Tepnel Life Sciences - Final Results
October 06 1999 - 3:01AM
UK Regulatory
RNS No 6017e
TEPNEL LIFE SCIENCES PLC
6 October 1999
PRELIMINARY RESULTS
Tepnel Life Sciences PLC ("Tepnel" or the "Company"), the developer of
proprietary DNA diagnostic systems for the life science research, clinical
diagnostics, food and environmental testing markets, announces its preliminary
results for the year ended 30 June 1999.
Financial Key Points:
* Loss in line with budget at #2.376 million (1998: #2.587 million)
* Loss per share down at 4.9p (1998: 5.3p)
* The cash balance at 30 June 1999 was #2.064 million (1998: #5.083 million)
Key Points:
* Prototype 96 column automated DNA purification system well received by
potential commercial partners
* Acquisition of Biokits and Laboratory Services in June 1999, generating
income and profit
* Strategic purchase of magnetic bead technology in August 1999 for use in the
DNA purification system
* DTI SMART award received for feasibility study on signal amplification
technology
* DARAS and SPA patents granted in the USA
Chairman, Peter Raymond, said: "During 1999, all of Tepnel's resources were
focused on business opportunities with income generating potential and I am
pleased to report that the Company has made real progress in building a base
for future profits generation.
"A prototype 96 column automated DNA purification instrument was rapidly
developed from our existing instrumentation platform. This prototype was well
received by an international audience at a major scientific meeting in New
Orleans in July 1999 and has since generated a great deal of commercial
interest.
"Our newly formed subsidiary, Tepnel BioSystems Limited purchased two
businesses in June 1999 - BioKits and Laboratory Services. These strategic
acquisitions provide us with a profitable vehicle to deliver our DNA
technologies to the food testing and related industries.
"We have continued to keep tight control of our costs and cash reserves at the
year-end were #2.064 million (1998: #5.083 million). Net cash outflow for the
year of #3 million included the #1 million consideration paid for the
BioKits and Laboratory Services businesses.
"Following the presentation of our prototype 96 column DNA purification
instrument, we have entered into discussions with a number of potential
partners. In addition, Tepnel's purification system is based on magnetic
bead technology and, following a significant period of joint development
work, we acquired this technology in August 1999, ensuring that we now fully
control the reagent stream.
"Tepnel BioSystems has successfully merged the two acquired businesses and
is already selling a range of DNA-based kits for detecting genetically
modified organisms (GMOs). We are now establishing development programmes
to increase our portfolio of DNA-based products.
"There is every reason for optimism that the progress we have already made
will establish successful businesses in both DNA Analysis and Food Testing.
"The Board and employees of Tepnel are committed to producing a profitable
business. Our challenge is to balance the expenditure of our cash
reserves with income generating activities. We believe that the Company
is now well positioned to exploit opportunities in the life science
research, clinical diagnostics, food and environmental markets and we are
optimistic about the prospects for the year 2000."
For further information, please contact:
Tepnel Life Sciences PLC Tel: 0161 445 9457
Peter Raymond, Chairman Internet: www.tepnel.co.uk
Michael Billingham, Commercial Director E-mail: corp@tepnel.co.uk
Jeremy Lee, Finance Director
Rawlings Financial PR Limited Tel: 0113 242 1500
John Rawlings
Catriona Valentine
CHAIRMAN'S STATEMENT
During 1999, all of Tepnel's resources were focused on business opportunities
with income generating potential and I am pleased to report that the Company
has made real progress in building a base for future profits generation.
A prototype 96 column automated DNA purification instrument was rapidly
developed from our existing instrumentation platform. This prototype
was well received by an international audience at a major scientific meeting
in New Orleans in July 1999 and has since generated a great deal of commercial
interest.
Our newly formed subsidiary, Tepnel BioSystems Limited purchased two
businesses in June 1999 - BioKits and Laboratory Services. These strategic
acquisitions provide us with a profitable vehicle to deliver our DNA
technologies to the food testing and related industries.
We received a DTI SMART award to fund a combined technical and commercial
feasibility study on an innovative isothermal signal amplification technology,
which was developed in-house.
The DARAS patent was granted in the USA and is proceeding to grant in Europe.
The SPA patent was also granted in the USA.
Results
A loss of #2.376 million was recorded in the year ended 30 June 1999
(1998: #2.587 million) on sales of #174,000 (1998: #135,000), representing a
loss per share of 4.9 pence (1998: 5.3 pence).
DARAS sales were below budget but the Company has been able to compensate for
this by effective cost controls.
We have continued to keep tight control of our costs and cash reserves at the
year-end were #2.064 million (1998: #5.083 million). Net cash outflow for
the year of #3 million included the #1 million consideration paid for the
BioKits and Laboratory Services businesses.
Business Strategy
The Board believes that Tepnel will become a successful and profitable company
by delivering DNA technologies to the life science research, clinical
diagnostics, food and environmental testing markets. This success will be
achieved by identifying the best opportunities available to us and combining
our in-house capabilities with appropriate partners, including acquisitions,
to meet customer needs.
The core competence of the Company remains the development of automated
systems to deliver the DNA-based technologies that the market requires.
Purification is the first step in any DNA-based analysis and we estimate
that the global DNA purification market is #500 million, growing at 12-13%
per annum. It is our view that we should seize this opportunity and so we
have developed a 96 column automated instrument for the research market. The
response to our prototype at the New Orleans meeting has confirmed this view.
We intend to form commercial partnerships which will enable us to introduce
our first purification system into the research market, generating sales
of both instrumentation and its associated consumables and reagents. Such
partnerships will also lead to the development and commercialisation of
further instruments to address different parts of the market, eg DNA from
blood.
The establishment of Tepnel BioSystems allows us to exploit opportunities that
exist for DNA-based technologies in the food and related markets through the
sale of kits and contract services. We will build on the existing income
stream by expanding both the range and scope of that business through in-house
developments and partnerships. Initial targets are the detection of
genetically modified organisms in food samples and related applications,
such as determining the species of origin of meat.
We also intend to obtain licensing revenue from our portfolio of patented
technologies, the value of which increases as more applications reach grant
in the USA and Europe. In the future, it is expected that Tepnel will
generate income and profits from technology transfer and licensing, sales
of products such as instruments and kits, and contract services.
Developments since the year-end
Following the presentation of our prototype 96 column DNA purification
instrument, we have entered into discussions with a number of potential
partners. In addition, Tepnel's purification system is based on magnetic
bead technology and, following a significant period of joint development work,
we acquired this technology in August 1999, ensuring that we now fully control
the reagent stream.
Tepnel BioSystems has successfully merged the two acquired businesses and
is already selling a range of DNA-based kits for detecting genetically
modified organisms (GMOs). We are now establishing development programmes to
increase our portfolio of DNA-based products.
There is every reason for optimism that the progress we have already made will
establish successful businesses in both DNA Analysis and Food Testing.
Personnel
I would like to thank all the Tepnel employees who have given positive and
sustained support to the Company's business strategy. It is also with
pleasure that I welcome to the Tepnel group all of the 21 new employees of
Tepnel BioSystems Ltd.
I am continuing in my role as acting Chief Executive Officer of the Company,
during the current phase of commercialisation. It is the Board's intention
to recruit a suitably qualified and experienced Chief Executive as soon as
is appropriate, when I will return to my non-executive role.
Outlook
The Board and employees of Tepnel are committed to producing a profitable
business. Our challenge is to balance the expenditure of our cash reserves
with income generating activities. We believe that the Company is now well
positioned to exploit opportunities in the life science research, clinical
diagnostics, food and environmental markets and we are optimistic about the
prospects for the year 2000.
Finally it is with pleasure that on behalf of all the Tepnel directors and
employees, I thank our shareholders for their faith and conviction in
supporting Tepnel. I sincerely hope that the commitment and investment in
time, money and personal skills, produces the success that everyone involved
with Tepnel deserves.
Peter Raymond
CHAIRMAN
6 October 1999
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 30 June 1999
Year to 30 June Year to 30 June
1999 1998
#000 #000 #000 #000
Turnover 174 135
Cost of sales (59) (71)
-------- --------
Gross profit 115 64
Research and development (1,553) (1,936)
Sales and marketing (531) (598)
Administrative expenses (667) (576)
-------- --------
(2,751) (3,110)
-------- --------
Operating loss (2,636) (3,046)
Interest receivable 260 459
-------- --------
Loss both before and after
taxation for the year (2,376) (2,587)
-------- --------
Loss per share 4.9p 5.3p
Diluted loss per share 4.9p 5.3p
Notes:
1. The Group's activities for the year relate to continuing operations and all
recognised gains and losses are included above.
2. A subsidiary Company, Tepnel BioSystems Limited, completed the acquisition
of the trade and assets of a food diagnostics and laboratory services
business on 18 June 1998. The effect of the acquisitions on the results of
the group for the year is not significant.
3. The Directors do not recommend the payment of a dividend.
4. The basic loss per share has been calculated on the following basis:
Year to 30 June 1999 Year to 30 June 1998
Average Average
Loss number of Loss number of
#'000 ordinary #'000 ordinary
shares shares
Basic (2,376) 48,794,379 (2,587) 48,694,402
In both years the diluted loss per share is the same as the basic loss per
share.
CONSOLIDATED BALANCE SHEET
At 30 June 1999
As at 30 June As at 30 June
1999 1998
#000 #000 #000 #000
Fixed assets
Intangible assets 1,091 542
Tangible assets 350 349
-------- --------
1,441 891
Current assets
Stocks 451 405
Debtors and prepayments 279 250
Investments 25 61
Cash at bank and in hand 2,064 5,083
-------- --------
2,819 5,799
Creditors: amounts falling
due within one year 531 595
-------- --------
Net current assets 2,288 5,204
-------- --------
Total assets less
current liabilities 3,729 6,095
======== =======
Capital and reserves
Called up share capital 488 487
Share premium account 15,990 15,981
Profit and loss account (12,749) (10,373)
-------- --------
Shareholders' funds 3,729 6,095
======== ========
Notes:
1. All items under capital and reserves are equity
2. On 18 June 1999 the Company completed the acquisition of the trade and
assets of the food diagnostics and laboratory services business at a cash
cost of #1,000,000 and acquisition costs of #52,122. The net assets
acquired was #502,630 giving rising goodwill of #549,492.
CONSOLIDATED CASH FLOW STATEMENT
Year ended 30 June 1999
Year to Year to
30 June 30 June
1999 1998
#000 #000
Reconciliation of operating loss to net
cash flow from operating activities
Operating loss (2,636) (3,046)
Depreciation 159 137
Amortisation 1 -
Decrease/(increase) in stocks 186 (391)
Decrease/(increase) in debtors 86 (27)
(Increase)/decrease in creditors (64) 239
(Profit)/loss on disposal of fixed assets (2) 25
Release on provision for diminution in
value of assets - (113)
-------- --------
Net cash outflow from operating activities (2,270) (3,176)
======== ========
#'000 #'000
Cash flow statement
Net cash outflow from operating activities (2,270) (3,176)
Returns on investments 260 459
Acquisitions and disposals (1,052) -
Investing activities 33 (258)
Management of liquid resources 2,999 2,849
Financing 10 9
-------- --------
Decrease in cash (20) (117)
======== ========
#'000 #'000
Reconciliation of net cash flow to
movements in net funds
Decrease in cash (20) (117)
Cash inflow from short term deposits (2,999) (2,849)
-------- --------
Change in net funds resulting from cash flow (3,019) (2,966)
Net funds at the beginning of year 5,083 8,049
-------- --------
Net funds at the end of year 2,064 5,083
======== ========
Notes:
Nature of Preliminary Announcement
The financial information supporting the preliminary announcement relating
to Tepnel Life Sciences PLC does not constitute statutory accounts as
defined by Section 240 of the Companies Act 1985. The abridged comparative
financial information for the year to 30 June 1998 has been based on the
statutory accounts of Tepnel Life Sciences PLC for the year to 30 June 1998.
These accounts have been reported on by the Company's auditors and delivered
to the Registrar of Companies. The report of the auditors was unqualified
and did not contain a statement under section 237(2) or (3) of the Companies
Act 1985.
The financial information for the year to 30 June 1999 has been prepared on
the basis of the accounting policies set out in the Company's accounts for
the year to 30 June 1998, with the following two exceptions. Goodwill arising
on acquisition is amortised through the profit and loss account over the
directors' estimate of its useful economic life - ranging from five to twenty
years. Depreciation on plant, equipment, fixtures and fittings is calculated
at 20 - 33.33% per annum. The auditors have not yet reported on the accounts
for the year ended 30 June 1999. The statutory accounts for the year will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
END
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