28th Dec 2011 07:00
28 December 2011
Source BioScience plc ("Source BioScience" or "the Company" or "the Group") Purchase of premises at 1 Orchard Place, Nottingham
The Board of Source BioScience plc the international diagnostics and genetic analysis business, announces that it has concluded an agreement with Simrock Holdings Limited to purchase the freehold land and buildings of its current business and Head Office premises at 1 Orchard Place, Nottingham, restructuring the existing lease obligation.
Rationale for the purchase
Since 2007 the Company has made significant investment in its operational and commercial infrastructure to support the continued growth of the business and deliver a considerably improved financial performance. This growth has been achieved through a combination of selective acquisitions, in addition to organic expansion of the business, and it remains the strategy to continue this programme of acquisition and investment.
At the same time as broadening and strengthening the product portfolio and extending the Company's geographic reach to enhance revenue growth, there has also been an ongoing focus on the costs incurred by the business. One of the most significant costs was the lease for the Head Office facility in Nottingham, UK of £0.5 million per annum.
The Company occupied the Nottingham premises under a 25 year lease that, at the date of the purchase, had a remaining term of 17 years. Over the remaining term there was no provision to terminate the lease and the scheduled rent reviews were upwards only. The Directors recognised that this was not an appropriate arrangement for the Company and was not aligned with the ongoing investment that is being made in the business and its infrastructure.
Financing
The Company has secured a new £3 million term loan facility provided by Royal Bank of Scotland plc, the Company's bankers. This loan is repayable 50% in instalments over three years with the balance on the fourth anniversary of draw down. The purchase price of £4.9 million has been funded using this new loan facility with the balance satisfied out of existing cash resources available to the Company.
Financial impact of the purchase
As a direct result of the purchase, operating profit and EBITDA is increased by £0.5 million per annum with immediate effect. There will be an incremental finance charge of £0.1 million per annum for the first four years, being the interest on the loan.
The purchase price of £4.9 million comprised the market value of the freehold land and buildings in conjunction with the attached lease. In the consolidated financial statements, the freehold property will be recognised at its valuation of £2.5 million, without ascribing value to the lease. The Directors believe this represents the most appropriate accounting treatment and fairest view of the property asset value.
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For further information, please contact:
Source BioScience plcDr Nick Ash, CEOTel: +44 (0)115 973 9010Email: [email protected]
www.sourcebioscience.com
College Hill (PR Agency to Source BioScience)Melanie Toyne-Sewell/ Jayne CrookTel: +44 (0)207 457 2020Mob: +44 (0)7890 022 814Email: [email protected]
About Source BioScience:
Source BioScience plc is an international diagnostics and genetic analysis business serving the healthcare and research markets. The LifeSciences division provides core laboratory research support from conceptualisation to implementation, calling upon a wide range of cutting-edge technology platforms including an online catalogue of biomolecular tools. The Company is a trusted provider of a complete range of sophisticated microarray, next generation and conventional sequencing services. GLP, GCP and CPA accreditations make the sequencing offerings also very attractive for applications in regulatory studies or clinical settings. Its Healthcare operations provide screening and reference laboratory diagnostic testing for cancer and other diseases and additional predictive testing for treatment optimisation for clinicians and patients. The Group has its headquarters in Nottingham, UK. Further information about Source BioScience can be found at www.sourcebioscience.com
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