12th Nov 2008 07:00
STOCK EXCHANGE ANNOUNCEMENT
CELSIS INTERNATIONAL PLC
("Celsis", "the Company" or "the Group")
INTERIM RESULTS
for the six months to 30 September 2008
STRONG REVENUE AND PROFIT GROWTH FROM CORE PRODUCT DIVISIONS
12 November 2008 - Celsis International plc, the life sciences products and laboratory services company, today announces its interim results for the six months to 30 September 2008.
Jay LeCoque, Chief Executive Officer of Celsis, commented:
"I am pleased to report another period of strong profit growth for the first half of this year, benefitting from robust performance in our higher margin Rapid Detection and In Vitro Technologies products businesses. These core businesses demonstrated substantial revenue and profit growth that has offset the slowdown we encountered in our Analytical and Development Services division. Our continued ability to balance revenues and manage costs in these uncertain economic times underscores the strength of our underlying business model to deliver sustained value for shareholders.
Overall, we remain on track to meet our expectations for the year. We are confident that our business model, which provides our customers with products and services that save both time and money, is gaining momentum in the current economic environment and will continue to drive the growth of the combined Celsis Group. In addition, with the sustained strengthening of the Company's balance sheet combined with our historically strong cash flow, we continue to evaluate new acquisition opportunities to expand our growing business portfolio."
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ENQUIRIES: |
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Celsis International plc |
Tel: +44 (0) 1223 598 428 |
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Jay LeCoque, Chief Executive OfficerChristian Madrolle, Finance Director Robyn LaLonde, Executive Assistant to CEO |
(+44 (0) 20 7831 3113 on 12 November 2008) |
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Financial Dynamics |
Tel: 020 7831 3113 |
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David Yates |
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Jonathan Birt |
A presentation for analysts will be held at Financial Dynamics at 9.30am today, Wednesday 12 November 2008. Please call Juliet Edwards at Financial Dynamics on 0207 269 7125 for further details.
Notes to editors
Celsis International plc
Celsis International plc is a leading international provider of innovative life science products and laboratory services to the pharmaceutical and consumer products industries. Each Celsis business has the capacity to deliver substantial time and cost savings to its customers, in addition to ensuring product quality and safety for consumers. Celsis' extensive client base includes many of the world's leading pharmaceutical and consumer products companies. The Company is listed on the London Stock Exchange (CEL.L).
Celsis Rapid Detection utilises proprietary enzyme technology to develop and supply diagnostic testing instruments and consumables for the rapid detection of microbial contamination in pharmaceutical and consumer products. These rapid testing systems provide significant economic value by reducing the time it takes to test and release raw materials, in process and finished goods to market.
Celsis In Vitro Technologies (Celsis IVT) employs proprietary expertise in hepatocyte (liver cell) technology to supply in vitro testing products to the pharmaceutical industry. Celsis IVT's consumable testing products screen drug compounds for liver toxicity early in the drug discovery process, thereby reducing the time and cost of further development or research on those compounds that will not be properly metabolised by the human liver.
Celsis Analytical and Development Services provides cost effective outsourced laboratory testing services to pharmaceutical companies. Its comprehensive service offerings include a full spectrum of laboratory services from discovery and drug development to analytical chemistry and from biological sciences to stability storage and testing.
Further information can be found on its website at www.celsis.com.
Chairman's and Chief Executive's Review
Introduction
The Celsis Group has made good progress in the first half of the year and continues to focus on providing leading-edge products and services to help its customers reduce the cost of drug development, improve operational efficiencies and enhance product quality. Total Group revenue increased 3.5% to $27.2 million (H1 2007: $26.3 million). EBITDA increased 11.5% to $6.5 million (H1 2007: $5.8 million) and operating profits increased 14.5% to $5.2 million (H1 2007: $4.6 million). Profit before tax was up 17.8% to $5.0 million (H1 2007: $4.2 million). Profit before tax adjusted for amortisation of intangible assets increased 16.3% to $5.3 million (2007: $4.6 million). Basic earnings per share (EPS) increased 14.1% to 15.99 cents (H1 2007: 14.02 cents).
Each Celsis division delivers solutions to its customers that save both time and money, as well as help ensure enhanced product quality and safety. As increasing numbers of businesses concentrate on improving their underlying cost structures, the focus on speed to market remains a key indicator of their success. From drug discovery and development to streamlined manufacturing and continuous quality improvement, Celsis has remained a leader in offering customers life science products and laboratory services that can both reduce their cost as well as increase their speed to market. Celsis is well positioned to continue to benefit from these trends and we remain confident in our ability to deliver another strong year end performance.
During the first half, 63% of Celsis' revenue was generated by product sales from our Rapid Detection and In Vitro Technologies businesses, with the remaining 37% coming from our Analytical and Drug Development Services division. The strong performance by Celsis' products businesses demonstrates their strength and resilience as they continue to grow steadily despite the current economic climate. We have also maintained strict controls over our cost structures to maintain our profit growth during this period. These operational levers are most effectively being employed to address the slowdown in revenue growth from our laboratory services businesses. Looking forward, we anticipate that the percentage of our product sales will continue to increase in the months and years to come, given the acceleration and growth rates from these businesses, while the services businesses will be more susceptible to external economic factors.
Rapid Detection Division
Celsis' Rapid Detection division provides testing systems to more rapidly detect microbial contamination (the presence of bacteria or other organic contaminants) in pharmaceutical and consumer products than older more traditional methods such as agar plates. These traditional methods can take up to 7 days to provide a confirmation of "no growth" whereas Celsis' systems can provide a "no growth" confirmation in just 24 hours.
By reducing testing times, Celsis systems also reduce its customers' manufacturing cycle times by several days, thereby allowing valuable savings in working capital in everything from a reduced need for raw materials and safety stock, to lower finished product inventory levels and a decrease in warehouse space. These reductions in working capital materially increase the efficiency and productivity of facilities that use Celsis' technology, thereby delivering a measurable financial benefit to our customers. In addition, if there is a product contamination episode, Celsis' technology alerts customers that corrective action is required in 24 hours vs multiple days using traditional agar methods. This provides significant financial as well as potential brand value to Celsis' customers.
For the first half ended 30 September 2008, Rapid Detection represented 43% of Group revenue (H1 2007: 37%). Revenue increased by a strong 20.0% to $11.7 million (H1 2007: $9.8 million) following last year's solid H1 performance of this business. Reagent kits now represent 90% of the business' revenue and we anticipate sustained strong growth in consumables as our systems continue to screen an increasing number of new products. We expect double digit revenue growth from this business for the full fiscal year.
Instrument sales in this year's first half were solid across both industry segments and geographic regions. Management has also implemented recent organizational changes to the sales force to further streamline the efficiency of this critical divisional component, and we expect continued growth for the fiscal year. Reagents and consumables posted exceptionally strong growth across all segments, demonstrating the importance of Celsis' scientific staff, dedicated customer and technical service, and validation support to help maintain and strengthen ongoing customer relationships which continue to support the underlying base Rapid Detection business.
Rapid Detection has also recently developed an additional detection technology within its product portfolio. Test market evaluations are well underway on a ribonucleic acid (RNA) technology, with the launch of this next generation product line expected later this fiscal year. Designed to leapfrog existing nucleic acid testing platforms, this innovative product offering which can be used on current Celsis instrument platforms, provides customers with real-time, specific organism intelligence allowing them a more rapid response time to microbial contamination events. As product safety, quality and operational efficiencies increasingly become a major concern for customers, this identification testing capability has been emphasized as a critical information need.
In Vitro Technologies Division
Celsis' IVT division provides in vitro liver cell products to the pharmaceutical industry to reduce the time and cost of drug discovery and development. As the number of drug compounds under development significantly expands, so does the need for pharmaceutical companies to quickly identify and progress new compounds into viable drug candidates. Days and weeks saved early in the drug development process can result in significant savings in the overall cost of bringing a new drug to market.
Our IVT products help accelerate drug development by providing in vitro ADME-Tox (Absorption, Dissolution, Metabolism and Excretion) testing products to the pharmaceutical industry that are used very early in the compound identification stage of the drug development process. Celsis IVT's primary product offering is cryo-preserved human liver cells that allow customers to determine how well a particular drug compound will be metabolised by the human liver. FDA guidance released in September 2006 has outlined their acceptance of cryo-preserved cells as equivalent to fresh liver cells and Celsis views this as an important development in the continued evolution and expansion of this new business. The market for ADME-Tox in vitro products and development services is estimated to be approximately $600 million and is growing at 10% per year.
Revenue for this division increased 13.6% to $5.4 million (H1 2007: $4.8 million), which now accounts for 20% of Group revenue (H1 2007: 18%). It should be noted that IVT is now reporting numbers exclusive to the products portion of the business, as we consolidated the financial reporting structure for our Analytical and Development Services businesses into one division.
The IVT business has benefited from strong growth in the first half across its key product lines, with companies continuing to increase their use of Celsis IVT's products to help streamline their screening of drug compounds. Growth in Europe and North America has been strong, and Celsis IVT's business continues to expand in Asia and Latin America, as both multinational and local pharmaceutical companies increase their research capabilities in these markets. In addition, the IVT division continues to develop and explore new technologies to expand its drug development product offering and remain a leader of both technology and quality in the field of ADME-Tox in vitro products.
Analytical and Development Services Division
Celsis' Analytical and Development Services division provides outsourced laboratory testing services to pharmaceutical companies during the drug discovery, in-process and finished product stages. The trend by pharmaceutical companies to outsource their analytical testing, especially in the US, has accelerated in recent years to an estimated market size of over $2 billion.
The outsourcing of analytical services saves our clients' headcount and laboratory space and allows them to focus their resources on research and drug discovery and development. In addition to providing these important benefits of outsourcing, Celsis has also carved out an important niche in this large market by providing faster results and enhanced customer service to its customers. The Company can provide results in just 10 days, with a very focused customer service offering, compared to an industry standard of 15 to 20 days, with little to no customer service. Celsis can therefore secure a price premium for this added customer value.
Revenue for our Analytical and Development Services division in the first half was down 14.3% to $10.1 million (H1 2007: $11.8 million), and this business now represents 37% of Group revenue (H1 2007: 38%). Management has remained vigilant in controlling the cost base of this business unit in the first half as it became increasingly apparent that the division's slowdown would be longer than initially anticipated. Management remains encouraged with the existing and new business opportunities across all departments of the Analytical and Development Services business and we are confident in the customer focused strategies that have been put in place to secure continued contract growth into the second half of the financial year and beyond.
The revenue slowdown in this division can be mainly attributed to two factors: the slowed pace of pharmaceutical companies in manufacturing their products that has resulted from the current uncertain economic environment and the timing of several large research contracts. Many pharmaceutical companies have made the strategic decision to reduce their inventories to historical lows before resuming regular manufacturing patterns and this reduction in output has directly impacted the amount of testing that is outsourced during the manufacturing process. In addition, we encountered a delay of several large research contracts into the second half.
Overall we anticipate stronger second half revenue for the Services division, although the timing and flow of contracts through the remainder of the year may impede revenue growth slightly. We are generally confident that pharmaceutical manufacturing levels will increase following recent draw downs in pharmaceutical inventories.
Financial Review
Total Group revenue for the six months ended 30 September 2008 was up 3.5% to $27.2 million (H1 2007: $26.3 million). Revenue growth has been particularly strong in Rapid Detection, with a solid performance in Europe, Asia and Latin America. IVT revenue has also continued to grow at a double digit rate during a period of pronounced economic uncertainty, with solid revenue growth in North America and a good performance in Europe.
Gross profit increased 5.6% to $18.7 million (H1 2007: $17.8 million). Rapid Detection revenue accounted for 43.1% of Group revenue (H1 2007: 37.2%) and IVT products for 19.9% (H1 2007: 18.1%). This acceleration of the two most profitable divisions' performance has had a favorable impact on the overall Group gross margin which increased to 68.9% (H1 2006: 67.6%).
Sales and marketing expenses increased 4.3% to $10.6 million (H1 2007: $10.2 million), largely as a result of the strengthening of the IVT product sales force in the US and in Europe.
Administrative expenses decreased 5.3% to $2.6 million (H1 2007: $2.7 million) due to the positive impact of the US$/Sterling and US$/Euro exchange rates fluctuations during the period on the corporate and central administrative costs.
Operating profit rose 14.5% to $5.2 million (H1 2006: $4.6 million) and profit before tax increased 17.7% to $5.0 million (H1 2007: $4.2 million). The profit before amortisation of intangible assets was up 16.3% to $5.3 million (H1 2006: $4.6 million).
Earnings per Share increased 14.1% to 15.99c (H1 2007: 14.02c). In Sterling terms, Earnings per Share increased 30.5% to 8.98p (H1 2007: 6.88p) due to the strengthening of the US$ against Sterling during the period.
Net interest payable improved 28.3% to a net cost of $0.2 million (H1 2007: $0.3 million) as the Company has continued the early redemption of its bank loan in respect of the acquisition of In Vitro Technologies, Inc. in July 2006, repaying $2.2 million during the period under review.
Group capital expenditure is down to $1.4 million (H1 2007: $2.1 million). Last year's programme was higher as it included the consolidation of the Rapid Detection division's departments, previously split in various locations (Chicago for the Americas and Brussels for Europe and Asia) and the commissioning of two new Rapid Detection laboratories, one for customer applications and R&D and one to be used as a manufacturing pilot plant. This year, management restricted capital expenditure to the replacement of property, plant and equipment and has continued to capitalise some of the R&D activities in compliance with IAS38 for the Rapid Detection and the IVT divisions.
Inventory is up 8.9% to $8.2 million (31 March 2008: $7.5 million) reflecting the acceleration of the Rapid Detection and In Vitro products revenues. Trade and other Receivables are up to $13.9 million (31 March 2008: $12.8 million), as a result of the strong activity in all divisions in September.
Current liabilities have decreased to $7.3 million (31 March 2008: $8.3 million) and include $0.2 million representing the short term portion of the bank loan payable within the next twelve months, $1.0 million representing the IVT creditors and $0.2 million of accrued interest payable on the bank loan.
The long-term portion of the remaining bank loan is now $2.8 million (31 March 2008: $5.0 million). The total non-current liabilities are down to $6.9 million (31 March 2008: $9.0 million) reflecting the accelerated repayment of the bank loan.
To finance the IVT acquisition, the Company contracted two 5 year loan facilities totaling $13.5 million in July 2006. After a little more than two years this debt has fallen to $3.0 million representing a total redemption in 26 months of $10.5 million. The remaining portion of this loan is a revolving facility until July 2011, by which date it will need to be repaid in full. We are planning to repay this loan ahead of schedule as we regard reduced leverage as an added strength in today's uncertain economic climate.
The Group acquired 184,015 of its own shares through purchases on the London Stock Exchange on 25 July 2008. The total amount paid to acquire the shares, net of income tax, was £324,622 which has been deducted from shareholders' equity. The shares are held as 'Treasury Shares.' The Company has the right to re-issue these shares at a later date. All shares issued were fully paid.
Our closing net cash position was positive $0.9 million (31 March 2008: $1.3 million). We have sufficient working capital and finance to service our on-going investment and trading activities.
In compliance with IFRS-Segmental Analysis, we have in Note 4 Segment Information consolidated the Development Services activity previously reported with the In Vitro Technologies Division with our Analytical Services Division, now called Analytical and Development Services. Prior year comparatives have been restated on the same basis.
The Directors have adopted the going concern basis in preparing the Company's interim statements. Equity shareholders' funds have increased 4.5% to $53.8 million (31 March 2008: $51.5 million).
The principal risks and uncertainties disclosed in the 2007 Annual Report have not changed.
While it seems likely that global market conditions (the 'credit crunch') will affect market confidence and consumer spending patterns, the Group is well placed to grow revenues through ongoing implementation of our business model. The Group does not have any exposure to sub-prime lending or collateralised debt obligations. The Group has sufficient headroom to enable it to conform to covenants on its existing borrowings. The Group has sufficient working capital and undrawn financing facilities to service its operating activities and ongoing investment in the business.
We anticipate continuing to strengthen the Group balance sheet, allowing us to deliver increased shareholder value and better enable the Group to pursue its organic and external growth.
Outlook
We are pleased with the strong profit performance of the Group in this first half despite a slower growth in revenue and remain confident that we will deliver strong year end results. Our core product businesses - Rapid Detection and In Vitro Technologies - remain particularly strong and we are expecting double digit revenue growth from these divisions for the full year. The higher margin product-based businesses have offset the slowdown in the services businesses and we have been vigilant in managing our cost structures.
Our strategies to offer leading edge technologies and laboratory services that help our customers save both time and money from pre-clinical drug development through product manufacture to final supply chain management are being well received by our pharmaceutical and consumer product customers. We operate in healthily growing markets and the business opportunities for our products and services continue to expand as our clients become increasingly focused on accelerating the development process and reducing costs. We are confident that we have implemented the appropriate business strategies to accelerate both profit and revenue growth to deliver a strong year end performance and we remain enthusiastic about the Company's long term prospects.
Jay LeCoque, Chief Executive Officer
Jack Rowell, Non-Executive Chairman
12 November 2008
Consolidated Income Statement
for the 6 months ended 30 September 2008
|
$'000 |
Six months to 30 Sept 2008 |
Six months to 30 Sept 2007 |
|
Unaudited |
Unaudited |
|
|
Revenue |
27,207 |
26,286 |
|
Cost of Sales |
(8,462) |
(8,536) |
|
|
|
|
|
Gross profit |
18,745 |
17,750 |
|
|
|
|
|
Sales & marketing expenses |
(10,607) |
(10,173) |
|
Administrative expenses |
(2,577) |
(2,721) |
|
Research & development expenditure |
(346) |
(302) |
|
Total operating expenses |
(13,530) |
(13,196) |
|
|
|
|
|
Operating profit |
5,215 |
4,554 |
|
|
|
|
|
Analysed as |
||
|
EBITDA |
6,478 |
5,809 |
|
Depreciation of property, plant and equipment |
(961) |
(940) |
|
Amortisation of intangible assets |
(302) |
(315) |
|
Operating Profit |
5,215 |
4,554 |
|
Interest receivable & similar income |
36 |
73 |
|
Interest payable & similar charges |
(267) |
(395) |
|
|
|
|
|
Profit before taxation |
4,984 |
4,232 |
|
Profit before taxation and amortisation of intangible assets |
5,286 |
4,547 |
|
|
|
|
|
Taxation |
(1,463) |
(1,136) |
|
Profit for the period |
3,521 |
3,096 |
|
Earnings per Ordinary Share |
||
|
Basic earnings per Ordinary Share |
15.99c |
14.02c |
|
Diluted earnings per Ordinary Share |
15.69c |
13.62c |
Consolidated Balance Sheet
at 30 September 2008
|
$'000 |
At 30 Sept 2008 |
At 31 March 2008 |
|
Unaudited |
Audited |
|
|
Assets |
|
|
|
Non-current assets |
||
|
Intangible assets |
31,838 |
31,496 |
|
Property, plant and equipment |
8,520 |
8,942 |
|
Other receivables and prepayments |
57 |
62 |
|
Deferred tax asset |
1,538 |
1,577 |
|
41,953 |
42,077 |
|
|
Current assets |
||
|
Inventory |
8,186 |
7,518 |
|
Trade and other receivables |
13,939 |
12,768 |
|
Cash and cash equivalents |
3,873 |
6,356 |
|
25,998 |
26,642 |
|
|
Liabilities |
|
|
|
Current liabilities |
||
|
Borrowings |
(191) |
(104) |
|
Trade and other payables |
(6,384) |
(7,465) |
|
Current tax liability |
(716) |
(681) |
|
(7,291) |
(8,250) |
|
|
Net current assets |
18,707 |
18,392 |
|
Non-current liabilities |
||
|
Borrowings |
(2,812) |
(4,960) |
|
Other non-current liabilities |
(2,001) |
(1,962) |
|
Deferred tax liabilities |
(2,072) |
(2,072) |
|
(6,885) |
(8,994) |
|
|
Net assets |
53,775 |
51,475 |
|
|
|
|
|
Shareholders' equity |
||
|
Called up share capital |
1,611 |
1,611 |
|
Share premium account |
13,120 |
13,120 |
|
Treasury shares |
(1,699) |
(1,201) |
|
Currency translation reserve |
(1,008) |
70 |
|
Retained earnings |
40,269 |
36,393 |
|
Reserve arising on consolidation |
1,482 |
1,482 |
|
|
|
|
|
Total equity |
53,775 |
51,475 |
Cashflow Statement
for the 6 months to 30 September 2008
|
$'000 |
Six months to 30 Sept 2008 |
Six months to 30 Sept 2007 |
|
Unaudited |
Unaudited |
|
|
|
|
|
|
Cash flows from operating activities |
3,838 |
4,051 |
|
Tax paid |
(1,144) |
(378) |
|
Interest paid |
(128) |
(341) |
|
Interest received |
36 |
73 |
|
Net cash generated by operating activities |
2,602 |
3,405 |
|
Cash flows from investing activities |
|
|
|
Purchase of property, plant and equipment |
(660) |
(1,788) |
|
Expenditure on intangible fixed assets |
(691) |
(314) |
|
Net cash used in investing activities |
(1,351) |
(2,102) |
|
Cash flows from financing activities |
|
|
|
Purchase of treasury shares |
(498) |
- |
|
Repayment of principal under finance leases |
(175) |
(98) |
|
Repayment of loan principal |
(2,200) |
(3,508) |
|
Net cash used in financial activities |
(2,873) |
(3,606) |
|
|
||
|
Effects of exchange rate changes |
(861) |
(442) |
|
Net decrease in cash and cash equivalents in the period |
(2,483) |
(2,745) |
|
Cash and cash equivalents at the beginning of the period |
6,356 |
5,946 |
|
Cash and cash equivalents at the end of the period |
3,873 |
3,201 |
|
Reconciliation of profit before taxation to cash generated by operations |
|
|
|
Profit before taxation |
4,984 |
4,232 |
|
Depreciation of property, plant and equipment |
961 |
940 |
|
Amortisation of intangible assets |
302 |
315 |
|
Share option compensation charge |
355 |
134 |
|
Net finance expense |
231 |
322 |
|
Operating cash flow before changes in working capital and provisions |
6,833 |
5,943 |
|
(Increase) in receivables |
(1,166) |
(771) |
|
(Increase) in inventory |
(668) |
(121) |
|
(Decrease) in payables |
(1,161) |
(1,000) |
|
Cash flows from operating activities |
3,838 |
4,051 |
Unaudited Consolidated Statement of Changes in Shareholders' Equity at 30 September 2008
|
$'000 |
Share capital |
Share premium account |
Treasury shares |
Currency translation reserve |
|
|
|
|
|
|
|
Balance at 1 April 2007 |
1,611 |
13,120 |
(1,201) |
438 |
|
Profit for the six months ended 30 September 2007 |
||||
|
Currency translation differences - group |
(80) |
|||
|
Share option compensation charge |
||||
|
Balance at 30 September 2007 and at 1 October 2007 |
1,611 |
13,120 |
(1,201) |
358 |
|
Balance at 31 March 2008 and at 1 April 2008 |
1,611 |
13,120 |
(1,201) |
70 |
|
|
|
|
|
|
|
Movement in own shares |
(498) |
|
||
|
Profit for the six months ended 30 September 2008 |
||||
|
Currency translation differences -group |
(1,078) |
|||
|
Share option compensation charge |
||||
|
Balance at 30 September 2008 |
1,611 |
13,120 |
(1,699) |
(1,008) |
|
$'000 |
Retained earnings |
Reserve arising on consolidation |
Total |
|
|
|
||
|
Balance at 1 April 2007 |
28,882 |
1,482 |
44,332 |
|
Profit for the six months ended 30 September 2007 |
3,096 |
- |
3,096 |
|
Currency translation differences - group |
|
|
(80) |
|
Share option compensation charge |
134 |
|
134 |
|
Balance at 30 September 2007 and at 1 October 2007 |
32,112 |
1,482 |
47,482 |
|
Balance at 31 March 2008 and at 1 April 2008 |
36,393 |
1,482 |
51,475 |
|
|
|
||
|
Movement in own shares |
|
|
(498) |
|
Profit for the six months ended 30 September 2008 |
3,521 |
|
3,521 |
|
Currency translation differences -group |
|
|
(1,078) |
|
Share option compensation charge |
355 |
|
355 |
|
Balance at 30 September 2008 |
40,269 |
1,482 |
53,775 |
Notes to the Financial Statements
for the 6 months to 30 September 2008
1. General Information
The company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 1010 Cambourne Business Park, Cambourne, Cambridge, CB23 6DP. The company has its primary listing on the London Stock Exchange. This condensed consolidated half-yearly financial information was approved for issue on 12 November 2008. These interim financial statements do not comprise statutory accounts within the meaning of Section 240 of the Companies act 1985. Statutory accounts for the year ended 31 March 2008 were approved by the Board of Directors on 16 June 2008 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain an emphasis of matter paragraph and any statement under Section 237 of the Companies Act 1985.
2. Basis of preparation - International Financial Reporting Standards
This condensed consolidated half-yearly financial information for the six months ended 30 September 2008 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The half-yearly condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 March 2008, which have been prepared in accordance with IFRS as adopted by the European Union. The half-yearly financial information has not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 March 2008, as described in those financial statements.
4. Segment Information
|
$'000 |
Six months to 30 September 2008 |
|||
|
Unaudited |
||||
|
Rapid Detection |
Laboratory Services |
In Vitro Technologies |
Group |
|
|
Revenue |
11,725 |
10,070 |
5,412 |
27,207 |
|
Segment result/operating profit |
3,727 |
201 |
1,287 |
5,215 |
|
Interest receivable |
|
|
|
36 |
|
Interest payable |
|
|
|
(267) |
|
Net result before tax |
|
|
|
4,984 |
|
Net result after tax |
|
|
|
3,521 |
|
$'000 |
Six months to 30 September 2007 (re-stated) |
|||
|
Unaudited |
||||
|
Rapid Detection |
Laboratory Services |
In Vitro Technologies |
Group |
|
|
Revenue |
9,769 |
11,754 |
4,763 |
26,286 |
|
Segment result/operating profit |
2,185 |
1,366 |
1,003 |
4,554 |
|
Interest receivable |
|
|
|
73 |
|
Interest payable |
|
|
|
(395) |
|
Net result before tax |
|
|
|
4,232 |
|
Net result after tax |
|
|
|
3,096 |
In compliance with IFRS-Segmental Analysis the Development Services activity previously reported with the In Vitro Technologies Division has now been consolidated with our Analytical and Drug Development Services Division and we have restated the segmental analysis of 30 September 2007 to reflect this change.
5. Capital Expenditure
|
$'000 |
Tangible and intangible assets |
|
Unaudited |
|
|
Six months ended 30 September 2007 |
|
|
Opening net book amount 1 April 2007 |
37,063 |
|
Additions |
2,614 |
|
Amortisation, depreciation and other movements |
(1,189) |
|
Closing net book amount 30 September 2007 |
38,488 |
|
|
|
|
Six months ended 30 September 2008 |
|
|
Opening net book amount 1 April 2008 |
40,438 |
|
Additions |
1,351 |
|
Amortisation, depreciation and other movements |
(1,431) |
|
Closing net book amount 30 September 2008 |
40,358 |
6. Share Capital
|
$'000 |
Number |
Nominal Value |
|
Unaudited |
Unaudited |
|
|
At the beginning and at the end of the period |
22,483,044 |
1,611 |
7. Borrowings and loans
|
$'000 |
At 30 Sept 2008 |
At 31 Mar 2008 |
|
Unaudited |
Audited |
|
|
Non current |
191 |
104 |
|
Current |
2,812 |
4,960 |
|
3,003 |
5,064 |
Movement in borrowings is analysed as follows:
|
Unaudited |
|
|
Six months ended 30 September 2007 |
|
|
Opening amount as at 1 April 2007 |
9,568 |
|
Repayments |
(3,508) |
|
Accretion of loan arrangement fees |
52 |
|
Closing amount 30 September 2007 |
6,112 |
|
|
|
|
Six months ended 30 September 2008 |
|
|
Opening amount as at 1 April 2007 |
5,064 |
|
Repayments |
(2,200) |
|
Accretion of loan arrangement fees |
52 |
|
Accrued interest |
87 |
|
Closing net book amount 30 September 2008 |
3,003 |
8. Income Taxes
The Corporation tax accrual for the interim period is charged at 29.4% representing the best estimate of the weighted average annual corporation tax rate expected for the full financial year. Differences between the effective tax rate of 29.4% and the notional statutory UK rate of 28% include, but are not limited to, the effect of tax rates in foreign jurisdictions and non deductible expenses.
9. Earnings per share
|
$'000 |
Six months to 30 Sept 2008 |
Six months to 30 Sept 2007 |
|
Unaudited |
Unaudited |
|
|
Profit on ordinary activities after taxation ($'000) |
3,521 |
3,096 |
|
Basic weighted average number of ordinary shares in issue (number) |
22,020,296 |
22,088,673 |
|
Diluted weighted average number of ordinary share in issue (number) |
22,439,144 |
22,728,122 |
10. Dividends
No dividend has been paid in the period (2007: $nil) and no interim dividend has been declared (2007: $nil).
11. Related party transactions
The company incurred the following costs in relation to consultancy services from related parties during the period:
|
$'000 |
Six months to 30 Sept 2008 |
Six months to 30 Sept 2007 |
|
Unaudited |
Unaudited |
|
|
Payments for consultancy services |
29 |
30 |
|
Merlin Scientific Limited* |
||
|
Amounts owed at the period end |
14 |
17 |
|
Merlin Scientific Limited* |
|
|
* Merlin Scientific Ltd is a company under the control of Sir Christopher Evans
12. Events occurring after the balance sheet date
There has been no significant event after the balance sheet date.
13. Principal Risks and Uncertainties
The management of the business and the execution of the Group' strategy are subject to a number of risks.
The key business risks affecting the Group are set out below:
Financial risk management
The Group's international operations expose it to a number of risks that include the effect of changes in foreign currency exchange rates, credit, liquidity and interest rates. The Group has in place a risk management program that seeks to limit the adverse effects on the financial performance of the Group. The Group does not enter into any derivative transactions or trade in financial instruments other than to hedge exposure to interest rates fluctuations.
(a) Foreign exchange risk
The Group policy has been to finance its operations in overseas subsidiary companies by generating cash through local currency sales, while surplus cash balances from overseas trading are used to finance UK central costs. Approximately 75% of the Group sales are denominated in US dollars and the remainder in Euros or Sterling. In respect of monetary assets and liabilities held in currencies other than the US dollar, namely Sterling and Euro, the Group ensures that the net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address short term imbalances. The principal payment liabilities of the Group in foreign currencies are hedged by trading cash flows.
The Group's foreign exchange exposure is continuously monitored.
(b) Interest rate risk
The Group finances its operations through a mixture of retained cash reserves, equity finance, and finance leases. The policy of the Group is to monitor exposure to interest rate risk and take into account potential movements in interest rates when selecting methods of financing or investing in short term deposits. Due to the securing of bank loan and credit facilities the policy regarding interest rate risk has been adjusted to include the hedging of exposure to interest rates fluctuations.
(c) Credit Risk
The Group is not dependant on a small number of large accounts and it does not believe it is exposed to major concentration of credit risk. In the event of non-performance by one of its largest customers the Group could be exposed to some credit-related losses, but does not expect any of its largest customers to fail to meet their obligations.
(d) Liquidity risks
The Group maintains a positive cash balance and has sufficient available funds for operations and planned expansions of its existing activities.
(e) Price risk
The Group is not exposed to commodity price risk.
Management of growth
The ability of the Group and its divisions to implement their strategy requires effective planning and management control systems. The Group's growth plan may place a significant strain on its divisions' management, operational, financial and personal resources. Therefore the divisions' future growth and prospects will depend on their ability to manage growth and to continue to expand and improve operational, financial and management information, and quality control systems on a timely basis, whilst at the same time maintaining effective cost controls. Any failure to expand and improve this information and these systems in line with the divisions' growth could have a material adverse effect on the divisions' business, financial condition or results of operations.
Dependence on key executives and personnel
The divisions' success is substantially dependant on retaining and incentivising senior management and certain key employees. The loss of the services of key personnel could have an adverse impact on the divisions' business. Such key employees could leave their divisions for a variety of reasons, including to go and work for one of the divisions' competitors.
Competition
The Directors intend to continue to invest in the growth opportunities that they perceive to exist in the markets the divisions operates in. However the divisions may face competitors who have greater capital and other resources than the divisions and who may be able to provide better products and services. There is no assurance that the divisions will be able to compete successfully in such an environment.
Supply chain
Each division sources its products and services independently from the other Group's divisions except for a few corporate services such as IT, Audit, Payroll etc. Each division has a different level of exposure to supply chain disruptions, and reliance on a single source supplier is mitigated by effective supplier selection, sound procurement practices, and contingency plans as part of the Risk Management process.
Statement of Director's responsibilities
The Directors confirm that this condensed consolidated half-yearly financial information for the six months ended 30 September 2008 has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.
The Directors of Celsis International Plc are listed in the Celsis International Annual Report for 31 March 2008.
By order of the Board
(signature)
Jay LeCoque
Chief Executive Officer
(Date)
(signature)
Christian Madrolle
Finance Director
& Company Secretary
(Date)
Forward Looking Statements
Certain statements in this half-yearly report are forward-looking. Although the group believes that the expectation reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied in these forward-looking statements.
We undertake no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Related Shares:
Celadon Pharmaceuticals