25th Apr 2006 07:02
Premier Research Group25 April 2006 For Immediate Release 25 April 2006 PREMIER RESEARCH GROUP plc PRELIMINARY RESULTS ANNOUNCEMENT For the year ended 31 January 2006 "Going from strength to strength" 25 April 2006, London, UK - Premier Research Group plc (AIM: PRG) ("PremierResearch", "Company" or "Group"), the international pharmaceutical servicesgroup today announces its preliminary results for the twelve months ended 31January 2006. HIGHLIGHTS • Financial Performance o Revenues £16.5m, an increase of 77% (2005 : £9.3m) o EBITDA £4.7m, up 124% (2005 : £2.1m) o Pre-tax profit £2.1m, an increase of 222% (2005 : £0.6m) o Retained profit £1.4m, up 166% (2005 : £0.5m) • Three highly complementary acquisitions completed in the year o EPA EuroPharma for up to £3.6m adding sales and delivery capability in Germany o PharmData for up to £12.5m adding technical capability and delivery capacity to US operations o IMFORM for up to £4.8m adding CEE geographical coverage and capability • Post acquisition integration of all acquisitions progressing as planned • Current trading o Good start to new financial year with book to bill ratio greater than 1 o £6.5m of new contracts signed and under negotiation o More than £50m outstanding proposals with customers Commenting on summary and outlook, Dr Simon Yaxley, CEO said: "With an aggressive organic growth strategy complemented by immediately earningsenhancing acquisitions Premier Research has the skill base, the flexibility andcompetitive positioning to compete seriously with the larger CROs. Robust market conditions, across our specialised market sectors combined withour broadening geographical reach, provides the group with excellent visibilityon revenues for 2006, and so we move into the new financial year with continuedconfidence. In closing, I would like to thank all our staff for their commitment and forembracing this exciting period of change, our new employees who join us from EPAEuroPharma, PharmData and IMFORM and to our shareholders for their continuedsupport." CHAIRMAN'S STATEMENT As Chairman of Premier Research Group plc I have great pleasure in presentingthese latest results. It has been a year of significant progress for PremierResearch and we have both achieved excellent results and continued to build thefoundations for future growth. Results The results for the year to 31 January 2006, show that the Company is in robusthealth and benefiting from the integration of the three businesses acquiredduring the past year. Our financial performance, including the contributions made by the threeacquisitions completed during the period, was strong with revenues having grownduring the period by 77% to £16.5m from the previous year of £9.3m. Underlyingorganic growth from the core business is 22.7%, compared with the market whichis generally accepted to the growing at between 10% and 14%, with the balancebeing derived from the acquired companies. The relatively high level ofexceptionals is made up entirely of labour- related cost of reorganisation bothwithin the core and acquired business. With benefits accruing both in thecurrent year and in succeeding years, the effect of both rationalisation actionand incremental sales being delivered without significant increases in fixedcosts results in improved margins which is reflected in the 124% increase inEBITDA year on year. EBITDA was £4.7m from £2.1m in 2005 whilst profit beforetax increased to £2.1m from a £0.6m loss in 2005. This achievement underlinesthe strong cash position of the group. The highly cash generative nature of the business is reflected in the fact thatexcluding the effects of exceptionals and deferred consideration for IMFORM, theoperating cash flow reconciles broadly with the EBITDA reported for the year.The cash generated by the business together with the placing in January 2006 andthe increased banking facilities provides Premier Research with the ability toreplicate 2005 acquisition activity from current resources. Interest payment for the year shows a reduction of over 50% from the previousyear as the full year effect of revised banking arrangements is reflected in theresults. The deferred taxation provision in the opening Balance Sheet of £0.8mhas been fully utilised during the year, resulting in no cash outflow forCorporation Tax. The effective rate for 2006 onwards is expected to be c.31%. 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 as the recentthree acquisitions all have different levels of visibility. Dividend Until now, the Company has reinvested all cash balances back into the business.Indeed, with the acquisitive nature of the business and the subsequentconsolidation, the Board does not currently propose the payment of anydividends. However, this important matter is kept under review by the Board, andit is our intention to ensure that shareholders receive an income from theirinvestment as soon as is appropriate Prospects The success of Premier Research and the substantial corporate changes which havebeen undertaken over the last year could not have taken place without the hardwork and dedication of all our employees and I am delighted to take thisopportunity to thank them for their significant contribution. The outlook for 2006 for the business remains highly encouraging with the corebusiness and each of the acquired businesses fully capable of delivering growthin revenues of greater than 20%, in line with the reported 2005 growth. Deliveryof these growth levels, combined with the fact that the fixed base is unlikelyto significantly increase, will result in increased margins in 2006 from thosereported in 2005. Premier Research is in good shape and operates in an exciting and growingmarket. We have a strong team in place and are now ideally poised to takeadvantage of growth opportunities as and when they arise. Geoffrey Forster Non-Executive Chairman 25 April 2006 Enquiries:Premier Research Group plc Tel: 01344 458311 Dr Simon Yaxley, Chief Executive Officer Tel: 01344 458309 Bernard Gallagher, Chief Financial Officerwww.premier-research.com: Buchanan Communications Tel: 020 7466 5000 Lisa Baderoon / Rebecca Skye Dietrich Mobile: 07721413496 Evolution Securities Tel: 020 7071 4300 Tim Worlledge/ Simon Leathers CHIEF EXECUTIVE'S REVIEW Overview Premier Research has continued on a positive trend throughout the year ending 31January 2006. I am delighted to report 12 months of sustained organic growthcomplemented by three highly strategic acquisitions. Operational Review As a leading international pharmaceutical services group our focus has been onsustainable growth and improving our ability to win and deliver higher value,multi-national projects. This year has seen us further deliver on these goalswith turnover increasing by over 75% and continued strong demand for ourservices from new and existing international customers with an increasedemphasis on larger value contracts. After a period of sustained organic growth in 2004, 2005 saw Premier Researchreturn its focus to the acquisition trail with three deals being completedduring the year. The funding was provided by means of two vendor share placingswith institutions, together with increased banking facilities. The successfulcompletion of these transactions and subsequent integration of the businesseshas contributed greatly to our growth and to providing long-term value forshareholders. Post year end, Premier Research successfully raised a further £6m gross througha placing to both new and existing investors which will be used to fund alloutstanding deferred cash consideration the from recent acquisitions, provideadditional working capital and fund or part-fund further acquisitions.Coincident with this raise the Company consolidated its banking facilities. The three acquisitions completed during the year each had a strong strategicrationale:- EPA EuroPharma - acquired June 2005 EPA EuroPharma provides a broad range of outsourced clinical services to thebiotechnology and pharmaceutical industries. The acquisition has providedPremier Research with a solid base from which to capitalise on marketopportunities in Germany, Europe's second largest outsourcing market. Theacquisition of EPA EuroPharma also allowed the Group to achieve improvedoperating margins through regionalised monitoring of investigator sites, highvalue regulatory affairs and statistics services and the integration of centraloverheads. PharmData - acquired July 2005 PharmData specialises in clinical data management, statistical analysis, medicalwriting, electronic archiving and project management services. Operating solelywithin the US market, PharmData provided Premier Research principally withincreased scope and scale of data management services. Due to the specialistnature of its service offering, PharmData achieves a higher operating marginthan Premier Research's existing data management operations. The customer base,which is comprised of largely US based pharmaceutical and biotechnologycompanies, is entirely complementary to that of Premier Research. This providesconsiderable scope for cross-selling opportunities, particularly offeringclinical services to PharmData's customers who have, to date, secured theseservices elsewhere. IMFORM - acquired December 2005 IMFORM, based in Darmstadt, Germany with offices across Eastern Europe,specialises in providing outsourced clinical services, including; clinical datamanagement, medical writing and quality assurance, to the bio/pharma market withexpertise, experience and technology necessary to develop drugs from Phase I toPhase IV. IMFORM again has a complementary customer base with 20 customers, 19of whom will be new customers to Premier Research. IMFORM provides a strategicfootprint for Premier Research to access doctors and patients within theimportant Eastern European CRO Market. Post Acquisition Integration The integrations of EPA EuroPharma and IMFORM into our International (i.e.non-US) infrastructure and of PharmData into our US infrastructure have largelybeen completed. Cost savings that were identified during the acquisitionprocesses have been realised and will continue to enhance our current yearearnings. I am delighted to confirm that we have maintained our track record ofnot losing any customer from an acquired company or indeed through our corebusiness. Importantly, since the acquisitions have been completed we have beenawarded repeat business from a number of legacy customers and we have continuedto be successful in attracting new customers to the enlarged Group, with thewinning of several new significant contracts on both sides of the Atlantic. Strengthened Management As highlighted at the time of our Interim results, the International and USoperational management teams were strengthened to facilitate the integration ofthe acquisitions. Furthermore, a small number of management positions withglobal responsibility have been created (information technology, qualityassurance, finance and proposals/sales) to drive the integration and toaccelerate the migration of best practice between business units. The Group nowhas a robust structure capable of handling the increasing operationalrequirements associated with Premier Research's projected growth and developmentin the global marketplace. Our sales teams have also been strengthened to retain a balanced focus acrossthe US and International territories to continue to drive organic growth. Service Offering & Sales Demand for our services remains strong stemming from our continued focus onthree of the highest growth areas in drug development (oncology, central nervoussystem and anti-infectives) together with our underlying expertise inpaediatrics, a specialised area with strong regulatory drivers. With over 325 employees in 31 countries our expertise across consultancy,clinical study delivery, data management and final medical reporting, providesus with an extremely robust business model and a powerful reputation amongst ourpeers which together has given us the infrastructure and kudos to compete forhigher value contracts. Our broad and blue chip customer base comprising over 120 customers, many ofwhich are major pharmaceutical organisations, with in any one year no contractaccounting for more than 10% of revenues, continues the trend of providing uswith recurring business, indicating the excellent service delivery we provide. Outsourcing Market With the improved quality, reliability, safety, efficiency and controlsassociated with outsourcing trials, the outsourcing market continues to bebuoyant and the requirement for outsourced clinical research services continuesto grow. As a management team who closely monitor the market, we are confident that thistrend will continue for the foreseeable future and importantly, PremierResearch's positioning within this growing market will allow the Company toexploit the significant opportunities which arise. Current Trading I am delighted to report that we have had a good start to the new financial yearwith the book to bill ratio still greater than one. By the end of March 2006,£6.5m of contracts signed and under negotiation, with new and existingcustomers, has been won. Encouragingly, more than £50 million of outstandingproposals are currently with customers. The continued growth of the order bookand the realisation of the operational benefits associated with the integrationof the three recent acquisitions provide management with added confidence thatthe Company is on track to deliver further growth in the current year. Summary & Outlook With an aggressive organic growth strategy complemented by immediately earningsenhancing acquisitions Premier Research has the skill base, the flexibility andcompetitive positioning to seriously compete with the larger CROs. Robust market conditions together with excellent visibility on revenues for2006, mean we move into the new financial year with continued confidence. In closing, I would like to thank all our staff for their commitment and forembracing this exciting period of change, our new employees who join us from EPAEuroPharma, PharmData and IMFORM and to our shareholders for their continuedsupport. Simon YaxleyChief Executive Officer25 April 2006 Premier Research Group plc - Financial Statements Preliminary Results 2005/2006 Consolidated profit and loss account For the year ended 31 January 2006 Note Year ended Year ended 31 January 31 January 2006 2005 £000's £000'sTurnoverContinuing operations 10,957 9,282Acquisitions 5,496 -Group turnover 3 16,453 9,282Administrative expenses 12,731 7,752Operating profit 3,722 1,530Exceptional items 4 (1,171) (154) 2,551 1,376Interest payable and similar charges (454) (724)Profit on ordinary activities before taxation 2,097 652Tax on profit on ordinary activities 5 (698) (127)Retained profit for the year 1,399 525Earnings per share basic 6 3.12p - Statement of total recognised gains and losses For the year ended 31 January 2006 Year ended Year ended 31 January 2006 31 January 2005 £000's £000'sProfit for the year 1,399 525Exchange difference on translation of net assets ofsubsidiary undertakings (117) -Total gains and losses for the year 1,282 525 Consolidated Balance Sheet As at 31 January 2006 Note As at As at 31 January 31 January 2006 2005 £000's £000'sFixed assetsIntangible assets 2 25,594 6,249Tangible assets 1,268 835Investments 7 52 52 26,914 7,136Current assetsDebtors 8 6,825 3,701Cash at bank 1,391 - 8,216 3,701Creditors: Amounts falling due within one year 9 10,080 3,274Net current (liabilities)/assets (1,864) 427Total assets less current liabilities 25,050 7,563Creditors: Amounts falling due after more thanone year 10 8,864 1,953Provisions 11 1,055 - 15,131 5,610Capital and reservesCalled-up equity share capital 12 482 400Shares to be issued 12 1,977 -Share premium account 12 12,939 6,759Other reserves (37) (37)Profit and loss account (230) (1,512)Shareholders' funds 15,131 5,610 Consolidated Cash Flow Statement For the year ended 31 January 2006 Year Year ended ended 31 January 31 January 2006 2005 £000's £000'sNet cash inflow/(outflow) from operating activities 2,184 (1,909)Returns on investments and servicing of financeInterest paid (447) (720)Interest element of hire purchase (7) (4)Net cash outflow from returns on investments andservicing of finance (454) (724)Taxation (117) 47Capital expenditure and financial investmentPayments to acquire intangible fixed assets - (128)Payments to acquire tangible fixed assets (131) (28)Receipts from sale of fixed assets 15 12Acquisition of investments - (8)Net cash outflow from capital expenditure andfinancial investment (116) (152)Acquisitions and disposalsAcquisition of shares in group undertakings (9,610) -Deferred consideration on acquisitions (2,182) -Net cash acquired with subsidiary 274 -Net cash outflow from acquisitions and disposals (11,518) -Cash outflow before financing (10,021) (2,738)FinancingIssue of equity share capital 82 200Share premium on issue of equity share capital 6,180 6,759Repayment of loans (3,073) (7,846)New bank loans 6,830 2,200Repayment of bank loans (398) (9)Capital element of hire purchase (117) (47)Net cash inflow from financing 9,504 1,257Decrease in cash (517) (1,481) Reconciliation of operating profit to net cash inflow/(outflow) from operatingactivities For the year ended 31 January 2006 Year Year ended ended 31 January 31 January 2006 2005 £000's £000'sOperating profit 3,722 1,530Amortisation 775 345Depreciation 164 222Loss on disposal of fixed assets 59 63Increase in debtors (542) (1,577)Decrease in creditors (823) (2,338)Reorganisation costs (1,171) (154)Net cash inflow/(outflow) from operating activities 2,184 (1,909) Reconciliation of net cash flow to movement in net debt For the year ended 31 January 2006 Year Year ended ended 31 January 31 January 2006 2005 £000's £000'sDecrease in cash in the year (517) (1,481)Cash outflow from loans 3,073 7,846Cash inflow from bank loans (6,432) (2,191)Cash outflow in respect of hire purchase 117 47Change in net debt resulting from cash flows (3,759) 4,221Non cash movements on loansNew hire purchase agreements (160) (20)Debt acquired with acquisitions (2,798) -Foreign exchange (117) -Movement in net debt in the year (6,834) 4,201Opening net debt (3,144) (7,345)Closing net debt (9,978) (3,144) Analysis of changes in net debt For the year ended 31 January 2006 At 1 February Cash flows Other Changes At 31 January 2005 2006 £000's £000's £000's £000'sNet Cash:Cash at bankand in hand - 1,508 (117) 1,391Overdrafts (608) (2,025) - (2,633) (608) (517) (117) (1,242)Debt:Debt duewithin 1 year (552) 2,011 (3,219) (1,760)Debt due after1 year (1,914) (5,370) 421 (6,863)Hire purchaseagreements (70) 117 (160) (113) (2,536) (3,242) (2,958) (8,736)Net debt (3,144) (3,759) (3,075) (9,978) 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 2006 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. 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 EPA EuroPharma, Imform GmbH and the assets ofPharmData. The goodwill on these acquisitions is being written off on a straightline basis over a period of twenty years. 3. Geographical analysis Year ended Year ended 31 January 2006 31 January 2005 £000's £000'sUK 6,015 37% 3,634 39%Europe 2,627 16% 930 10%USA 7,811 47% 4,609 50%Other - - 109 1% Total 16,453 100% 9,282 100% 4. Exceptional items The exceptional items represent restructuring costs arising as a result ofrationalisation and reorganisation following the acquisitions in the year. 5. Tax on profit on ordinary activities Year Year ended ended 31 January 31 January 2006 2005 £000's £000'sCurrent taxUK Corporation tax 101 149Overseas tax 22 17Total current tax 123 166Deferred taxDeferred tax current year 404 (39)Deferred taxation charge in respect of prior years 171 -Total deferred tax 575 (39)Tax on profit on ordinary activities 698 127 6. Earnings per share Earnings per share for the year ended 31 January 2006 is based on the profitafter taxation of £1,399,000 divided by the weighted average number of sharesduring the year, 44,823,737 1p ordinary shares. 7. Investments Following the completion of the fair value exercise for the EPA EuroPharmaacquisition the investment in the rights to eight generic drug products has beenwritten down to nil. At the half year this asset had a value of £1,435k beingthe net book value for the rights acquired from Europharma Contract ResearchLimited a company owned by EPA EuroPharma's former major shareholder. 8. Debtors As at As at 31 January 2006 31 January 2005 £000's £000'sTrade 4,571 1,798Prepayments and other debtors 2,254 1,903 6,825 3,701 9. Creditors and amounts due within one year As at As at 31 January 2006 31 January 2005 £000's £000'sLoans - 275Bank loans and overdrafts 4,393 885Trade creditors 2,278 1,073Hire purchase agreements 28 31Corporation tax 504 224Other taxes and social security 297 171Other creditors 379 104Accruals and deferred income 2,201 511 10,080 3,274 10. Creditors and amounts due over one year As at As at 31 January 2006 31 January 2005 £000's £000'sBank loans 6,863 1,914Deferred consideration 1,916 -Hire purchase agreements 85 39 8,864 1,953 11. Provisions Reorganisation Total provision £000's £000's1 February 2005 - -On acquisition 534 534Charged to the profit and loss account 521 52131 January 2006 1,055 1,055 12. Share capital and share premium account Called Up and £000's Fully Paid 1p Ordinary Shares1 February 2005 40,000,000 400On acquisition EPA 3,666,667 37On acquisitionPharmdata 4,578,313 4531 January 2006 48,244,980 482 Share Premium £000's1 February 2005 6,759On acquisition EPA 2,602On acquisition Pharmdata 3,57831 January 2006 12,939 Also included in share capital and reserves is the equivalent amount of sharesthat will be issued upon Pharmdata meeting the first tier earn out - USD 3.5M or£1,977k of ordinary shares. 13. Post balance sheet event In February 2006 the company placed 4,444,444 new ordinary 1p shares at a priceof 135p. The net funds will be used to: Satisfy all outstanding deferred cash consideration from recent acquisitions;Fund additional working capital;Fund or part-fund further acquisitions without the need to raise further funds; andFacilitate the adoption of new consolidated and increased bank facilities 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 ExchangeRelated Shares:
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