the subsequent documentation, is an essential element of Stability Storage projects |
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