RNS Number:2043Q
Tepnel Life Sciences PLC
17 March 2008
TEPNEL LIFE SCIENCES PLC
Preliminary results for the year ended 31 December 2007
Manchester, UK, 17 March 2008: Tepnel Life Sciences plc (AIM: TED), the
international molecular diagnostics and research products and services group,
announces preliminary results for the year ended 31 December 2007.
2007 Highlights
* Substantial underlying organic growth leading to the first year of
significant profitability and operating cash inflows
* Revenue increased by 19% to �17.8m (2006: �15.0m) and by 22% on a constant
currency basis
* Operating profit increased to �1.39m (2006: �0.05m)
* Earnings before interest, tax, depreciation and amortization (EBITDA)
increased by 192% to �2.01m (2006: �0.69m)
* First significant operating cash inflow reported at �1.72m (2006: �0.12m)
* Improvement in gross margin to 57% (2006: 54%)
* Increase in earnings per share to 0.59p (2006: 0.06p)
* Strong sales growth in the Molecular Diagnostics division driven by the
LifeMatch range of products
* Major investment in the future of the Research Products and Services
division with the completion of the new pharmaceutical facility in
Livingston, Scotland and newly launched service lines
Results Year ended Year ended
Continuing operations 31 December 2007 31 December 2006
�'000 �'000 Change
Revenue 17,819 14,998 + 19%
EBITDA (pre exceptionals) 2,005 687 +192%
EBIT (pre exceptionals) 1,390 170 +�1.22m
EBIT 1,390 48 +�1.34m
Profit after tax 1,368 139 + �1.23m
Basic EPS 0.59 pence 0.06 pence + 0.53 pence
Gross margin 57% 54% + 3%
Commenting on Tepnel's full year results, Ben Matzilevich, CEO, said:
"2007 has been a breakthrough year for Tepnel resulting in impressive revenue
growth and the first year of significant profitability. This is the result of
our strategy of establishing leadership positions in niche areas of molecular
diagnostics and research products and services. The major investment the Group
has made in the new facilities, new service lines and product development has
enabled Tepnel to build an exceptional product and service pipeline. Tepnel is
well positioned for future growth."
For further information, please contact:
Tepnel Life Sciences plc Capital MS&L
Ben Matzilevich, CEO Mary Clark or Catie Corcoran
Michael Slater, Group Finance Director Tel: +44 20 7307 5330
Tel: +44 161 946 2200
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 over 200 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
2007 has been a breakthrough year for Tepnel. The Group has delivered
significant profits, sales growth and operating cash inflows. This performance
has, for the first time, allowed Tepnel to make substantial capital investment
in the future of the Company. In particular, the construction of the new
facility in Livingston, Scotland and the launch of the new services for the
pharmaceutical outsourcing business has placed the Group in a strong position
for growth in 2008 and 2009.
Operating profits from continuing operations were �1.39m (2006: �0.05m) on
revenue of �17.82m (2006: �15.0m). Revenue growth on a constant currency basis
was 22% (2006: 23%). The performance in 2007 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.
Molecular Diagnostics
The Molecular Diagnostics division has demonstrated strong growth with a 39%
increase in revenues compared to the prior year. This division focuses on the
growth markets of transplant diagnostics, foetal distress diagnosis and genetic
disease 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 55% compared to the
prior year. In 2007, Tepnel extended its licence with Luminex for access to the
xMAP technology. This, along with continued new product development, leaves the
Group well placed for further growth in this market.
Tepnel closed its Transplant Diagnostics Service business towards the end of
2007. This had become loss making and this closure allows the Transplant
Diagnostics business to focus on sales of its core product lines. The results
from this business have been disclosed as discontinued operations in the
financial statements.
The launch of the QST*R range in 2006 was highly successful resulting in
significant sales in key territories. The DNA-based assay is used for the rapid
detection during pregnancy of common genetic abnormalities, including Down
syndrome, Edwards syndrome and Patau syndrome. During the year the product was
successfully evaluated by the National Genetic Research Laboratory which
concluded QST*R was a high quality, reliable product that is easy to use.
Research Products and Services
This division provides outsourcing services for the pharmaceutical,
biotechnology and healthcare industries, food testing products and services and
immunological reagents. Our client base includes many of the top 20
pharmaceutical companies. The Research Products and Services division has
delivered good sales growth with turnover increasing 4% on 2006. The impact of
the relocation of the pharmaceutical services business and the completion of the
Boehringer Ingelheim contract in 2006 offset the otherwise strong underlying
growth.
Tepnel has made significant capital investment in its pharmaceutical services
outsourcing business in 2007. In July, the Group announced the completion of
Phase I of its 18,000 sq ft laboratories on time and to budget. In the same
month, the existing businesses based in Edinburgh and Glasgow were relocated and
in October 2007 work commenced on Phase II. The second phase, the remaining
4,000 sq ft, is being used for Tepnel's new services including genotyping and
biopharmaceutical services.
In July 2007, the Group completed the acquisitions of laboratory service
providers Wildlife DNA Services and Food DNA Services. Wildlife DNA Services is
an established provider of genotyping services, specifically in the area of
wildlife crime investigation and wildlife conservation. The acquisition will
accelerate Tepnel's entry into the clinical genotyping market, broadening its
service offering to the pharmaceutical industry. Food DNA Services provides
high quality genetic information for identifying food composition and origin.
Both of these businesses have now been relocated and integrated with Tepnel's
existing operations.
Future Prospects
Following the strategic reorganisation and integration of the businesses
acquired in 2004, the Group has significantly improved its year on year
performance. Each year since 2004 the Group has grown organically by over 20%
culminating in this year's operating profit of �1.39m and operating cash inflow
of �1.72m.
The Group is focusing its Molecular Diagnostics division into key growth
markets, principally organ transplant monitoring and foetal distress
diagnostics, and developing products which utilise its technologies for new
markets, including the blood bank market. The strategic objectives for
Molecular Diagnostics include expanding the product lines for pre and post
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. In particular, the capital
investment in the pharmaceutical outsourcing services business, means that it is
well placed for future growth.
Current Trading
Tepnel has made a good start to the new financial year. The Board is confident
that the Group will report continued improvements in its performance in 2008.
Alec Craig
Non-Executive Chairman
14 March 2008
Group Income Statement
for the Year Ended 31 December 2007
Note Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000 �'000 �'000
Aggregate revenue 1 18,337 16,156
Revenue - discontinued operations (518) (1,158)
Revenue - continuing operations 1 17,819 14,998
Cost of sales (7,676) (6,879)
Gross profit 10,143 8,119
Selling and distribution costs (2,813) (2,510)
Research and development costs (2,069) (1,775)
Administrative expenses - normal (3,871) (3,664)
- exceptional 2 - (122)
Total administrative expenses (3,871) (3,786)
Operating profit - continuing operations 1,390 48
Finance income 115 80
Finance expense (232) (143)
Profit/(loss) before taxation - continuing operations 1,273 (15)
Tax credit 95 154
Profit for the year - continuing operations 1,368 139
(Loss)/profit for the year - discontinued operations (124) 229
Profit for the year 4 1,244 368
Operating profit before exceptional items -
continuing operations 1,390 170
Basic EPS - continuing operations 3 0.59p 0.06p
Diluted EPS - continuing operations 3 0.55p 0.06p
Basic EPS - profit for the year 3 0.54p 0.17p
Diluted EPS - profit for the year 3 0.50p 0.16p
Group Statement of Recognised Income and Expense
for the Year Ended 31 December 2007
Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000
Income and expense recognised directly in equity
Exchange differences on retranslation of foreign operations 77 (58)
Profit for the year 1,244 368
Total recognised income and expense for the year 1,321 310
Group Balance Sheet
at 31 December 2007
Note 31 December 2007 31 December 2006
�'000 �'000
Non-current assets
Property, plant and equipment 5,567 2,246
Intangible assets 2,047 1,836
Deferred tax asset 140 104
7,754 4,186
Current assets
Inventories 2,586 2,645
Trade and other receivables 4,514 3,051
Income tax receivable 168 88
Cash and short-term deposits 3,499 3,857
10,767 9,641
Total assets 1 18,521 13,827
Current liabilities
Trade and other payables (8,075) (5,108)
Financial liabilities (216) (88)
Income tax payable (242) (151)
(8,533) (5,347)
Non-current liabilities
Financial liabilities (1,274) (1,307)
Provisions (120) -
Total liabilities 1 (9,927) (6,654)
Net assets 1 8,594 7,173
Capital and reserves
Equity share capital 4 36,878 36,878
Foreign exchange reserve 4 19 (58)
Retained losses 4 (28,303) (29,647)
Total equity 8,594 7,173
Group Cash Flow Statement
for the Year Ended 31 December 2007
Year ended Year ended
31 December 31 December
2007 2006
�'000 �'000
Operating activities
Profit after taxation 1,244 368
Adjustments to reconcile group profit after tax to net cash
inflow from operating activities:
Tax credit (95) (154)
Net finance costs 117 63
Depreciation of property, plant and equipment 606 509
Amortisation of intangible fixed assets 12 11
Share based payments 100 25
Increase in trade and other receivables (1,390) (221)
Decrease/(increase) in inventories 95 (547)
Increase/(decrease) in trade and other payables 984 (4)
Cash generated from operating activities 1,673 50
Income tax received 44 73
Net cash inflow from operating activities 1,717 123
Investing activities
Interest received 102 80
Government grants received 100 -
Purchase of subsidiary undertakings (75) (39)
Cash held by subsidiary undertakings on acquisition 48 -
Investment in fixed deposit 200 (200)
Payments to acquire property, plant and equipment (2,092) (1,013)
Payments to acquire intangible assets (6) (5)
Net cash outflow from investing activities (1,723) (1,177)
Financing activities
Interest paid (41) (22)
Proceeds from issue of share capital - 1,276
Repayment of capital element of finance leases (85) (36)
New borrowings - 1,234
Repayment of borrowings (43) -
Net cash (outflow)/inflow from financing activities (169) 2,452
(Decrease)/increase in cash and cash equivalents (175) 1,398
Cash and cash equivalents at the beginning of the period 3,657 2,279
Effect of exchange rates on cash and cash equivalents 17 (20)
Cash and cash equivalents at the end of the period 3,499 3,657
Notes:
1 Business Segments (Primary Reporting Format)
The primary segment reporting format is determined to be business segments, as
the Group's risks and rates of return are affected predominantly by differences
in the products and services provided. Secondary segment information is
provided geographically. The Research Products and Services (RPS) segment
provides products and services for the Biomedical research industry. The
Molecular Diagnostics (MD) segment provides diagnostic testing products and
services.
The following tables present revenue, profit and certain assets and liability
information regarding the Group's business segments for the years ended 31
December 2007 and 31 December 2006:
Continuing operations Discontinued
RPS MD Total Operations Total
31 December 31 December 31 December 31 December 31 December
2007 2007 2007 2007 2007
�'000 �'000 �'000 �'000 �'000
Segment revenue 7,538 10,281 17,819 518 18,337
Results
Segment result 733 1,967 2,700 (124) 2,576
Central costs (1,310) - (1,310)
Operating profit/(loss) 1,390 (124) 1,266
Net finance costs (117) - (117)
Profit/(loss) before taxation 1,273 (124) 1,149
Tax credit 95 - 95
Profit/(loss) for the year 1,368 (124) 1,244
Continuing operations Discontinued
RPS MD Total Operations Total
31 December 31 December 31 December 31 December 31 December
2006 2006 2006 2006 2006
�'000 �'000 �'000 �'000 �'000
Segment revenue 7,275 7,723 14,998 1,158 16,156
Results
Segment result 685 447 1,132 229 1,361
Central costs (1,084) - (1,084)
Operating profit 48 229 277
Net finance costs (63) - (63)
(Loss)/profit before taxation (15) 229 214
Tax credit 154 - 154
Profit for the year 139 229 368
All segment revenue is from external customers
RPS MD Total
31 December 2007 31 December 2007 31 December 2007
�'000 �'000 �'000
Assets and liabilities
Segment assets 9,477 5,237 14,714
Central assets
- cash 3,499
- income and deferred tax assets 308
Total assets 18,521
Segment liabilities (4,945) (3,250) (8,195)
Central liabilities
- financial liabilities (1,490)
- income tax liabilities (242)
Total liabilities (9,927)
Net assets 8,594
RPS MD Total
31 December 2006 31 December 2006 31 December 2006
�'000 �'000 �'000
Assets and liabilities
Segment assets 5,458 4,320 9,778
Central assets
- cash 3,857
- income and deferred tax assets 192
Total assets 13,827
Segment liabilities (2,426) (2,682) (5,108)
Central liabilities
- financial liabilities (1,395)
- income tax liabilities (151)
Total liabilities (6,654)
Net assets 7,173
Geographical Segments (Secondary Reporting Format)
The following table presents revenue, expenditure and certain asset information
regarding the Group's geographical segments for the years ended 31 December 2007
and 31 December 2006.
Revenue by destination Year ended Year ended
31 December 31 December
Continuing operations 2007 2006
�'000 �'000
UK 5,759 4,628
Rest of Europe 4,959 4,106
US 4,252 3,786
Asia 1,715 1,699
Rest of World 1,134 779
Total segment revenue 17,819 14,998
Revenue from discontinued operations of �518,000 (2006: �1,158,000) relates to
sales made in the United States.
2 Exceptional Items
Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000
Settlement of unfair dismissal claim - 122
There are no exceptional items in 2007. On 24 May 2006, the Group settled the
unfair dismissal claim brought by the former Group Finance Director. The
�122,000 charge reflects the settlement made in excess of the provision made in
2005.
3 Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the
year attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing net profits
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the period adjusted for the effects
of dilutive options and warrants.
Year ended Year ended
31 December 2007 31 December 2006
�'000 �'000
Earnings attributable to ordinary shareholders:
- continuing operations 1,368 139
- discontinued operations (124) 229
Total 1,244 368
000's 000's
Weighted average number of shares 230,211 222,884
Dilutive effect of - options 2,284 1,222
- warrants 16,864 227
Diluted weighted average number of shares 249,359 224,333
Basic earnings per share - continuing operations 0.59p 0.06p
Diluted earnings per share - continuing operations 0.55p 0.06p
Basic earnings per share - profit for the year 0.54p 0.17p
Diluted earnings per share - profit for the year 0.50p 0.16p
The Group has granted additional share options to employees that were not
classified as being dilutive during the period but which may become dilutive in
the future.
4 Statement of changes in equity
Equity Share Capital Foreign Exchange Reserve Retained
Losses
�'000 �'000 �'000
At 1 January 2007 36,878 (58) (29,647)
Total recognised income and expense - 77 1,244
Share-based payments - - 100
At 31 December 2007 36,878 19 (28,303)
Equity share capital
The balance classified as equity share capital includes the total net proceeds
(both nominal value and share premium) on issue of the Company's equity share
capital, comprising 1p ordinary shares.
Foreign exchange reserve
The foreign exchange reserve is used to record exchange differences arising from
the translation of the financial statements of foreign subsidiaries.
5 Additional financial information
Year ended Year ended
31 December 2007 31 December 2006
Continuing operations �'000 �'000
Operating profit 1,390 48
Exceptional items - 122
Depreciation 603 506
Amortisation 12 11
Pre-exceptional EBITDA 2,005 687
6 Constant currency sales growth
2007 results compared with 2006 at constant 2006 exchange rates
Year ended Year ended
31 December 2007 31 December 2006 % change
Continuing operations �'000 �'000
Research Products and Services 7,557 7,275 4%
Molecular Diagnostics 10,728 7,723 39%
Revenue 18,285 14,998 22%
Foreign currency
The principal exchange rates used in the preparation of the Group accounts were
as follows:
Year ended Year ended
31 December 2007 31 December 2006
Continuing operations
US dollar - average 2.00 1.84
- closing 1.99 1.96
Euro - average 1.46 1.47
- closing 1.36 1.49
7 Dividends
The Directors do not recommend the payment of a dividend.
8 Accounting policies
Prior to 2007 the Group prepared its annual financial statements under UK GAAP.
For the year ended 31 December 2007 the Group is required to prepare its annual
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS). 2006 has been restated accordingly. Reconciliations
between previously reported accounts are included in the June 2007 interim
report along with the Group's IFRS accounting policies.
The preliminary results for the year ended 31 December 2007 have been approved
by the Directors. Our auditors have issued an unqualified audit report on the
results for the year ended 31 December 2007 under section 235 of the Companies
Act 1985. The accounts for the year ended 31 December 2007 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
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