21st Aug 2012 07:01
21 August 2012 Source BioScience plc ("Source BioScience" or "the Group") HALF YEAR REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2012
Source BioScience plc the international diagnostics and genetic analysis business, announces its Half Year Report for the six months ended 30 June 2012.
Financial highlights
* Revenue increased by 11% to £8.4 million (2011: £7.6 million) * EBITDA of £1.3 million (2011: £0.5 million) * Operating profit of £0.5 million (2011: loss of £0.2 million) * Profit before tax of £0.4 million (2011: loss of £0.2 million) * EPS of 0.20p basic (2011: loss of 0.09p basic) * Cash balance of £1.8 million (31 December 2011: £1.1 million)
Operational highlights
* Developments in LifeSciences business delivering growth: * + DNA sequencing has grown by 60% year on year, driven by our Overnight Service + Phase III of GenomeCube®, our proprietary web-based search engine and bioinformatics tool is underway; this is enabling globalisation of product portfolio and the appointment of overseas franchise distributors * Further advancement in the Healthcare business: * + Access to the automated cervical cancer screening technology, BD FocalPointâ„¢, was the determining factor in winning the University Hospital of North Staffordshire NHS Trust's liquid based cytology contract. Significantly this is the first Trust to switch liquid based cytology technology and is worth £0.3 million per annum + Increased range of molecular diagnostic tests for more disease areas to satisfy the increasing requirement from the NHS; 80% increase in demand for the K-RAS gene test for colorectal cancer treatment
Post period events
* MiSeqâ„¢ next generation sequencing service launched; Source BioScience is the only commercial provider of this new technology in the UK, with applications in life sciences and healthcare * Enhancement to ultra-fast sequencing offering with launch of Weekend Service for DNA sequencing, enabling researchers access to our service seven days a week * Appointed a second franchise distributor for our product portfolio in the important South East Asia life sciences market
Laurie Turnbull, Chairman of Source BioScience, said:
"We have seen another period of strategic progress, double digit revenue growth and significantly enhanced profitability compared with the first half of last year. This progress has been underpinned by significant headway in LifeSciences' Overnight Service for DNA sequencing and Healthcare's cervical cancer screening business. We have also introduced additional technology platforms and accessed new markets, increasing the capability and geographic reach of the Group.
"The encouraging first half of the year represents a continuation of the strong growth and business performance achieved last year and reflects the substantial opportunities we see for further growth and development across both our LifeSciences and Healthcare operations."
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For further information, please contact:
Source BioScience plcDr Nick AshChief Executive OfficerTel: +44 (0) 115 973 9010www.sourcebioscience.com
For investor and media enquiries:
N+1 Brewin (Financial Advisor, Sponsor and Broker)Aubrey Powell/Luke BoyceTel: +44 (0)203 201 3710www.nplus1brewin.comCollege Hill (PR Agency to Source BioScience)Melanie Toyne-Sewell/Jayne CrookTel: +44 (0) 207 457 2020sourcebioscience@collegehill.com
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 STATEMENTIntroduction
Source BioScience has continued its growth and development throughout the first half of 2012. In our Interim Management Statement issued on 16 May 2012 we reported a robust first quarter performance and this has been sustained for the full six months to 30 June 2012.
Financial Review
Revenue for the six months ended 30 June 2012 increased by 11% to £8.4 million (2011: £7.6 million) and the overall gross margin improved to 45% (2011: 43%).
A key component of the increase was due to Healthcare which grew by 25% to £4.4 million (2011: £3.6 million). LifeSciences revenue of £4.0 million was consistent with the same period last year (2011: £4.0 million). Both divisions increased in profitability; the aggregate divisional operating profit, before central costs, increased by 48% to £1.9 million (2011: £1.3 million).
The Group's cost base has remained tightly controlled; Normal Administrative Expenses were unchanged at £2.3 million (2011: £2.3 million) and represented 28% of revenue (2011: 30% of revenue).
As a result of the improved divisional performance and the management of the cost base, EBITDA increased by over 135% to £1.3 million (2011: £0.5 million) and profit before tax was £0.4 million (2011: loss of £0.2 million).
The financial position of the Group remains strong with net assets of £13.1 million (31 December 2011: £12.6 million). The cash balance was £1.8 million at 30 June 2012 (31 December 2011: £1.1 million) and borrowings were £3.0 million (31 December 2011: £3.3 million).
Cash generated from operating activities was £1.9 million in the period (2011: £0.2 million cash used) and net cash inflow was £0.8 million (2011: £1.2 million outflow) after capital expenditure of £0.9 million. This expenditure reflected enhancements to our technology platforms and e-commerce infrastructure and included investment in BD FocalPointâ„¢ automated imaging, the Illumina MiSeqâ„¢ platform and ongoing development of GenomeCube®.
LifeSciences
We provide ultra-fast DNA sequencing services and related products, delivered by our international network of laboratories and distributors to academic research groups, biotechnology and pharmaceutical companies.
Whilst LifeSciences revenue of £4.0 million was consistent with the same period last year (2011: £4.0 million), operating profit increased to £0.5 million (2011: £0.3 million) as a result of the operational improvements made during 2011.
The launch of the Overnight Service for sequencing during 2011 has helped us significantly increase our market share to become the only company offering a UK-based sequencing service and take a leading position as a commercial provider of DNA sequencing in Europe. Sequencing volumes during the first half of 2012 were 60% greater than the same period last year and we continue to sustain this momentum by introducing new services, such as our Weekend Service for sequencing which was launched in July.
During the first quarter of 2012, we experienced some issues with our high throughput next generation sequencing platforms which resulted in a period of machine down time and approximately 30% loss of production capacity. As with all cutting edge technology services, there is the potential for technical issues to arise and we endeavour to take all reasonable operational steps to mitigate this risk. The particular issues have now been rectified and as the market for next generation sequencing is growing strongly, we continue to experience increasing demand for these services.
In July we announced an extended next generation sequencing service using the new Illumina MiSeqâ„¢ technology platform. The MiSeqâ„¢ service addresses the "middle ground" between the Group's existing Overnight Service for sequencing and the ultra high throughput HiSeqâ„¢ service, enabling access to new markets and customers for next generation sequencing. The MiSeqâ„¢ also presents significant opportunities for the Group's Healthcare division, applying next generation sequencing to molecular diagnostics, a key component of the business.
Source BioScience is the only commercial provider of the MiSeqâ„¢ technology in the UK, maintaining the Group's position at the forefront of sequencing services and the largest UK provider of Illumina sequencing.
GenomeCube®, our proprietary search engine and bioinformatics tool for our clone and antibody portfolio, has been very successful during the period, website traffic has increased and internet orders are up by more than 50% on a year on year basis. A primary focus for the first half of 2012 has been Phase III of the GenomeCube® project, further enhancing the functionality of the platform and enabling its roll out across an international distributor network. In May, we announced the appointment of our first regional franchise distributor for the genomic products portfolio and we launched the first country-specific, local language, GenomeCube® in Japan with KK DNAForm.
Since then we have appointed a second distributor in the important South East Asian life sciences market, Benebiosis of South Korea. They will partner with us as a franchise distributor, providing the local research community with improved access to the largest publically available library of DNA clones, representing nearly every known human and mouse gene, in addition to many genes from most model organisms important for biological research. We see the GenomeCube® platform as a major part of the Group's growth strategy for the medium to longer term.
Healthcare
The Healthcare division comprises Cytology and Diagnostics, which includes cervical cancer screening and diagnostic testing services for diseases such as cancer.
The division has delivered strongly in the period. Revenue of £4.4 million was 25% ahead of the same period last year (2011: £3.6 million) with divisional operating profit increasing by 45% to £1.4 million (2011: £1.0 million).
Our 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 Screening Programme and underpins approximately 50% of the cervical cancer screening programme in England and Wales.
Performance was particularly strong during the period. Much of the demand arose from the scheduled three year recall of women who underwent screening tests in early 2009, when there was a spike in test volumes following the extensive media coverage of Jade Goody's death from cervical cancer.
Implementation of our BD FocalPointâ„¢ 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.
Access to BD FocalPointâ„¢ was instrumental in the University Hospital of North Staffordshire NHS Trust's decision to award the LBC supply contract to Source BioScience and represented the first time that an NHS Trust had switched its LBC technology provider.
The Diagnostics operations provide expert histopathology (tissue analysis), molecular diagnostics (genetic analysis) and companion diagnostic testing services to public and private healthcare providers. This operation has delivered good growth in the period, with revenue up over 10% compared with the same period last year.
Molecular diagnostic testing, especially companion diagnostic testing which provides information about how a patient might respond to a particular drug therapy, is gaining in clinical relevance and importance, and is being increasingly adopted within the NHS. We believe this growing demand strengthens our commercial advantage. We are one of only few accredited laboratories in Europe with the capability to deliver this type of complex diagnostic testing.
Demand from the NHS for one such molecular diagnostics test, the K-RAS gene test for colorectal cancer treatment has risen more than 80% in the period compared with last year and exemplifies this trend.
We have expanded our Diagnostics offering and enhanced the range of diagnostic testing services during 2012 including the development and validation of proprietary assays for the most important genetic tests. These proprietary assays improve our laboratory efficiency, reduce our costs and provide a competitive advantage.
As part of this, Source BioScience, in partnership with Barts Cancer Institute and Agilent Technologies, is collaborating to develop novel genetic approaches to cancer diagnosis and personalised treatment for patients. The collaboration is part funded through the Technology Strategy Board's `Tumour Profiling and Data Capture to Improve Cancer Care' funding competition. As highlighted above, the investment in the Illumina MiSeqâ„¢ next generation sequencing platform is an important component in delivering this opportunity.
Our extended range of genetic testing also enables us to offer services in disease areas where previously we have had limited penetration. For example, we offer a range of molecular diagnostic testing for metabolic, cardiac and central nervous system disease in addition to our core strength in oncology.
Board changes
After more than eight years of service as a Non Executive Director, Robin Slinger believes that it is now appropriate to step down from the Board. Since joining the Group in 2004, Robin has provided guidance and independent appraisal across the full spectrum of business matters and disciplines. Everyone at Source BioScience would like to thank Robin for his diligence, and input, and wish him all the best in his future endeavours.
The Board is delighted to welcome Robert Bakewell to the Board. Rob joined Source BioScience in 2005 and has been Finance Director for the Group, in a non-board capacity, since 2011. Both of the Board changes are effective immediately.
Outlook
In LifeSciences we have forged a leading position in Europe for the provision of DNA sequencing services and genomic products. With our international network of facilities, we are ideally placed to meet the growing demand for genetic analysis. Our share of the UK market for DNA sequencing has continued to grow during the first half of 2012. By the end of the year, we aim to be the largest outsourced provider of sequencing in the UK, a market worth an estimated £10 million per annum, and ultimately be regarded as Europe's leading sequencing provider.
Phase III of GenomeCube®, our web-based search engine and bioinformatics tool, is aimed at delivering the operational and commercial infrastructure to drive the globalisation of our products business. The world market for clones and antibodies exceeds $1 billion. The ongoing development of GenomeCube® will enable the Group to establish a network of distributors across Asia, representing an international expansion opportunity that has previously been limited.
In Healthcare, the approval by the NHS of the BD FocalPointâ„¢ automated imaging system has been an important trigger to further growth of our Cytology business. Demand is evident from a number of NHS Trusts looking to reduce laboratory costs and improve turnaround times for screening.
In Diagnostics, patient and disease stratification is becoming increasingly relevant and this will entail the use of genomic biomarkers for diagnostic and predictive purposes, aiding more effective and efficient healthcare. The ability to provide many of the new and anticipated genetic tests is outside the capability of all but a few hospital laboratories, not just in the UK but across Europe. With ongoing uncertainty surrounding healthcare resourcing, we see this as a significant opportunity to provide a broader and cost effective diagnostic service to a wider customer base including infectious disease, cardiovascular and metabolic disease, in addition to oncology.
The second half of the year has begun well and is trading in line with the Board's expectations. We expect the excellent momentum that we saw in the first half to be sustained through the remainder of the year.
Laurie TurnbullChairman21 August 2012
Unaudited Condensed Consolidated Statement of Comprehensive Income For the six months ended 30 June 2012
Six months Six months Year ended ended ended 30 June 30 June 31 2012 2011 December 2011 Note £'000 £'000 £'000 Continuing operations Revenue 2 8,411 7,572 15,192 Cost of sales (4,664) (4,315) (8,441) Gross profit 3,747 3,257 6,751 Selling and distribution expenses (725) (555) (1,243) Research and development (106) (125) (281) Administrative expenses: - normal (2,346) (2,286) (4,521) - amortisation of intangibles arising (96) (135) (245)from acquisitions - restructuring costs - (353) (559) - property impairment - - (2,846) Administrative expenses (2,442) (2,774) (8,171) Operating profit/(loss) 474 (197) (2,944) Finance income 3 13 20 Finance costs (75) (15) (43) Profit/(loss) before tax 402 (199) (2,967) Taxation - 20 172 Profit/(loss) attributable to equity 402 (179) (2,795)holders of the Company Other comprehensive income/(expense) Exchange differences on translation of 13 (5) 18foreign operations Total comprehensive income/(expense) 415 (184) (2,777)attributable to equity holders of the Company Earnings per share:
Basic profit/(loss) per ordinary share 3 0.20p (0.09)p (1.37)p
Diluted profit/(loss) per ordinary share 3 0.18p (0.09)p (1.37)p
All results derive from continuing operations.Unaudited Condensed Consolidated Statement of Changes in Shareholders' EquityAs at 30 June 2012 Attributable to equity holders of the parent company Share Merger Special Translation Profit Total capital and reserve reserve and equity other loss reserves reserve £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2011 4,075 2,408 10,788 (1) (1,902) 15,368 Currency translation - - - (5) - (5)adjustments Loss for the period - - - - (179) (179) Total comprehensive expense - - - (5) (179) (184)for the period Transactions with owners, recorded directly in equity Employee share option scheme: - value of services provided - - - - 24 24 Balance at 30 June 2011 4,075 2,408 10,788 (6) (2,057) 15,208 Balance at 1 July 2011 4,075 2,408 10,788 (6) (2,057) 15,208 Currency translation - - - 23 - 23adjustments Loss for the period - - - - (2,616) (2,616) Total comprehensive income/ - - - 23 (2,616) (2,593)(expense) for the period Transactions with owners, recorded directly in equity Employee share option scheme: - value of services provided - - - - 16 16 Balance at 31 December 2011 4,075 2,408 10,788 17 (4,657) 12,631 Balance at 1 January 2012 4,075 2,408 10,788 17 (4,657) 12,631 Currency translation - - - 13 - 13adjustments Profit for the period - - - - 402 402 Total comprehensive income - - - 13 402 415for the period Transactions with owners, recorded directly in equity Employee share option scheme: - value of services provided - - - - 22 22 Balance at 30 June 2012 4,075 2,408 10,788 30 (4,233) 13,068Unaudited Condensed Consolidated Statement of Financial PositionAs at 30 June 2012 As at As at As at 30 June 30 June 31 2012 2011 December 2011 £'000 £'000 £'000 Non-current assets Goodwill 8,341 8,346 8,343 Other intangible assets 1,066 1,109 1,128 Financial assets 60 45 40 Property, plant and equipment 4,938 2,697 4,572 14,405 12,197 14,083 Current assets Inventories 586 747 709 Trade and other receivables 3,163 3,356 3,163 Cash and cash equivalents 1,848 2,987 1,094 5,597 7,090 4,966 Current liabilities Trade and other payables 3,921 3,450 3,024 Financial liabilities - borrowings 629 135 628 Deferred consideration - 77 77 4,550 3,662 3,729 Net current assets 1,047 3,428 1,237 Total assets less current liabilities 15,452 15,625 15,320 Non-current liabilities Financial liabilities - borrowings 2,384 268 2,689 Deferred tax - 149 - 2,384 417 2,689 Net assets 13,068 15,208 12,631 Equity Issued share capital 4,075 4,075 4,075 Special reserve 10,788 10,788 10,788 Other reserves 2,438 2,402 2,425 Profit and loss reserve (4,233) (2,057) (4,657) Total equity 13,068 15,208 12,631
Unaudited Condensed Consolidated Statement of Cash Flows For the six months ended 30 June 2012
Six Six Year months months ended ended ended 31 30 June 30 June December 2012 2011 2011 £'000 £'000 £'000 Cash flows from operating activities Profit/(loss) for the period 402 (179) (2,795) Adjustments for: Depreciation of tangible fixed assets 542 524 992 Recognition of grant income (6) (6) (13) Amortisation of capitalised development 114 44 116costs Amortisation of other intangibles 98 135 251 Impairment of property, plant and equipment - - 2,846 (Profit)/loss on sale of property, plant (33) (24) 102and equipment Profit on sale of investments (14) - - Fair value (gain)/loss on investments (8) - 5 Finance costs 75 15 43 Finance income (3) (13) (20) Taxation - (20) (172) Share-based payments - value of employee 22 24 40service Decrease/(increase) in inventories 123 (31) 7 Increase in trade and other receivables - (445) (668) Increase/(decrease) in creditors 674 (194) (73) Cash generated from/(used in) operations 1,986 (170) 661 Interest paid (78) (15) (40)
Net cash generated from/(used in) operating 1,908 (185) 621 activities
Cash flows from investing activities Share purchases (52) (45) (45) Purchases of property, plant and equipment (690) (918) (7,028) Proceeds from sale of property, plant and - 304 939equipment Proceeds from sale of investments 54 - - Purchases of intangible assets (163) (291) (512) Interest received 3 7 52 Net cash used in investing activities (848) (943) (6,594) Cash flows from financing activities Repayment of borrowings (245) (24) (373) Proceeds from borrowings - - 2,962 Proceeds from finance leases - - 350 Finance lease principal repayments (59) (5) (54)
Net cash (used in)/generated from financing (304) (29) 2,885 activities
Net increase/(decrease) in cash and cash 756 (1,157) (3,088)equivalents Cash and cash equivalents at beginning of 1,094 4,170 4,170period Exchange (losses)/gains on cash and cash (2) (26) 12equivalents Cash and cash equivalents at end of period 1,848 2,987 1,094
Responsibility Statement
We confirm that to the best of our knowledge:
* The condensed consolidated interim financial statements for the six months ended 30 June 2012 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; and * the half year report includes a fair review of the information required by: * + DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year) + DTR 4.2.8R (disclosure of related party transactions and charges therein) By order of the Board Nick Ash Laurie Turnbull Chief Executive Officer Chairman 21 August 2012 21 August 2012
Notes to the Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2012
1. Basis of preparation
Source BioScience plc is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as the Group).
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as endorsed and adopted for use in the European Union. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2011, which have been prepared in accordance with IFRS adopted by the European Union.
These condensed consolidated interim financial statements have been prepared on the basis of accounting policies consistent with those applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2011 except as noted below.
The Group has adopted improvements to various standards within the `Improvements to IFRS' programme, none of which have had a significant effect on the reported results or financial position of the Group.
The condensed consolidated interim financial statements for the six months ended 30 June 2012 have neither been audited nor reviewed by the Group's auditor in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board.
The comparative figures for the financial year ended 31 December 2011 are not the Company's statutory consolidated accounts for that financial year but represent an extract from those accounts. Statutory accounts for the year ended 31 December 2011 were approved by the Board on 30 April 2012 and delivered to the Registrar of Companies. The report of the auditor on those financial statements was (i) unqualified, (ii) did not include 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 consolidated financial statements of the Group as at and for the year ended 31 December 2011 are available on request from the Company's registered office at 1 Orchard Place, Nottingham Business Park, Nottingham NG8 6PX or at www.sourcebioscience.com.
The condensed consolidated interim financial statements are presented in pounds sterling, rounded to the nearest thousand pounds. They are prepared on the historical cost basis except for the valuation to fair value of certain assets as indicated.
The preparation of the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key source of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2011.
There have been no related party transactions or changes in related party transactions described in the latest annual report that could have a material effect on the financial position or performance of the Group in the first six months of this financial year.
The condensed consolidated interim financial statements for the six months ended 30 June 2012 were approved by the Board of Directors on 21 August 2012.
Notes to the Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2012
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 organised into two divisions:
* LifeSciences
* Healthcare (comprising the business units of Cytology and Diagnostics)
During the period there were immaterial sales between business segments (six months ended 30 June 2011: immaterial; year ended 31 December 2011: 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.
Six months ended 30 June 2012 Life Healthcare Unallocated Group Sciences £'000 £'000 £'000 £'000 Revenue 3,980 4,431 - 8,411 Segment result 457 1,410 (1,393) 474 Finance income 3 3 Finance costs (75) (75) (Loss)/profit before tax (1,465) 402 Taxation - - Profit / (loss) for the 457 1,410 (1,465) 402period Segment assets 11,273 3,405 - 14,678 Unallocated assets - property, plant and 2,784 2,784equipment - financial assets 60 60 - debtors and prepayments 632 632 - cash and cash 1,848 1,848equivalents Total assets 11,273 3,405 5,324 20,002 Segment liabilities 1,589 1,254 - 2,843 Unallocated liabilities - borrowings 3,013 3,013 - creditors and accruals 1,078 1,078 Total liabilities 1,589 1,254 4,091 6,934 Other segment items Capital expenditure - tangible assets 224 666 40 930 - intangible assets 163 - - 163 Depreciation 293 116 133 542 Amortisation of intangible 182 30 - 212assets Other non-cash expenses - share option scheme - - 22 22
All results derive from continuing operations.Notes to the Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2012
2. Operating segments (continued)
Six months ended 30 June 2011 Life Healthcare Unallocated Group Sciences £'000 £'000 £'000 £'000 Revenue 4,018 3,554 - 7,572 Segment result 292 972 (1,461) (197) Finance income 13 13 Finance costs (15) (15) Loss before tax (1,463) (199) Taxation 20 20 Profit/(loss) for the 292 972 (1,443) (179)period Segment assets 11,909 2,626 - 14,535 Unallocated assets - property, plant and 643 643equipment - financial assets 45 45 - debtors and prepayments 1,077 1,077 - cash and cash equivalents 2,987 2,987 Total assets 11,909 2,626 4,752 19,287 Segment liabilities 1,359 778 - 2,137 Unallocated liabilities - borrowings 403 403 - creditors and accruals 1,539 1,539 Total liabilities 1,359 778 1,942 4,079 Other segment items Capital expenditure - tangible assets 473 89 69 631 - intangible assets 247 44 - 291 Depreciation 341 57 126 524 Amortisation of intangible 149 30 - 179assets Other non-cash expenses - share option scheme - - 24 24
All results derive from continuing operations.Notes to the Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2012
2. Operating segments (continued)
Year ended 31 December 2011 Life Healthcare Unallocated Group Sciences £'000 £'000 £'000 £'000 Revenue 7,789 7,403 - 15,192 Segment result 768 2,203 (5,915) (2,944) Finance income 20 20 Finance costs (43) (43) Loss before tax (5,938) (2,967) Taxation 172 172 Profit/(loss) for the year 768 2,203 (5,766) (2,795) Segment assets 11,864 2,600 - 14,464 Unallocated assets - property, plant and 2,883 2,883equipment - financial assets 40 40 - debtors and prepayments 568 568 - cash and cash equivalents 1,094 1,094 Total assets 11,864 2,600 4,585 19,049 Segment liabilities 1,550 408 - 1,958 Unallocated liabilities - borrowings 2,962 2,962 - creditors and accruals 1,498 1,498 Total liabilities 1,550 408 4,460 6,418 Other segment items Capital expenditure - tangible assets 841 173 5,318 6,332 - intangible assets 453 59 - 512 Depreciation 578 109 305 992 Amortisation of intangible 312 55 - 367assets Impairment of tangible assets - - 2,846 2,846 Other non-cash expenses - share option scheme - - 40 40
All results derive from continuing operations.Notes to the Condensed Consolidated Interim Financial Statements For the six months ended 30 June 2012
3. Earnings per share
Basic earnings per share amounts are calculated by dividing net result for the period attributable to ordinary equity shareholders of the Company by the weighted average number of shares outstanding during the period. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity shareholders by the weighted average number of ordinary shares outstanding during the period adjusted for the effects of dilutive options.
The calculation of basic and diluted earnings per share for each respective period is outlined in the table below:
Six months Six months Year ended ended ended 30 June 30 June 31 December 2012 2011 2011 Earnings/(loss) (£'000) 402 (179) (2,795) Basic EPS Weighted average number of shares 203,765 203,765 203,765(`000s) Earnings/(loss) per share (pence) 0.20 (0.09) (1.37) Diluted EPS Weighted average number of shares 203,765 203,765 203,765(`000s) Dilutive options adjustment (`000's) 14,579 - - Weighted average number of shares 218,344 203,765 203,765adjusted for dilutive options (`000s) Diluted earnings/(loss) per share 0.18 (0.09) (1.37)(pence)
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. Assuming that option holders will not exercise out of the money options, no adjustment has been made to the diluted earnings per share for out of the money share options.
4. Half Year Report
Copies of the Half Year Report for the six months ended 30 June 2012 will be posted on the Company's website at www.sourcebioscience.com
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About Source BioScience:
Source BioScience plc is an international diagnostics and genetic analysis business serving the healthcare and research markets. The LifeSciences division provides core laboratory research support from conceptualisation to implementation, calling upon a wide range of cutting-edge technology platforms including an online catalogue of biomolecular tools. The Group is a trusted provider of a complete range of sophisticated microarray, next generation and conventional sequencing services. GLP, GCP and CPA accreditations make the sequencing offerings also very attractive for applications in regulatory studies or clinical settings. Its Healthcare operations provide screening and reference laboratory diagnostic testing for cancer and other diseases and additional predictive testing for treatment optimisation for clinicians and patients. The Group has its headquarters in Nottingham, UK. Further information about Source BioScience can be found at www.sourcebioscience.com
GLOSSARY Antibodies Proteins that are found in blood or other bodily fluids; they are used by the immune system to identify and neutralise foreign objects, such as bacteria and viruses. 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 FocalPointTM (`FP') An automated imaging system for screening SurePathâ„¢
liquid based cytology slides. It uses complex algorithms to interpret the images of each slide and decide the 10 `fields of view' most likely to have any abnormal cells. It can archive up to 25% as "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 sequencing 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. Capillary DNA sequences are determined using a chemical Electrophoresis DNA reaction that results in an array of products that Sequencing terminate in a different fluorescent coloured dye,
(also known as Sanger which vary in size by one nucleotide. The products sequencing or
are separated, like the rungs of a ladder, by passing
conventional sequencing) them through a capillary with an electric current and
determining the order in which they emerge. This method was used for the large DNA sequencing projects of the last 15 years and remains the only way of inexpensively analysing large numbers of small sets of samples (see also Next Generation DNA Sequencing - below). 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. Circulating Tumour Cells The identification of small numbers of cancer cells (`CTC') 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 CPA is the accreditation body for clinical pathology Accreditation services. Accreditation involves audit of the ability(`CPA') 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 DNA sequence, such as a gene, that is transferred from one organism to another and can be replicated by genetic engineering techniques. 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 Herceptinâ„¢. Deoxyribo Nucleic Acid DNA is a large, complex molecule which, by virtue of (DNA) and complementary a unique sequence of building blocks, contains all DNA (cDNA) 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 cell surface of tumour cells. Clinicians wishing to prescribe Gefitinibâ„¢ (Iressa) for lung cancer patients are required to confirm the presence of any mutations found in the tyrosine kinase domain on the EGFR gene. Fluorescence In Situ In situ hybridisation (`ISH') is a powerful Hybridisation technique, not unlike immunohistochemistry (below), (`FISH') for visualising the presence of specific sequences of DNA or RNA in tissue sections. 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. 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). Genomics The study of an organism's entire 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 clone libraries A clone library is a collection of clones containing
complementary DNA (`cDNA') (see above) and is often intended to represent the genes that are expressed within a given cell or tissue type at a given period. Genomic products and In this instance, DNA or RNA extracted and purified reagents from a range of species and provided in a variety of forms for research purposes. Genotyping and DNA sequencing is the process of precisely ordering sequencing 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 is an international ethical and scientific (`GCP') 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 is a set of principles that provides a framework (`GLP') 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').
Human Epidermal Growth HER2 is a protein the over-expression of which within Factor Receptor 2 (HER2) a breast or gastric/gastro-oesophageal tumour sample
may indicate a patient is suitable for treatment with Herceptinâ„¢. 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 is a family of viruses that commonly infect human(`HPV') tissues. Several members of this family in particular genotype 16 & 18 are sexually transmitted and persistent infection with these subtypes is believed to play 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 The HTA licenses organisations that store and use (`HTA') 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. Immunohistochemistry IHC is a technique for visualising proteins and other(`IHC') 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 Erbituxâ„¢ and Vectibixâ„¢. Liquid based cytology LBC is a process for collecting and processing (`LBC') cervical cytology samples from epithelial tissues such as the cervix. 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 you to determine the sample nucleic acid sequence. Next Generation DNA NGS refers generically to a set of recent Sequencing (`NGS'), technologies, in our case Illumina HiSeq 2000â„¢ and Illumina HiSeq 2000â„¢and Illumina MiSeqâ„¢, in which extremely large numbers of Illumina MiSeqâ„¢ short sequences can be determined in a single experiment; for example the Illumina HiSeq 2000â„¢ selected by Source BioScience can sequence two human genomes in ten days No further review A unique feature of the BD FocalPointâ„¢ automated (`NFR') 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. Polymerase Chain PCR is a laboratory technique which specifically and Reaction (`PCR') exponentially amplifies a single or a few copes of a segment of DNA. The resulting 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)
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 activity of a large 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.
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