17th Apr 2007 07:02
Premier Research Group17 April 2007 For Immediate release 17 April 2007 An Analyst meeting will be held at the offices of Buchanan Communication, 45Moorfields, London, EC2Y 9AE followed by a PCB Lunch Briefing at 12:45. PREMIER RESEARCH GROUP plc PRELIMINARY RESULTS ANNOUNCEMENT For the year ended 31 January 2007 "Building a leading global player within the CRO market" 17 April 2007, London, UK - Premier Research Group plc (AIM: PRG) ("PremierResearch", "Company" or "Group"), the international pharmaceutical servicesgroup today announces its preliminary results for the year ended 31 January2007. HIGHLIGHTS • Financial Performance o Maiden dividend of 0.5 pence o Revenues £41.8m, an increase of 154% (2006: £16.45m) o EBITDA £9.8m, up 108% (2006: £4.7m), despite an adverse currency variance of £0.3 million and a non-cash charge of £0.2 million for share based payments o Pre-tax profit £4.3m, an increase of 104% (2006: £2.1m) o Effective tax rate of 21% achieved following a Schedule 23 Corporation Tax deduction o Retained profit £3.4m, up 142% (2005 : £1.4m) • Acquisition of Scirex, in July 2006 o Integration progressing well with significant planned cost synergies already achieved o Two global deals recently signed with delivery already underway o Significant number of Phase III projects in sales pipeline • Operating Board established o Overseeing day to day management of US and International business o Allowing main Board to focus on strategic development of the Company, including acquisitions o New board appointments - Chief Operating Officer and CFO. • Current trading o Strong start to FY2008 with £21.6m of new contracts already signed or under negotiation enabling a book to bill ratio of greater than 1 to be maintained o More than £131m outstanding proposals with customers o Highest proportion to date of Phase III and Paediatric contract wins Commenting on summary and outlook, Dr Simon Yaxley, CEO said: "The year to 31 Jan 2007 has once again seen dramatic growth and development ofthe Group. In the year we concluded a very significant transition, Scirex, andas the results show the Group has achieved a substantial position in the market.Accordingly I am pleased to announce another set of strong results today" Enquiries: Premier Research Group plc Dr Simon Yaxley, Chief Executive Officer Tel: 01344 752375Bernard Gallagher, Chief Financial Officer Tel: 01344 458309www.premier-research.com Buchanan Communications Tel: 020 7466 5000 Lisa Baderoon Mobile: 07721 413496Rebecca Skye Dietrich Evolution Securities Tim Worlledge / Simon Leathers Tel: 020 7071 4300 CHAIRMAN'S STATEMENT I have great pleasure in presenting these latest results. It has been a year offurther significant progress for Premier Research and we have both achievedexcellent results and continued to build the foundations for future growth. Results The results for the year to 31 January 2007, show that the Company is in robusthealth and benefiting from the integration of Scirex acquired during the year,but it is important to note that strong organic growth was also achieved duringthe period. Our financial performance, including the contribution made by the Scirexacquisition completed in July 2007, was strong with revenues having grown duringthe period by 154% to £41.8m from the previous year of £16.45m, EBITDA(including a £0.2 million non-cash charge for share based payments) up by 108%to £9.8m (2006:£4.7m) and profit before tax of £4.3m, up from £2.1m in 2006,despite suffering from adverse currency exchange effects as over 95% of therevenue is either in US dollars or Euros. We have achieved underlying organic growth from the core business of 20.7%,compared with the market which is generally accepted to the growing at between10% and 14%, with the balance being derived from the acquired company, Scirex,which was part of the Group for almost 7 months of the year. Strong order intake was maintained with a book-to-bill ratio at the year-end ofgreater than one indicating the consistent growth of the order book. Thisindicator of future sales visibility is increasingly important and what giveseven greater comfort to the Board is current year trading with revenues on alike-for-like basis significantly in excess of the prior period. The Company achieved an effective tax rate of 21% as a result of a CorporationTax deduction arising from Schedule 23 of the Finance Act 2003. This taxdeduction arose from the exercise of Share Options and the benefit is notexpected to be repeated. Dividend It was highlighted at the half year that the Board intended to recommend amodest dividend. I am delighted to report that following these excellentfinancial results the Board is now proposing to pay a maiden Dividend of 0.5p.Subject to approval of shareholders at the Annual General Meeting ("AGM"), thiswill be paid on 27 June 2007 to shareholders on the register on 1 June 2007. Itis the Board's intention to pay a similar dividend at the interim stage for thecurrent year and thereafter to adopt a progressive dividend policy. The AGM is scheduled for 11.00am, 13 June 2007 and is to be held at the officesof Buchanan Communications, 45 Moorfields, London EC2Y 9AE. Management and Board Changes As highlighted in our trading statement earlier this year we have established anOperating Board. The rationale for this was that going forward the focus for theCompany would be twofold: accelerating organic growth and identifying andexecuting earnings enhancing synergistic acquisitions. This Board is now inplace and has already had a positive effect on day to day management of thebusiness allowing the main Board to focus on the longer term strategicdevelopment of the Group, including pursuing earnings enhancing acquisitions. Further strengthening this strategy, I am pleased to announce today two Boardappointments, Dr Troy McCall as Chief Operating Officer and Peter Kyle as CFO.Troy was appointed to this role on the Operating Board and now steps up to themain board in the same role. Peter, previously financial controller, takes overfrom Bernard Gallagher, the current CFO, who has increasingly taken on moreresponsibility in the strategic development of Premier Research, will becomeChief Development Officer. Guy Patrick, Chief Medical Officer and a founder of the Company, who has becomeless involved in executive duties as the Company has grown. He will nowrelinquish his executive director position in order to pursue other interests.He will provide consulting services to the Company to ensure a smooth transitionof responsibilities and customer relationships. We have appointed search consultants to help us identify a new chairman. Asearch is underway and we hope to confirm an appointment in due course. In themeantime, Steve Harris the remaining independent Non-Executive Director willcontinue to act as the Interim Non-Executive Chairman. Long-term Incentive Plan With the appointment of these additional board members and recognising theincreasing number of senior and key executives within the Group, the Boardintends to introduce a new long-term incentive plan for such employees. The planis being considered by the Board and will be discussed with major shareholdersbefore any proposals are put forward. Prospects The outlook for 2007 for the business remains highly encouraging. With thestrong order intake that we experienced in Q4 of 2006 continuing into thecurrent year, the Board is confident that Premier Research is in excellent shapeand operates in an exciting and growing market. We have a strong team in placestrengthened by the management changes announced over the last few months andtoday and are now ideally positioned to take full advantage of growthopportunities over the next year and beyond. The continued success of Premier Research and the further changes which havebeen undertaken over the last year to firmly put down an international footprintcould not have taken place without the hard work and dedication of all ouremployees and I am delighted to take this opportunity to thank them for theirsignificant contribution. Steve Harris Non-Executive Chairman 25 April 2006 CHIEF EXECUTIVE'S REVIEW Overview Premier Research has again put in another extremely strong performance for theperiod. I am therefore delighted to report a further 12 months of sustainedorganic growth complemented by the US acquisition of Scirex, in July, ourlargest to date, and highly strategic in further accessing the important USmarket. Of important note and an illustration of how Premier Research has evolved sincebecoming a public company is the announcement today that we will be paying ourfirst dividend. This factor in itself demonstrates that as a business we arecoming of age and as such moving away from a perceived emerging business modelto a company with a sustainable and growing financial model, that is highly cashgenerative and that can facilitate potential funding requirements by a mixtureof both equity and debt. Operational Review Our continued focus as a leading international pharmaceutical services group hasbeen on sustainable growth and improving our ability to win and deliver highervalue, multi-national projects. This year has seen us further deliver on thesegoals with turnover increasing by over 154% and continued strong demand for ourservices from new and existing international customers with an increasedemphasis on larger value contracts. We now have over 170 customers, and have over the period signed 7 preferredprovider agreements allowing us greater certainty of repeat business with thosecustomers. It is also important to note that we are currently working with 15 ofthe world's top 20 pharma and biotech companies and with these contracts thereis now a greater emphasis on winning the more lucrative Phase III work.Importantly and to mitigate against risk, we have ensured that there is nocustomer or project concentration by having a well spread business with over 240current projects across more than 150 customers giving protection againstindividual project delays. The second half of 2006 saw strong organic growth of the core business and thebenefits from the Scirex integration process have exceeded management'sexpectations. Scirex - acquired July 2006 Scirex was acquired in July 2006 and was the 7th acquisition for the Company andour largest to date. It is a full service CRO that specialises in providingoutsourced clinical services to the global biotechnology and pharmaceuticalindustries. The company is headquartered in Philadelphia, USA, and has tenoffices located across the US, London (UK) and Krakow (Poland). Scirex offersexpertise, experience and technology necessary to develop drugs from Phase I toPhase IV and is working in the same therapeutic areas as Premier Research,particularly in central nervous system disorders. Importantly, Scirex hasprovided a strategic footprint for Premier Research to access doctors andpatients within the important US market. Post Acquisition Integration The integration of Scirex went extremely well being completed within one monthof acquisition and below budgets by at least £200,000, demonstratingmanagement's prudent and skilled approach to acquisition integration. That theintegration of the largest acquisition to date in one key territory can becompleted quickly and efficiently serves as a huge endorsement to the Board'sand key management's experience in the integrating of acquisitions into the corebusiness. We have maintained our track record of not losing any customers froman acquired company or indeed through our core business. Importantly, since thecompletion of the acquisition, we have been awarded repeat business from anumber of legacy customers and we have continued to be successful in attractingnew customers to the enlarged Group, with the winning of several new significantglobal contracts on both sides of the Atlantic and a significant number of PhaseIII projects in the sales pipeline. The Company strongly believes that theScirex acquisition and the skill base that it has brought to the Group was asignificant contributing factor to two major contract wins over the last fewmonths. The successful completion and integration of this acquisition proved earningsenhancing to the Group in the year and will contribute greatly to our continuedgrowth as it strengthens our business model and will enhance our serviceoffering amongst our customer base. Accordingly we expect to see marginsimprove. Service Offering & Sales Our continued focus remains on three of the highest growth areas in drugdevelopment (oncology, central nervous system and anti-infectives) together withour underlying expertise in paediatrics, a specialised area with strongregulatory drivers. However, as Premier Research continues its expansion as aleading international pharmaceutical services player, new areas of developmentwithin cardiovascular and respiratory may be targeted. Our expertise across consultancy, clinical study delivery, data management andfinal medical reporting, continues to provide us with an extremely robustbusiness model and an infrastructure which boasts over 750 employees in 31countries. This together with a powerful reputation amongst our peer groupcontinues to provide the kudos to compete for higher value contracts; a trendwhich we are focused on maintaining, and indeed increasing, over time. Our diverse and highly credible customer base now comprises over 150 customers.With no contract accounting for more than 10% of revenues in any one year, thiscontinues to provide us with recurring business, endorsing the excellent servicedelivery we provide. Outsourcing Market The outsourcing market continues to be buoyant and the requirement foroutsourced clinical research services continues to grow with the improvedquality, reliability, safety, efficiency and controls associated withoutsourcing trials. All the indicators point to this continuing for the longerterm. Importantly, Premier Research's positioning within this growing marketwill allow the Company to exploit the significant opportunities which arise. Current Trading I am delighted to report that we have had a very strong start to the newfinancial year (with the book to bill ratio remaining greater than one.)Encouragingly FY 2007 revenues are significantly in excess of the prior period.The continued growth of our sales pipeline with £21.6m of new contracts signedand under negotiation and more than £131m outstanding proposals with customersprovide us with further encouragement of sustaining this aggressive growthstrategy. Of particular note is that we are now seeing the highest proportion todate of the Phase III contract work and in particular, within the last couple ofmonths, Phase III paediatric contract work. Summary & Outlook These exceptional results for the year are a true reflection of the quality andmotivation of Premier Research's operational and sales teams across both the USand International territories combined with the continued focus on winning newbusiness and driving organic growth. It is also important to note that our niche model of focusing on three of thehighest growth areas in drug development continues to provide us with a uniqueproposition to customers and this is truly visible in the significant contractwins we have achieved whilst competing with larger generic CRO players. With current trading buoyant we move into the new financial year withconfidence. Our focus remains on both stimulating and accelerating organicgrowth and seeking out earnings enhancing synergistic acquisitions. A key focuswill also be on continuing to bring further scale to the business by movinglarger and more lucrative contracts through our sales pipeline. In closing, I would again like to reiterate my thanks to all our staff for theircommitment, to our new employees who joined us from Scirex and to ourshareholders for their continued support. Dr Simon Yaxley Chief Executive Officer17 April 2007 Premier Research Group plc - Financial StatementsPreliminary Results 2006/2007 Consolidated profit and loss accountFor the year ended 31 January 2007 Note Year Year ended ended 31 January 31 January 2007 2006 £000's £000's TurnoverContinuing operations 25,842 10,957Acquisitions 15,987 5,496 Group turnover 3 41,829 16,453 Administrative expenses 34,397 12,731 Operating profit 4 7,432 3,722 Exceptional items 5 (2,069) (1,171) 5,363 2,551Interest payable and similar charges (1,051) (454) Profit on ordinary activities before 4,312 2,097taxation Tax on profit on ordinary activities 6 (905) (698) Retained profit for the year 3,407 1,399 Earnings per share basic 7 6.0p 3.12p Statement of total recognised gains and lossesFor the year ended 31 January 2007 Year Year ended ended 31 January 31 January 2007 2006 £000's £000's Profit for the year 3,407 1,399Exchange difference on translation of net assets of subsidiary undertakings (784) (117) Total gains and losses for the year 2,623 1,282 Consolidated Balance SheetAs at 31 January 2007 Note As at As at 31 January 31 January 2007 2006 £000's £000's Fixed assetsIntangible assets 2 40,790 25,594Tangible assets 1,833 1,268Investments 52 52 42,675 26,914 Current assetsDebtors 8 19,592 6,825Cash at bank 554 1,391 20,146 8,216 Creditors: Amounts falling due within one year 9 18,386 10,080 Net current assets/(liabilities) 1,760 (1,864) Total assets less current liabilities 44,435 25,050 Creditors: Amounts falling due after more than one year 10 12,349 8,864 Provisions 11 1,109 1,055 30,977 15,131 Capital and reserves Called-up equity share capital 12 601 482Shares to be issued - 1,977Share premium account 12 27,799 12,939Share based payments 12 221 -Other reserves (37) (37)Profit and loss account 2,393 (230) Shareholders' funds 30,977 15,131 Consolidated Cash Flow StatementFor the year ended 31 January 2007 Year Year ended ended 31 January 31 January 2007 2006 £000's £000's Net cash (outflow)/inflow from operating activities (1,358) 2,184 Returns on investments and servicing offinance Interest paid (1,045) (447)Interest element of hire purchase (6) (7) Net cash outflow from returns on investments and servicing of finance (1,051) (454) Taxation (372) (117) Capital expenditure and financialinvestment Payments to acquire tangible fixed (167) (131)assetsReceipts from sale of fixed assets 9 15 Net cash outflow from capital expenditure and financial investment (158) (116) Acquisitions and disposals Acquisition of shares in group undertakings (18,933) (9,610)Deferred consideration on acquisitions (2,243) (2,182)Net cash acquired with subsidiary 415 274 Net cash outflow from acquisitions and disposals (20,761) (11,518) Cash outflow before financing Financing (23,700) (10,021) Issue of equity share capital 119 82Share premium on issue of equity share capital 14,860 6,180Repayment of loans - (3,073)New bank loans 17,311 6,830Repayment of bank loans (6,462) (398)Capital element of hire purchase (39) (117) Net cash inflow from financing 25,789 9,504 Increase / (Decrease) in cash 2,089 (517) Reconciliation of operating profit to net cash (outflow)/inflow from operatingactivities For the year ended 31 January 2007 Year Year ended ended 31 January 31 January 2007 2006 £000's £000's Operating profit 7,432 3,722Share based payments 221 -Amortisation 1,820 775Depreciation 509 164Loss on disposal of fixed assets 11 59Increase in debtors (5,468) (542)Decrease in creditors (3,814) (823)Reorganisation costs (2,069) (1,171) Net cash (outflow)/inflow from operating activities (1,358) 2,184 Reconciliation of net cash flow to movement in net debtFor the year ended 31 January 2007 Year Year ended ended 31 January 31 January 2007 2006 £000's £000's Increase/(decrease) in cash in the year 2,089 (517)Cash outflow from loans - 3,073Cash inflow from bank loans (10,849) (6,432)Cash outflow in respect of hire purchase 39 117 Change in net debt resulting from cash flows (8,721) (3,759) New hire purchase agreements (30) (160)Debt acquired with acquisitions - (2,798)Foreign exchange 207 (117) Movement in net debt in the year (8,544) (6,834) Opening net debt (9,978) (3,144) Closing net debt (18,522) (9,978) Analysis of changes in net debtFor the year ended 31 January 2007 At 1 February Cash flows Other Changes At 31 January 2006 2007 £000's £000's £000's £000's Net Cash:Cash at bank and in hand 1,391 (544) (293) 554Overdrafts (2,633) 2,633 - - (1,242) 2,089 (293) 554 Debt:Debt due within 1 year (1,760) (3,172) (1,753) (6,685)Debt due after 1 year (6,863) (7,677) 2,253 (12,287)Hire purchase agreements (113) 39 (30) (104) (8,736) (10,810) 470 (19,076) Net debt (9,978) (8,721) 177 (18,522) Notes to the financial statements 1. Basis of preparation The financial information contained in this preliminary announcement does notconstitute the Group's statutory financial statements. These preliminaryfinancial statements have been extracted from the Group's audited financialstatements for the year ended 31 January 2007 upon which the auditors reportedwithout qualification. The audited financial statements for the Group will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. The financial statements have been prepared on the basis of accounting policieswhich are consistent with those set out in the Group's statutory financialstatements for the previous financial year except for the first time adoption ofFinancial Reporting Standard 20 'Share-based payment (IFRS 2)' as set out below. In preparing the financial statements for the current year, the group hasadopted in full Financial Reporting Standard 20 'Share-based payment (IFRS 2)'. FRS 20 'Share-based payment (IFRS 2)' requires the recognition of equity-settledshare-based payments at fair value at the date of the grant and the recognitionof liabilities for cash-settled share-based payments at the current fair valueat each balance sheet date. The Group intends to publish its first set of financial statements preparedunder IFRS for the year ending 31 January 2008, with comparatives for the yearending 31 January 2007 in accordance with the requirements of AiM. PremierResearch Group plc is expecting the areas of greatest impact on it's financialstatements to be business combinations, the treatment of goodwill, financialinstruments and employee benefits including share based payments. Given thepotential impact to the Group from reporting under IFRS an implementation teamhas been formed which is steered by the Board. 2. Acquisitions During the year the Group acquired Scirex LLC. The goodwill on this acquisitionis being written off on a straight line basis over a period of twenty years. 3. Geographical analysis Year ended Year ended 31 January 31 January 2007 2006 £000's £000's UK 8,862 21% 6,015 37%Europe 12,362 30% 2,627 16%USA 20,605 49% 7,811 47% Total 41,829 100% 16,453 100% 4. Financial Reporting Standard 20 In preparing the financial statements for the current year, the group hasadopted in full Financial Reporting Standard 20 'Share-based payment (IFRS 2)'. FRS 20 'Share-based payment (IFRS 2)' requires the recognition of equity-settledshare-based payments at fair value at the date of the grant and the recognitionof liabilities for cash-settled share-based payments at the current fair valueat each balance sheet date. The charge to operating profits resulting from the adoption of this standard is£221k. The adoption of the standard has had no material effect on the prior periods. 5. Exceptional items The exceptional items represent restructuring costs arising as a result offundamental rationalisation and reorganisation following the acquisition in theyear. 6. Tax on profit on ordinary activities Year Year ended ended 31 January 31 January 2007 2005 £000's £000'sCurrent taxUK Corporation tax current year - 101UK Corporation tax adjustment in respect of prior years (232) -Overseas tax current year 489 22Overseas tax adjustment in respect of prior year 109 - Total current tax 366 123 Deferred taxDeferred tax current year 513 404Deferred tax charge in respect of prior years 26 171 Total deferred tax 539 575 Tax on profit on ordinary activities 905 698 7. Earnings per share Earnings per share for the year ended 31 January 2007 is based on the profitafter taxation of £3,407,000 divided by the weighted average number of sharesduring the year, 56,703,156 1p ordinary shares. 8. Debtors As at As at 31 January 2007 31 January 2006 £000's £000's Unbilled receivables 7,743 1,664 Trade 9,621 3,478 Prepayments and other debtors 2,228 1,683 19,592 6,825 9. Creditors and amounts due within one year As at As at 31 January 2007 31 January 2006 £000's £000's Bank loans and overdrafts 6,685 4,393 Trade creditors 3,253 2,278 Hire purchase agreements 42 28 Corporation tax 299 504 Other taxes and social security 117 297 Other creditors 705 379 Accruals and deferred income 7,285 2,201 18,386 10,080 10. Creditors and amounts due over one year As at As at 31 January 2007 31 January 2006 £000's £000's Bank loans 12,287 6,863 Deferred consideration - 1,916 Hire purchase agreements 62 85 12,349 8,864 11. Provisions An analysis of movements on the deferred tax provision and reorganizationprovision for the Group are as follows Deferred Reorganisation Total Tax Provision £000's £000's £000's 1 February 2005 - - - On acquisition - 534 534 Charged to the profit and loss account - 521 521 31 January 2006 - 1,055 1,055 Reclassification of opening balance (274) - (274) Deferred tax charge for current year 739 - 739 Charged to the profit and loss account - 1,254 1,254 Utilised - (1,665) (1,665) 31 January 2007 465 644 1,109 The reclassification of the opening deferred tax debtor is from prepayments andother debtors as at 31 January 2006. 12. Share capital and share premium account Called Up and £000's Fully Paid 1p Ordinary Shares 1 February 2006 48,244,980 482 Issue in respect of working capital injection 4,444,444 45 Issue in respect of deferred consideration 2,201,816 22 Issue in respect of acquisition 5,172,413 52 Issue in respect of employee option exercises 48,333 - 31 January 2007 60,111,986 601 Share Premium £000's 1 February 2006 12,939 In respect of working capital injection 5,721 In respect of deferred consideration 1,954 In respect of acquisition 7,140 In respect of employee option exercises 45 31 January 2007 27,799 Also included in share capital and reserves is an amount of £221k for sharebased payments that arises following the first time adoption of FinancialReporting Standard 20 'Share-based payment (IFRS 2)'. 13. Post Balance Sheet Event The Group's policy is to pay dividends which reflect the earnings, cash flow andpotential of the Group. The Board confirms that the Group proposes to pay a full year dividend of 0.5pper share on 27 June 2007 to ordinary shareholders on the register on 1 June2007. The dividend is subject to approval at the Annual General Meeting to beheld on 13 June 2007. 14. A copy of this statement is being sent to all shareholders and furthercopies are available from the Company's Registered Office at the address belowas well as on the Company's website: www.premier-research.com Premier Research Group plc, 30 Wellington Business Park, Dukes Ride, Crowthorne,Berkshire, RG45 6LS This information is provided by RNS The company news service from the London Stock Exchange ENDRelated Shares:
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