TED Ted Baker Plc

TEPNEL LIFE SCIENCES PLC - Preliminary Results 2004 31st March 2005 TEPNEL LIFE SCIENCES PLC ("the Company", AIM:TED) www.tepnel.com Tepnel's preliminary results for the year ended 31st December 2004 Tepnel Life Sciences provides research products and services to the fast growing pharmaceutical and biotechnology markets and provides molecular diagnostic products and services Highlights * Completion of Tepnel Lifecodes acquisition at a favourable price * Increase in annual sales from �3.9 million (2003) to �10.2 million (2004) * Reduction in annual operating losses (pre-exceptional items) from �2.17 million (2003) to �1.73 million * Secured new equity funding of �4.2 million (before expenses) * Completion of Diaclone acquisition Chairman's Statement 2004 was a year of significant change and growth for Tepnel, with the completion of two international acquisitions, Tepnel Lifecodes Corporation (formerly Orchid Diagnostics) in January and Diaclone Research SAS in December. These marked the Group's entrance into the strategically important markets of molecular diagnostics and monoclonal antibody development and production. The acquisition of Tepnel Lifecodes based in Stamford, Connecticut USA, was completed in January 2004 for an initial consideration of $3.45m. Following a review of the completion accounts, the consideration was revised downwards to $2.49m. We are pleased to report that this important new addition to our Group performed in line with management's expectations for the year under review. A rapid integration of the business has allowed us to commence the sale and distribution of our existing Tepnel DNA purification products and Tepnel Biosystems food safety tests into continental USA. Tepnel's second acquisition in 2004 was Diaclone Research SAS in December for a consideration of �2.37 million. The company, located in Besancon, France, produces monoclonal antibodies for in vitro studies and diagnostic purposes. Diaclone has strong historical relationships with several major pharmaceutical companies and this is expected to create cross-selling opportunities for both our TSS Division and for Diaclone to build incremental revenues in the future. Tepnel also secured significant new funding in 2004. A successful round of � 4.2m (before expenses) in November was used to raise the funds required for the acquisition of Diaclone Research SAS. In addition the funds will be used for the construction of a biopharmaceutical facility for the Tepnel Scientific Services business in Livingston, Scotland. The Company also issued 74.4 million warrants to subscribe for shares at 6.98 pence per share and raised �0.6 million of equity funding at the beginning of the year through Cornell Capital Partners Offshore L.P. Poor progress in sales of our Nucleoplex and Nucleopure systems during the year was a major disappointment. The Board has decided that these products would have a better chance of success with a specialist instrument business and we are actively searching for appropriate opportunities to sell the instruments operation to such a company. Alternatively we may choose a partner through whom we would retain the right to sell reagents to end-users. The Group has since the year-end ceased the research, development, sales and marketing activities associated with these two projects and the benefits of this decision are expected to contribute positively to our financial results in 2005. Financial results Turnover for the twelve months ended 31st December 2004 reached �10.2 million from �5.7 million in the 18 months to 31st December 2003. Turnover in the calendar year 2004 from activities owned in 2003, grew 4.5% to �4.04 million (2003 - �3.87 million). Turnover from acquisitions in the year contributed � 6.15 million (2003: � nil) Operating losses for the twelve months were �2.28 million (2003 18 months: � 5.94 million) after taking account of exceptional items totalling �0.55 million (2003 18 months: �2.35 million). An exceptional loss was recognised in the following area during the final six months of the year: * The lack of progress in sales of the Nucleoplex and Nucleopure instruments systems has resulted in cessation of continued research, development, sales and marketing activities associated with these products. The Company has provided at year-end a total of �547,000, comprising �506,000 for write-down of stocks of these two instruments systems and �41,000 for redundancy costs for people employed directly or indirectly on these projects. Operating losses pre-exceptional items in calendar year 2004, from activities owned in 2003, were �1.64 million, a reduction of 24.3% from the calendar year 2003 loss of �2.17 million. Acquisitions during the year made an operating loss of �0.09 million (2003: �nil) The basic loss per share for the year was 1.5 pence (2003 18 months: 5.6 pence). Following the completion of the acquisition of Diaclone Research, cash balances at 31st December 2004 amounted to �2.54 million. Net assets at year-end totalled � 7.56 million (2003: � 5.90 million) Overall, during the last year for Tepnel has once again demonstrated increased sales and increased gross profits. In addition, losses before interest, tax and exceptional items were reduced. Board additions Dr. Andrew Clark joined the Company as Non-Executive Director in May and brings a wealth of experience to the Company. Andrew acts as a consultant for Reabourne Technology Investment Management Ltd, which he co-founded in 1995. Prior to this role he held several positions including UK and European Biotechnology Analyst at Barings. Post balance-sheet events Our new subsidiary in France began the year well by securing a valuable comprehensive research collaboration with Boehringer Ingelheim of Germany to develop antibodies for research and possibly for therapeutic use. Under the terms of the agreement Diaclone will generate murine monoclonal antibodies that recognise human immune regulatory cells. The terms of the collaboration also allow Tepnel to market for research and diagnostic applications those monoclonal antibodies generated by Diaclone which are not developed for therapeutic indications by Boehringer Ingelheim. Future Prospects Following the acquisition of Diaclone Research SAS in December 2004, our businesses have been restructured into two divisions: * Research Products and Services; and * Molecular Diagnostics. The Molecular Diagnostics division comprises the Tepnel Lifecodes and Tepnel Diagnostics businesses acquired from Orchid Biosciences in January 2004, whereas the Research Products and Services division comprises all our other activities including the newly acquired Diaclone Research SAS. These two divisions and their related markets we believe offer excellent growth prospects. Resources for organic growth and further strategic M&A will be directed towards these markets. All of our UK companies, with the exception of Tepnel Life Sciences plc, traded profitably during 2004. Certain ongoing annual payroll costs estimated to be around �250,000 associated with the instrument side of Tepnel Life Sciences plc have now been eliminated. This is expected to have a positive impact on financial results for the year ended 31st December 2005. Acquisitions during the year, whilst loss-making, are expected to achieve operating profitability in 2005. The key objective for the Tepnel Group is to reach sustainable profitability at the earliest opportunity. Both of the new divisions and their constituent parts are committed to further improvements in financial performance in 2005. Current Trading Tepnel has made a solid start to the year. The Board is confident of reporting further progress towards profitability in 2005. Alec Craig Non-Executive Chairman 31st March 2005 References to the figures for the calendar year ended 31 December 2003 are contained within note 6. Consolidated Profit & Loss account for the year ended 31 December 2004 Unaudited Audited Continuing Activities Consolidated Acquisitions Year ended 18 Months 31 ended December 31 2004 December 2003 Notes �'000 �'000 �'000 �'000 Turnover 1 6,149 4,044 10,193 5,676 Cost of sales (3,687) (1,780) (5,467) (3,041) Gross profit 2,462 2,264 4,726 2,635 Other administrative (443) (2,279) (2,722) (3,320) expenses Exceptional items 2 - (547) (547) (2,348) Total administrative (443) (2,826) (3,269) (5,668) expenses Sales and marketing (1,293) (892) (2,185) (1,295) Research and development (820) (733) (1,553) (1,613) Total expenses (2,556) (4,451) (7,007) (8,576) Operating loss (94) (2,187) (2,281) (5,941) Bank interest receivable 43 100 Interest payable (23) (41) Loss on ordinary (2,261) (5,882) activities before taxation Taxation on loss on 19 221 ordinary activities Loss on ordinary (2,242) (5,661) activities after taxation Basic loss per share 5 1.5p 5.6p Diluted loss per share 5 1.5p 5.6p Consolidated Balance Sheet as at 31 December 2004 Unaudited Audited Notes 31 31 December December 2004 2003 �'000 �'000 Fixed assets Intangible 1,882 - Tangible 1,851 1,171 3,733 1,171 Current assets Stocks 2,279 995 Debtors 2,932 1,481 Cash at bank and in hand 2,542 4,244 7,753 6,720 Creditors: amounts falling (3,927) (1,859) due within one year Net current assets 3,826 4,861 Total assets less current 7,559 6,032 liabilities Creditors: amounts falling - (137) due after more than one year Net Assets 7,559 5,895 Represented by: Called up share capital 2,129 1,337 Share premium 33,588 30,438 Profit and loss account (28,158) (25,880) 4 7,559 5,895 Consolidated Statement of Total Recognised Gains and Losses Unaudited Audited Year ended 18 months 31 December ended 31 2004 December 2003 �'000 �'000 Loss for the period (2,242) (5,661) Currency translation differences on (36) - foreign currency net investments Total losses recognised (2,278) (5,661) Consolidated Cash Flow Statement for the year ended 31 December 2004 Unaudited Audited Year ended 31 18 months December 2004 ended 31 December 2003 �'000 �'000 Net cash outflow from operating (1,107) (3,089) activities Return on investments and servicing 20 59 of finance Corporation tax refund 180 323 Capital expenditure (317) (223) Acquisitions (3,838) - Net cash outflow before financing (5,062) (2,930) Management of liquid resources - 2,802 Financing 3,310 3,875 (Decrease) / Increase in cash (1,752) 3,747 Unaudited Audited Year ended 31 18 months December 2004 ended 31 December 2003 Reconciliation of operating loss to �'000 �'000 net cash outflow from operating activities: Operating loss (2,281) (5,941) Depreciation 596 1,022 Amortisation 56 1,783 Decrease/(Increase) in stocks 572 (155) Decrease/(Increase) in debtors 228 (73) (Decrease)/Increase in creditors (227) 255 Decrease in current asset investment - 20 Other non-cash movements (51) - Net cash outflow from operating (1,107) (3,089) activities Unaudited Audited Year ended 31 18 months December 2004 ended 31 December 2003 Reconciliation of net cash flow to �'000 �'000 movement in net funds: (Decrease)/Increase in cash (1,752) 3,747 Cash inflow from short term deposits - (2,802) Cash outflow from lease financing 142 250 Exchange differences on (37) - retranslation Change in net funds resulting from (1,647) 1,195 cash flow New finance leases - (499) Net funds at beginning of period 3,968 3,272 Net funds at end of period 2,321 3,968 Notes 1 Consolidated turnover for the year ended 31 December 2004 Unaudited Audited Year ended 18 months 31 December ended 31 2004 December 2003 �'000 �'000 United Kingdom 3,577 4,137 Rest of Europe 2,400 831 Americas 3,350 472 Asia 472 156 Rest of World 394 80 10,193 5,676 Segmental analysis Following the acquisition of Tepnel Lifecodes, Tepnel Diagnostics and Diaclone Research, the Board believe there to be two distinct business classes being, Research Products and Services, and Molecular Diagnostics. The businesses included in the comparative figures form part of Research, Products and Services. Class of business Unaudited Audited 2004 Class of business 2003 Class of business Research Research Products Products and Molecular and Molecular Services Diagnostics Total Services Diagnostics Total �'000 �'000 �'000 �'000 �'000 �'000 TURNOVER Total sales to third 4,068 6,125 10,193 5,676 - 5,676 parties LOSS BEFORE TAXATION (2,196) (65) (2,261) (5,882) - (5,882) NET ASSETS Segment net assets 7,689 (130) 7,559 5,895 - 5,895 Geographical segments Unaudited Audited 2004 Geographical segments 2003 Geographical segments UK EU US Asia Rest Group UK EU US Asia Rest Group of of World World �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 �'000 TURNOVER Sales to third 3,577 2,400 3,350 472 394 10,193 4,137 831 472 156 80 5,676 parties by geographical destination Sales to third 5,295 25 4,873 - - 10,193 5,676 - - - - 5,676 parties by geographical origin LOSS BEFORE TAXATION Segmental loss (2,094) (29) (138) - - (2,261) (5,882) - - - - (5,882) NET ASSETS Segment net 7,889 (30) (300) - - 7,559 5,895 - - - - 5,895 assets 2 Exceptional items Unaudited Audited Year ended 31 18 months December 2004 ended 31 December 2003 �'000 �'000 Fixed asset impairment - 528 Goodwill impairment - 1,642 Foreign currency exchange loss - 178 Redundancy costs1 41 - Costs relating to restructuring and 506 - relocation1 547 2,348 1 The lack of progress in sales of the Nucleoplex and Nucleopure instruments systems has resulted in cessation of continued research, development, sales and marketing activities associated with these products. The Company has provided at year-end a total of �547,000, comprising �506,000 for write down of stocks of the Nucleopure and Nucleoplex instruments systems held at 31 December 2004 and �41,000 for redundancy costs for people employed directly or indirectly on these projects. 3 Fair value of assets acquired Tepnel Life Sciences PLC acquired Tepnel Lifecodes and Tepnel Diagnostics, formerly Orchid Diagnostics, on 21 January 2004 and Diaclone on 15 December 2004. Unaudited Purchase of subsidiary Orchid Diaclone Total undertakings Diagnostics �'000 �'000 �'000 Tangible fixed assets 929 18 947 Stocks 1,321 534 1,855 Debtors 953 223 1,176 Prepayments 146 43 189 Cash at bank and in hand 13 37 50 Creditors (1,920) (378) (2,298) Net assets acquired 1,442 477 1,919 Goodwill 616 1,353 1,969 2,058 1,830 3,888 less costs of acquisition (598) (81) (679) Satisfied by cash 1,460 1,749 3,209 Unaudited Provisional fair value of Fair value adjustments assets acquired (Orchid Diagnostics): Book value Revaluations Accounting Fair value policy alignment �'000 �'000 �'000 �'000 Tangible fixed assets 1,897 - (968) 929 Stocks 1,395 - (74) 1,321 Debtors 982 - (29) 953 Prepayments 171 - (25) 146 Cash at bank and in hand 13 - - 13 Creditors (1,748) - (172) (1,920) 2,710 - (1,268) 1,442 Unaudited Provisional fair value of Fair value adjustments assets acquired (Diaclone): Book value Revaluations Accounting Fair value policy alignment �'000 �'000 �'000 �'000 Tangible fixed assets 18 - - 18 Stocks 807 - (273) 534 Debtors 223 - - 223 Prepayments 43 - - 43 Cash at bank and in hand 37 - - 37 Creditors (378) - - (378) 750 - (273) 477 Unaudited Total provisional fair Fair value adjustments value of assets acquired: Book value Revaluations Accounting Fair value policy alignment �'000 �'000 �'000 �'000 Tangible fixed assets 1,915 - (968) 947 Stocks 2,202 - (347) 1,855 Debtors 1,205 - (29) 1,176 Prepayments 214 - (25) 189 Cash at bank and in hand 50 - - 50 Creditors (2,126) - (172) (2,298) 3,460 - (1,541) 1,919 4 Reconciliation of movement of shareholders funds Unaudited Audited Year ended 31 18 months ended December 2004 31 December 2003 �'000 �'000 Loss for the year/period and net (2,242) (5,661) increase in shareholders' deficit Other recognised losses for the (36) - year Issue of shares (including premium) 3,942 4,224 Net additions/(reduction) to equity 1,664 (1,437) shareholders' funds Opening equity shareholders funds 5,895 7,332 Closing equity shareholders funds 7,559 5,895 5 Loss per share Unaudited Audited Year ended 31 18 months December 2004 ended 31 December 2003 Shares in issue (weighted average) 148,403,632 101,402,875 Loss for period �2,242,000 �5,661,000 Loss per share 1.5p 5.6p Diluted loss per share 1.5p 5.6p 6 Reconciliation of results for the 12 months ended 31 December 2003 Unaudited Audited Unaudited 6 months ended 18 months ended 12 months ended 31 December 31 December 31 December 2002 2003 2003 �000s �000s �000s Sales 1,805 5,676 3,871 Cost of Sales (1,096) (3,041) (1,945) Gross Profit 709 2,635 1,926 Operating Expenses: Research and Development (515) (1,613) (1,098) Sales and Marketing (469) (1,295) (826) Administrative expenses (1,153) (3,320) (2,167) (excluding exceptional items) Exceptional items - (2,348) (2,348) (Administrative expenses) Total Operating Expenses (2,137) (8,576) (6,439) Operating loss before interest (1,428) (5,941) (4,513) Interest 54 100 46 receivable Interest payable (1) (41) (40) Loss before tax (1,375) (5,882) (4,507) Taxation 57 221 164 Loss after tax (1,318) (5,661) (4,343) Operating Loss before (1,428) (3,593) (2,165) exceptional items 7 The preliminary results for the year ended 31 December 2004 have been approved by the Directors. Our Auditors have not issued a report on the results for the year ended 31 December 2004 under Section 235 of the Companies Act 1985. The accounts for the year ended 31 December 2004 will be delivered to the Registrar of Companies in due course. The financial information set out above does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The audited information as at 31 December 2003 has been extracted from the statutory accounts for the period ended 31st December 2003, which have been delivered to the Registrar of Companies and whilst the audit opinion was unqualified, the Auditors included an explanatory paragraph regarding going concern. 8 The directors do not recommend the payment of a final dividend. 9 The operating loss is arrived at after writing off research and development expenditure and exceptional items to the profit and loss account in the period in which it was incurred 10 The accounting policies used are consistent with those applied in the latest published company accounts. END DATASOURCE: TEPNEL LIFE SCIENCES PLC

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