8th Nov 2006 07:00
Celsis International PLC08 November 2006 CELSIS INTERNATIONAL PLC ("Celsis", "the Company" or "the Group") INTERIM RESULTS for the six months to 30 September 2006 STRONG REVENUE AND PROFIT GROWTH 8 November 2006: Celsis International plc, the life sciences products andlaboratory services company, today announces its interim results for the sixmonths to 30 September 2006. Highlights Financial: • Group revenues up 29% to $20.13 million (H1 2005: $15.65 million) • Organic business revenues up 16% to $18.16 million (H1 2005: $15.65 million) • In Vitro Technologies Inc (IVT) acquired revenue of $1.96 million from 20 July 2006 • Gross margins remain strong at 65% (H1 2005: 68%) • Profit before tax up 12% to $3.99 million (H1 2005: $3.56 million) • Earnings per share up 12.7% to 12.22c (H1 2005: 10.84c) and after-tax diluted earnings per share up 12.4% to 12.08c (H1 2005: 10.75c) • Cash position at $5.54 million following acquisition of IVT Operational: • Analytical Services division delivers record first half revenues up 35% • Celsis Drug Master File (DMF) accepted by US Food and Drug Administration (FDA) for pharmaceutical rapid detection system • Completed acquisition of IVT with integration proceeding as planned • Expands pharmaceutical product and services offering • Recurring revenue business with 80% of revenues coming from consumable kits • Earnings enhancing in first full year of operations Jay LeCoque, Chief Executive Officer of Celsis, commented: "I am pleased to announce another strong set of results in the year's firsthalf. Organic business revenue growth is up 16% and, with the addition of ournewly acquired In Vitro Technologies (IVT) division, revenues are up 29%.Profits are up 12% following this acquisition early in the half. "We remain encouraged by the performance of the Company and look forward tocontinued growth from further synergies and the cross selling opportunities fromIVT that have yet to be realised. As the need for managing costs in the globalhealthcare industry accelerates, Celsis has strengthened its strategy to offercustomers the opportunity to save both time and money. The Company is wellpositioned for further revenue and profit growth and I remain enthusiastic aboutthe Company's prospects for the full year." Enquiries: Celsis International plc Tel: 01638 600 151Jay LeCoque, Chief Executive Officer Tel: 020 7831 3113Christian Madrolle, Finance Director on 8 November 2006 Financial Dynamics Tel: 020 7831 3113Anna KeebleBen Atwell A presentation for analysts will be held at Financial Dynamics at 9.30am today,Wednesday 8 November 2006. Please call Mo Noonan at Financial Dynamics on 0207269 7116 for further details. Celsis International plc Celsis International plc provides value enhancing products and services to thepharmaceutical, biopharmaceutical, and consumer products industries through itsthree business areas; rapid detection, analytical services and in vitrodiagnostics. The company is listed on the London Stock Exchange (CEL.L). Each division of Celsis has the capacity to deliver substantial time and costsavings to its customers, in addition to ensuring product quality and safety forconsumers. Using proprietary technology, the rapid detection business is theworld leader in the provision of diagnostic systems for the rapid detection ofcontamination. By reducing the time it takes to test and release raw materialsand finished goods to the market place, Celsis technology facilitates increasedmanufacturing productivity and improved supply chain management. The analyticalservices division provides outsourced laboratory testing services topharmaceutical and biopharmaceutical companies to ensure the stability andchemical composition of their products. In Vitro Technologies (IVT) supplies invitro testing products and services to the pharmaceutical and biotechnologyindustries. IVT's in vitro products and services screen drug compounds early inthe discovery process, thereby reducing the time and cost of drug development. Further information can be found on its website at www.celsis.com. Chairman and Chief Executive's Review Introduction For the first half ending 30 September 2006, we are pleased to report strongorganic and acquired revenue growth coupled with continued profit growth. TotalGroup revenue increased 29% to $20.13 million (H1 2005: $15.65 million) withorganic business growth up 16% to $18.16 million (H1 2005: $15.65 million), andour new In Vitro Technologies (IVT) division adding $1.96 million in revenuessince 20 July 2006. Profit before tax increased a healthy 12% to $3.99 million(H1 2005: $3.56 million). The Company has made good progress in the first half of the year, including thecompletion of the acquisition of IVT. Our Analytical Services divisiondelivered an exceptionally strong half in addition to rebounding from lastyear's slower first half. The Rapid Detection business model is strong with theReagent business remaining robust, and although we experienced a brief slow downin instrument sales due to recent industry consolidations and delayed capitalexpenditure, the division is now showing signs of a stronger second half and weremain on track to meet our revenue and profit targets for the year. Our focus on providing products and services which save our customers both timeand money by utilising enhanced technologies is resonating across our businessdivisions. An increasing amount of businesses are concentrating on speed tomarket as an indicator of their success. From drug discovery and development tostreamlined manufacturing and continuous quality improvement, the focus on timesavings and cost efficiencies is driving positive change in today'spharmaceutical and consumer products companies. Celsis is very well positionedto help these 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. Analytical Services Division Revenues in the first half increased an outstanding 35% to $9.96 million (H12005: $7.36 million) as our New Jersey business continued to accelerate and theSt Louis business rebounded from last year's temporary slowdown. We remainconfident in our strategy of focusing our business growth on customer needs andhigher margin services and are comfortable that our current momentum willcontinue in the second half and beyond. The healthy growth which our Analytical Services division experienced in thesecond half of last year has accelerated into the first half of this year withstrong demand continuing. This division, which provides outsourced laboratorytesting services to the pharmaceutical and biopharmaceutical industries toensure the safety and chemical composition of their products, now represents 55%of total organic Group revenues following its exceptionally strong first half. Our recently expanded New Jersey operation has been successful in retainingcurrent contracts as well as securing new business with higher margin serviceofferings. In particular, the New Jersey Analytical Chemistry business nowrepresents $4.47 million or 45% of the total Analytical Services revenue. Weexpect this division to maintain its excellent growth into the second half ofthe financial year and beyond as momentum remains strong. Rapid Detection Division Revenues were slightly off, by 1%, at $8.20 million (H1 2005: $8.29 million)resulting from a temporary slow down in instrument sales during the first half.This was due to recent industry consolidations and delayed capital expenditure.However, the division is now showing signs of a stronger second half. The RapidDetection division, which provides rapid microbial detection systems to morequickly ensure the safety and quality of products bound for consumers,represented 45% of total organic Group revenues in the first half. Reagent kitsnow represent over 85% of the division's revenue and continue to grow robustlyas more and more products are being screened by our rapid detection systems. We are pleased to announce the acceptance of Celsis' Drug Master File (DMF) fromthe Food and Drug Administration (FDA) for our pharmaceutical reagent kits andhave been working closely with the FDA to enable pharmaceutical companies tosecure regulatory approval more easily for our rapid detection systems. The DMFgreatly streamlines the FDA approval process for our customers as it can now beused as a pre-accepted point of reference for companies' FDA filings. We remainconfident in our strategy to help pharmaceutical companies save time and moneyas the need for managing costs in the global healthcare industry accelerates. Our new product development activity utilising alternative detectiontechnologies continues as Celsis remains committed to being the global leader inrapid detection. We have patents being developed in several new applicationsand will be able to provide more information in the near future. As ourcustomers are becoming more concerned about the safety of their products, aswell as the efficiency of their supply chain management, we are seeing theinterest in and rate of adoption of our testing systems increasing. In Vitro Technologies Division The integration of IVT is progressing to plan and the business is showing goodgrowth. Revenues from IVT totalled $1.96 million from the close of theacquisition on 20 July 2006. The Analytical Services business development teamhas been trained to introduce IVT's drug development services to theirpharmaceutical and biotechnology customer base and we have started to seeinitial success from this cross selling activity. IVT remains a leader in thefield of ADME-Tox in vitro diagnostic products used to help screen the growingnumber of drug compounds used in pre-clinical drug discovery and development. The addition of IVT strengthens the breadth of Celsis' products and servicesoffering into the pharmaceutical industry and compliments our strategy ofoffering new product and service technologies to save our customers time andmoney. IVT utilises leading edge in vitro diagnostic products and services toreduce the time and cost of drug discovery and development. Days and work savedearly in the drug development process can mean millions of dollars in costsavings for pharmaceutical companies. We foresee strong growth andprofitability from this new division in the second half of this year and in thelonger term. Financial Review Total Group revenue for the six months ended 30 September 2006 was up 29% to$20.13 million (H1 2005: $15.65 million), with a strong performance from theAnalytical Services division and the In Vitro Technologies division contributing$1.96 million in the period. Gross profit increased 22.7% to $12.98 million (H1 2005: $10.58 million). Therelative importance of the growth in the Analytical Services division hasresulted in a reduction in the overall gross margin rate to 65% (H1 2005: 68%).Sales and marketing expenses increased 30% to $6.85 million (H1 2005: $5.25million) largely as a result of the Analytical Services divisions' requirementsto meet the strong increase in activity and the integration of IVT operationalcosts. Administration and R&D costs increased 14.2% to $2.30 million (H1 2005: $2.01million) due to the negative impact of the US$/Sterling exchange ratefluctuation during the period on the corporate and statutory costs. Operatingprofit rose 15.7% to $3.83 million (H1 2005: $3.31 million) and profit beforetax increased 12.1% to $3.99 million (H1 2005: $3.56 million). For the six-month period, we accrued a future tax-charge based on the currentprofitability of our UK and US entities amounting to $1.29 million (H1 2005:$1.14 million). A large proportion of this tax charge has been allocated to ourDeferred Tax Assets account, saving the Company substantial cash outflow. Earnings per share were up 12.7% to 12.22c (H1 2005: 10.84c) and after-taxdiluted earnings per share up to 12.4% to 12.08c (H1 2005: 10.75c). Total Groupcapital expenditure increased to $1.61 million (H1 2005: $1.28 million) afterthe integration of IVT. Stocks were up to $6.51 million (H1 2005: $2.51million) largely due to the integration of IVT inventory of $3.41 million.Trade and Other Receivables were up to $9.5 million (H1 2005: $7.47 million),reflecting the $1.62 million added after the integration of IVT Trade and OtherReceivables. Creditors increased to $8.1 million (H1 2005: $3.48 million) due to theinclusion of $2.7 million representing the short term portion of the bank loanpayable within the next 12 months, $1 million representing IVT creditors and$0.18 million of accrued interest payable on the bank loan. The long termportion of the remaining bank loan is $10.8 million (H1 2005: nil) and the totalnon current liabilities are $11.34 million (H1 2005: $0.19 million). Our closing cash position decreased to $5.54 million (H1 2005: $17.34 million)after taking into consideration a net cash outflow of $18.5 million and a netcash acquired inflow of $1.3 million resulting from the IVT acquisition.Shareholders' funds increased 14.4% to $40.62 million (H1 2004: $35.49 million). With the cash generation continuing as planned, we expect to pay down anincreasing portion of the long term debt at an earlier stage than our loanagreement stipulates and thereby continue to strengthen the Group Balance Sheet,deliver increased shareholder value and allow the Group to pursue both organicand external growth by acquisitions. Outlook We are encouraged with the performance in the first half and remain confident inour ability to deliver successful year end results. Our strong revenue growthcoupled with a solid profit increase highlights the strength of the Company andwe are confident that further revenue and profit synergies will be realised asour new IVT division becomes more integrated into the business. Our focus on providing new technologies to save our customers both time andmoney from drug development to product manufacture and supply chain managementcontinues to be well received by our pharmaceutical and consumer productcustomers. We are confident that we have the correct business strategies inplace to accelerate revenue growth whilst continuing to deliver consistent andstrong profit growth. We would like to thank all of our employees around the world for their manyindividual and combined contributions during this first half as well as ourshareholders for their support of our recent acquisition and continuedconfidence in Celsis. We are optimistic of our ability to deliver a strong yearend performance and are enthusiastic about the Company's longer term prospects. Jay LeCoque, Chief Executive Officer Jack Rowell, Non-Executive Chairman 8 November 2006 Consolidated Income Statementfor the 6 months ended 30 September 2006 $'000 Six months Six months Year to 30 Sept to 30 Sept to 31 March 2006 2005 2006 Unaudited Unaudited Audited _____ _____ _____ Revenue 20,125 15,650 33,104Cost of Sales (7,143) (5,071) (11,305) _____ _____ _____Gross profit 12,982 10,579 21,799 OverheadsSales & marketing expenses (6,852) (5,254) (10,972)Administrative expenses (2,134) (1,904) (3,892)Research & development expenditure (166) (110) (335) _____ _____ _____Operating profit 3,830 3,311 6,600 Interest receivable & similar income 336 254 628Interest payable & similar charges (179) (6) (24) _____ _____ __________Profit before taxation 3,987 3,559 7,204 Taxation (1,288) (1,139) (2,601) _____ _____ _____Profit for the period 2,699 2,420 4,603 _____ _____ _____Dividends Final 2005 paid at 5.13 cents per share - 1,150 1,150 Earnings per Ordinary ShareBasic earnings per Ordinary Share 12.22c 10.84c 20.78cDiluted earnings per Ordinary Share 12.08c 10.75c 20.57c Statement of Recognised Income and Expensefor the 6 months to 30 September 2006 Profit for the period 2,699 2,420 4,603Net exchange adjustment offset in reserve net of tax 26 (307) (377) _____ _____ _____Total recognised income for the period 2,725 2,113 4,226 _____ _____ _____ All results are from continuing operations Consolidated Balance Sheetat 30 September 2006 $'000 At 30 Sept At 30 Sept At 31 March 2006 2005 2006 Unaudited Unaudited Audited _____ _____ _____AssetsNon-current assetsGoodwill 27,551 1,143 1,143Intangible assets 2,531 1,679 2,214Property, plant and equipment 5,825 4,116 4,652Other receivables and prepayments 45 81 23Deferred tax asset 150 2,050 2,050 _____ _____ _____ 36,102 9,069 10,082Current assetsInventory 6,514 2,513 2,813Trade and other receivables 9,503 7,473 7,444Current tax asset 2,375 2,760 1,792Cash and cash equivalents 5,538 17,341 21,174 _____ _____ _____ 23,930 30,087 33,223LiabilitiesCurrent liabilitiesTrade and other payables (8,073) (3,480) (5,514) _____ _____ _____Net current assets 15,857 26,607 27,709 Non-current liabilitiesOther non-current liabilities (11,337) (186) (501) _____ _____ _____Net assets 40,622 35,490 37,290 _____ _____ _____Shareholders' equityCalled up share capital 1,611 1,611 1,611Share premium account 13,120 13,120 13,120Treasury shares (1,224) (715) (1,224)Currency translation reserve 266 (127) (197)Retained earnings 25,367 20,119 22,498Reserve arising on consolidation 1,482 1,482 1,482 _____ _____ _____Total equity 40,622 35,490 37,290 _____ _____ _____ Cashflow Statementfor the 6 months to 30 September 2006 $'000 Six months Six months Year to 30 Sept to 30 Sept to 31 March 2006 2005 2006 Unaudited Unaudited Unaudited _____ _____ _____Cash flows from operating activities 2,641 2,682 8,939Tax paid (372) (85) (647)Interest paid (4) (6) (24)Interest received 404 254 590 _____ _____ _____Net cash from operating activities 2,669 2,845 8,858 Cash flows from investing activitiesPurchase of property, plant and equipment (1,015) (893) (1,595)Purchase of intangible fixed assets (390) (391) (1,000)Acquisition of subsidiary (32,021) - -Cash acquired 1,308 - - _____ _____ _____Net cash used in investing activities (32,118) (1,284) (2,595) Cash flows from financing activitiesDividends paid - (1,150) (1,150)Purchase of treasury shares - (295) (804)New bank loans 13,500 - -New finance leases 28 - -Repayment of principal under finance leases (24) (37) (115) _____ _____ _____Net cash used in financial activities 13,504 (1,482) (2,069) Effects of exchange rate changes 309 (101) (383) _____ _____ _____Net (decrease)/increase in cash and cash equivalents in (15,636) (22) 3,811the period _____ _____ _____ Cash and cash equivalents at the beginning of the period 21,174 17,363 17,363Cash and cash equivalents at the end of the period 5,538 17,341 21,174 _____ _____ _____ Reconciliation of operation profit to cash generated from operations Profit before taxation 3,987 3,559 7,204Depreciation of tangible fixed assets 695 563 1,209Amortisation of intangible assets 181 165 349Loss/(profit) on disposal of tangible fixed assets 4 - 10Share option compensation charge 170 50 239Net finance expense/(income) (157) (248) (604) _____ _____ _____Operating cash flow before changes in working capital and 4,880 4,089 8,407provisions(Increase)/decrease in receivables (136) (1,018) (759)Decrease/(increase) in inventory (434) 258 31(Decrease)/increase in payables (1,669) (637) 1,270(Decrease) in provisions - (10) (10) _____ _____ _____Cash flows from operating activities 2,641 2,682 8,939 _____ _____ _____ Notes to the Financial Statementsfor the 6 months to 30 September 2006 1. Basic & diluted profit per ordinary share $'000 Six months Six months Year to 30 Sept to 30 Sept to 31 March 2006 2005 2006 Unaudited Unaudited Audited _____ _____ _____ Profit on ordinary activities after taxation 2,699 2,420 4,603Basic weighted average number of ordinary shares in issue 22,081,673 22,322,881 22,148,577Diluted weighted average number of ordinary share in 22,341,881 22,515,510 22,374,644issue _____ _____ _____ 2. Basis of preparation - International Financial Reporting Standards The financial information prepared in accordance with the Group's IFRSaccounting policies comprises the consolidated balance sheets as of 30 September2006 and 30 September 2005 and related consolidated interim statements of incomeand cash flows for the six months then ended, together with related notes. Thisfinancial information has been prepared in accordance with the Listing Rules ofthe Financial Services Authority. In preparing this financial informationmanagement has used the principal accounting policies as set out in the Group'sAnnual Report and Accounts for the year ended 31 March 2006. The Group haschosen not to adopt IAS 34, 'Interim financial statements', in preparing its2006 interim statements and, therefore, this interim financial information isnot in compliance with IFRS. 3. Dividends $'000 Six months Six months to 30 Sept to 30 Sept 2006 2005 Unaudited Unaudited _____ _____ Final dividend paid - c: (2005: 5.13c) per ordinary share - 1,150 _____ _____ The Directors have declared no interim dividend. 4. Taxation $'000 Six months Six months to 30 Sept to 30 Sept 2006 2005 Unaudited Unaudited _____ _____ United Kingdom taxation at 30% 470 593Foreign taxation (US-Europe) 814 546 _____ _____ 1,284 1,139 _____ _____ The Corporation tax accrual for the interim period is charged at 32%representing the best estimate of the weighted average annual corporation taxrate expected for the full financial year. Differences between the effectivetax rate of 32% and the notional statutory UK rate of 30% include, but are notlimited to the effect of tax rates in foreign jurisdictions and non deductibleexpenses. 5. Unaudited Consolidated Statement of Changes in Shareholder's Equity at 30 September 2006 $'000 Share capital Share premium Treasury shares account _____ _____ _____ Balance at 1 April 2005 1,611 13,120 (420) Purchase of own shares (295)Profit for the six months ended30 September 2005DividendsCurrency translation differences -groupShare option compensation charge _____ _____ _____ Balance at 30 September 2005 1,611 13,120 (715)and at 1 October 2006 _____ _____ _____ Purchase of own shares (509)Profit for the six months ended31 March 2006Currency translation differences -groupShare option compensation charge _____ _____ _____ Balance at 31 March 2006 1,611 13,120 (1,224)and at 1 April 2006 _____ _____ _____ Purchase of own sharesProfit for the six months ended 30 September 2006Currency translation differences -groupShare option compensation charge _____ _____ _____ Balance at 30 September 2006 1,611 13,120 (1,224) _____ _____ _____ Unaudited Consolidated Statement of Changes in Shareholder's Equityat 30 September 2006 (continued from table above) $'000 Currency Retained Reserve arising on Total translation earnings consolid-ation reserve _____ _____ _____ _____ Balance at 1 April 2005 180 18,806 1,482 34,779 Purchase of own shares (295)Profit for the six months ended 2,420 2,420 30 September 2005Dividends (1,150) (1,150)Currency translation differences -group (307) (307)Share option compensation charge 43 43 _____ _____ _____ _____Balance at 30 September 2005 (127) 20,119 1,482 35,490and at 1 October 2006 _____ _____ _____ _____ Purchase of own shares (509)Profit for the six months ended 2,183 2,183 31 March 2006Currency translation differences -group (70) (70)Share option compensation charge 196 196 _____ _____ _____ _____Balance at 31 March 2006 (197) 22,498 1,482 37,290and at 1 April 2006 _____ _____ _____ _____ Purchase of own shares -Profit for the six months ended 2,699 2,699 30 September 2006Currency translation differences -group 463 463Share option compensation charge 170 170 _____ _____ _____ _____Balance at 30 September 2006 266 25,367 1,482 40,622 _____ _____ _____ _____ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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