25th Mar 2015 07:00
25 March 2015
Source BioScience plc
("Source BioScience" or "the Group")
Preliminary results for the year ended 31 December 2014
Platform established to support significant growth
Source BioScience plc (LSE: SBS), the international laboratory services and products business announces its unaudited preliminary results for the year ended 31 December 2014.
Financial highlights
· Revenue increased by 29% to £25.2 million (2013: £19.5 million)
· Adjusted* operating profit increased by 85% to £2.6 million (2013: £1.4 million adjusted*)
· Adjusted* EBITDA increased by 54% to £5.1 million (2013: £3.3 million adjusted*)
· Profit before tax of £1.4 million (2013: loss of £1.1 million)
· Adjusted* EPS increased by 133% to 0.56p basic (2013: 0.24p basic)
· Cash balance of £2.6 million (2013: £4.2 million) and net debt of £4.3 million (2013: £5.0 million)
*Adjusted results are stated after eliminating non-recurring restructuring costs of £0.8 million (2013: after eliminating £2.3 million of acquisition costs and post-acquisition restructuring costs). The adjusted results have been included to present a fair comparison of the progress in the underlying business.
Operational highlights
· Commercial launch of the enhanced Source BioScience portfolio commenced in the USA
· Overnight Service™ for DNA sequencing launched from new laboratories in Los Angeles, BioCity Scotland and Tramore, Ireland
· Product distribution started from new molecular biology laboratories in Atlanta
· Relocation and consolidation of contract research LifeSciences laboratory activities from Germany to the UK, enabling the Berlin facility to focus on Overnight Service™ for DNA sequencing
· Capital investment in additional, specialised bio-storage facilities in the UK and the USA to meet customer demand from the bio pharma industry for storage and laboratory services
Post-period events
· Launch of new Company website and superior e-commerce solution and eShop, allowing customers ready access to products and services, as well as scientific and technical support applications; underpins comprehensive digital marketing strategy for 2015 and beyond
· Commissioned state of the art serology and blood banking products manufacturing facilities at the Group's Rochdale, UK site including "Class A" Good Manufacturing Practice clean room capability
Laurie Turnbull, Chairman of Source BioScience, said:
"During 2014 our focus was very much on the efficient and timely integration of the acquisitions made by the Group during 2013. We completed a number of significant infrastructure projects to improve operational efficiencies and enhance capacity to meet the growing demand for the Group's products and services. New opportunities are being crystallised for the Group's portfolio, particularly in the US with our new facilities in Atlanta and Los Angeles.
"The success of the integration, both operationally and commercially, can be seen from the 29% increase in revenue to £25.2 million. The progression in gross margin to 48% (2013: 46%) highlights the strength of Source BioScience in leveraging its laboratory infrastructure and expertise across the Group.
"Source BioScience now offers a broad portfolio of laboratory services and products to customers in more geographical markets. This not only provides a more diversified and balanced business but also outstanding opportunities for increased sales and the expansion of our international business."
- Ends -
For further information, please contact:
Source BioScience plcNick AshChief Executive OfficerTel: +44 (0)115 973 9010www.sourcebioscience.com
For investor enquiries:
N+1 Singer (Financial Advisor, Sponsor and Broker)Aubrey Powell/James WhiteTel: +44 (0)207 496 3000www.nplus1singer.com
About Source BioScience
Source BioScience plc (LSE: SBS) is a trusted provider of state of the art laboratory services and products to the healthcare and clinical, life and applied sciences and biopharma industries. It is an international business operating nine state of the art facilities in five countries and with customers in over 90 countries worldwide. The Group offers a complementary portfolio of laboratory services and products that share common technologies, laboratory processes, infrastructure and expertise. These include clinical diagnostics, genomics, proteomics, drug discovery and development research as well as controlled environment storage and testing services for a diverse range of markets. These services and products are provided to a large and diverse customer base including the top 50 pharmaceutical companies, leading universities and research institutes worldwide, the UK NHS and other healthcare providers. The Group is listed on the Premium Main Market of the London Stock Exchange.
Cautionary statement
This preliminary announcement 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
2014 has been another year of significant progress for the Company. A key focus for 2014 was concluding the integration of the Inverclyde Biologicals and Vindon businesses, both acquired during 2013, and this has been delivered to plan.
These two transactions were important steps in accelerating the growth and expansion of the Group. The rapid integration of these businesses has enabled the Company to leverage the portfolio benefits and new commercial channels that the acquisitions provided. Through these acquisitions the Group has added high quality, high margin clinical grade serology products to the Healthcare portfolio and accelerated the penetration of the very substantial US life science research and biopharma markets.
The Source BioScience DNA sequencing service has been launched in Los Angeles and LifeSciences products are now distributed to US customers from the Group's molecular biology laboratories, commissioned during the year in Atlanta.
The enhanced range of services and products, including the combination of laboratory services and controlled storage expertise, has enabled the Group to offer a "one stop" storage and downstream analysis service. The cohesion and commonality of the operational infrastructure, expertise and extended 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.
As a result of the rapid integration of the acquired businesses, and the subsequent leveraging of the expanded portfolio and geographic reach, the Directors are again pleased to report that operating profit and cash generation from operations have increased during the year.
Summary results
| 2014£'000 | 2013£'000 | % change |
Revenue | 25,175 | 19,525 | +29% |
Gross profit | 12,244 | 8,990 | +36% |
Adjusted operating profit* | 2,626 | 1,420 | +85% |
Adjusted profit before tax* | 2,223 | 1,182 | +88% |
Adjusted EBITDA* | 5,089 | 3,295 | +54% |
Cash generated from operations | 2,822 | 2,446 | +15% |
*Adjusted results are stated after eliminating non-recurring restructuring costs of £0.8 million incurred in the year (2013: after eliminating £2.3 million of acquisition costs and post-acquisition restructuring costs). The adjusted results have been included to present a fair comparison of the progress in the underlying business.
Divisional performance
A summary of the activities and performance of the Healthcare, LifeSciences and Stability & Bio Storage divisions is presented below. More detail is provided in the Business Review.
Healthcare
Healthcare revenue increased by 7% to £10.0 million (2013: £9.4 million) and divisional operating profit increased by 15% to £3.4 million (2013: £3.0 million).
The diagnostic activities continued the impressive performance reported at the half year and the aggregate number of diagnostic tests conducted increased by over 70% compared with 2013.
A significant component of this increase resulted from the growth in the sexually transmitted infection ('STI') testing service, particularly through the award of additional Chlamydia screening contracts to the Group during the year. STI testing volumes have increased by more than 150% compared with 2013. Source BioScience's expertise in DNA-based diagnostic testing and significant experience of supporting the UK Cervical Screening Programme has been central to winning tenders for the National Chlamydia Screening Programme.
During 2014 the Group also saw volumes increase by over 70% for gene-based cancer companion diagnostic testing. A leading capability in DNA analysis, coupled with core pathology expertise, ensure that Source BioScience is well placed to exploit the growing demand for companion diagnostic and gene-based testing for cancer and other diseases.
As reported previously, since 2009 there has been a year on year, UK-wide reduction in the number of women being called for cervical screening tests in addition to a decline in the number of women complying with the screening programme. It is pleasing to report however, that the anticipated softening in cervical screening volumes has been compensated for by the planned portfolio expansion and increased geographic coverage of the serology products business. The downward trend in cervical screening volumes is expected to continue but, as highlighted above, there are greater opportunities for growth across other components of the Healthcare portfolio.
LifeSciences
LifeSciences delivered revenue of £7.2 million (2013: £7.6 million) and a divisional operating profit of £1.1 million (2013: £1.2 million) as the Group invested to extend its market coverage and expand its specialist product offering.
Operating profit in the division was impacted by the incremental, fixed staffing and other operational costs associated with opening the new laboratory facilities during the year. The commissioning costs were in line with budget and gross margin will increase as revenue is generated from these facilities. The commercial endeavours to support this growth are progressing as planned.
Pricing pressures in the highly competitive life sciences research market also impacted negatively on revenue during the year. These pressures were particularly acute with respect to the more complex next generation DNA sequencing and genomics projects. Adjusting the sales mix, not competing on price and delivering further operational efficiencies substantially mitigated the price pressure impact.
Source BioScience's ambition is to become Europe and the USA's leading commercial provider of DNA sequencing and the Overnight Service™, which provides rapid access to sequencing data, is instrumental in achieving this. The Group's market share in the UK continues to increase and DNA sequencing volumes during 2014 were over 30% greater than the prior 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 into Scotland and into the USA. During the year the Overnight Service™ was launched from the newly commissioned facilities in Los Angeles, BioCity Scotland and Tramore (Ireland).
In addition, a new molecular biology laboratory was opened in the Atlanta facility to support the LifeSciences expansion in the USA, allowing products to be delivered to US customers from a US base. This significantly reduces turnaround times and transportation costs, making the LifeSciences product portfolio more attractive to local customers.
As reported previously, a major element of the longer term growth strategy is the expansion of the Group's 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 Group's entire portfolio of products.
Stability & Bio Storage
Revenue was £8.0 million (2013: £2.5 million) and divisional operating profit increased to £1.6 million (2013: £0.3 million) reflecting the successful integration of Vindon and a much stronger commercial focus on product development and laboratory services.
The division largely comprises the activities of the Vindon business acquired in September 2013, integration of which was completed during the year. The first tranche of operational initiatives was largely concluded during the first quarter of the year, including the consolidation of the Group's two Ireland facilities onto a single site in Tramore and the consolidation of the Group-wide warehousing and logistics infrastructure into Rochdale, UK. The operational efficiencies gained from these changes have already benefitted the Group throughout the year.
The second tranche of operational initiatives involved the transfer of our Scotland-based DNA sequencing service to new, bespoke laboratory facilities at BioCity Scotland and the commissioning of high throughput serology production capability at our Rochdale site. This included the installation of clean room manufacturing facilities for serology and blood banking products. In addition, our specialised LifeSciences laboratory operations were migrated and consolidated from Germany to the UK, enabling the Berlin facility to focus on the delivery of the Overnight Service™ for DNA sequencing.
In implementing the second tranche of operational and infrastructure improvements, the Group incurred one-off, non-recurring restructuring costs totalling £0.8 million (Note 4). These initiatives were substantially complete at the year end and have been concluded during Q1 2015. The steps taken have provided the flexibility to support the continued growth of the customer base in Scotland and the capacity to deliver on the Board's aspirations for the serology products business.
Our people
Source BioScience's staff are fundamental to the success of the business and 2014 was another year of significant change and continued improvement in its performance. On behalf of the Board, I would like to thank everyone across the Group for their hard work and dedication throughout the year and also welcome all of the new employees who have joined the Source BioScience team over the past twelve months.
During the year, Tim Metcalfe was appointed to the Board as Group Finance Director. Tim's substantial international accounting and finance experience, in a range of large multinational companies, will be invaluable as we progress the expansion of our operations outside of the UK.
I would also like to reiterate my welcome to Pam Liversidge to the Board as a Non-Executive Director. Pam has enjoyed a successful career in senior leadership roles across a broad spectrum of companies and her considerable knowledge will be invaluable to the Group.
The Company is determined to recruit and retain the highest calibre individuals and both Tim and Pam bring experience and an important, additional skill base to the Board as we continue with the implementation of the Group's growth strategy.
Outlook
We believe that the Group has a very strong business model and opportunities for further 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 established in the business.
Laurie Turnbull
Chairman25 March 2015
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 & Bio Storage. The business activities and performance during 2014 and expectations for 2015 are described below.
Healthcare
The Healthcare division comprises diagnostic services, including testing for cancer and infectious disease, and a complementary portfolio of laboratory and clinical products, including cervical screening and blood banking serology reagents.
The division has performed strongly in the year; revenue increased by 7% to £10.0 million (2013: £9.4 million) and divisional operating profit increased by 15% to £3.4 million (2013: £3.0 million).
Diagnostic services
The Healthcare diagnostic services business provides expert histopathology (tissue analysis), molecular diagnostics (genetic and DNA-based 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 disease screening.
Source BioScience operates one of only a limited number of accredited laboratories in Europe with the capability to deliver this combination of complex tissue-based and molecular testing to hospitals and clinics, as well as private individuals, providing the Group with a competitive advantage.
Diagnostic services has delivered good growth in 2014, with laboratory volumes up more than 70% compared with last year, and is expected to drive growth in the longer term. Continued growth in core diagnostics and companion diagnostics for cancer, coupled with the planned expansion into infectious disease, delivered the growth in diagnostic services in the year.
A significant component of the increase in diagnostic services volumes resulted from the expansion of sexually transmitted infection ('STI') testing, launched during the second half of 2013, and the subsequent winning of a number of Chlamydia screening tenders in the UK. The Source BioScience service enables web-based access to Chlamydia and Gonorrhea testing for private individuals as well as an outsourced laboratory services model for healthcare commissioning groups.
Chlamydia testing is provided free in the UK to anyone aged between 16 and 24 years old, supported by the NHS Chlamydia Screening Programme, and can be accessed via the Company's www.dontpassiton.co.uk online service. Where testing is not available free, the Company's confidential service for a range of STI testing can be accessed at www.jbuclinic.co.uk.
In addition to providing laboratory testing, Source BioScience also provides a complete patient care pathway to support individuals after they have accessed their results and received their diagnosis. This end to end service offering is instrumental in winning contracts for healthcare commissioning groups.
Ongoing and increasing demand from the NHS for gene-based diagnostics and 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 for the core cancer and companion diagnostic service has risen by more than 50%, validating the Source BioScience outsourcing model and demonstrating the increasing clinical importance of this type of diagnostic testing and the role it will play in stratified and personalised medicine.
The diagnostic services offering is constantly monitored and reviewed to ensure that it meets existing and anticipated demand from customers. The portfolio has been further enhanced during the year, including the development and validation of proprietary assays for additional 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 2015.
Healthcare products
The Healthcare products business comprises a portfolio of laboratory and clinical products and reagents. The cytology (cell analysis) operation provides products and systems essential for the preparation and analysis of cervical smear samples as part of the NHS Cervical Screening Programme. The cytology offering underpins approximately 50% of the Cervical Screening Programme in England and Wales.
Demand for cytology products closely correlates with overall compliance with the screening programme which, as reported previously, peaked in 2009. The Company has managed the impact of this ongoing change in the dynamics by introducing additional services and products to support the screening programme, for example the implementation of the FocalPoint™ automated imaging solution. The downward trend in cervical screening compliance is expected to continue and the Company has a number of strategies in place to manage this. Further changes to the NHS Cervical Screening Programme are anticipated, including the gradual switch to Human Papilloma Virus ('HPV') testing as part of the screening programme. At this stage the NHS timescale for any changes, and the timing of its impact on Source BioScience, remains undetermined.
The serology operation provides diagnostic products and other clinical reagents, including phosphate buffered saline solutions, to laboratories undertaking blood typing and tissue analysis including NHS Blood and Transplant. This product portfolio is complementary with the existing Source BioScience products business and has resulted in cross-selling opportunities being crystallised during the year. This operation has benefitted from additional commercial activity, achieving annualised revenue up nearly 20% year on year.
The commissioning of high throughput serology production capability in Rochdale along with the installation of clean room manufacturing facilities for serology and blood banking products supports the next stage in accelerating the growth of the Group's serology business by increasing the flexibility, productivity and gross margin of the manufacturing process.
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. Source BioScience's ambition is to become the leading commercial provider of DNA sequencing in Europe and the USA.
LifeSciences delivered revenue of £7.2 million (2013: £7.6 million) and a divisional operating profit of £1.1 million (2013: £1.2 million). The reduction in operating profits resulted from market-wide pressure on prices, a shift in the sales mix and further investment in personnel and operational capability to support the Group's ambition to extend its LifeSciences business in the UK and USA.
International investment and expansion
During 2014, the Group has invested significantly in its LifeSciences operational capability, commissioning three additional DNA sequencing facilities in Los Angeles, BioCity Scotland and Tramore. A molecular biology laboratory has also been commissioned in Atlanta to support the expansion of the products business into the US. This increased the number of sequencing laboratories in the Source BioScience network to eight across the UK, Europe and USA and is consistent with the Group's strategy of operating a network of laboratories situated close to major life science research centres.
In parallel the Group has increased its commercial investment to exploit the new markets for the products and services. The US market is seen as the next step in the growth of the Source BioScience business and the necessary investment has been made in infrastructure and people to deliver growth. The US business was launched in April and, whilst it is still relatively early in the development process, it is satisfying to report that the US-based activities are generating significant incremental revenue for the Group.
Sequencing services
Source BioScience is furthering its position as a leading provider of DNA sequencing and the Overnight Service™ continues to power the growth of this business. The number of sequencing reads delivered to customers increased by more than 30% compared with last year and this has been sustained into 2015. This momentum is being maintained by the introduction of new services, the expansion of the laboratory network and continued development of the Source BioScience brand.
LifeSciences products
GenomeCUBE®, the Group's proprietary database and bioinformatics tool for the LifeSciences product portfolio, has undergone further development during the year. These have been aimed at enhancing the utility of the database and ensuring that GenomeCUBE® is configured appropriately to support the Group's comprehensive digital marketing strategy for 2015 and beyond.
The GenomeCUBE® database is a key component of the international growth strategy for the medium to longer term and ultimately all of the Group's products, including LifeSciences and Healthcare products, will be available through this platform. In conjunction with the improvements made to the Company website, e-commerce platform and eShop, this will enable the accelerated globalisation of the products business, providing distributors, and customers, fast and ready access to the Group's product portfolio including antibodies, cDNA clones, serology products and other reagents and biomolecular tools with applications in life science research and healthcare.
Stability & Bio Storage
The Stability & 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. The division largely comprises the Vindon business acquired in September 2013.
The division delivered revenue of £8.0 million (2013: £2.5 million) and an operating profit of £1.6 million (2013: £0.3 million) reflecting the successful integration and increased commercial focus.
Stability & Bio Storage services
The Stability & Bio Storage activities are delivered from five sites in Nottingham, Rochdale, Tramore, Atlanta and Los Angeles. At these sites, customers in the biopharma and life science research markets are offered stability storage, ultra-low minus 80 Celsius and cryobank (liquid nitrogen) storage in the cryosuite. In the majority of cases, stability storage contracts with customers are multi-year arrangements, typically for periods of three years. Cryobank storage agreements can be for substantially longer periods and Source BioScience has a number of contracts lasting 30 years.
Accreditation by the relevant authorities is essential in providing services into the highly regulated pharmaceutical, biopharma and contract manufacturing industry. The Group holds Good Manufacturing Practice ('GMP'), Good Laboratory Practice ('GLP') and Good Clinical Practice ('GCP') accreditation and the UK facilities are licensed by the Human Tissue Authority ('HTA') for the secure storage of biological samples.
The ability to bring the latest tissue and gene-based analysis technologies to stability and cryobank customers, and vice versa, enables the Group to perform downstream analyses at single site, accredited facilities. This significantly de-risks sample handling and specimen transport, which is attractive to pharma and bio pharma customers who may only have very limited and extremely valuable samples and specimens. New opportunities with biopharma customers have been crystallised during the year, directly resulting from the enhanced offering of storage in conjunction with laboratory services expertise.
Stability & Bio Storage 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 climatic conditions specified to the customers' requirements. These include meeting the regulatory ICH Tripartite Guidelines for stability storage conditions for biotechnology, pharmaceutical and contract manufacturing customers. These specified conditions simulate the four global climatic zones for long term, intermediate and accelerated stability testing.
A number of new products have been launched to meet the demands of biopharma customers, including customers that have traditionally engaged Source BioScience for laboratory services only. These have included minus 25 Celsius walk-in chambers, FDA-approved storage for controlled drugs and ATEX certified cabinets for conducting stability trials which could result in an explosive atmosphere.
Integration of Vindon with the Group
The integration progressed well and to plan. Phase 1 of the integration focused on the operational initiatives of consolidating and restructuring the Group's facilities and this was largely concluded during the first quarter of the year. This included the consolidation of the Group's two Ireland facilities onto a single site in Tramore and the consolidation of the Group-wide warehousing and logistics infrastructure into Rochdale. The operational efficiencies gained from these changes benefitted the Group throughout the year.
Phase 2 comprised the roll out and launch of the enhanced range of laboratory services, including DNA sequencing and molecular biology, across the new sites in Rochdale, Tramore, Los Angeles and Atlanta. The Source BioScience US business was launched in April 2014, including Overnight Service™ for DNA sequencing in Los Angeles and molecular biology product despatch from Atlanta, enabling customers to access these products within a timeframe, and at a price, that cannot be matched by distributing the products from the UK. The commercial plans are progressing in line with expectations.
Subsequent to this second phase of initiatives, additional opportunities were identified during the year to further enhance our operational efficiency, laboratory facilities and production capability. These included the transfer of our Scotland-based DNA sequencing service to new, bespoke laboratory facilities at BioCity Scotland and the commissioning of high throughput serology production capability at the Rochdale site along with the installation of "Class A" clean room facilities for serology and blood banking product manufacture. These initiatives were substantially complete at the year end and have been concluded during Q1 2015. The steps taken have provided the flexibility to support the continued growth of the customer base in Scotland and the capacity to deliver on the Board's aspirations for the serology products business. In addition, the specialised LifeSciences laboratory operations were migrated and consolidated from Germany to the UK, enabling the Berlin facility to focus on the delivery of our Overnight Service™ for DNA sequencing.
Phase 3 is a medium term objective to combine the Group's service offerings to leverage the full range of expertise from biomarker identification and clinical trial support to stability storage and downstream laboratory analysis. This will provide a one-stop shop for biopharma, pharmaceutical and contract manufacture customers and is well underway and progressing to plan.
During the year capital expenditure of £1.1 million was invested in the improved infrastructure, laboratory facilities and manufacturing capability. Non-recurring restructuring costs of £0.8 million (Note 4) were attributable to concluding the integration and restructuring across the Group.
Financial Review
Financial performance
Group revenue increased by 29% to £25.2 million (2013: £19.5 million).
Owing to the operational gearing generated within the laboratory and production infrastructure, coupled with close management of the cost base, gross margins improved to 48% (2013: 46%). In the current economic environment with constant pressure on prices and rising input costs, the Board believes this represents an encouraging performance.
Normal administrative expenses decreased as a percentage of revenue to 26% (2013: 27%) and ongoing administrative expenses are largely fixed and appropriate to the increasing scale of the business.
Adjusted* operating profit for the year was £2.6 million (2013: £1.4 million) after adjusting for non-recurring costs of £0.8 million (2013: non-recurring costs of £2.3 million in aggregate, comprising acquisition costs of £1.2 million and post-acquisition restructuring costs of £1.1 million). On an unadjusted basis the reported operating result for the year was a profit of £1.8 million (2013: £0.9 million loss).
Adjusted* profit before tax was £2.2 million (2013: £1.2 million) which was in line with expectations.
Included in the Consolidated Statement of Comprehensive Income are non-cash items, including depreciation, amortisation and share option costs, of £2.5 million (2013: £1.9 million). After accounting for these non-cash items, non-recurring restructuring costs, net finance expense and taxation, EBITDA increased by 54% to £5.1 million (2013: £3.3 million).
Financial position
At 31 December 2014 the Group had net assets of £25.4 million (2013: £24.4 million). Non-current assets decreased by a net £1.5 million to £29.6 million (2013: £31.1 million). The movement included £1.6 million of capital expenditure offset by an aggregate £2.4 million of depreciation and amortisation and a reduction of £0.5 million in the deferred tax asset.
At 31 December 2014 the Group had aggregate debt of £6.9 million (2013: £9.2 million). This debt represents the banking facility secured to part-fund the acquisitions in 2013 and has been reduced during the year by scheduled repayments totalling £2.3 million.
Cash flows and liquidity
Cash generated from operations was £2.8 million (2013: £2.4 million) and net cash flow for the year was an outflow of £1.5 million (2013: inflow of £1.9 million including the debt and equity fund raising).
It should be noted that cash generated from operations of £2.8 million is stated after the payment during the year of £1.2 million attributable to non-recurring expenditure relating to both the 2014 and the 2013 restructuring exercises.
Net £1.6 million was invested in capital expenditure including £1.3 million on new laboratory infrastructure and facilities and £0.3 million on enhanced IT and laboratory information management platforms. The financing cash outflow was £2.3 million on debt principal repayments in addition to £0.4 million of interest paid.
The Group's cash balance was £2.6 million as at 31 December 2014 (2013: £4.2 million) and net debt was £4.3 million (2013: £5.0 million).
People
Source BioScience's people are critical to its success. In addition to ensuring the highest quality laboratory facilities and technology platforms, the Board is also mindful to ensure that the Group recruits and retains the highest calibre individuals. To support the commercial aspirations and initiatives, a number of which are highlighted above, the Company recruited an experienced Marketing Director during the year.
The Board will continue to invest to ensure that the Company has the best people in place, and a skilled and experienced senior management team, to support the planned growth and expansion of the business across all of its activities and its international markets.
Conclusion and outlook
The Group has robust strategies in place to generate attractive levels of organic growth, as has been demonstrated over recent years.
The acquisitions made during 2013 opened up significant opportunities to the Group, both from additional services and products as well as extending the Group's international reach. Source BioScience is now accessing new customers in new markets and has established a solid platform for further growth on both the East and West coasts of the USA. The launch of the Source BioScience US business during 2014 was a critical milestone on the road to exploiting the potential of the US markets.
The investment made in the laboratory facilities and production capability in the year has delivered efficient and scalable infrastructure, employing common technologies and processes, which support the Company's aspirations and strategy for continued growth.
Healthcare
Healthcare has delivered strongly in the period, driven by continued growth from the diagnostic services activities, particularly in core cancer diagnostics and companion diagnostics, in addition to DNA-based testing for sexually transmitted infection. Capacity and capability constraints faced by the NHS can be met by the Group's ability to address both short and long term demand, with rapid turnaround times. Source BioScience is already a valued partner for outsourced diagnostic services and speciality products and the intention is to enhance this status with the continued introduction of new diagnostic services and products alongside migrating cancer diagnostic expertise into other disease areas.
The commissioning of high throughput serology production capability at the Rochdale site, along with the installation of "Class A" clean room manufacturing facilities for serology and blood banking products, supports the next stage in accelerating the growth of the Group's serology business.
LifeSciences
In LifeSciences, the Company has forged a leading position in Europe for the provision of DNA sequencing services and genomic products and the ambition is to replicate this in the USA. With an international network of laboratories, Source BioScience is ideally placed to meet the growing demand for genetic analysis. The Group's intention is to continue to grow its European market for DNA sequencing and drive marketing efforts in the US for the Overnight Service™, following its launch in Los Angeles.
The commissioning of a molecular biology laboratory at the Atlanta facility during the year, coupled with further enhancements to the Company website, e-commerce platforms and GenomeCUBE®, are further steps in the long term strategy to exploit the potential of the product portfolio in the US and other geographic markets.
Stability & Bio Storage
Significant attention has been focused in the year on aligning the new Stability & Bio Storage division with the rest of the Group. Major changes were made to the environmental storage suites and laboratory infrastructure to improve efficiency and allow for greater flexibility and scalability of operations. At the same time commercial initiatives to align the diagnostic laboratory services with the stability storage capabilities were rolled out during the second half of the year, supported by a considerably strengthened marketing function.
In the Board's view, there are significant opportunities to align expertise in laboratory testing with storage service customers, particularly biopharma and contract manufacturer 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 customers as many of the samples handled by the Group represent unique and invaluable biological resources.
The Board is confident that each of the factors outlined above will contribute to the continuing progress of the Group in 2015 and beyond.
Dr Nick Ash
Chief Executive Officer25 March 2015
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2014
Year ended31 December2014 | Year ended31 December2013 | ||
Note | £'000 | £'000 | |
Revenue | 25,175 | 19,525 | |
Cost of sales | (12,931) | (10,535) | |
Gross profit | 12,244 | 8,990 | |
Selling and distribution expenses | (2,391) | (1,889) | |
Research and development | (158) | (48) | |
Administrative expenses: | |||
- normal | (6,455) | (5,265) | |
- amortisation of intangibles arising from acquisitions | (614) | (368) | |
- non-recurring costs | 4 | (808) | (1,104) |
- acquisition costs | - | (1,215) | |
Administrative expenses | (7,877) | (7,952) | |
Operating profit/(loss) | 1,818 | (899) | |
Finance income | 8 | 12 | |
Finance costs | (411) | (250) | |
Profit/(loss) on ordinary activities before tax | 1,415 | (1,137) | |
Taxation | (481) | (621) | |
Profit/(loss) attributable to equity holders of the Company | 934 | (1,758) | |
Other comprehensive income/(expense) | |||
Items that are, or may subsequently be, recycled to profit or loss: | |||
- exchange differences on translation of foreign operations | 38 | (38) | |
Total comprehensive income/(expense) attributable to equity holders of the Company | 972 | (1,796) | |
Earnings per share: | |||
Basic profit/(loss) per ordinary share | 5 | 0.30p | (0.74)p |
Diluted profit/(loss) per ordinary share | 5 | 0.29p | (0.74)p |
Consolidated Statement of Changes in Shareholders' Equity
For the year ended 31 December 2014
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 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 expensefor 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 |
Balance at 1 January 2014 | 6,265 | 7,768 | 2,408 | 10,788 | (2) | (2,825) | 24,402 |
Currency translation adjustments | - | - | - | - | 38 | - | 38 |
Profit for the year | - | - | - | - | - | 934 | 934 |
Total comprehensive income for the year | - | - | - | - | 38 | 934 | 972 |
Transactions with owners, recordeddirectly in equity | |||||||
Employee share option scheme: | |||||||
- value of services provided | - | - | - | - | - | 90 | 90 |
- taxation in respect of share based payments | - | - | - | - | - | (37) | (37) |
- proceeds from shares issued | 6 | 16 | - | - | - | - | 22 |
Reclassification of special reserve** | - | - | - | (10,788) | - | 10,788 | - |
Balance at 31 December 2014 | 6,271 | 7,784 | 2,408 | - | 36 | 8,950 | 25,449 |
**On 22 December 2008 the Court made an order approving the cancellation of the then share premium account and the crediting of the balance on that account to a special reserve. The special reserve was to be distributable subject to the Company discharging the obligations imposed by the Court at that time. As at 31 December 2014 those obligations had been discharged and the special reserve has been reclassified to the profit and loss reserve.
Consolidated Statement of Financial Position
As at 31 December 2014
As at31 December2014 | As at31 December2013 | ||
£'000 | £'000 | ||
Non-current assets | |||
Goodwill | 15,996 | 15,996 | |
Other intangible assets | 2,118 | 2,737 | |
Financial assets | - | 47 | |
Property, plant and equipment | 10,419 | 10,772 | |
Deferred tax | 1,054 | 1,542 | |
29,587 | 31,094 | ||
Current assets | |||
Inventories | 1,149 | 1,063 | |
Trade and other receivables | 4,829 | 4,763 | |
Cash and cash equivalents | 2,603 | 4,158 | |
8,581 | 9,984 | ||
Current liabilities | |||
Trade and other payables | 5,281 | 6,724 | |
Financial liabilities | |||
- borrowings | 2,199 | 2,338 | |
Deferred consideration | - | 200 | |
7,480 | 9,262 | ||
Net current assets | 1,101 | 722 | |
Total assets less current liabilities | 30,688 | 31,816 | |
Non-current liabilities | |||
Deferred income | 540 | 575 | |
Financial liabilities | |||
- borrowings | 4,679 | 6,818 | |
- derivative financial instruments | 20 | 21 | |
5,239 | 7,414 | ||
Net assets | 25,449 | 24,402 | |
Equity | |||
Issued share capital | 6,271 | 6,265 | |
Share premium | 7,784 | 7,768 | |
Special reserve | - | 10,788 | |
Other reserves | 2,444 | 2,406 | |
Profit and loss reserve | 8,950 | (2,825) | |
Total equity | 25,449 | 24,402 |
Consolidated Statement of Cash Flows
For the year ended 31 December 2014
Year ended31 December2014 | Year ended31 December2013 | ||
£'000 | £'000 | ||
Cash flows from operating activities | |||
Profit/(loss) for the year | 934 | (1,758) | |
Adjustments for: | |||
Depreciation of property, plant and equipment | 1,497 | 1,227 | |
Amortisation of capitalised development costs | 262 | 250 | |
Amortisation of other intangible assets arising on acquisitions | 614 | 368 | |
Loss on sale of property, plant and equipment | 52 | 29 | |
Fair value gain on investments | - | (60) | |
Finance costs | 411 | 250 | |
Finance income | (8) | (12) | |
Taxation | 481 | 621 | |
Share based payments - value of employee service | 90 | 30 | |
(Increase)/decrease in inventories | (86) | 444 | |
Increase in trade and other receivables | (50) | (643) | |
(Decrease)/increase in trade and other payables | (1,375) | 1,700 | |
Cash generated from operations | 2,822 | 2,446 | |
Interest paid | (352) | (232) | |
Tax received | - | 2 | |
Tax paid | (103) | (92) | |
Net cash generated from operating activities | 2,367 | 2,124 | |
Cash flows from investing activities | |||
Acquisition of subsidiaries | (200) | (13,606) | |
Cash acquired with subsidiaries | - | 288 | |
Share purchases | - | (34) | |
Purchases of property, plant and equipment | (1,331) | (1,540) | |
Proceeds from sale of property, plant and equipment | 162 | 11 | |
Proceeds from sale of investments | 47 | 96 | |
Capitalised development expenditure | (269) | (131) | |
Interest received | 8 | 12 | |
Net cash used in investing activities | (1,583) | (14,904) | |
Cash flows from financing activities | |||
Proceeds from issue of shares | 6 | 9,898 | |
Repayment of borrowings | (2,120) | (4,241) | |
Proceeds from borrowings | - | 9,333 | |
Finance lease principal repayments | (218) | (264) | |
Net cash (used in)/generated from financing activities | (2,332) | 14,726 | |
Net (decrease)/increase in cash and cash equivalents | (1,548) | 1,946 | |
Cash and cash equivalents at the beginning of the year | 4,158 | 2,217 | |
Exchange losses on cash and cash equivalents | (7) | (5) | |
Cash and cash equivalents at the end of the year | 2,603 | 4,158 |
Notes to the Consolidated Preliminary Financial Statements
For the year ended 31 December 2014
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 2014 or 2013. Neither the Directors of the Company, nor our auditor, have as yet approved the statutory financial statements for the financial year ended 31 December 2014. These financial statements are therefore unaudited. The financial information for 2013 is derived from the statutory financial statements for 2013 which have been delivered to the Registrar of Companies. The auditor has reported on the 2013 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 2014 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 2014 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 customer-focused divisions:
· Healthcare
· LifeSciences
· Stability & Bio Storage
Financial information for each reporting segment 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 (2013: 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 all freehold land and buildings, other receivables and prepayments and cash. Segment liabilities comprise operating liabilities and exclude borrowings. Unallocated liabilities comprise borrowings and trade and other payables. Segment capital expenditure comprises additions to property, plant and equipment and capitalised development costs.
2. Operating segments (continued)
Healthcare | LifeSciences | Stability &Bio Storage | Unallocated | Group | ||
Year ended 31 December 2014 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Continuing operations | ||||||
Revenue | 10,017 | 7,152 | 8,006 | - | 25,175 | |
Segment result | 3,431 | 1,079 | 1,570 | (4,262) | 1,818 | |
Finance income | 8 | 8 | ||||
Finance costs | (411) | (411) | ||||
Profit/(loss) before tax | 3,431 | 1,079 | 1,570 | (4,665) | 1,415 | |
Taxation | (481) | (481) | ||||
Profit/(loss) for the year | 3,431 | 1,079 | 1,570 | (5,146) | 934 | |
Segment assets | 4,853 | 10,495 | 13,416 | - | 28,764 | |
Unallocated assets | ||||||
- property, plant and equipment | 5,179 | 5,179 | ||||
- deferred tax asset | 1,054 | 1,054 | ||||
- other receivables and prepayments | 568 | 568 | ||||
- cash and cash equivalents | 2,603 | 2,603 | ||||
Total assets | 4,853 | 10,495 | 13,416 | 9,404 | 38,168 | |
Segment liabilities | 1,414 | 1,183 | 1,601 | - | 4,198 | |
Unallocated liabilities | ||||||
- borrowings | 6,878 | 6,878 | ||||
- derivative financial instruments | 20 | 20 | ||||
- trade and other payables | 1,623 | 1,623 | ||||
Total liabilities | 1,414 | 1,183 | 1,601 | 8,521 | 12,719 | |
Other segment items | ||||||
Capital expenditure | ||||||
- property, plant and equipment | 167 | 473 | 504 | 187 | 1,331 | |
- development expenditure | - | 269 | - | - | 269 | |
Depreciation | 386 | 381 | 537 | 193 | 1,497 | |
Amortisation of intangible assets arising on acquisitions | 31 | 103 | 480 | - | 614 | |
Amortisation of capitalised development expenditure | 142 | 120 | - | - | 262 | |
Other non-cash expenses | ||||||
- share option scheme | - | - | - | 90 | 90 |
2. Operating segments (continued)
Healthcare | LifeSciences | Stability &Bio 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) | ||||
Profit/(loss) before tax | 2,985 | 1,174 | 258 | (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 | 13,154 | - | 29,341 | |
Unallocated assets | ||||||
- property, plant and equipment | 5,181 | 5,181 | ||||
- financial assets | 47 | 47 | ||||
- deferred tax asset | 1,542 | 1,542 | ||||
- other receivables and prepayments | 809 | 809 | ||||
- cash and cash equivalents | 4,158 | 4,158 | ||||
Total assets | 5,400 | 10,787 | 13,154 | 11,737 | 41,078 | |
Segment liabilities | 1,115 | 2,050 | 1,679 | - | 4,844 | |
Unallocated liabilities | ||||||
- borrowings | 9,156 | 9,156 | ||||
- derivative financial instruments | 21 | 21 | ||||
- trade and other payables | 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 | ||||||
- property, plant and equipment | 471 | 340 | 518 | 211 | 1,540 | |
- development expenditure | 1,395 | 131 | 8,590 | - | 10,116 | |
Depreciation | 264 | 425 | 162 | 376 | 1,227 | |
Amortisation of intangible assets arising on acquisitions | 73 | 164 | 131 | - | 368 | |
Amortisation of capitalised development expenditure | 69 | 181 | - | - | 250 | |
Other non-cash expenses | ||||||
- share option scheme | - | - | - | 30 | 30 |
3. Acquisitions of subsidiaries
The fair value of the assets and liabilities in relation to the acquisition of Inverclyde Biologicals Limited acquired on 26 April 2013 were determined in the consolidated financial statements of the Group for the year ended 31 December 2013 and no adjustment to these values has been deemed necessary. The deferred consideration of £0.2 million was paid on 26 April 2014.
The fair value of the assets and liabilities in relation to the acquisition of Vindon Healthcare plc acquired on 17 September 2013 were determined in the consolidated financial statements of the Group for the year ended 31 December 2013 and no adjustment to these values has been deemed necessary.
4. Non-recurring costs
As highlighted in the Business Review, the planned integration of the businesses acquired during 2013 continued during 2014. This entailed significant operational changes to the acquired and existing businesses, in addition to infrastructure enhancements to support the growth of the enlarged Group, which have benefited the efficiency of operations immediately. The one-off, non-recurring costs associated with the integration and restructuring of the facilities amounted to £0.7 million (2013: £1.1 million) in addition to £0.1 million attributable to the changes to the Board of Directors.
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 profit attributable to ordinary shareholders of £934,000 (2013: £1,758,000 loss) and 313,504,170 ordinary shares (2013: 237,826,331 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 profit attributable to ordinary shareholders of £934,000 (2013: £1,758,000 loss) and the weighted average number of ordinary shares in issue, adjusted for 6,196,084 dilutive options (2013: nil dilutive options) of 319,700,254 (2013: 237,826,331).
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.
Reconciliation of the earnings and weighted average number of shares used in the calculations is set out below:
2014 | 2013 | ||||||
Earnings | Weightedaveragenumber ofshares | Pershareamount | (Loss)/Earnings | Weightedaveragenumber ofshares | Pershareamount | ||
£'000 | 000's | (pence) | £'000 | 000's | (pence) | ||
Basic EPS | |||||||
Earnings/(loss) attributable toordinary shareholders | 934 | 313,504 | 0.30 | (1,758) | 237,826 | (0.74) | |
Diluted EPS | |||||||
Earnings/(loss) attributable toordinary shareholders | 934 | 319,700 | 0.29 | (1,758) | 237,826 | (0.74) | |
Adjusted basic EPS* | |||||||
Earnings attributable toordinary shareholders | 1,742 | 313,504 | 0.56 | 561 | 237,826 | 0.24 | |
Adjusted diluted EPS* | |||||||
Earnings attributable toordinary shareholders | 1,742 | 319,700 | 0.54 | 561 | 241,771 | 0.23 | |
*Adjusted results are stated after eliminating non-recurring costs of £0.8 million incurred in the year (2013: after eliminating £2.3 million of acquisition costs and post-acquisition restructuring costs). The adjusted results have been included to present a fair comparison of the progress in the underlying business.
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. |
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. |
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. At Source BioScience the cryobank operates at minus 196 Celsius using liquid nitrogen storage facilities. |
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. |
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 mutations found in the tyrosine kinase domain on the EGFR gene. |
US Food and Drug Administration ('FDA') | The FDA is an agency of the US Department of Health and Human Services and is responsible for protecting the public health by assuring the safety, efficacy and security of human and veterinary drugs, biological products, medical devices, cosmetics and items that emit radiation. |
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). |
FocalPoint™ | An automated imaging system for screening 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. |
GenomeCUBE® | Source BioScience's proprietary database, search engine and e-commerce tool for Life Science products. GenomeCUBE® contains over 20 million clones and over 100,000 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. |
ISO9001 | ISO9001 is a universal quality management system which Source BioScience holds for various aspects of its business where there are not more stringent programmes available. |
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') | NGS refers generically to a set of recent technologies, in our case Illumina HiSeq™, Illumina MiSeq™ and Illumina NextSeq™ 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 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). |
reSource™ | Brand name carried by the Source BioScience LifeSciences product portfolio. |
Ribo Nucleic 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. |
Sexually transmitted infection ('STI') | An infection that can be transferred from one person to another through sexual contact. Source BioScience offers Chlamydia screening services to various commissioning bodies as part of the National Chlamydia Screening Programme. |
SpeedREAD™
| The Source BioScience brand used to identify our fast overnight capillary sequencing services with less than 10 hour turnaround and pre 9am delivery of results. |
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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