17th Nov 2009 07:00
17 November 2009
Source BioScience plc (`Source BioScience', the `Company' or the `Group') INTERIM MANAGEMENT STATEMENT
Growing demand for the Group's healthcare services underpins a 10% increase in Q3 revenues and helps drive further strong cash generation as Source BioScience
builds on first half profitability
Source BioScience plc the provider of diagnostic and screening services to the healthcare community and genetic analysis and biomolecular tools to the life science research and pharma biotech sectors, today provides its Interim Management Statement (`IMS') as required by the UK Listing Authority's Disclosure and Transparency Rules, relating to the period from 1 July 2009 to 17 November 2009.
Highlights:
* Revenue in Q3 increased by 10% compared with the same period last year * Extended agreement with Cervical Screening Wales to supply liquid based cytology equipment and reagents * Expansion of laboratory capability at University College London with introduction of new, enhanced technology platform for genotyping * Significant growth opportunities across the Group as it benefits from investment programme * Further product and service portfolio enhancements expected * Strong balance sheet with 6.8 million of cash underpins investment and acquisition plans
Financial performance
Unless otherwise stated, the financial information referenced below refers to the three months ended 30 September 2009, and the corresponding period last year, this being the latest practicable date to which financial information has been prepared. Commentary relates to the entire period of this IMS.
The Group has built on the strong start to the financial year and revenues for the third quarter increased by 10% compared with the same period last year. Across the Group, performance is in line with current market expectations.
Healthcare has returned a very strong performance compared with the same period last year, driven by growth in Diagnostic Pathology. In addition to growth in our core pathology business, we have also undertaken a number of one-off "duty of care" pathology reviews during the period, which account for a significant element of the increased revenue. Source BioScience's reputation as an independent, fully-accredited high quality service provider is instrumental in securing this type of work.
In this third quarter, revenue from our Cytology operations has returned to expected normalised levels. This is following the exceptional demand for our liquid based cytology consumables which we witnessed during the first half of the year.
Whilst the revenue stream is much more modest, we have also seen increased demand for our FocalPoint automated cytology imaging platform, with revenues increased threefold compared with the same period last year. During the first half of this year we entered into a two year agreement with the Northwest NHS Region to provide the FocalPoint system for quality assurance applications and this is largely responsible for the growth in this activity.
Pharma Biotech Services has also performed well during the period. Although activity can be more unpredictable due to the project-based nature of the work, the business demonstrated double-digit growth compared with the same period last year. The growth is largely attributable to the migration of our genomic capability in the pharma biotech arena, coupled with our established pathology expertise.
Life Science Research has delivered a mixed performance during this third quarter, which is typically the seasonal low period for the division, encompassing the summer holiday period and reduced activity in the academic sector.
Demand for our DNA sequencing services continues to strengthen. Growth has been delivered by both our conventional sequencing business and our next generation sequencing service, with our facility at University College London (`UCL') proving a real success. We have developed an extremely robust DNA sequencing service model and have identified opportunities to increase market share in both the conventional and next generation sequencing markets. We will be investing further and pursuing these opportunities during the coming months with the aim of making Source BioScience the first choice provider for DNA sequencing services.
We also continue to respond to advances in technology across the life science research sector and remain ahead of the curve in providing access to new technologies where demand exists. We will shortly be launching an enhanced genotyping service on a new technology platform from our UCL laboratory.
Financial position
Our balance sheet remains strong with 6.8 million of cash at the date of this IMS (31 December 2008: 7.6 million).
During the year end we have made scheduled payments totalling 1.1 million in respect of the acquisitions of Autogen Bioclear and Geneservice. Deferred consideration on the Geneservice acquisition has now been settled in full.
We have also invested a further 0.7 million in technology platforms to extend and enhance our capabilities across the Group. This has included significant investment in our FocalPoint automated imaging platform to support the NHS cervical cancer screening programme and further expansion of our DNA sequencing capacity.
Other than noted above, there have been no other significant changes in the financial position of the Company over the period since the publication of the Interim Report for the six months ended 30 June 2009.
Commenting on the period and outlook, Dr Nick Ash, Managing Director, said:
"Source BioScience has continued to build on the first half momentum and profitability, with our Healthcare and Pharma Biotech Services divisions performing particularly well.
"During 2009 we have invested significantly in our automated imaging capability in Healthcare, with the acquisition of a further two FocalPoint platforms to support the NHS cervical cancer screening programme. We are also investing in the operational infrastructure supporting our Healthcare activities and expect to reap the efficiency benefits from this investment during 2010.
"The success of our conventional and next generation DNA sequencing service, using the Illumina Genome Analyzer platform is particularly satisfying. We remain the only commercial service provider of this technology in the UK and we are attracting customers from pharmaceutical companies as well as research institutions. Increasingly, customers are looking to use the resolution of genetic information this platform yields to understand the genetics of disease, the response to targeted therapies and to guide development of new drugs. We believe there are significant opportunities to increase our market share through appropriate investment in these technologies.
"In addition to the investment opportunities highlighted above to support and drive organic growth of the business, the Group also has significant cash resources to support growth through selected and appropriate acquisitions".
Outlook
Source BioScience has maintained good momentum in the year to date, with increased revenues across the divisions compared with last year and overall performance in line with expectations.
The Group continues to actively seek earnings enhancing acquisitions and investment opportunities.
The Company has been cash generative since 2008 and has achieved profitability during the current year. The Board will continue to equip the business with the necessary skills, expertise, technology and products to deliver controlled growth and value to shareholders.
---ENDS---
For further information, please contact:
Source BioScience plcNick AshManaging DirectorTel: 0115 973 9010www.sourcebioscience.comBishopsgate Communications LtdNick Rome/Gemma O'HaraTel: 0207 562 3350www.bishopsgatecommunications.com
About Source BioScience
Source BioScience is a highly focused healthcare and biotechnology company providing diagnostic and screening services to the healthcare community and genetic analyses and biomolecular tools and products to the life science research and pharma biotech sectors.
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. Pharma Biotech Services offers support for early stage therapeutic development, offering a 'one-stop shop' from tissue pathology, immunohistochemistry, sophisticated image analysis, biomarker determination and assay development to pharmacogenomics including genotyping and gene expression analysis. Life Science Research services provide core laboratory research support from conceptualization to implementation, calling upon a wide range of cutting-edge technology platforms including an online catalogue of biomolecular tools. This incorporates DNA sequencing, whole genome amplification and a comprehensive library of genomic reagents and clones including cDNA and RNAi, as well as facilitating rapid access to high quality antibodies, cell cultures, diagnostic assays for cancer and other genetic testing, and related research tools.
The Group has its headquarters in Nottingham, UK where it operates state of the art reference laboratory facilities, with additional UK laboratory facilities in London, Cambridge and Oxford. Source BioScience is CPA, GLP and GCP accredited and is licensed by the Human Tissue Authority.
Further information about Source BioScience can be found at www.sourcebioscience.com
Disclaimer
The Interim Management Statement may contain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of Source BioScience plc speak only as at the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Source BioScience plc does not undertake to update forward-looking statements to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.
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