15th Sep 2005 07:01
Tepnel Life Sciences PLC15 September 2005 Tepnel Life Sciences plc ('Tepnel' or 'the Company') Interim results for the 6 months ended 30 June 2005 Manchester, UK, 15 September 2005: Tepnel Life Sciences plc (AIM: TED), theUK-based international Research Products & Services and Molecular Diagnosticsgroup, is pleased to announce its interim results for the six month period ended30 June 2005. Summary • Group sales totalled £6.89m, an increase of 36% over the same periodlast year (6 months to 30 June 2004: £5.07m) • Pre-tax losses for the Group decreased 61% to £0.36m (6 months to 30June 2004: £0.92m) • End of period cash totalled £1.81m. With cash balances at 31 March2005 of £1.80m (unaudited), the second quarter of the year was marginally cashpositive • Recently acquired Diaclone signs a comprehensive researchcollaboration with Boehringer Ingelheim to generate murine monoclonal antibodiesthat recognise human immune regulatory cells • Introduction of ELUCIGENE CF-HT kits for rapid, high-throughput cysticfibrosis testing, marks significant extension of the highly profitable ELUCIGENEproduct group Ben Matzilevich, Chief Executive Officer commented: "We are pleased andgratified with our first half performance. These results demonstrate that ourdecision, taken in the Spring of 2005, to focus our business strategy on thehighly profitable areas of Research Products & Services and MolecularDiagnostics has quickly shown itself to be a successful one. The recentacquisition of Diaclone in December 2004 has also significantly increased ourcapabilities for antibody and assay development. The integration of Diacloneallows us to offer an extended menu of analytical services to our pharmaceuticalcustomers, a broader catalogue of research reagents and will enable us todevelop new tests for Molecular Diagnostics." CHAIRMAN'S STATEMENT Interim Results for the 6 months ended 30 June 2005 Financial Results In the six months ended 30 June 2005, turnover for the Group increased 36% to£6.89m (6 months to 30 June 2004: £5.07m) including revenues from the newlyacquired Diaclone business. Pre-tax losses for the Group during the period decreased 61% to £0.36m (6 monthsto 30 June 2004: £0.92m). The loss per share during the period decreased to 0.1p (6 months to June 302004: 0.6p). Cash and cash equivalents at the end of the period were £1.81m. With cashbalances at 31 March 2005 at £1.80m (unaudited), the second quarter of the yearwas marginally cash positive. Overview The first half of 2005 has been an outstanding success for Tepnel, bothfinancially and in terms of product development. Ongoing operations and thecompletion of our acquisition of Diaclone have led us to our strongest financialperformance since the arrival of the new executive management team in 2001 withhalf-year sales totalling £6.89m. This represents an impressive 36% increase inGroup sales over the same period last year. Overall pre-tax losses for the six month period were reduced 61% to £0.36m (6months to 30 June 2004: £0.92m). The second quarter of 2005 also marked theGroup's further progress towards profitability, as cash balances at the end ofthe period exhibited a marginal increase over the end of the previous quarter.This follows a strategic decision made by the Board in March of this year tofocus the business on the highly profitable areas of Research Products &Services and Molecular Diagnostics. By concentrating our development efforts onthese two segments, while withdrawing from the smaller DNA purificationinstrument business, the Group made considerable progress towards establishingproduction synergies that will further support the continuing drive towardsprofitability. The Group's strong commercial viability has also made a significant impactwithin our industry. As we announced in July, the Board received a number ofapproaches ranging from offers for the Group, to Joint Venture and distributionagreements. Whilst a proposed valuation of the Group received from a thirdparty was above the current share price, the Board announced on 5 September thatthey believed that such a valuation underestimated the present and futurepotential value of Tepnel and consequently were not in a position to recommendto shareholders any of the proposals made to the Group. Moving forward, ourgreater commercial focus, recent acquisitions and unique product lines areexpected to further enhance our attractiveness to the international investmentcommunity and drive our progress as one of today's most dynamic life sciencescompanies. Molecular Diagnostics Period sales for the Molecular Diagnostics Division were ahead approximately 35%over the previous year. Key products contributing to growth in this areainclude the Tepnel Lifecodes (TLC) LIFEMATCH(R) antibody detection system foruse with LuminexTM multiplex analysis technology. This line has continued tocapture market share in the HLA/DNA typing marketplace due to its highsensitivity, short assay times and low reagent use. Future growth in this area is expected to be strengthened by 510(k) clearancereceived in August this year from the U.S. Food and Drug Administration (FDA)for TLC's DNA typing kits for HLA-A, HLA-B, HLA-C, HLA-DQB, and HLA-DRB, whichallows the products to be marketed for in-vitro Diagnostic use. The use ofthese kits with the Luminex 100 instrument system provides clinicians with ahighly automated testing system that minimises the occurrence of sample loss orcontamination. The worldwide market for transplant diagnostics is estimated at$150m, with the U.S. market representing approximately 40% of this total.Additionally, the emerging field of post-transplant monitoring is expected toadd a new application for these kits in a market that is growing at an estimatedrate of nearly 20% per annum. Tepnel Diagnostics (TD) also exhibited an increased market presence as sales ofgenetic pre-disposition kits and services increased by 30%. The ELUCIGENETMrange of products for simple and rapid mutation detection has been a crucialdriver of this growth and in March of this year, this group was extended withthe introduction of ELUCIGENE CF-HT for high-throughput cystic fibrosis testing. Featuring an advanced fluorescent format of the already well-validated ARMSTMtechnology, these kits are capable of detecting 30 of the most common causativemutations of cystic fibrosis, providing clinical testing laboratories withcost-effective and reliable results. The Group announced recently that it has licenced the global rights to develop,manufacture and market a DNA-based diagnostic assay for the rapid prenataldetection of common foetal chromosome abnormalities, including Down Syndrome.This product has generated considerable market interest in the UK medicaldiagnostics community ahead of its anticipated launch in late 2005. Research Products & Services Overall sales from Tepnel's Research Products & Services Division increasedapproximately 38% from the same period last year. This division comprises theGroup's activities in DNA purification (TLS), outsourcing services for thepharmaceutical and healthcare industries (TSS), food safety (TBS) and therecently acquired Diaclone business engaged in monoclonal antibody products anddevelopment services. Tepnel Life Sciences (TLS) revenues from DNA purification contractedapproximately 19% during the first half of the year, due to delays in receipt ofcustomer samples. Recent contract awards and scheduling of sample receipts inthe second half of the year indicate a resumption of growth from this activityfor the year as a whole. Tepnel BioSystems (TBS) continued to grow its revenues from allergen and toxintesting and from animal and fish speciation in foods. Distribution of productsinto the U.S. through the TLC facility in Stamford has begun to gain somemomentum in that market, resulting in improved operating margins compared to theprior year period. TBS traded profitably and generated cash during the firsthalf of the year. Revenues from Tepnel Scientific Services (TSS) grew 23% during the first half ofthe year with the principal growth being derived from analytical chemistry andbio-analysis services. Revenue growth is expected to remain at a similar rateto the year-end. TSS traded profitably and generated cash during the first halfof the year and is expecting a successful outcome to the year. TSS is now welladvanced in its plans to relocate its Edinburgh and Glasgow facilities to newpurpose built laboratories in Livingston, Scotland. Solicitors have beeninstructed to finalise the site acquisition and construction agreements. Atthis stage, construction is expected to commence in October 2005 with ananticipated completion date of end June 2006. The integration of Diaclone has also been highly rewarding to the Division,beginning with the signing of a research collaboration agreement with BoehringerIngelheim in January. Diaclone expands Tepnel's capabilities geographically andat the level of product services. Located in Besancon, France, Diaclone has apresence in over 30 countries and is a leader in the field of antibody and assaydevelopment. In the first six months of 2005, this has already enabled theCompany to offer a broader menu of analytical services to our pharmaceuticalcustomers, expanded our research reagents catalogue and created cross-sellingopportunities for other business segments within the division. Prospects The Group has had an excellent first six months in 2005. Streamlining ourbusiness around profitable, core operations has had an excellent positivereflection in Group sales, while opening the possibility for operationalsynergies. Through the remainder of 2005, the Group will look to identify otherkey areas in which our business could benefit from these synergies and tofurther capitalise on recent acquisitions. Looking ahead, Tepnel remains focused on delivering high-quality products andservices to its customers and on competing effectively in the global biotechmarket. By carefully examining every viable opportunity for growth in theseareas, we are confident that we will maintain our ultimate objective ofincreasing the value of our Company to our shareholders, while creating achallenging and rewarding workplace for our employees. Alec CraigNon-Executive Chairman15 September 2005 For Further Information: Tepnel Life Sciences plcBen Matzilevich, CEOGron Ffoulkes-Davies, Group Finance Director0161 946 2200 Seymour PierceMark Percy, Corporate Finance020 7107 8000 De Facto CommunicationsRichard Anderson020 7940 1000 Notes to Editors About Tepnel Life Sciences plc Tepnel Life Sciences (TLS) is a UK based international biotechnology company.The Company has laboratories, manufacturing and operations in the USA, UK andFrance with 175 employees. TLS provides test kits, reagents and services to twohighly synergistic markets, these being Molecular Diagnostics and BiomedicalResearch. The company's strategy has been to identify high growth nicheopportunities within these multi-billion pound markets. TLS focuses on theseniche opportunities with internally developed products, patents, expertise andknow-how as well as strategic acquisitions, to develop a leadership positionwithin these defined market segments. Consolidated Profit & Loss Account for the 6 months ended 30 June 2005 6 months ended 30 Audited 6 months June 2005(1) Year ended 31 ended 30 June 2004(1) December 2004 £'000 £'000 £'000Turnover 6,893 10,193 5,068Cost of sales (2,804) (5,467) (2,974)Gross profit 4,089 4,726 2,094 Research and development (953) (1,553) (636)Sales and marketing (1,421) (2,185) (994)Administrative expenses (2,106) (2,722) (1,395)Administrative expenses - - (547) -exceptional(2)Total administrative expenses (2,106) (3,269) (1,395)Total expenses (4,480) (7,007) (3,025)Operating loss (391) (2,281) (931)Interest receivable 35 43 26Interest payable (5) (23) (17)Loss on ordinary activities before (361) (2,261) (922)taxationTaxation 69 19 60Loss on ordinary activities after (292) (2,242) (862)taxationBasic and diluted loss per share 0.1p 1.5p 0.6p Statement of Total Recognised Gains and Losses for the 6 months ended 30 June2005 6 months Audited 6 months ended 30 ended 30 June Year ended 31 December June 2004(1) 2005(3) 2004 £'000 £'000 £'000Loss for the period (292) (2,242) (862)Currency translation differences on (21) (36) 13foreign currency net investmentsTotal gains and losses recognised (313) (2,278) (849) Consolidated Balance Sheet as at 30 June 2005 30 June 2005(4) Audited 30 June 2004(1) 31 December 2004 £'000 £'000 £'000Fixed assetsIntangible fixed assets 1,762 1,882 502Tangible fixed assets 1,675 1,851 1,933 3,437 3,733 2,435Current assetsStocks 2,412 2,279 2,245Debtors: due within one year 3,615 2,932 3,357Cash at bank and in hand 1,807 2,542 1,474 7,834 7,753 7,076Creditors: amounts falling due (4,025) (3,927) (4,003)within one yearNet current assets 3,809 3,826 3,073Total assets less current 7,246 7,559 5,508liabilitiesCreditors: amounts falling due after - - (64)more than one yearNet assets 7,246 7,559 5,444 Capital and reserves(5)Called up share capital 2,129 2,129 1,385Share premium account 33,588 33,588 30,788Profit and loss account (28,471) (28,158) (26,729)Equity shareholders' funds 7,246 7,559 5,444 Consolidated Cash Flow Statement for the 6 months ended 30 June 2005 6 months Audited 6 months ended 30 June 2005 Year ended 31 December ended 30 June 2004(1) (6) 2004 £'000 £'000 £'000Consolidated cash flow statementNet cash outflow from operating (574) (1,057) (1,389)activitiesReturns on investments and 30 20 9servicing of financeAcquisitions - (3,838) (1,967)Corporation tax - 180 (98)Capital expenditure (125) (317) 342Net cash outflow before financing (669) (5,012) (3,103)Financing (66) 3,310 333Decrease in cash (735) (1,702) (2,770) Reconciliation of operating loss to netcash outflow from operating activities:Operating loss (391) (2,281) (931)Depreciation 300 596 324Amortisation 109 56 -(Increase)/decrease in stocks (133) 572 (1,250)(Increase)/decrease in debtors (619) 228 (1,876)Increase/(decrease) in creditors 160 (227) 2,344Other non-cash movements - (1) -Net cash outflow from operating activities (574) (1,057) (1,389) Reconciliation of net cash flow tomovement in net fundsDecrease in cash (735) (1,702) (2,770)Cash outflow from decrease in lease 66 132 65financingIssued debt - (550) -Change in net funds resulting from cash (669) (2,120) (2,705)flowsConversion of debt to equity - 550 -Net funds at beginning of period 2,398 3,968 3,968Net funds at end of period 1,729 2,398 1,263 Notes 1 The Interim Report for the six months ended 30 June 2005 is unaudited and was approved by the directors. The financial information set out above does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The information for the comparative figures has been extracted from the previously published Interim and Annual Reports. The Annual Report from which the information for the year ended 31 December 2004 has been delivered to the Registrar of Companies and contained an unqualified audit opinion. 2 The directors do not recommend the payment of an interim dividend. 3 The accounting policies used are consistent with those applied in the latest published consolidated accounts. 4 Segmental analysis 6 months ended 30 June 2005(7) Turnover by geographical Research Products Molecular Total destination and Services Diagnostics £'000 £'000 £'000 UK 1,624 300 1,924 Rest of Europe 1,111 875 1,986 US 72 1,877 1,949 Asia 6 342 348 Rest of World 63 623 686 2,876 4,017 6,893 Audited Year ended 31 December 2004 Turnover by geographical Research Products Molecular Totaldestination and Services Diagnostics £'000 £'000 £'000UK 3,251 326 3,577Rest of Europe 614 1,786 2,400US 79 3,271 3,350Asia 10 462 472Rest of World 114 280 394 4,068 6,125 10,193 6 months ended 30 June 2004(1)Turnover by geographical Research Products Molecular Totaldestination and Services Diagnostics £'000 £'000 £'000UK 1,640 310 1,950Rest of Europe 340 592 932US 41 1,771 1,812Asia 4 1 5Rest of World 61 308 369 2,086 2,982 5,068 5 The basic and diluted loss per share has been calculated on the following basis: 6 months Audited 6 months ended 30 ended 30 June Year ended 31 December June 2004(1) 2005(8) 2004 Loss for the period (292) (2,242) (862) (£'000) Weighted average no. of 212,927,315 148,403,632 134,244,887 shares In the current period the average number of shares is the same on a diluted basis. 6 Copies of this statement are being sent to all shareholders and will be available to the public at the Company's Registered office at Heron House, Oaks Business Park, Crewe Road, Wythenshawe, Manchester M23 9HZ. -------------------------- (1) Neither audited or reviewed. (2) Exceptional items comprise costs relating to restructuring (£506k) and redundancy costs (£41). (3) Neither audited or reviewed. (4) Neither audited or reviewed. (5) All items under capital and reserves are equity. (6) Neither audited or reviewed. (7) Neither audited or reviewed (8) Neither audited or reviewed. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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