31st Oct 2007 07:02
Celsis International PLC31 October 2007 CELSIS INTERNATIONAL PLC ("Celsis", "the Company" or "the Group") INTERIM RESULTS for the six months to 30 September 2007 PERFORMANCE STRENGTHENS 31 October 2007: Celsis International plc, the life sciences products andlaboratory services company, today announces its interim results for the sixmonths to 30 September 2007. Highlights Financial:• Group revenues up 31% to $26.3 million (H1 2006: $20.1 million) • Rapid Detection division revenues up 19% to $9.8 million (H1 2006: $8.2 million) • Analytical Services division revenues consolidated at $9.9 million (H1 2006: up 35% to $9.9 million) • In Vitro Technologies Inc (IVT) full six month revenue of $6.6 million (H1 2006: $1.96 million since acquisition on 20 July 2006)• Gross margins increased to 68% (H1 2006: 65%)• EBITDA up 23% to $5.8 million (H1 2006: $4.7 million)• Operating profit up 19% to $4.6 million (H1 2006: $3.8 million)• Basic earnings per share up 15% to 14.02c (H1 2006: 12.22c) and diluted earnings per share up 13% to 13.62c (H1 2006: 12.08c) Operational:• Rapid Detection business rebounds with stronger instrument placement across industry sectors• Analytical Services business has consolidated its performance by maintaining revenues following strong 35% growth in H1 of last year• In Vitro Technologies adds new markets and broadens revenue mix; integration going to plan Jay LeCoque, Chief Executive Officer of Celsis, commented: "I am pleased to report a continued strengthening of performance from theexpanded Celsis Group and another overall strong set of results for the firsthalf of this year. We remain confident that our strategies for each divisionwill continue to drive the growth of our business and we are encouraged by thepace of our business development for the second half. "Celsis continues to benefit from its growing customer base that increasinglyfocuses on improving quality at reduced cost, which is a fundamental driver ofour business model. We are generating considerable new business through ourability to cross-sell into the pharmaceutical industry following the acquisitionof IVT, while continuing to expand our presence in the consumer product andbeverage industries where quality coupled with decreases in manufacturing costsis a perennial concern." ENQUIRIES:Celsis International plc Tel: 020 7831 3113Jay LeCoque, Chief Executive Officer on 31 October 2007Christian Madrolle, Finance Director Financial Dynamics Tel: 020 7831 3113Ben AtwellDavid Yates A presentation for analysts will be held at Financial Dynamics at 9.30am today,Wednesday 31 October 2007. Please call Gemma Cross Brown at Financial Dynamicson 0207 269 7125 for further details. Celsis International plc Celsis International plc is a world leading provider of innovative life scienceproducts and laboratory services to the pharmaceutical, biopharmaceutical, andconsumer products industries through its three business areas; rapid detection,analytical and drug development services and ADME-Tox in vitro technologies.The company is listed on the London Stock Exchange (CEL.L). Each division of Celsis International plc has the capacity to deliversubstantial time and cost savings to its customers, in addition to ensuringproduct quality and safety for consumers. Using proprietary technology, theCelsis Rapid Detection division provides diagnostic systems for the rapiddetection of contamination. These systems provide significant economic value byreducing the time it takes to test and release raw materials, in process andfinished goods to market. Celsis Analytical Services division provides costeffective outsourced laboratory testing services to pharmaceutical andbiopharmaceutical companies. Its comprehensive service offerings include a fullspectrum of laboratory services from drug development and discovery toanalytical chemistry and biological sciences to stability storage and testing.Celsis In Vitro Technologies (Celsis IVT) supplies in vitro testing products tothe pharmaceutical and biotechnology industries. Celsis IVT's in vitro productsscreen drug compounds early in the discovery process, thereby reducing the timeand cost of drug development. Further information can be found on its website at www.celsis.com. Chairman and Chief Executive's Review Introduction We are pleased to report strong revenue and profit growth for the first halfended 30 September 2007. Total Group revenue increased 31% to $26.3 million (H12006: $20.1 million), with organic business growth up 8% to $19.7 million (H12006: $18.2 million), and our new In Vitro Technologies (IVT) divisioncontributing $6.6 million of revenues for the full six months. The Group has made good progress in the first half of the year, with alldivisions now fully contributing to this reporting period. EBITDA increased 23%to $5.8 million (H1 2006: $4.7 million) and operating profits increased 19% to$4.6 million (H1 2006: $3.8 million). Profit before tax was up 6.1% to $4.2million (H1 2006: $4.0 million) and basic earnings per share increased 15% to14.02c (H1 2006: 12.22c), both being impacted by interest variance due to theshift between interest receivable last year and interest payable this year. Wehave continued with our plan to accelerate repayment of the loan utilised forthe IVT acquisition. Our Rapid Detection division recovered strongly from last year's brief slow downin instrument sales due to industry consolidation and also experienced healthygrowth in our reagents and consumables business. Our Analytical Servicesdivision delivered a solid first half across the business while consolidatingthe exceptional 35% revenue increase experienced from last year's first half.As previously reported, we also managed the unexpected wind down of a largecontract in our New Jersey Chemistry business and have made plans to cover thisshortfall accordingly in the second half. Our IVT division had a strong firsthalf following our recent integration activities and we remain optimistic aboutthe current and future potential of this new business. Celsis continues to focus on providing products and services which improve thequality levels and efficiencies of our customers' products and operations. EachCelsis division delivers market accelerating solutions to its customers that notonly save time and money but also help ensure enhanced product quality andsafety. An increasing number of businesses concentrate on speed to market as anindicator of their success, from drug discovery and development to streamlinedmanufacturing and continuous quality improvement. Celsis continues to benefitfrom these positive changes as more companies recognise the value of ourtechnologies and services. Celsis intends to remain well positioned to helpthese companies continue to succeed and we therefore expect healthy andsustainable business growth across the Company and remain confident in ourability to deliver a strong year end performance. Rapid Detection Division The Rapid Detection division, which provides rapid microbial detection systemsto more quickly ensure product safety and quality, represented 37% of Grouprevenues in the first half. Revenues were up a strong 19% to $9.8 million (H12006: $8.2 million) following last year's temporary slow down in instrumentsales during the first half, which was due to industry consolidation and somedelayed capital expenditure. Instrument sales in this year's first half were strong across both industrysegments and geographic regions. Reagents and consumables also posted stronggains across all segments demonstrating that Celsis' dedicated customer focus onproviding technical and validation support is generating consistent returns forthis business. Reagent kits now represent over 85% of the division's revenueand we expect continued growth in consumables as more and more products andprocesses are screened by our systems. Our continued focus on the pharmaceutical industry, together with our recentregulatory acceptances, is making the transition to Celsis Rapid Detectionsystems a much more streamlined process for pharmaceutical companies. We remainconfident in our strategies to help these companies save time and money as theneed for managing costs in the global healthcare industry accelerates. OurBeauty, Home and Beverage segments are growing in multiple ways as we continueto place new instruments for end product screening and expand our rapiddetection system applications to include water testing, in process and rawmaterials screening. New product development activities utilising alternative detection technologiesare being prepared for beta testing at some of our key customer sites. Thesenew tests will be able to be run on our existing instrument platforms andpromise to provide our customers with enhanced information and rapid actionableintelligence regarding microbial contaminations. Celsis is committed toremaining the global leader in rapid detection and these new tests are beingdeveloped with ease-of-use as one of the primary design objectives. Weanticipate an increase in the rate of adoption of Celsis' rapid testing systemsas customers become increasingly concerned about product safety and quality andsecuring continuous improvements in their supply chains. Analytical Services Division This division, which provides outsourced laboratory testing and drug developmentservices to the pharmaceutical industry, now represents 38% of Group revenues.Revenues for the first half were flat at $9.9 million (H1 2006: $9.9 million)after consolidating the exceptional 35% increase from last year's first half. As previously disclosed, our New Jersey Chemistry business experienced a winddown in one of its larger contracts faster than anticipated, and we have madeplans to recover this business in the second half. Our three other AnalyticalServices departments, St Louis Chemistry and New Jersey and St Louis BiologicalSciences, contributed double digit revenue growth helping to offset the relativedecline in New Jersey Chemistry. We have started to exploit the customer synergies from cross selling IVT'sDevelopment Services. Our combined marketing and business development effortshave enabled us to offer a much broader suite of services to our combinedcustomer base. We are also seeing success from the expansion of our businessdevelopment activities into new geographic areas to include those areas morespecialised in drug development. The Analytical Services division is expected to remain flat for the full year asthis division overcomes the impact of the temporary contract wind down in NewJersey, as well as continues to consolidate the strong demand and revenue gainsfrom last year into the second half. We remain encouraged with the new businessgrowth across all departments of the Analytical Services division and we areconfident in the customer focused strategies that have been put in place tosecure continued new contract growth into the second half of the financial yearand beyond. In Vitro Technologies Division The IVT division provides in vitro products to the pharmaceutical industry toreduce the time and cost of drug discovery and development, and now accounts for25% of Group revenues. First full six month revenues totalled $6.6 million (H12006: $1.96 million for 2.3 months from acquisition on 20 July 2006). We expectsome modest seasonality to be added into the second half for this new businessunit as R&D budgets are rushed to completion as well as initially renewed aroundthe early part of the calendar year. The integration of IVT into Celsis continues to plan and the business is showingsolid progress over the past year. As part of the integration, our IVT businessis being upgraded with new capital equipment designed to improve the consistencyof product quality as well as increase the speed of production. Newtechnologies are being developed to increase the use of our various productsinto expanding areas of drug development. We have upgraded our dedicatedbusiness development activities to broaden our presence in North America whilealso expanding our capabilities internationally. Celsis IVT remains committedto remaining a leader of both technology and quality in the field of ADME-Tox invitro products. IVT's Services Division, renamed Celsis Development Services (Celsis DS), hasbeen operationally integrated into a separate but augmented laboratory servicesoffering of our Analytical Services (AS) division from an operationalperspective but will still be accounted for under our IVT division for fullfinancial transparency. The abilities of our AS business development team tocross-sell DS services with AS services is proceeding and expanding as expected.Celsis DS intends to expand its pre-clinical drug development servicesoffering to include an expandable platform of cGLP and cGMP laboratory services.The addition of these services allows Celsis to increase the scope andpresence of its laboratory services offering into a much broader customer base. The addition of IVT has broadened Celsis' products and services offering to thepharmaceutical industry and complements our strategy of providing new productand service technologies that save our customers time and money. Days and worksaved early in the drug development process can mean millions of dollars in costsavings for pharmaceutical companies. We remain confident in the potential forstrong business growth from this new division in the second half of this yearand for the long term. Financial Review Total Group revenues for the six months ended 30 September 2007 were up 31% to$26.3 million (H1 2006: $20.1 million). Revenue growth has been particularlyhealthy in the Rapid Detection division, with strong performances in Europe,North America and Latin America. The IVT division revenue in Europe has alsoaccelerated following the closure of the Leipzig office and its transfer toBrussels. Gross profit increased 36.7% to $17.8 million (H1 2006: $13.0 million). The IVTdivision revenue now accounts for 25% of Group revenue (H1 2006: 9.7%) and thishas had a favourable impact on the overall Group gross margin which increased to68% (H1 2006: 65%). The Rapid Detection division net operating margin hasdecreased to 22.4% (H1 2006: 23.8%) due to the negative impact of the US/Euroexchange rate fluctuation during the period. Sales and marketing expenses increased 48.4% to $10.2 million (H1 2006: $6.9million), largely as a result of the integration of the IVT division's costsduring the full six months which represent 36.6% of the total increase. Administrative costs increased 27.5% to $2.7 million (H1 2006: $2.1 million) dueto the negative impact of the US$/Sterling exchange rate fluctuation during theperiod on the corporate and statutory costs, representing 8% of the increase.The recruitment and associated costs of two Non-Executive Directors, thetransfer of the Chicago Office and the amortisation of some intangible assetsduring the full six months as a result of the IVT acquisition were the otherdrivers of the increase. Operating profit rose 18.9% to $4.6 million (H1 2006: $3.8 million) and profitbefore tax increased 6.1% to $4.2 million (H1 2006: $4.0 million). The profitbefore amortisation of intangible assets was up 9% to $4.6 million (H1 2006:$4.2 million). The variance between the operating profit growth and the profit before taxgrowth was entirely due to the Company moving from a net interest receivablesituation last year of $0.16 million to a net interest payable situation of$0.32 million, a net difference of $0.48 million, due to the utilisation of ourcash reserves and the bank loan to finance the IVT acquisition last year. The IVT acquisition has been completed without raising additional equity as thiswould have had a more negative impact on Earnings per Share through the dilutionfactor. The Group has completed this major acquisition through a combination ofcash and debt and nevertheless managed to improve the Earnings per Share by14.7% to 14.02c (H1 2006: 12.22c) and diluted earnings per share are up 12.7% to13.62c (H1 2006: 12.08c). Total Group capital expenditure is up to $2.6 million (H1 2006: $1.2 million).We have continued our facilities upgrade programme in our AS laboratories in NewJersey and our IVT and DS laboratories in Baltimore. The consolidation of theRapid Detection division's departments, previously split in various locations,is now complete. Departments are now centralised in Chicago for the America'sand Brussels for Europe and Asia. The commissioning of two new Rapid Detectionlaboratories, one for customer applications and R&D and one to be used as amanufacturing pilot plant, have been completed in Chicago. Finally we havecontinued to capitalise some of our R&D activities in compliance with IAS38 forthe Rapid Detection division as well as for the IVT division. Inventory is up 1.6% to $7.5 million (March 2007: $7.39 million). Trade andOther Receivables are up to $10.7 million (March 2007: $10.0 million),reflecting the increased revenue. Current liabilities have decreased to $7.0 million (March 2007: $8.1 million)and include $2.7 million representing the short term portion of the bank loanpayable within the next twelve months, $1 million representing the IVT creditorsand $0.18 million of accrued interest payable on the bank loan. The long term portion of the remaining bank loan is now $4.6 million against$10.6 million a year ago (March 2007: $8.0 million). The total non currentliabilities are down at $7.1 million against $11.3 million a year ago (March2007: $10.4 million) reflecting the accelerated repayment of the initial $13.5million bank loan secured to finance IVT acquisition. Our closing cash position has decreased to $3.2 million (March 2007: $6.0million) as we have made early bank loan redemptions for an amount of $3.4million since March 2007, reducing future interest payable, and strengtheningour balance sheet post IVT acquisition. We have sufficient working capital andfinance to service our on-going investment and trading activities. The Directors have adopted the going concern basis in preparing the Company'sinterim statements. Equity shareholders' funds have increased 7.2% to $47.5million (March 2007: $44.3 million). As our significant cash generation continues we expect to be able to repay anincreasing portion of the long term debt at an earlier stage, therebystrengthening the Group Balance Sheet, allowing us to deliver increasedshareholder value and better enable the Group to pursue its organic and externalgrowth. Outlook We are encouraged with our Group performance in this first half and remainconfident in our ability to deliver strong year end results. In the second halfof the year we expect to see continued strong profit growth from our RapidDetection division which will balance the consolidation of our AnalyticalServices division, with our In Vitro Technologies division continuing to performto expectations. Our strategies to offer leading edge technologies and laboratory services thathelp our customers save both time and money from pre-clinical drug developmentthrough product manufacture to final supply chain management are well receivedby our pharmaceutical and consumer product customers. We remain confident thatwe have assembled a combined business offering which will deliver a strong yearend performance and are enthusiastic about the Company's long term prospects. Jay LeCoque, Chief Executive OfficerJack Rowell, Non-Executive Chairman31 October 2007 Consolidated Income Statementfor the 6 months ended 30 September 2007 $'000 Six months Six months to 30 Sept to 30 Sept 2007 2006 Unaudited Unaudited _____ _____ Revenue 26,286 20,125Cost of Sales (8,536) (7,143) _____ _____ Gross profit 17,750 12,982 Sales & marketing expenses (10,173) (6,852)Administrative expenses (2,721) (2,134)Research & development expenditure (302) (166) _____ _____Total operating expenses (13,196) (9,152) _____ _____ Operating profit 4,554 3,830 _____ _____ Analysed asEBITDA 5,809 4,706Depreciation of property, plant and equipment (940) (695)Amortisation of intangible assets (315) (181) _____ _____Operating Profit 4,554 3,830 _____ _____ Interest receivable & similar income 73 336Interest payable & similar charges (395) (179) _____ _____ Profit before taxation 4,232 3,987 _____ _____ Profit before amortisation of intangible 4,547 4,168assets _____ _____ Taxation (1,136) (1,288) _____ _____ Profit for the period 3,096 2,699 _____ _____ Earnings per Ordinary ShareBasic earnings per Ordinary Share 14.02c 12.22cDiluted earnings per Ordinary Share 13.62c 12.08c Consolidated Balance Sheetat 30 September 2007 $'000 At 30 Sept At 31 March 2007 2007 Unaudited Audited _____ _____ AssetsNon-current assetsIntangible assets 30,803 30,795Property, plant and equipment 7,685 6,268Other receivables and prepayments 63 69Deferred tax asset 1,585 2,387 _____ _____ 40,136 39,519Current assetsInventory 7,515 7,394Trade and other receivables 10,729 9,952Current tax asset - -Cash and cash equivalents 3,201 5,946 _____ _____ 21,445 23,292LiabilitiesCurrent liabilitiesBorrowings (1,496) (1,604)Trade and other payables (5,537) (6,448) _____ _____ (7,033) (8,052) _____ _____ Net current assets 14,412 15,240 Non-current liabilitiesBorrowings (4,616) (7,964)Other non-current liabilities (1,095) (1,108)Deferred tax liabilities (1,355) (1,355) _____ _____ (7,066) (10,427) _____ _____ Net assets 47,482 44,332 _____ _____ Shareholders' equityCalled up share capital 1,611 1,611Share premium account 13,120 13,120Treasury shares (1,201) (1,201)Currency translation reserve 358 438Retained earnings 32,112 28,882Reserve arising on consolidation 1,482 1,482 _____ _____ Total equity 47,482 44,332 _____ _____ Cashflow Statementfor the 6 months to 30 September 2007 $'000 Six months Six months to 30 Sept to 30 Sept 2007 2006 Unaudited Unaudited _____ _____ Cash flows from operating activities 4,051 2,641Tax paid (378) (372)Interest paid (341) (4)Interest received 73 404 _____ _____Net cash generated by operating activities 3,405 2,669 Cash flows from investing activitiesAcquisition of subsidiary, net of cash acquired - (30,408)Purchase of property, plant and equipment (1,788) (1,015)Expenditure on intangible fixed assets (314) (390) _____ _____Net cash used in investing activities (2,102) (32,813) Cash flows from financing activitiesPurchase of treasury shares - -New bank loans - 13,188New finance leases - 28Repayment of principal under finance leases (98) (24)Repayment of loan principal (3,508) - _____ _____Net cash (used in)/generated by financial activities (3,606) 13,192 Effects of exchange rate changes (442) 316 _____ _____ Net (decrease) in cash and cash equivalents in the period (2,745) (15,636) _____ _____ Cash and cash equivalents at the beginning of the period 5,946 21,174Cash and cash equivalents at the end of the period 3,201 5,538 _____ _____ Reconciliation of profit before taxation to cash generated byoperationsProfit before taxation 4,232 3,987Depreciation of property, plant and equipment 940 695Amortisation of intangible assets 315 181Loss on disposal of property, plant and equipment - 4Share option compensation charge 134 170Net finance expense/(income) 322 (157) _____ _____Operating cash flow before changes in working capital and provisions 5,943 4,880(Increase) in receivables (771) (136)(Increase) in inventory (121) (434)(Decrease) in payables (1,000) (1,669) _____ _____Cash flows from operating activities 4,051 2,641 _____ _____ Unaudited Consolidated Statement of Changes in Shareholders' Equity Balanceat 1 October 2007 $'000 Share Share Treasury Currency capital premium shares translation account reserve _____ _____ _____ _____ Balance at 1 April 2006 1,611 13,120 (1,224) (197) Movement in own sharesProfit for the six months ended 30 September 2006Currency translation differences -group 463Share option compensation charge Balance at 30 September 2006 1,611 13,120 (1,224) 266 _____ _____ _____ _____ Balance at 1 April 2007 1,611 13,120 (1,201) 438 _____ _____ _____ _____ Profit for the six months ended30 September 2007Currency translation differences -group (80)Share option compensation charge Balance at 30 September 2007 1,611 13,120 (1,201) 358 _____ _____ _____ _____ Continued from table above $'000 Retained Reserve arising Total earnings on consolidation _____ _____ _____ Balance at 1 April 2006 22,498 1,482 37,290 Movement in own shares -Profit for the six months ended 2,699 2,699 30 September 2006Currency translation differences -group 463Share option compensation charge 170 170 Balance at 30 September 2006 25,367 1,482 40,622 _____ _____ _____ Balance at 1 April 2007 28,882 1,482 44,332 _____ _____ _____ Profit for the six months ended 3,096 3,09630 September 2007Currency translation differences -group (80)Share option compensation charge 134 134 Balance at 30 September 2007 32,112 1,482 47,482 _____ _____ _____ Notes to the Financial Statementsfor the 6 months to 30 September 2007 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 StockExchange. This condensed consolidated half-yearly financial information wasapproved for issue on 29 October 2007. These interim financial statements donot comprise statutory accounts within the meaning of Section 240 of theCompanies Act 1985. Statutory accounts for the year ended 31 March 2007 wereapproved by the Board of Directors on 25 June 2007 and delivered to theRegistrar of Companies. The report of the auditors on those accounts wasunqualified and did not contain an emphasis of matter paragraph and anystatement 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 half yearended 30 September 2007 has been prepared in accordance with the Disclosure andTransparency Rules of the Financial Services Authority and with IAS 34, 'Interimfinancial reporting' as adopted by the European Union. The half-yearlycondensed consolidated financial report should be read in conjunction with theannual financial statements for the year ended 31 March 2007, which have beenprepared in accordance with IFRS as adopted by the European Union. Thehalf-yearly financial information has not been audited or reviewed by auditorspursuant to the Auditing Practices Board guidance on Review of Interim FinancialInformation. 3. Accounting policies The accounting policies adopted are consistent with those of the annualfinancial statements for the year ended 31 March 2007, as described in thosefinancial statements. The Group will adopt IFRIC 11, 'IFRS 2- Group and sharetreasury transactions', effective for annual periods beginning on or after 1March 2007 in its year end financial statements. The adoption of this standardhad had no impact on the consolidated results of the Group for the six monthsended 30 September 2007. As this interim report contains only condensed financial statements, and asthere are no material financial instrument related transactions in the period,full IFRS 7, 'Financial Instrument Disclosures' disclosures are not required atthis stage. The standard is effective for annual periods beginning on or after1 January 2007. The full IFRS 7 disclosures, including the sensitivity analysisto market risk and capital disclosures required by the amendment of IAS 1, willbe given in the annual financial statements. 4. Segment information $'000 Six months to 30 September 2007 Rapid Analytical In Vitro Detection Services Technologies Group _____ _____ _____ _____ Revenue 9,769 9,923 6,594 26,286Segment result / operating profit 2,185 1,564 805* 4,554Interest receivable 73Interest payable (395)Net result before tax 4,232Net result after tax 3,096 $'000 Six months to 30 September 2006 Rapid Analytical In Vitro Detection Services Technologies Group _____ _____ _____ _____ Revenue 8,203 9,960 1,962 20,125Segment result / operating profit 1,954 1,656 220* 3,830Interest receivable 336Interest payable (179)Net result before tax 3,987Net result after tax 2,699 * Administrative and central costs have been allocated to In Vitro Technologiesfor the first time during the period ended 30 September 2007. 5. Capital Expenditure $'000 Tangible and intangible Assets _____ Six months ended 30 September 2006Opening net book amount 1 April 2006 8,009Acquisition of subsidiary 27,551Additions 1,223Amortisation, depreciation & other movements (876) _____Closing net book amount 30 September 2006 35,907 _____ Six months ended 30 September 2007Opening net book amount 1 April 2007 37,063Additions 2,614Amortisation, depreciation & other movements (1,189) _____Closing net book amount 30 September 2007 38,488 _____ 6. Share capital $'000 Number Nominal Value _____ _____ At the beginning and at the end of the period 22,483,044 1,611 _____ _____ 7. Borrowings and loans $'000 At 30 Sept At 31 March 2007 2007 Unaudited Audited _____ _____ Non current 4,616 7,964Current 1,496 1,604 _____ _____ 6,112 9,568 _____ _____ Movement in borrowings is analysed as follows Six months ended 30 September 2006Opening amount as at 1 April 2006 -Net bank loan secured during the period 13,188Bank loans acquired during the period on business 172combinationRepayments (41)Accretion of loan agreement fees 20Accrued interest 174 _____Closing amount as at 30 September 2006 13,513 _____ Six months ended 30 September 2007Opening amount as at 1 April 2007 9,568Repayments (3,508)Accretion of loan agreement fees 52 _____Closing amount as at 30 September 2007 6,112 _____ 8. Income taxes The Corporation tax accrual for the interim period is charged at 26.8%representing the best estimate of the weighted average annual corporation taxrate expected for the full financial year. Differences between the effectivetax rate of 26.8% and the notional statutory UK rate of 30% include, but are notlimited to the effect of tax rates in foreign jurisdictions, non deductibleexpenses and US tax credit on goodwill depreciation arising from the IVTacquisition. 9. Earnings per share Six months Six months to 30 Sept to 30 Sept 2007 2006 Unaudited Unaudited _____ _____ Profit on ordinary activities after taxation ($'000) 3,096 2,699Basic weighted average number of ordinary shares in issue (number) 22,088,693 22,081,673Diluted weighted average number of ordinary share in issue (number) 22,728,122 22,341,881 _____ _____ 10. Dividends No dividend has been paid in the period (2006: $nil) and no interim dividend hasbeen declared (2006: $nil). 11. Related party transactions The Company incurred the following costs in relation to consultancy servicesfrom related parties during the period: $'000 Six months Six months to 30 Sept to 30 Sept 2007 2006 Unaudited Unaudited _____ _____ Payments for consultancy services 30 27Merlin Scientific Limited*Amounts owed at the period end 17 16Merlin 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 post balance sheet date. 13. Principal risks and uncertainties The management of the business and the execution of the Group's strategy aresubject to a number of risks. The key business risks affecting the Group areset out below: Financial risk management The Group's international operations expose it to a number of risks that includethe effect of changes in foreign currency exchange rates, credit, liquidity andinterest rates. The Group has in place a risk management program that seeks tolimit the adverse effects on the financial performance of the Group. The Groupdoes not enter into any derivative transactions or trade in financialinstruments other than to hedge exposure to interest rates fluctuations. (a) Foreign exchange risk The Group policy has been to finance its operations in overseas subsidiarycompanies by generating cash through local currency sales, while surplus cashbalances from overseas trading are used to finance UK central costs.Approximately 75% of the Group sales are denominated in US dollars and theremainder in Euros or Sterling. In respect of monetary assets and liabilitiesheld in currencies other than the US dollar, namely Sterling and Euro, the Groupensures that the net exposure is kept to an acceptable level by buying orselling foreign currencies at spot rates where necessary to address short termimbalances. The principal payment liabilities of the Group in foreigncurrencies 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 monitorexposure to interest rate risk and take into account potential movements ininterest rates when selecting methods of financing or investing in short termdeposits. Due to the securing of bank loan and credit facilities the policyregarding interest rate risk has been adjusted to include the hedging ofexposure to interest rates fluctuations. (c) Credit Risk The Group is not dependant on a small number of large accounts and it does notbelieve it is exposed to major concentration of credit risk. In the event ofnon-performance by one of its largest customers the Group could be exposed tosome credit-related losses, but does not expect any of its largest customers tofail to meet their obligations. (d) Liquidity risks The Group maintains a positive cash balance and has sufficient available fundsfor 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 requireseffective planning and management control systems. The Group's growth plan mayplace a significant strain on its divisions' management, operational, financialand personal resources. Therefore the divisions' future growth and prospectswill depend on their ability to manage growth and to continue to expand andimprove operational, financial and management information, and quality controlsystems on a timely basis, whilst at the same time maintaining effective costcontrols. Any failure to expand and improve this information and these systemsin line with the divisions' growth could have a material adverse effect on thedivisions' business, financial condition or results of operations. Dependence on key executives and personnel The divisions' success is substantially dependant on retaining and incentivisingsenior management and certain key employees. The loss of the services of keypersonnel could have an adverse impact on the divisions' business. Such keyemployees could leave their divisions for a variety of reasons, including to goand work for one of the divisions' competitors. Competition The Directors intend to continue to invest in the growth opportunities that theyperceive to exist in the markets the divisions operates in. However thedivisions may face competitors who have greater capital and other resources thanthe 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 insuch an environment. Supply chain Each division sources its products and services independently from the otherGroup's divisions except for a few corporate services such as IT, audit, payrolletc. Each division has a different level of exposure to supply chaindisruptions, and reliance on a single source supplier is mitigated by effectivesupplier's selection, sound procurement practices and contingency plans as partof the Risk Management process. Statement of Directors' responsibilities The Directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union, and thatthe interim management report herein includes a fair review of the informationrequired by DTR 4.2.7 and DTR 4.2.8. The Directors of Celsis International plc are listed in the Celsis InternationalAnnual Report for 31 March 2007, with the exception of the following changes inthe period: Mr Peter Jensen and Mr Nicholas Badman were appointed as NonExecutive Directors on 7 May 2007, and on 22 June 2007 Mr Peter Jensen has beenappointed Chairman of the Remuneration Committee and Mr Nicholas Badman Chairmanof the Audit Committee. Dr Derek Pearce stepped down from the Board on 26 July2007. By order of the Board Jay LeCoqueChief Executive Officer29 October 2007 Christian MadrolleFinance Director& Company Secretary29 October 2007 Forward Looking Statements Certain statements in this half-yearly report are forward-looking. Although theGroup believes that the expectation reflected in these forward-lookingstatements are reasonable, we can give no assurance that these expectations willprove to have been correct. Because these statements involve risks anduncertainties, actual results may differ materially from those expressed orimplied in these forward-looking statements. We undertake no obligation to update any forward-looking statements whether as aresult of new information, future events or otherwise. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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