RNS Number:9576S
Tepnel Life Sciences PLC
15 March 2007
TEPNEL LIFE SCIENCES PLC
Preliminary results for the year ended 31st December 2006
Manchester, UK, 15th March 2007: Tepnel Life Sciences plc (AIM: TED), the
international molecular diagnostics and research products and services group,
announces preliminary results for the year ended 31st December 2006 and reports
its maiden profit.
2006 Highlights
* 19% increase in annual sales to #16.16 million, up from #13.60 million
in 2005
* Gross profit increase of 34% to #8.49 million with the gross margin
increasing to 53% from 47% in 2005
* Pre exceptional EBITDA for the year increased to #0.92 million, from a
loss of #0.17 million in 2005
* Achieved the Group's first operating profit (pre exceptionals) of #0.21
million in 2006, up from an operating loss (pre exceptionals) of #0.92
million in 2005
* Achieved operating profit after exceptionals of #0.08 million compared to
loss of #1.9 million in 2005
* Improved operating cash inflow of #0.05 million from an operating cash
outflow of #0.17 million in 2005
* Continued focus on operational synergies driving margin expansion
* Substantial organic growth from both divisions leading to the Group
achieving its first year of profitability
Results Year ended Year ended Change
31 Dec 2006 31 Dec 2005
#'000 #'000
Group turnover 16,156 13,602 + 19%
EBITDA (pre exceptionals) 922 (172) +#1.09m
EBIT (pre exceptionals) 206 (924) +#1.13m
EBIT 84 (1,899) +#1.98m
Profit/(loss) after tax 175 (1,905) + #2.08m
Basic EPS 0.08 pence (0.89) pence + 0.97 pence
Gross margin 53% 47% + 6%
Commenting on Tepnel's full year results, Ben Matzilevich, CEO, said:
"2006 has been a milestone year for Tepnel as it announces its first full year
of profitability. This record financial performance reflects the success of
Tepnel's operational strategy and I firmly believe the Company is well placed to
continue to substantially grow the business from these levels".
For further information, please contact:
Tepnel Life Sciences plc Capital MS&L
Ben Matzilevich, CEO Mary Clark or Halina Kukula
Tel: +44 161 946 2200 Tel: +44 20 7307 5330
Seymour Pierce
Mark Percy
Tel: +44 20 7107 8000
Notes to Editors
About Tepnel Life Sciences plc
Tepnel Life Sciences (AIM:TED) is a UK-based international life sciences
products and services group with two divisions, Molecular Diagnostics and
Research Products & Services. The Company has laboratories, manufacturing and
operations in the USA, UK and France with 195 employees. Tepnel 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. Tepnel focuses on these niche operations with internally developed
products, patents, expertise and know-how as well as strategic acquisitions, to
develop a leadership position within these defined market segments.
Chairman's Statement
This year has been a highly successful one for Tepnel which has resulted in a
maiden operating pre-exceptional profit of #0.21m on turnover of #16.16m.
The performance in 2006 is a direct result of Tepnel's corporate strategy to
build leadership positions in attractive niche markets in the molecular
diagnostics and research products and services sectors.
The Group continues to reap the benefits of the strategic reorganisation of the
business in 2005 and the successful integration of its acquisitions has allowed
Tepnel to exploit operational and sales and marketing synergies in advance of
those anticipated.
Research Products and Services
The Research Products and Services division has delivered strong sales growth
with turnover increasing 24% on 2005. This division provides outsourcing
services for the pharmaceutical, biotechnology and healthcare industries, food
testing products and services and immunological reagents. Our client base
continues to grow and includes many of the top 20 pharmaceutical companies.
Tepnel is now firmly established as one of the largest providers of Nucleic Acid
Purification (NAP) and analysis services in Europe and during the year delivered
major contracts for large pharmaceutical companies, and expanded its customer
base significantly. This included signing two major agreements with Pfizer and
AstraZeneca.
The increase in customer demand for our outsourced services has made essential
the construction of the new state-of-the-art pharmaceutical testing facility in
Livingston, Scotland. Construction began in July 2006 and the facility is
scheduled to be fully operational by July 2007. The new facility will allow us
to add further capacity, develop additional services and strengthen our position
in the genomic and protein analysis sectors.
Our food safety business delivered good growth during the year and we saw
significant improvements in US sales. This was driven by the establishment of
direct sales and marketing capabilities, together with a complete range of
inventory, in the US. In 2006, a range of new ELISA and RAPID 3-D food allergen
kits were launched leaving the business well placed for growth in 2007.
In December 2006, Tepnel signed a global licensing agreement with the world's
largest online supplier of antibody products, Abcam, for the distribution of our
immunological reagents. The move significantly extends Tepnel's reach and will
provide immediate access to a broad range of customers from both academia and
industry.
Molecular Diagnostics
The Molecular Diagnostics division continues to see strong growth with a 15%
increase in sales for the year. This division is focusing on the growth markets
of organ transplant monitoring, foetal distress diagnosis and genetic
predisposition testing. Tepnel's innovative product range includes the Lifematch
transplant monitoring assays and the ELUCIGENE genetic predisposition assays.
The Lifematch range of products, based on the highly multiplexed Luminex
platform, continues to perform strongly in the market place capturing additional
market share and delivering sales growth of over 40% compared to the prior year.
There were two major product launches during the year: Donor Specific
Anitbodies (DSA), novel assays for the detection of antibodies which can be used
in pre-transplant antibody detection, and the Lifecodes Single Antigens (LSA)
assays, which improve antibody detection in patients prior to solid organ
transplant through increased sensitivity and specificity. These product launches
will help Tepnel to achieve its aim of being a market leader in the organ
transplant monitoring market.
The ELUCIGENE QST*R product, launched throughout Europe in March 2006, continues
to gain momentum and is now used in 30 laboratories in over 15 countries. The
DNA-based assay is used for the rapid detection during pregnancy of common
genetic abnormalities, including Down syndrome, Edwards syndrome and Patau
syndrome. The diagnostic test is a highly sensitive and rapid test that can
provide results within 4 hours, compared with 12-14 days needed for current
standard tests. The test has been approved for in-vitro diagnostic use in Europe
and Canada, and further regulatory approvals are in process.
Financial results
Turnover for the year increased by 19% to #16.16m (2005: #13.60m) with double
digit growth across both operating divisions. Research Products and Services
generated a 24% increase to #7.28m (2005: #5.88m) and Molecular Diagnostics grew
by 15% to #8.88m (2005: #7.72m), now comprising 45% and 55% of group turnover
respectively.
Sales to Asia represented the largest growth as a market, growing from 4% to 11%
of Group turnover in 2006, while 85% of the Group's revenues continue to be
derived from the key markets of the US, UK and the rest of Europe.
Operating profits before interest, tax, depreciation, amortisation (EBITDA) and
exceptional items for the year ended 31 December 2006 were #0.92m compared to
losses on the same basis of #0.17m in the previous year (See Note 5). Operating
profit pre-exceptional items was #0.21m compared to losses on the same basis of
#0.92m in 2005. The retained profit for the year after taxation was #0.18m
(2005: retained loss of #1.91m).
Basic earnings per share for the year were 0.08 pence (2005: basic loss per
share of 0.89 pence).
Net cash inflow from operating activities of #0.05m was reported, having
reported a net outflow of #0.17m in the previous year. Cash balances at 31
December 2006 amounted to #3.86m (2005: #2.28m) with net funds of #2.26m (2005:
#2.26m). Net assets at the year end totalled #6.97m, up from #5.68m at the
prior year end.
Overall, Tepnel has continued to record strong year on year growth in sales and
gross profits. Importantly, the Group has achieved its first full year of
profitability along with improving operating cash flows and a strong balance
sheet.
Future Prospects
Following the strategic reorganisation and integration of the businesses
acquired in 2004, the Group has significantly improved its year on year
performance.
The Group is focusing its Molecular Diagnostic division into key growth markets,
principally organ transplant monitoring and foetal distress diagnostics. The
strategic objectives for Molecular Diagnostics include expanding the product
lines for pre and post operating transplant monitoring assays with the aim of
becoming a market leader in this sector. The division is also focusing on
developing molecular diagnostics for the highly mutated multi gene disease
states within the ELUCIGENE and QST*R lines.
The Research Products and Services division is focused on expanding its
capabilities in the development of assays and services in immunology,
genotyping, food allergens and protein analysis. The new laboratory will be
used to develop epigenetic and genotyping capabilities to increase our market
share in these areas.
Current Trading
Tepnel has made a good start to the new financial year. The Board is confident
the Group will report continued improvements in its performance in 2007.
Alec Craig
Non-Executive Chairman
15 March 2007
Consolidated Profit and Loss Account for the year ended 31 December 2006
Note Year ended 31 Year ended 31
December 2006 December 2005
#'000 #'000
Turnover 1 16,156 13,602
Cost of sales - normal (7,663) (6,718)
- exceptional 2 - (556)
Total cost of sales (7,663) (7,274)
Gross profit 8,493 6,328
Administrative expenses - normal (3,857) (3,528)
- exceptional 2 (122) (419)
Total administrative expenses (3,979) (3,947)
Research and development (1,775) (1,738)
Sales and distribution costs (2,655) (2,542)
Operating profit/(loss) 84 (1,899)
Interest receivable 80 89
Interest payable (143) (205)
Profit/(loss) on ordinary activities before taxation 1 21 (2,015)
Taxation on profit/(loss) on ordinary activities 154 110
Profit/(loss) for the financial period 4 175 (1,905)
Basic earnings/(loss) per share 3 0.08p (0.89p)
Diluted earnings/(loss) per share 3 0.08p (0.89p)
Operating profit/(loss) excluding exceptional items 206 (924)
Consolidated Statement of Total Recognised Gains and Losses for the year ended
31 December 2006
Year ended 31 Year ended 31
December 2006 December 2005
#'000 #'000
Profit/(loss) for the financial period 175 (1,905)
Currency translation differences on retranslation of (58) 14
subsidiary undertakings
Total gains/(losses) recognised since last annual 117 (1,891)
report
All items dealt with in arriving at operating profit/(loss) above relate to
continuing operations.
Consolidated Balance Sheet at 31 December 2006
Note 31 December 2006 31 December 2005
#'000 #'000
Fixed assets
Intangible assets 1,590 1,665
Tangible assets 2,246 1,500
3,836 3,165
Current assets
Stocks 2,645 2,247
Debtors 3,243 3,140
Cash at bank and in hand 3,857 2,279
9,745 7,666
Creditors: amounts falling due within one year (5,303) (4,937)
Net current assets 4,442 2,729
Total assets less current liabilities 8,278 5,894
Creditors: amounts falling due after more than one year (1,307) (20)
Provisions for liabilities and charges - (190)
Net assets 1 6,971 5,684
Capital and reserves
Called up share capital 2,302 2,132
Share premium account 34,576 33,601
Profit and loss account (29,907) (30,049)
Shareholders' funds 4 6,971 5,684
Consolidated Cash Flow Statement for the year ended 31 December 2006
Consolidated cash flow statement Year ended Year ended
31 December 31 December
2006 2005
#'000 #'000
Net cash inflow/(outflow) from operating activities 45 (171)
Return on investments and servicing of finance 58 75
Taxation 73 90
Capital expenditure and financial investment (1,213) (230)
Acquisitions (39) -
Net cash outflow before management of liquid resources and (1,076) (236)
financing
Financing 2,474 (41)
Increase/(decrease) in cash 1,398 (277)
Reconciliation of operating profit/(loss) to net cash inflow/ Year ended Year ended
(outflow) from operating activities 31 December 31 December
2006 2005
#'000 #'000
Operating profit/(loss) 84 (1,899)
Depreciation 509 555
Impairment - 84
Amortisation 207 197
Loss on disposal of fixed assets - 25
Share based payment 25 -
(Increase)/decrease in stocks (547) 101
Increase in debtors (221) (336)
(Decrease)/increase in creditors (12) 1,102
Net cash inflow/(outflow) from operating activities 45 (171)
Reconciliation of net cash flow to movements in net funds Year ended Year ended
31 December 31 December
2006 2005
#'000 #'000
Increase/(decrease) in cash 1,398 (277)
Cash outflow from decrease in lease financing 36 144
Cash inflow from increase in debt (1,234) -
Changes in net funds resulting from cash flow 200 (133)
Inception of finance leases (177) (20)
Exchange differences (20) 14
Net funds at beginning of year 2,259 2,398
Net funds at end of year 2,262 2,259
Notes:
1 Segmental analysis
Turnover, profit/(loss) before taxation and net assets by business segment:
Year ended 31 December 2006
Research
Products and Molecular
Services Diagnostics Total
#'000 #'000 #'000
Turnover 7,275 8,881 16,156
Segment profit 675 493 1,168
Central costs (including #122,000 exceptional costs) (1,084)
Net interest payable (63)
Profit before taxation 21
Net assets 5,501 1,470 6,971
Year ended 31 December 2005
Research
Products and Molecular
Services Diagnostics Total
#'000 #'000 #'000
Turnover 5,881 7,721 13,602
Segment (loss)/profit pre exceptional costs (361) 352 (9)
Segment exceptional costs (312) (473) (785)
Segment loss (673) (121) (794)
Central costs (including #190,000 exceptional costs) (1,105)
Net interest payable (116)
Loss before taxation (2,015)
Net assets 4,246 1,438 5,684
Turnover, profit/(loss) before taxation and net assets by geographical segment:
Year ended Year ended 31
31 December 2006 December 2005
#'000 #'000
Turnover by geographical destination:
UK 4,628 3,861
Rest of EU 4,106 3,494
US 4,944 4,139
Asia 1,699 595
Rest of World 779 1,513
16,156 13,602
Turnover by geographical origin:
UK 6,868 5,741
Rest of EU 1,532 1,404
US 7,756 6,457
16,156 13,602
Profit/(loss) before taxation by geographical segment
UK (314) (1,465)
Rest of EU 222 171
US 113 (721)
21 (2,015)
Net assets by geographical segment
UK 3,362 2,424
Rest of EU 1,836 2,240
US 1,773 1,020
6,971 5,684
2 Exceptional items
Year ended Year ended
31 December 31 December
2006 2005
#'000 #'000
Cost of sales - exceptional items
Provision for slow moving/obsolete stock lines2 - 556
- 556
Administrative expenses - exceptional items
Unfair dismissal claim1 122 190
Fixed asset impairment3 - 84
Legal and other charges4 - 145
122 419
Total exceptional items 122 975
1 Unfair dismissal claim
On 29 November 2005, the Group terminated the employment contract of Mr G P
Ffoulkes Davies, Group Finance Director. Mr G P Ffoulkes Davies had brought a
claim for unfair dismissal in the Manchester Employment Tribunal and a defence
to this action had been filed. The Group made a provision of #190,000 against
any potential award against the Group for unfair dismissal and any action that
may have been brought in respect of breach of contract in 2005.
On 24 May 2006, the Group settled the unfair dismissal claim. The #122,000
charge reflects the settlement made in excess of the provision made in 2005 as
well as associated legal costs incurred. As part of this settlement Mr G P
Ffoulkes Davies paid in full the outstanding unpaid share capital of #134,500 on
3,000,000 shares purchased in 2004, together with the interest accrued on this
amount.
2 Provision for slow moving/obsolete stock lines
The exceptional charge for slow moving and obsolete stock was #556,000. The
Group is constantly improving and developing its product range and during 2005 a
review of all stock lines across the Group was undertaken and provision made for
slow moving or obsolete lines. In particular, the success of sales of the
Lifematch HLA system has led to slower sales of its RFLP HLA products. The
majority of the provision related to individual stock items within this product
line which were acquired with the acquisition of Tepnel Lifecodes.
3 Fixed asset impairment
The development of the Group's product range led to several capital items no
longer being used within the business. These items were fully written down
during 2005 and the total of the impairment charge was #84,000.
4 Legal and other charges
The Group had exceptional legal and other charges during 2005 of #145,000.
These principally relate to corporate finance and distribution agreements
advice, but also included lease dilapidation and grant repayment charges.
3 Earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing net profit/(loss) for
the year that is attributable to the ordinary equity shareholders of the Group,
by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings/(loss) per share is calculated by dividing the net profit/
(loss) for the year that is attributable to the ordinary equity shareholders of
the Group, by the weighted average number of ordinary shares outstanding during
the year plus the weighted average number of ordinary shares that would be
issued on the conversion of all dilutive potential ordinary shares into ordinary
shares.
2006 Earnings Weighted Earnings per
Average share
No of
Shares
#'000 000's
Basic EPS 175 222,884 0.08p
Dilutive effect of securities - Options - 1,222 -
- 227 -
Warrants
Diluted EPS 175 224,333 0.08p
2005 Earnings Weighted Earnings per
Average share
No of
Shares
#'000 000's
Basic EPS and Diluted EPS (1,905) 213,022 (0.89p)
The basic and dilutive loss per share are the same in 2005 at 0.89p because
losses have been incurred which result in all potentially dilutive shares being
treated as anti-dilutive.
4 Reconciliation of Movements in Shareholders' Funds
31 December 31 December
2006 2005
#'000 #'000
Profit/(loss) for the financial period 175 (1,905)
Currency translation differences on retranslation of (58) 14
subsidiary undertakings
Share based payments 25 -
Issue of shares (including premium) 1,192 17
Share issue costs (47) (1)
Net increase/(reduction) in shareholders' funds 1,287 (1,875)
Opening shareholders' funds 5,684 7,559
Closing shareholders' funds 6,971 5,684
5 Additional Financial Information
Reconciliation of operating profit/(loss) to profit/(loss) before interest, tax,
depreciation, amortisation (EBITDA) and exceptional items
31 December 2006 31 December 2005
#'000 #'000
Operating profit/(loss) 84 (1,899)
Exceptional items 122 975
Depreciation 509 555
Amortisation 207 197
EBITDA pre exceptional items 922 (172)
6 Dividends
The directors do not recommend the payment of a dividend.
7 Accounting policies
The Group has implemented FRS 20: Share Based Payments during the year and taken
advantage of the transitional provisions in respect of share based payments
granted and fully vested before 1 January 2006. There has been no change to
prior year financial statements in respect of the implementation of this
standard. The impact of adopting FRS 20 in the current year, has resulted in a
charge to the profit and loss account of #25,000. All other accounting policies
used are consistent with those applied in the latest published Group accounts.'1
The preliminary results for the year ended 31 December 2006 have
been approved by the directors. Our auditors have issued an unqualified audit
report on the results for the year ended 31 December 2006 under section 235 of
the Companies Act 1985. The accounts for the year ended 31 December 2006 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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