13th May 2008 07:00
13 May 2008 Source BioScience plc ("Source BioScience", the "Company" or the "Group") INTERIM MANAGEMENT STATEMENT
Source BioScience makes a strong start to the financial year with all divisions
performing well - underpinning a 75% increase in revenues for Q1 2008
Source BioScience plc the provider of expert, quality services and products to the healthcare, pharma biotech and life sciences research sectors, today provides its first Interim Management Statement ("IMS") as required by the UK Listing Authority's Disclosure and Transparency Rules, relating to the period from 1 January 2008 to 13 May 2008.
Highlights:
* Revenue in Q1 increased by 75% compared with the same period last year * New Life Science Research division, representing the acquired businesses of Geneservice Limited ("Geneservice") and Autogen Bioclear UK Limited ("Autogen Bioclear") provided significant new sales * Initial cash received from the FocalPoint automated cytology screening platform following the addition of FocalPoint to the existing exclusive distribution agreement with TriPath Imaging, Inc. * Acquisition of Autogen Bioclear, a profitable and cash-generative privately owned UK business, for up to ‚£6.0 million * Change of name to Source BioScience plc to more appropriately reflect the nature and scope of the Group's activities * Investment in the Illumina, Inc. next generation gene sequencing and genotyping technology platforms, becoming the UK's first commercial service provider for these leading edge technologies * Revenues for the first quarter increased by 10% on a like for like basis compared with the same period last year * Strong balance sheet with ‚£8.0 million of cash at the end of March 2008 * This strong first quarter performance underpins confidence in the continued improvement in the financial performance of the Group for the full year
Key events
On 10 March 2008 the Company completed the acquisition of Autogen Bioclear. This acquisition was another significant step in the Group's strategy to broaden the portfolio of products and services by expanding our core expertise into complementary activities. Autogen Bioclear distributes a wide range of products for applications in life sciences and clinical research, offering customers rapid access to high quality, leading-edge genomic products, antibodies, cell culture, diagnostic kits and related research tools. The business is highly complementary with the Group's existing Life Science Research activities and its customers include academic and research institutions, NHS laboratories and pharma biotech companies.
For the year ended 30 June 2007, Autogen Bioclear reported a profit before tax of ‚£0.8 million, before owner-manager remuneration, on sales of ‚£2.7 million. Consideration for the entire issued share capital is up to ‚£6.0 million, excluding transaction costs, payable in cash. Of this consideration, an initial amount of ‚£4.0 million was satisfied on completion and is subject to an adjustment based on completion accounts. A further ‚£2.0 million is deferred, of which ‚£0.5 million is subject to performance criteria. Transaction costs were ‚£ 0.3 million.
The sale and purchase agreement anticipated net current assets of ‚£2.0 million, mainly present as cash, and any shortfall against this will be deducted ‚£ for ‚£ from the initial consideration through the completion accounts mechanism. The draft completion accounts indicate net current assets at completion of ‚£1.8 million, of which ‚£1.5 million was present as cash, and therefore initial consideration will be adjusted down by the ‚£0.2 million shortfall in net current assets.
On 10 March 2008 the Company also changed its name to Source BioScience plc. This new name more appropriately reflects the nature and scope of the Group's current and planned activities.
Financial performance
Unless otherwise stated, the financial information referenced below refers to the three months ended 31 March 2008, and the corresponding period last year, this being the latest practicable date to which financial information has been prepared.
The Group has made a very positive start to the financial year and revenues for the first quarter increased by 10% on a like for like basis compared with the same period last year.
Revenue has increased by 75% for the first quarter compared with the same period last year when revenue from the new Life Science Research division, representing the acquired businesses of Geneservice and Autogen Bioclear, is included.
Within Healthcare, revenues were in line with expectations for our Cytology business, but exceeded expectations in our Pathology operations. Whilst there was a significant contribution from non-recurring pathology work in the period, underlying laboratory activity was also strong for our routine diagnostic services.
In the period we received the first payment from an NHS customer for our FocalPoint automated cytology screening offering. This represents an important milestone and demonstrates the intent of the NHS to accept and adopt this technology into the cervical cancer screening program. As previously announced FocalPoint is highly complementary with our existing Cytology business. With over 3.5 million cytology slides manually screened for cervical cancer every year in the UK, cytology lends itself to increased automation.
Life Science Research performed extremely strongly during the period. Revenue from gene sequencing, genotyping and genomic reagents is 30% higher than in both of the last two quarters of 2007 demonstrating that the integration of Geneservice has been completed satisfactorily and cross selling opportunities are being identified and exploited. Again, there is a significant influence of non-recurring project revenue in the period, however, Source BioScience is clearly competing effectively in this market.
Financial position
Our balance sheet remains strong with ‚£8.0 million of cash at the end of March (31 December 2007: ‚£12.3 million). Since the year end we have invested a net ‚£ 2.8 million in the acquisition of Autogen Bioclear. This represents initial consideration of ‚£4.3 million, including transaction costs, net of the cash in the business at acquisition of ‚£1.5 million, and prior to any adjustments arising from the completion accounts. We have also paid ‚£1.4 million for the second installment on the Geneservice acquisition.
Since the year end we have invested in our new technology platforms, the Illumina next generation gene sequencing and genotyping platforms and the FocalPoint automated cytology screening system.
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 Annual Report and Accounts for the year ended 31 December 2007.
Commenting on the period and outlook, Dr Nick Ash, Managing Director, said:
"Source BioScience has made a strong start to the financial year with all divisions performing well. The increase in volumes for our core Pathology business has been particularly pleasing as has been the revenue growth in the Life Science Research division.
"The investment in a robust laboratory infrastructure combined with consolidation of the laboratory operations and exploitation of cross-selling opportunities have all been drivers of this sales growth.
"In the months ahead we look forward to fully integrating the Autogen Bioclear acquisition, ramping up commercial project activity on the next generation gene sequencing and genotyping platforms and supporting the introduction of automated cytology screening technology into the NHS."
Outlook
The Company has maintained good momentum at the start of the year with strong sales performance across the divisions, which in Healthcare and Life Science Research has exceeded expectations. This strong first quarter performance underpins confidence in the continued improvement in the financial performance of the Group for the full year. The Board remains focused on returning the Group to profitability and will continue to equip the business with the necessary skills, expertise, technology and products to deliver controlled growth and value to shareholders.
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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 plc is a highly focused healthcare and biotechnology company offering expert, quality services and products to the healthcare, pharma biotech and life science research sectors. Its Healthcare operations provide the latest cytology screening equipment and techniques as well as reference laboratory diagnostic testing for cancer and other diseases including 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 Cambridge and Oxford. Source BioScience is CPA, GLP and GCP accredited and is licensed by the Human Tissue Authority.
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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