RNS Number:2868R
Tepnel Life Sciences PLC
15 September 2005
Tepnel Life Sciences plc ('Tepnel' or 'the Company')
Interim results for the 6 months ended 30 June 2005
Manchester, UK, 15 September 2005: Tepnel Life Sciences plc (AIM: TED), the
UK-based international Research Products & Services and Molecular Diagnostics
group, is pleased to announce its interim results for the six month period ended
30 June 2005.
Summary
* Group sales totalled #6.89m, an increase of 36% over the same period
last year (6 months to 30 June 2004: #5.07m)
* Pre-tax losses for the Group decreased 61% to #0.36m (6 months to 30
June 2004: #0.92m)
* End of period cash totalled #1.81m. With cash balances at 31 March
2005 of #1.80m (unaudited), the second quarter of the year was marginally cash
positive
* Recently acquired Diaclone signs a comprehensive research
collaboration with Boehringer Ingelheim to generate murine monoclonal antibodies
that recognise human immune regulatory cells
* Introduction of ELUCIGENE CF-HT kits for rapid, high-throughput cystic
fibrosis testing, marks significant extension of the highly profitable ELUCIGENE
product group
Ben Matzilevich, Chief Executive Officer commented: "We are pleased and
gratified with our first half performance. These results demonstrate that our
decision, taken in the Spring of 2005, to focus our business strategy on the
highly profitable areas of Research Products & Services and Molecular
Diagnostics has quickly shown itself to be a successful one. The recent
acquisition of Diaclone in December 2004 has also significantly increased our
capabilities for antibody and assay development. The integration of Diaclone
allows us to offer an extended menu of analytical services to our pharmaceutical
customers, a broader catalogue of research reagents and will enable us to
develop new tests for Molecular Diagnostics."
CHAIRMAN'S STATEMENT
Interim Results for the 6 months ended 30 June 2005
Financial Results
In the six months ended 30 June 2005, turnover for the Group increased 36% to
#6.89m (6 months to 30 June 2004: #5.07m) including revenues from the newly
acquired Diaclone business.
Pre-tax losses for the Group during the period decreased 61% to #0.36m (6 months
to 30 June 2004: #0.92m).
The loss per share during the period decreased to 0.1p (6 months to June 30
2004: 0.6p).
Cash and cash equivalents at the end of the period were #1.81m. With cash
balances at 31 March 2005 at #1.80m (unaudited), the second quarter of the year
was marginally cash positive.
Overview
The first half of 2005 has been an outstanding success for Tepnel, both
financially and in terms of product development. Ongoing operations and the
completion of our acquisition of Diaclone have led us to our strongest financial
performance since the arrival of the new executive management team in 2001 with
half-year sales totalling #6.89m. This represents an impressive 36% increase in
Group sales over the same period last year.
Overall pre-tax losses for the six month period were reduced 61% to #0.36m (6
months to 30 June 2004: #0.92m). The second quarter of 2005 also marked the
Group's further progress towards profitability, as cash balances at the end of
the period exhibited a marginal increase over the end of the previous quarter.
This follows a strategic decision made by the Board in March of this year to
focus the business on the highly profitable areas of Research Products &
Services and Molecular Diagnostics. By concentrating our development efforts on
these two segments, while withdrawing from the smaller DNA purification
instrument business, the Group made considerable progress towards establishing
production synergies that will further support the continuing drive towards
profitability.
The Group's strong commercial viability has also made a significant impact
within our industry. As we announced in July, the Board received a number of
approaches ranging from offers for the Group, to Joint Venture and distribution
agreements. Whilst a proposed valuation of the Group received from a third
party was above the current share price, the Board announced on 5 September that
they believed that such a valuation underestimated the present and future
potential value of Tepnel and consequently were not in a position to recommend
to shareholders any of the proposals made to the Group. Moving forward, our
greater commercial focus, recent acquisitions and unique product lines are
expected to further enhance our attractiveness to the international investment
community and drive our progress as one of today's most dynamic life sciences
companies.
Molecular Diagnostics
Period sales for the Molecular Diagnostics Division were ahead approximately 35%
over the previous year. Key products contributing to growth in this area
include the Tepnel Lifecodes (TLC) LIFEMATCH(R) antibody detection system for
use with LuminexTM multiplex analysis technology. This line has continued to
capture market share in the HLA/DNA typing marketplace due to its high
sensitivity, short assay times and low reagent use.
Future growth in this area is expected to be strengthened by 510(k) clearance
received in August this year from the U.S. Food and Drug Administration (FDA)
for TLC's DNA typing kits for HLA-A, HLA-B, HLA-C, HLA-DQB, and HLA-DRB, which
allows the products to be marketed for in-vitro Diagnostic use. The use of
these kits with the Luminex 100 instrument system provides clinicians with a
highly automated testing system that minimises the occurrence of sample loss or
contamination. The worldwide market for transplant diagnostics is estimated at
$150m, with the U.S. market representing approximately 40% of this total.
Additionally, the emerging field of post-transplant monitoring is expected to
add a new application for these kits in a market that is growing at an estimated
rate of nearly 20% per annum.
Tepnel Diagnostics (TD) also exhibited an increased market presence as sales of
genetic pre-disposition kits and services increased by 30%. The ELUCIGENETM
range of products for simple and rapid mutation detection has been a crucial
driver of this growth and in March of this year, this group was extended with
the introduction of ELUCIGENE CF-HT for high-throughput cystic fibrosis testing.
Featuring an advanced fluorescent format of the already well-validated ARMSTM
technology, these kits are capable of detecting 30 of the most common causative
mutations of cystic fibrosis, providing clinical testing laboratories with
cost-effective and reliable results.
The Group announced recently that it has licenced the global rights to develop,
manufacture and market a DNA-based diagnostic assay for the rapid prenatal
detection of common foetal chromosome abnormalities, including Down Syndrome.
This product has generated considerable market interest in the UK medical
diagnostics community ahead of its anticipated launch in late 2005.
Research Products & Services
Overall sales from Tepnel's Research Products & Services Division increased
approximately 38% from the same period last year. This division comprises the
Group's activities in DNA purification (TLS), outsourcing services for the
pharmaceutical and healthcare industries (TSS), food safety (TBS) and the
recently acquired Diaclone business engaged in monoclonal antibody products and
development services.
Tepnel Life Sciences (TLS) revenues from DNA purification contracted
approximately 19% during the first half of the year, due to delays in receipt of
customer samples. Recent contract awards and scheduling of sample receipts in
the second half of the year indicate a resumption of growth from this activity
for the year as a whole.
Tepnel BioSystems (TBS) continued to grow its revenues from allergen and toxin
testing and from animal and fish speciation in foods. Distribution of products
into the U.S. through the TLC facility in Stamford has begun to gain some
momentum in that market, resulting in improved operating margins compared to the
prior year period. TBS traded profitably and generated cash during the first
half of the year.
Revenues from Tepnel Scientific Services (TSS) grew 23% during the first half of
the year with the principal growth being derived from analytical chemistry and
bio-analysis services. Revenue growth is expected to remain at a similar rate
to the year-end. TSS traded profitably and generated cash during the first half
of the year and is expecting a successful outcome to the year. TSS is now well
advanced in its plans to relocate its Edinburgh and Glasgow facilities to new
purpose built laboratories in Livingston, Scotland. Solicitors have been
instructed to finalise the site acquisition and construction agreements. At
this stage, construction is expected to commence in October 2005 with an
anticipated completion date of end June 2006.
The integration of Diaclone has also been highly rewarding to the Division,
beginning with the signing of a research collaboration agreement with Boehringer
Ingelheim in January. Diaclone expands Tepnel's capabilities geographically and
at the level of product services. Located in Besancon, France, Diaclone has a
presence in over 30 countries and is a leader in the field of antibody and assay
development. In the first six months of 2005, this has already enabled the
Company to offer a broader menu of analytical services to our pharmaceutical
customers, expanded our research reagents catalogue and created cross-selling
opportunities for other business segments within the division.
Prospects
The Group has had an excellent first six months in 2005. Streamlining our
business around profitable, core operations has had an excellent positive
reflection in Group sales, while opening the possibility for operational
synergies. Through the remainder of 2005, the Group will look to identify other
key areas in which our business could benefit from these synergies and to
further capitalise on recent acquisitions.
Looking ahead, Tepnel remains focused on delivering high-quality products and
services to its customers and on competing effectively in the global biotech
market. By carefully examining every viable opportunity for growth in these
areas, we are confident that we will maintain our ultimate objective of
increasing the value of our Company to our shareholders, while creating a
challenging and rewarding workplace for our employees.
Alec Craig
Non-Executive Chairman
15 September 2005
For Further Information:
Tepnel Life Sciences plc
Ben Matzilevich, CEO
Gron Ffoulkes-Davies, Group Finance Director
0161 946 2200
Seymour Pierce
Mark Percy, Corporate Finance
020 7107 8000
De Facto Communications
Richard Anderson
020 7940 1000
Notes to Editors
About Tepnel Life Sciences plc
Tepnel Life Sciences (TLS) is a UK based international biotechnology company.
The Company has laboratories, manufacturing and operations in the USA, UK and
France with 175 employees. TLS provides test kits, reagents and services to two
highly synergistic markets, these being Molecular Diagnostics and Biomedical
Research. The company's strategy has been to identify high growth niche
opportunities within these multi-billion pound markets. TLS focuses on these
niche opportunities with internally developed products, patents, expertise and
know-how as well as strategic acquisitions, to develop a leadership position
within these defined market segments.
Consolidated Profit & Loss Account for the 6 months ended 30 June 2005
6 months ended 30 Audited 6 months
June 2005(1) Year ended 31 ended 30 June 2004(1)
December 2004
#'000 #'000 #'000
Turnover 6,893 10,193 5,068
Cost of sales (2,804) (5,467) (2,974)
Gross profit 4,089 4,726 2,094
Research and development (953) (1,553) (636)
Sales and marketing (1,421) (2,185) (994)
Administrative expenses (2,106) (2,722) (1,395)
Administrative expenses - - (547) -
exceptional(2)
Total administrative expenses (2,106) (3,269) (1,395)
Total expenses (4,480) (7,007) (3,025)
Operating loss (391) (2,281) (931)
Interest receivable 35 43 26
Interest payable (5) (23) (17)
Loss on ordinary activities before (361) (2,261) (922)
taxation
Taxation 69 19 60
Loss on ordinary activities after (292) (2,242) (862)
taxation
Basic and diluted loss per share 0.1p 1.5p 0.6p
Statement of Total Recognised Gains and Losses for the 6 months ended 30 June
2005
6 months Audited 6 months ended 30
ended 30 June Year ended 31 December June 2004(1)
2005(3) 2004
#'000 #'000 #'000
Loss for the period (292) (2,242) (862)
Currency translation differences on (21) (36) 13
foreign currency net investments
Total gains and losses recognised (313) (2,278) (849)
Consolidated Balance Sheet as at 30 June 2005
30 June 2005(4) Audited 30 June 2004(1)
31 December 2004
#'000 #'000 #'000
Fixed assets
Intangible fixed assets 1,762 1,882 502
Tangible fixed assets 1,675 1,851 1,933
3,437 3,733 2,435
Current assets
Stocks 2,412 2,279 2,245
Debtors: due within one year 3,615 2,932 3,357
Cash at bank and in hand 1,807 2,542 1,474
7,834 7,753 7,076
Creditors: amounts falling due (4,025) (3,927) (4,003)
within one year
Net current assets 3,809 3,826 3,073
Total assets less current 7,246 7,559 5,508
liabilities
Creditors: amounts falling due after - - (64)
more than one year
Net assets 7,246 7,559 5,444
Capital and reserves(5)
Called up share capital 2,129 2,129 1,385
Share premium account 33,588 33,588 30,788
Profit and loss account (28,471) (28,158) (26,729)
Equity shareholders' funds 7,246 7,559 5,444
Consolidated Cash Flow Statement for the 6 months ended 30 June 2005
6 months Audited 6 months
ended 30 June 2005 Year ended 31 December ended 30 June 2004(1)
(6) 2004
#'000 #'000 #'000
Consolidated cash flow statement
Net cash outflow from operating (574) (1,057) (1,389)
activities
Returns on investments and 30 20 9
servicing of finance
Acquisitions - (3,838) (1,967)
Corporation tax - 180 (98)
Capital expenditure (125) (317) 342
Net cash outflow before financing (669) (5,012) (3,103)
Financing (66) 3,310 333
Decrease in cash (735) (1,702) (2,770)
Reconciliation of operating loss to net
cash outflow from operating activities:
Operating loss (391) (2,281) (931)
Depreciation 300 596 324
Amortisation 109 56 -
(Increase)/decrease in stocks (133) 572 (1,250)
(Increase)/decrease in debtors (619) 228 (1,876)
Increase/(decrease) in creditors 160 (227) 2,344
Other non-cash movements - (1) -
Net cash outflow from operating
activities (574) (1,057) (1,389)
Reconciliation of net cash flow to
movement in net funds
Decrease in cash (735) (1,702) (2,770)
Cash outflow from decrease in lease 66 132 65
financing
Issued debt - (550) -
Change in net funds resulting from cash (669) (2,120) (2,705)
flows
Conversion of debt to equity - 550 -
Net funds at beginning of period 2,398 3,968 3,968
Net funds at end of period 1,729 2,398 1,263
Notes
1 The Interim Report for the six months ended 30 June 2005 is unaudited and was approved by
the directors. The financial information set out above does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. The information for
the comparative figures has been extracted from the previously published Interim and Annual
Reports. The Annual Report from which the information for the year ended 31 December 2004
has been delivered to the Registrar of Companies and contained an unqualified audit opinion.
2 The directors do not recommend the payment of an interim dividend.
3 The accounting policies used are consistent with those applied in the latest published
consolidated accounts.
4 Segmental analysis
6 months ended 30 June 2005(7)
Turnover by geographical Research Products Molecular Total
destination and Services Diagnostics
#'000 #'000 #'000
UK 1,624 300 1,924
Rest of Europe 1,111 875 1,986
US 72 1,877 1,949
Asia 6 342 348
Rest of World 63 623 686
2,876 4,017 6,893
Audited
Year ended 31 December 2004
Turnover by geographical Research Products Molecular Total
destination and Services Diagnostics
#'000 #'000 #'000
UK 3,251 326 3,577
Rest of Europe 614 1,786 2,400
US 79 3,271 3,350
Asia 10 462 472
Rest of World 114 280 394
4,068 6,125 10,193
6 months ended 30 June 2004(1)
Turnover by geographical Research Products Molecular Total
destination and Services Diagnostics
#'000 #'000 #'000
UK 1,640 310 1,950
Rest of Europe 340 592 932
US 41 1,771 1,812
Asia 4 1 5
Rest of World 61 308 369
2,086 2,982 5,068
5 The basic and diluted loss per share has been calculated on the following basis:
6 months Audited 6 months ended 30
ended 30 June Year ended 31 December June 2004(1)
2005(8) 2004
Loss for the period (292) (2,242) (862)
(#'000)
Weighted average no. of 212,927,315 148,403,632 134,244,887
shares
In the current period the average number of shares is the same on a diluted basis.
6 Copies of this statement are being sent to all shareholders and will be available to the public at the
Company's Registered office at Heron House, Oaks Business Park, Crewe Road, Wythenshawe, Manchester M23
9HZ.
--------------------------
(1) Neither audited or reviewed.
(2) Exceptional items comprise costs relating to restructuring (#506k) and redundancy costs (#41).
(3) Neither audited or reviewed.
(4) Neither audited or reviewed.
(5) All items under capital and reserves are equity.
(6) Neither audited or reviewed.
(7) Neither audited or reviewed
(8) Neither audited or reviewed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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