27th Aug 2008 07:00
27 August 2008 Source BioScience plc ("Source BioScience" or "the Company" or "the Group") Interim results for the six months ended 30 June 2008
The Board of Source BioScience plc the provider of expert, quality services and products to the healthcare, pharma biotech and life science research sectors, announces its interim results for the six months ended 30 June 2008.
Financial highlights
* Revenue up 88% to ‚£5.9 million
* Operating loss (before exceptional items) reduced by 55% to ‚£0.4 million
* Loss for the period reduced by 40% to ‚£0.2 million * Operations now cash generative (2007: ‚£0.9 million negative) * Cash reserves of ‚£8.3 million
Key events
* Acquisition of Autogen Bioclear UK Limited, a profitable and cash-generative privately owned UK business, for up to ‚£5.9 million enhancing the Group's portfolio for life science research products * Investment in the Illumina, Inc. next generation DNA sequencing and genotyping platforms with applications in life science research and
molecular diagnostics for healthcare, becoming the UK's first commercial
service provider for these leading edge technologies
* Change of name to Source BioScience plc to more appropriately reflect the
nature and scope of the Group's activities
Post period event
* Also announced today, the Board is proposing that the Company restructure
its balance sheet. This will enable the payment of future dividends out of distributable profits and provide the flexibility for the Company to purchase its own shares, should circumstances and opportunity allow Laurie Turnbull, Executive Chairman, said: "The Group has maintained goodmomentum during the first half of the year with strong performance across eachof our divisions. Thisrobustfirst half performance underpins confidence in thecontinued improvement in the financial performance of the Group for the fullyear."We believe the growth opportunities across the Group are strong. We expectdemand for our services and products to grow and we will continue to enhanceour product and service portfolio to meet that demand. We are also exploringnew markets for our products and services and looking to exploit thecross-selling opportunities we now have from our broad customer base andextended portfolio." ---ENDS---
For further information, please contact:
Source BioScience plc Nick Ash - Managing Director 0115 973 9010 www.sourcebioscience.com
Bishopsgate Communications Ltd 0207 562 3350
Nick Rome Gemma O'Hara Advisors: Charles Stanley Securities 0207 149 6000 Mark Taylor Ben Johnston Hichens, Harrison & Co. plc Martin Lampshire 0207 588 5171 About Source BioScience:Source BioScience plc is a highly focused healthcare andbiotechnology company offering expert, quality services and products to thehealthcare, pharma biotech and life science research sectors. Its Healthcaredivision provides the latest cytology screening equipment and techniques aswell as diagnostic testing for cancer and other diseases, including predictivetesting for treatment optimisation for clinicians and patients. Pharma BiotechServices offers support for early stage therapeutic development, offering a'one-stop shop' from tissue pathology, immunohistochemistry, sophisticatedimage analysis, biomarker determination and assay development topharmacogenomics including genotyping and gene expression analysis. The LifeScience Research division provides core laboratory research support fromconceptualisation to implementation, calling upon a wide range of cutting-edgetechnology platforms including an online catalogue of biomolecular tools. Thisincorporates DNA sequencing, whole genome amplification and a comprehensivelibrary of genomic reagents and clones including cDNA and RNAi, as well asfacilitating rapid access to high quality antibodies, cell cultures, diagnosticassays for cancer and other genetic testing, and related research tools.The Group has its headquarters in Nottingham where it operates state of the artreference laboratory facilities, with additional laboratory facilities inCambridge and Oxford. Source BioScience is CPA, GLP and GCP accredited and islicensed by the Human Tissue Authority.
Further information is available on the Source BioScience website: www.sourcebioscience.com
CHAIRMAN'S STATEMENTIntroductionThe first half of 2008 has been another period of continued growth anddevelopment for Source Bioscience. In March we completed our second acquisitionwithin twelve months acquiring Autogen Bioclear UK Limited (`AutogenBioclear'). This expanded the Group's product portfolio and enhanced our LifeScience Research activities. Since the acquisition, there has been significantfocus on the rapid and effective integration of the business into the Group toconsolidate the operations and crystallise the commercial opportunities.
In our interim management statement issued on 13 May 2008 we reported a strong first quarter performance and this strong performance has continued for the full six months to 30 June 2008, underpinning confidence in the continued improvement in the financial performance of the Group for the full year.
As also announced today, the Board is proposing that the Company cancel itsshare premium account in order to restructure the Company's balance sheet,subject to shareholder and court approval. This will allow the payment ofdividends out of future distributable profits in the event that the Company isprofitable and has sufficient resources to do so. In addition, it will enablethe Company the flexibility to purchase its own shares should circumstance andopportunity allow. The ability of the Company to pay dividends out of futureprofits and acquire its own shares is an important component of the Board'sstrategy to deliver value to shareholders.
Financial Review
Turnover for the six months ended 30 June 2008 increased by 88% to ‚£5.9 millioncompared with the first half of 2007 (2007: ‚£3.1 million). Of the ‚£2.8 millionrevenue growth, ‚£2.4 million was attributable to our new Life Science Researchdivision representing the acquired businesses of Geneservice (‚£1.6 millionrevenue) and Autogen Bioclear (‚£0.8 million revenue). There was also strongorganic growth in our Healthcare division which delivered sales growth of 13%compared with the same period last year.The cost base of the enlarged Group has increased in line with expectationsfollowing the expansion of the operations and acquisitions. However, it isworth noting that normal administrative expenses for the period fell to 36% ofrevenue compared with 56% for the same period last year. This improvement hasbeen achieved through increased efficiency of operations and demonstrates thecontinued importance the Board places on cost control within the business.The operating loss was ‚£0.4 million (2007: ‚£0.9 million before exceptional itemof ‚£0.2 million credit) and the loss before taxation was ‚£0.2 million (2007: ‚£0.3 million).Cash was generated from operations. After acquisitions, and other non-tradingitems, net cash outflow was ‚£4.0 million (2007: ‚£1.1 million outflow). Theinitial net consideration for Autogen Bioclear was ‚£2.7 million (note 6) anddeferred consideration for Geneservice was ‚£1.4 million. We also invested ‚£0.3million in our new technology platforms including the Illumina next generationgene sequencing and genotyping platforms and the FocalPoint automated cytologyscreening system. The Group's cash balance was ‚£8.3 million as at 30 June 2008(30 June 2007: ‚£14.1 million; 31 December 2007: ‚£12.3 million).
Divisional Performance Review
Healthcare
Revenues were in line with expectations for our Cytology business at ‚£2.2 million (2007: ‚£2.1 million) and exceeded expectations for our Diagnostic Pathology operations, growing 34% to ‚£1.1 million for the period (2007: ‚£0.8 million).
Both business units improved financial performance in the period. Cytology generated a profit of ‚£0.6 million, up 9% on the same period last year and Diagnostic Pathology generated a profit of ‚£0.2 million, compared with break-even performance in 2007.
Diagnostic Pathology
Our Diagnostic Pathology operations have benefited from a significant amount ofnon-recurring work in the period but underlying laboratory activity has alsobeen strong for both routine diagnostic services and, increasingly, for ourmolecular diagnostic offering.
The first half of 2008 has seen increasing demand, primarily from the private healthcare sector, for our molecular diagnostic tests. These include the OncotypeDX prognostic test for breast cancer and the K-RAS gene test which indicates whether patients are unlikely to respond favourably to particular therapies for certain types of cancer, making treatment more cost effective.
Our strategy is to expand the range of diagnostic tests we provide but also toextend the penetration of our molecular diagnostic offering into the NHS. Weare working closely with key opinion leaders in the oncology and pathologycommunity, and with a number of biotechnology and pharmaceutical companies, toincrease awareness and utilisation of molecular pathology techniques in publichealthcare.Molecular diagnostics can also be used as companion tests. Companion diagnostictests indicate the likely response, or non-response, of a patient to specifictherapies. There is increasing demand for targeted therapies as a means toimprove treatment success and reduce costs. Accordingly there is increasingdemand for companion diagnostics to identify which patients are likely torespond and which are not. The K-RAS test is one example of such a companiondiagnostic. Recent studies in colorectal and lung cancers show that mutationsin the K-RAS gene can impart resistance to some therapies and a positive resultfrom the K-RAS test indicates that a patient is unlikely to respond favourablyto those therapies.During the second half of this year we aim to strengthen our moleculardiagnostic and companion diagnostic portfolio and leverage our experience andcredibility as a provider of expert, quality laboratory services as thefoundation for the increased penetration of our molecular diagnostic servicesinto the NHS.CytologyDuring 2007 we completed our liquid based cytology roll-out programme to thoseregions that selected the SurePath system. As a consequence, we expectedrevenue from our existing Cytology operations to be consistent with the secondhalf of 2007.We have identified the introduction of automated cervical cancer screening inthe UK as a significant opportunity for the Group and during the period wereceived the first payment from an NHS customer for our FocalPoint automatedcytology screening offering. This represents an important milestone anddemonstrates the intent of the NHS to accept and adopt this technology into thecervical screening programme. FocalPoint is highly complementary with ourexisting Cytology business and enables the automated screening of cytologyslides produced using the SurePath liquid based cytology system. With over 3.5million cytology slides manually screened for cervical cancer every year in theUK, cytology lends itself to increased automation.In the second half of this year we will continue to support the Government'songoing Health Technology Assessment trial of automated cytology screeningsystems. We will also continue to collaborate with NHS trusts to demonstratethe utility of the FocalPoint system within the clinical setting.
Pharma BiotechServices
In the period ended 30 June 2008, Pharma Biotech Services has maintained thesales performance achieved during the first half of 2007 with revenue of ‚£0.2million (2007: ‚£0.2 million). However, better utilisation of resources improvedoverall financial performance by ‚£0.1 million, to an operating loss of ‚£0.1million, for period (2007: ‚£0.2 million operating loss).We have continued to focus our sales and marketing activity on the smaller tomedium pharmaceutical and biotechnology companies with operations locatedmainly in the UK and Europe. We are, however, seeing increased interest from abroader spectrum of pharma biotech customers in our enhanced "one-stop shop"pathology to genomics offering. The combination of our established pathologyexpertise combined with our biomaterials resource of human tissue, DNA and RNAlibraries represents a powerful offering particularly with acceleratinginterest in targeted therapies, as highlighted above.Maintaining our laboratory accreditations is key to generating growthespecially where we are performing work associated with regulatory studies andclinical trials. We have enhanced our quality environment with accreditationfor Good Clinical Practice (`GCP') being awarded to the Group in February 2008and have maintained our Good Laboratory Practice (`GLP') status and HumanTissue Authority license throughout the period.We will continue to promote our genomic capability to pharmaceutical companieswhich require molecular analysis as part of their pre-clinical research anddevelopment programmes as well as emerging pharmacogenomic analysis supportingclinical development of therapeutics, especially targeted therapeutics. Currentopinion on the genetics of diseases suggests that cancer, diabetes andcardiovascular disease are likely to be the areas of focus for pharmaceuticalcompanies looking to employ pharmacogenomic analysis.
Life Science Research
Life Science Research performed strongly in the period; revenue was ‚£2.4 million and the division delivered an operating profit of ‚£0.3 million.
Revenue from gene sequencing, genotyping and genomic reagents grew by 26% to ‚£1.6 million compared with the second half of 2007 (H2 2007: ‚£1.3 million). Thiswas a result of the rapid and effective integration of the Geneservice businessand cross-selling opportunities being identified and exploited. The Geneservicebusiness operating profit reflected this, improving to ‚£245,000 compared with ‚£71,000 for the second half of 2007. Again, there has been a number ofnon-recurring projects in the period; however Source BioScience is clearlycompeting effectively in this market.Technologies within this sector are developing rapidly and we recognise theneed to stay at the forefront of genomic services. During the period we broughtin-house the latest in next generation gene sequencing and genotypingtechnologies by investing in the Illumina Genome Analyser and IlluminaBeadstation platforms. Source BioScience is the first commercial serviceprovider of these technologies in the UK and we are working in partnership withthe supplier and end users to develop the market and applications for thisservice.We have seen the continued success of our model to embed our services withinacademic centres and provide them with core genomic services. This has provedsuccessful with our Oxford laboratory which is based within the Department ofBiochemistry at Oxford University. We are pursuing opportunities to duplicatethis model in other major genomic research centres where we can consolidate theexisting service provision and secure volumes for our embedded technology.On 10 March 2008 we were delighted to announce the acquisition of AutogenBioclear for consideration of up to ‚£5.9 million (note 6). Autogen Biocleardistributes a wide range of products for applications in life sciences andclinical research, offering customers rapid access to high quality,leading-edge genomic products, antibodies, cell culture, diagnostic kits andrelated research tools. The business is highly complementary with the Group'sexisting Life Science Research activities and its customers include academicand research institutions, NHS laboratories and pharma biotech companies.Since the acquisition, there has been significant focus on the integration ofthe Autogen Bioclear business into the Group to consolidate the operations andcrystallise the commercial opportunities.Turnover in the period since acquisition was ‚£0.8 million and operating profitwas ‚£0.1 million. This was in line with expectations after taking into accountemployment costs for the vendors in their new roles within the Group andone-off costs associated with restructuring and integrating the business.During the second half of the year we will continue to enhance our Life ScienceResearch product and service portfolio. In particular, there are significantopportunities to expand our range of genomic products and antibodies. Potentialpartners are being attracted by our broad customer base combined with ourtechnical ability and credibility as a provider of genomic services as well asgenomic products.
We are also examining routes to overseas markets for both our life science products and services, especially those in East Asia and the Far East where there is significant demand for our product and service portfolio. We already operate an extensive online catalogue for our entire portfolio of genomic reagents and antibodies and we will exploit this through local distributor networks where appropriate.
Board
On 27 June 2008 we were delighted to announce the appointment of Dr Nick Leavesto the Board as Operations Director, from his existing position as Head ofOperations for the Group. Nick has been instrumental in integrating theGeneservice and Autogen Bioclear operations and will be a great asset to theBoard as we continue to expand our activities. As also announced, Dr TomWeaver, Commercial Director, left the Group at the end of July and we wish himevery success in his new role at the Medical Research Council.
Prospects
It has been the short term objective of the Board to deliver profit before taxand cash generation. Excluding the cash impact in the period of theacquisitions of Geneservice and Autogen Bioclear, in aggregate ‚£4.1 million,the Group was cash generative. It remains the short term objective to deliverprofitability. The Group has maintained good momentum during the first half ofthe year with strong performance across the divisions. This robust first halfperformance underpins confidence in the continued improvement in the financialperformance of the Group for the full year.As highlighted above, we believe the growth opportunities across the Group arestrong. We expect demand for our services and products to grow and we willcontinue to enhance our product and service portfolio to meet that demand. Weare exploring new markets for our products and services and looking to exploitthe cross-selling opportunities we now have from our broad customer base andexpanded portfolio.
We will continue to equip the business with the necessary skills, expertise, technology and products to deliver controlled growth and value to shareholders.
Laurie TurnbullExecutive Chairman27 August 2008UNAUDITED CONSOLIDATED INCOME STATEMENTFor the six months ended 30 June 2008 Six months Six months Year ended ended ended 30 June 30 June 31 2008 2007 December 2007 Note ‚£'000 ‚£'000 ‚£'000 Revenue 2 5,874 3,120 7,531 Cost of sales (3,444) (1,851) (4,404) Gross profit 2,430 1,269 3,127 Selling and distribution expenses (592) (353) (680) Administrative expenses: - normal (2,126) (1,735) (3,731) - restructuring costs - - (29) - exceptional credit 5 - 206 206 Administrative expenses (2,126) (1,529) (3,554) Research and development (109) (61) (110) Operating loss (397) (674) (1,217) Finance income 195 386 728 Finance costs (6) (12) (24) Share of results of associate 27 (4) (20) Loss on ordinary activities before tax (181) (304) (533) Taxation - - - Loss attributable to equity holders of (181) (304) (533)the Company Earnings per share:
Basic and diluted loss per ordinary share 3 (0.09)p (0.15)p (0.26)p
All results derive from continuing operations
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITYAs at 30 June 2008 Attributable to equity holders of the Parent Company Share Share Merger Profit Total capital premium and and loss equity other reserve reserves ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Balance at 1 January 2007 4,075 32,284 2,408 (23,340) 15,427 Loss for the period - - - (304) (304) Total recognised expense for the - - - (304) (304)period Employee share option scheme: - value of services provided - - - 15 15 Balance at 30 June 2007 4,075 32,284 2,408 (23,629) 15,138 Balance at 1 July 2007 4,075 32,284 2,408 (23,629) 15,138 Loss for the period - - - (229) (229) Total recognised expense for the - - - (229) (229)period Employee share option scheme: - value of services provided - - - 55 55 Balance at 31 December 2007 4,075 32,284 2,408 (23,803) 14,964 Balance at 1 January 2008 4,075 32,284 2,408 (23,803) 14,964 Loss for the period - - - (181) (181) Total recognised expense for the - - - (181) (181)period
Employee share option scheme: - value of services provided - - - 58
58 Balance at 30 June 2008 4,075 32,284 2,408 (23,926) 14,841UNAUDITED CONSOLIDATED BALANCE SHEETAs at 30 June 2008 As at As at As at 30 June 30 June 31 2008 2007 December 2007 ‚£'000 ‚£'000 ‚£'000 Non-current assets Goodwill 7,558 583 3,729 Other intangible assets 266 80 347 Investment in associate 180 144 128 Loan to associate 134 125 130 Property, plant and equipment 2,044 1,411 1,709 10,182 2,343 6,043 Current assets Inventories 576 455 435 Trade and other receivables 2,828 1,608 1,903 - cash and cash equivalents 8,341 14,083 12,267 11,745 16,146 14,605 Current liabilities Trade and other payables 3,884 3,064 3,034 Financial liabilities - borrowings 111 166 166 - loan notes and deferred consideration 1,734 - 2,133 5,729 3,230 5,333 Net current assets 6,016 12,916 9,272 Total assets less current liabilities 16,198 15,259 15,315 Non-current liabilities Financial liabilities - borrowings 19 121 51
- loan notes and deferred consideration 1,338 -
300 1,357 121 351 Net assets 14,841 15,138 14,964 Equity Issued share capital 4,075 4,075 4,075 Share premium 32,284 32,284 32,284 Other reserves 2,408 2,408 2,408 Profit and loss reserve (23,926) (23,629) (23,803) Total equity 14,841 15,138 14,964UNAUDITED CONSOLIDATED CASHFLOW STATEMENTFor the six months ended 30 June 2008 Six Six Year months months ended ended ended 31 30 June 30 June December 2008 2007 2007 Note ‚£'000 ‚£'000 ‚£'000
Cash flows from operating activities Cash generated from/(used in) operations 4 33 (863) (1,126) Interest paid (6) (12) (22)
Tax paid on behalf of acquired subsidiaries (144) - (40)
Net cash used in operating activities (117) (875)
(1,188)
Cash flows from investing activities
Acquisition of subsidiaries (5,244) - (1,503)
Cash acquired with subsidiaries 1,474 -
269
Transaction costs in relation to (335) - (444)acquisitions Investment in associate (25) (148) (148) Loan to associate - (125) (125) Purchases of property, plant and equipment (280) (64)
(347)
Proceeds from sale of property, plant and 546 -
15equipment
Transaction costs arising from sale of - (53)
(53)subsidiary Interest received 142 200 726 Net cash used in investing activities (3,722) (190)
(1,610)
Cash flows from financing activities
Repayment of borrowings (57) (53) (108)
Finance lease principal repayments (30) (28)
(56)
Net cash used in financing activities (87) (81)
(164)
Net decrease in cash and cash equivalents (3,926) (1,146) (2,962)
Net decrease in cash and cash equivalents (3,926) (1,146) (2,962)
Cash and cash equivalents at beginning of 12,267 15,229 15,229period Cash and cash equivalents at end of period 8,341 14,083
12,267
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
* The condensed consolidated interim financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
and
* The interim 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 By order of the Board Laurie Turnbull Nick Ash Executive Chairman Managing Director
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the six months ended 30 June 2008
1. Basis of preparation
Source BioScience plc is a company domiciled in the United Kingdom. Thecondensed consolidated financial interim statements of the Company as at andfor the six months ended 30 June 2008 comprise the Company and its subsidiaries(together referred to as the Group) and the Group's interests in associates.These consolidated interim financial statements have been prepared inaccordance with IAS 34 Interim Financial Reporting as endorsed and adopted foruse in the European Union. They do not include all of the information requiredfor full annual financial statements and should be read in conjunction with theconsolidated financial statements of the Group for the year ended 31 December2007, which have been prepared in accordance with IFRSs adopted by the EuropeanUnion.As required by the Disclosure and Transparency Rules of the Financial ServicesAuthority, these condensed consolidated interim financial statements have beenprepared applying the accounting policies that we applied in the preparation ofthe Company's published consolidated financial statements for the year ended 31December 2007. The following new standards, amendments to standards orinterpretations are mandatory for the first time for the financial year ending31 December 2008: * IFRIC 11, IFRS 2 Group and Treasury Share Transactions - effective for annual periods beginning on or after 1 March 2007 * IFRIC 12 Service Concession Arrangements - effective for annual periods beginning on or after 1 January 2008 * IFRIC 14 Recognition of a Defined Benefit Pension Scheme Surplus - effective for annual periods beginning on or after 1 January 2008
Management do not expect the adoption of these amendments to materially affect the Group results or financial position.
The interim condensed consolidated financial statements for the six monthsended 30 June 2008 have not been audited or reviewed by the Group's auditor.The comparative figures for the financial year ended 31 December 2007 are notthe Company's statutory consolidated accounts for that financial year.Statutory accounts for the year ended 31 December 2007 were approved by theBoard on 24 April 2008 and delivered to the Registrar of Companies. The reportof the Auditor on those financial statements was (i) unqualified (ii) did notinclude reference to any matters to which the auditors drew attention by way ofemphasis without qualifying their report and (iii) did not contain a statementunder section 237(2) or (3) of the Companies Act 1985. The consolidatedfinancial statements of the Group as at and for the year ended 31 December 2007are available on request from the Company's registered office at 1 OrchardPlace, Nottingham Business park, Nottingham, NG8 6PX or atwww.sourcebioscience.com.
The 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 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, thesignificant judgements made by management in applying the Group's accountingpolicies and the key source of estimation uncertainty were the same as thoseapplied to the consolidated financial statements as at and for the year ended31 December 2007.There have been no related party transactions or changes in related partytransactions described in the latest annual report that could have a materialeffect on the financial position or performance of the Group in the first sixmonths of this financial year.
The condensed consolidated financial statements for the six months ended 30 June 2008 were approved by the Board of Directors on 27 August 2008.
2. Segmental analysis
Primary reporting format - operating divisions
At 30 June 2008, the Group's continuing trading operations were organised into three main operating divisions:
* Healthcare * Pharma Biotech Services * Life Science Research Healthcare comprises the business units of Diagnostic Pathology and Cytology.The Life Science Research Division incorporates the activities of Geneserviceand the newly acquired activities of Autogen Bioclear.During the period there were immaterial sales between business segments (sixmonths ended 30 June 2007: immaterial; year ended 31 December 2007: 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 2008
Healthcare Pharma Life Diagnostic Biotech Science Pathology Cytology Services Research Unallocated Group ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue 1,116 2,172 211 2,375 - 5,874 Segment result 206 552 (120) 339 (1,347) (370) Finance income 195 195 Finance costs (6) (6) Loss before tax (1,158) (181) Taxation - - Loss for the period (1,158) (181) Segment assets 1,200 1,532 187 12,141 - 15,060 Unallocated assets - property, plant and 594 594equipment - debtors and prepayments 670 670 - cash and cash 5,603 5,603equivalents Total assets 1,200 1,532 187 12,141 6,867 21,927 Segment liabilities 170 681 140 4,135 - 5,126 Unallocated liabilities - corporate borrowings 48 48 - creditors and accruals 1,912 1,912 Total liabilities 170 681 140 4,135 1,960 7,086 Other segment items Capital expenditure - 5 210 - 425 44 684tangible fixed assets Depreciation 19 174 33 90 70 386 Amortisation of - - 10 71 - 81intangible assets Other non-cash expenses - share option scheme - - - - 58 58Six months ended 30 June 2007 Healthcare Pharma Life Diagnostic Biotech Science Pathology Cytology Services Research Unallocated Group ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue 830 2,083 207 - - 3,120 Segment result 31 507 (195) - (1,021) (678) Finance income 386 386 Finance costs (12) (12) Loss before tax (647) (304) Taxation - - Loss for the period (647) (304) Segment assets 1,168 1,627 312 - - 3,107 Unallocated assets - property, plant and 567 567equipment - debtors and prepayments 732 732 - cash and cash 14,083 14,083equivalents Total assets 1,168 1,627 312 - 15,382 18,489 Segment liabilities 128 854 168 - 1,150 Unallocated liabilities - corporate borrowings 160 160 - creditors and accruals 2,041 2,041 Total liabilities 128 854 168 - 2,201 3,351 Other segment items Capital expenditure - - 57 - - 7 64tangible fixed assets Depreciation 20 162 57 - 48 287 Amortisation of intangible 26 - 11 - - 37assets Other non-cash expenses - share option scheme 15 15Year ended 31 December 2007 Healthcare Pharma Life Diagnostic Biotech Science Pathology Cytology Services Research Unallocated Group ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Revenue 1,501 4,242 509 1,279 - 7,531 Segment result 31 1,072 (272) 71 (2,139) (1,237) Finance income 728 728 Finance costs (24) (24) Loss before tax (1,435) (533) Taxation - - Loss for the year (1,435) (533) Segment assets 1,243 1,451 197 4,830 - 7,721 Unallocated assets - property, plant and 625 625equipment - debtors and prepayments 324 324 - cash and cash equivalents 11,978 11,978 Total assets 1,243 1,451 197 4,830 12,927 20,648 Segment liabilities 173 666 147 2,868 - 3,854 Unallocated liabilities - corporate borrowings 105 105 - creditors and accruals 1,725 1,725 Total liabilities 173 666 147 2,868 1,830 5,684 Other segment items Capital expenditure - 69 63 8 76 131 347tangible fixed assets Depreciation 40 325 82 55 126 628 Amortisation of intangible 48 - 21 70 - 139assets Other non-cash expenses - share option scheme - - - - 70 70
Secondary reporting format - geographical segments
The Group manages its business segments on a global basis. The operations are based in the UK which is the home country of the Parent Company, where all assets are located and customer orders are received.
The sales analysis in the table below is based on the location of the customer.
Six months ended 30 June 2008 and 30 June 2007
Revenue Segment Capital assets expenditure Six Six Six Six Six Six months months months months months months ended ended ended ended ended ended 30 June 30 June 30 June 30 June 30 June 30 June 2008 2007 2008 2007 2008 2007 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 UK 5,403 3,077 21,927 18,489 684 64 Europe (excluding 260 32 - - - -UK) North America 154 - - - - - Middle East, Asia 57 11 - - - -& Australasia Total 5,874 3,120 21,927 18,489 684 64Year ended 31 December 2007 Revenue Segment Capital assets expenditure Year Year Year ended ended ended 31 31 31 December December December 2007 2007 2007 ‚£'000 ‚£'000 ‚£'000 UK 7,126 20,648 347 Europe (excluding UK) 245 - - North America 80 - -
Middle East, Asia & Australasia 80 -
- Total 7,531 20,648 347
Analysis of revenue by category
The Group's revenue is analysed as follows:
Six months Six months Year ended ended ended 30 June 30 June 31 2008 2007 December 2007 ‚£'000 ‚£'000 ‚£'000 Revenue from the provision of services 2,490 997
2,768
Revenue from the sales of goods 3,100 1,864
4,260
Revenue from operating lease rentals 284 259
503 Total 5,874 3,120 7,5313. Loss per shareBasic loss per share amounts are calculated by dividing net loss for the periodattributable to ordinary equity shareholders of the Parent Company by theweighted average number of shares outstanding during the period. Diluted lossper share amounts are calculated by dividing the net loss attributable toordinary equity shareholders by the weighted average number of ordinary sharesoutstanding during the period adjusted for the effects of dilutive options.The calculation of basic and diluted earnings per share for the six monthsended 30 June 2008 is based on the loss attributable to ordinary shareholdersof ‚£181,000 (six months ended 30 June 2007: loss of ‚£304,000; year ended 31December 2007: loss of ‚£533,000) and on the weighted average number of ordinaryshares in issue in each respective period of 203,765,232.IAS 33 Earnings Per Share requires presentation of diluted earnings per sharewhen a company could be called upon to issue shares that would decrease netprofit or increase net loss per share. Net loss per share in a loss-makingcompany would only be increased by the exercise of share options which were outof the money. Assuming that option holders will not exercise out of the moneyoptions, no adjustment has been made to the diluted loss per share for out ofthe money share options.
4. Cash generated from/(used in) operations
Six months Six Year ended months ended 30 June ended 31 2008 30 June December 2007 2007 ‚£'000 ‚£'000 ‚£'000 Loss for the period from operations (181) (304)
(533)
Depreciation of tangible fixed assets 386 287
628 Recognition of grant income (17) (18) (34)
Amortisation of capitalised development costs 14 37
74
Amortisation of other intangibles 67 -
65
Share of associate's (profit)/loss (27) 4
20
(Profit)/loss on sale of property, plant and (24) -
1equipment Interest payable 6 12 24 Interest receivable (195) (386) (728)
Share-based payments - value of employee 58 15
70service
(Increase)/decrease in inventories (28) 78
160
(Increase)/decrease in trade and other (307) (250) (249)receivables Increase/(decrease) in creditors 281 (338)
(624)
Cash generated from/(used in) operations 33 (863)
(1,126)
5. Administrative expenses - exceptional credit
During 2007 agreement was reached with Her Majesty's Revenue and Customs tosettle the liability arising following an inspection during the last quarter of2006 for which an accrual of ‚£446,000 was made at the end of 2006. As aconsequence, the balance of the accrual was credited back to the incomestatement as an exceptional item of ‚£206,000 in the six months ending 30 June2007.6. Acquisition of subsidiaryOn 10 March 2008 Source BioScience plc completed the acquisition of the entireordinary share capital of Autogen Bioclear UK Limited for total considerationof up to ‚£5.9 million, excluding transaction costs of ‚£0.3 million. Theprincipal activity of Autogen Bioclear is the distribution of products forapplication in life sciences, clinical research and development includinggenomic products, antibodies, cell cultures, diagnostic kits and relatedresearch tools.The acquired business contributed revenue of ‚£766,000 and net profit of ‚£94,000to the Group for the period from 10 March 2008 to 30 June 2008. If theacquisition had occurred on 1 January 2008, Group revenue would have been ‚£785,000 higher and the net loss would have increased by ‚£253,000 on a pro formabasis.The book and provisional fair values of the assets and liabilities acquiredwere as follows: Provisional Acquiree's fair value carrying amount ‚£'000 ‚£'000
Property, plant and equipment 605
605 Financial assets 14 14 Cash and cash equivalents 1,474 1,474 Inventories 113 198 Other current assets 569 569 Other current liabilities (381) (381) Deferred tax (23) (23) Value of net assets acquired 2,371
2,456
Goodwill arising on acquisition 3,829 3,744 Consideration 6,200 6,200
Consideration is made up as follows:
Initial cash consideration 3,860 3,860 Deferred consideration 2,000 2,000 5,860 5,860 Transaction costs 340 340 6,200 6,200The goodwill represents future economic benefits arising from assets that arenot capable of being identified individually nor recognised as separate assets.This will include acquirer specific synergies that arise in the postacquisition period such as cross selling opportunities and the enhancement oftechnologies and processes between existing and acquired sites; the technicalskills and customer support provided by the business and attributable to theworkforce and access to Autogen Bioclear's product range.The fair value adjustments shown above are provisional figures, being the bestcurrently available. Detailed exercises to identify the fair value adjustmentsare expected to be completed in the second half of the year.Deferred consideration is payable in two tranches; up to ‚£1,000,000 payable on10 March 2009 of which ‚£250,000 is contingent upon performance criteria beingachieved, and up to ‚£1,000,000 payable on 10 March 2010 again of which ‚£250,000is subject to performance criteria. The performance criteria relate to targetsales revenue across the Autogen Bioclear product portfolio.For the purposes of the acquisition accounting and calculation of goodwillabove, it has been assumed that the performance criteria will be achieved andthe deferred consideration will be paid in full. This represents the bestestimate at the date of acquisition of the present value of the considerationpayable.7. Interim results
Copies of the interim results for the six months ended 30 June 2008 will besent to all shareholders and will be posted on the Company's website atwww.sourcebioscience.com. In addition, copies may be obtained from the CompanySecretary at Source BioScience plc, 1 Orchard Place, Nottingham Business Park,Nottingham NG8 6PX.
vendorRelated Shares:
SBS.L