RNS Number : 2442A
Tepnel Life Sciences PLC
31 July 2008
TEPNEL LIFE SCIENCES PLC ANNOUNCES INTERIM RESULTS FOR THE
6 MONTHS ENDED 30 JUNE 2008
Substantial increase in revenues and profits
Manchester, UK, Stamford, USA, 31 July 2008: Tepnel Life Sciences plc (AIM: TED), the international Molecular Diagnostics and Research
Products and Services Group, announces interim results for the 6 month period ended 30 June 2008.
"Tepnel continues to deliver very strong revenue and operating profit growth across its entire business. Our new purpose built,
state-of-the-art pharmaceutical services facility, along with our recently launched Biopharmaceutical and Genotyping services, have been a
great success with strong customer demand.
Additionally, Tepnel's immunological products are showing good growth and have now begun to penetrate worldwide markets. Tepnel's
Molecular Diagnostics division also continues to exhibit strong growth led by our LifeMatch range of products and our Elucigene CF and QST*R
genetic tests" stated Ben Matzilevich, Tepnel's Chief Executive Officer. "We believe Tepnel is very well positioned for future growth
bolstered by a growing menu of novel molecular diagnostic products and demand for our advanced pharmaceutical outsourcing services. Our
strong H1 performance and positive outlook are testament to the loyalty, commitment and dedication of Tepnel's staff and shareholders
alike."
2008 Highlights
* Revenue increased to �11.8m from �8.8m, an increase of 34% compared to the prior period and 29% on a constant currency basis
* Gross profit increased 34% to �6.9m compared to �5.1m in 2007
* An increase of 149% in operating profit to �1.5m from �0.6m in 2007
* EBITDA increased 118% to �1.9m from �0.9m in 2007
* Operating cash inflow increased to �1.5m from a cash outflow of �0.2m in 2007
* Tepnel continues to deliver significant and sustained growth in both revenue and operating profit across both divisions in line
with its strategic and operational plans:
Research Products and Services revenue increased by 28% driven by the strong demand for its pharmaceutical outsourcing services from its
new state-of-the-art facility in Livingston and newly introduced Biopharmaceutical and Genotyping service lines
Molecular Diagnostics revenue increased by 39% driven by the Transplant Diagnostics business line. The LifeMatch range of products
continued to show strong growth compared to the prior period
Continuing operations 6 months ended 30 June 2008 �'000 6 months ended 30 June 2007 Change
�'000
Group revenue 11,770 8,767 +34%
EBITDA 1,899 873 +118%
Operating profit 1,501 603 +149%
Profit after tax 1,386 620 +123%
Operating cash 1,534 (193) +�1.7m
inflow/(outflow)
Basic EPS 0.60p 0.27p +123%
For further information, please contact:
Tepnel Life Sciences plc
Ben Matzilevich, Chief Executive Officer
Michael Slater, Group Finance Director
Tel: +44 161 946 2200
Capital MS&L
Mary Clark or Joey Whineray
Tel: +44 20 7307 5330
Seymour Pierce
Mark Percy
Tel: +44 20 7107 8000
About Tepnel Life Sciences plc
Tepnel Life Sciences (AIM:TED) is an 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 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.
Chairman's Statement
Overview
The first six months of 2008 has been another extremely successful period for Tepnel as the Group continues to deliver significant
revenue and operating profit growth. Revenue grew by 34% to �11.8m and operating profit for the 6 month period was �1.5m.
Significant growth has been delivered across both divisions and the performance continues to demonstrate the success of Tepnel's
corporate strategy to build leadership positions in niche markets in the Molecular Diagnostics and Research Products and Services sectors.
The key financial highlights are as follows:
* Revenue for the 6 months ended 30 June 2008 increased to �11.8m from �8.8m, an increase of 34% on the prior period and 29% on a
constant currency basis
* Operating profit increased by 149% to �1.5m from �0.6m in 2007
* EBITDA increased by 118% to �1.9m from �0.9m in 2007
* Operating cash inflow increased to �1.5m compared to an operating cash outflow of �0.2m for 2007
* Basic earnings per share for the period were 0.60 pence compared to 0.27 pence in 2007
Research Products and Services
Tepnel's Research Products and Services division has had an excellent first half of 2008, delivering revenue growth of 28% (25% on a
constant currency basis) to �4.9m. This division provides outsourcing services for the pharmaceutical, biotechnology and healthcare
industries, food safety products and immunological reagents.
This growth has been primarily driven by the demand for Tepnel's pharmaceutical outsourcing services from its state-of-the-art
pharmaceutical facility based in Livingston, Scotland. In March 2008, the Group announced the completion of Phase II of the construction,
which completed the facility, and marked the launch of its biopharmaceutical and clinical genotyping services.
The introduction of these new services gives Tepnel access to two rapidly growing market sectors, enabling the Group to offer an
expanded service menu to new and existing customers. In addition, these new services simultaneously enhance the product development
capabilities of our Molecular Diagnostics division whilst positioning us to become one of UK's leading service providers.
The Research Products and Services division continues to gain business from some of the largest pharmaceutical companies in the world.
In May 2008, the Group extended its preferred supplier agreement with AstraZeneca for DNA extraction services. The Group's reputation for
client service and technical expertise has been key to the delivery of new pharmaceutical outsourcing contracts.
The Group's immunological reagent line has delivered good growth in both direct sales in the UK, US and France, and through our
distributor network. In May 2008, the Group announced a two year extension to its global licensing agreement with Abcam, the world's largest
on-line supplier of antibody products. This agreement covers the worldwide distribution of Tepnel's Diaclone range of diagnostic and
research products and includes a guaranteed annual minimum in sales, strengthening Tepnel's global reach to customers in both academia and
industry.
Molecular Diagnostics
Tepnel's Molecular Diagnostics division also had a very strong first half of 2008, delivering revenue growth of 39% (32% on a constant
currency basis) to �6.8m. This division focuses on the organ transplant monitoring, foetal diagnostic testing and genetic predisposition
testing markets. Tepnel's innovative product range includes the LifeMatch transplant monitoring assays and the Elucigene genetic
predisposition assays.
The LifeMatch range of products continues to gain market share and increased sales through new customers and a broadening product range.
Tepnel continues to develop innovative new product lines using the Luminex xMAP technology providing a strong base for future growth of the
LifeMatch range.
Sales of Tepnel's QST*R product for the rapid detection during pregnancy of common genetic abnormalities, has shown strong growth
compared to the prior year and continues to gain momentum throughout Europe.
Tepnel is continuously expanding its product pipeline of molecular diagnostic products and technologies and in June 2008 announced that
the Group had been awarded a BBSRC grant to develop new technologies for molecular diagnostic applications. Tepnel is developing a
technology for the rapid detection and identification of pathogenic micro-organisms which can cause potentially fatal infections in human
and animals. The research project enables Tepnel to explore this innovative technology and assess its potential for human and animal
applications.
Future Prospects
These excellent interim results for the first 6 months of 2008 once again demonstrate Tepnel's continued progress in achieving
sustainable growth in both revenues and operating profits and are testament to the loyalty, commitment and dedication of Tepnel's staff and
shareholders alike.
The Group is strategically focused on delivering growth across both divisions. The Molecular Diagnostics division is focused on 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 Research Products and Services division, through its new pharmaceutical
facility and recently launched services is well placed to access the growing Biopharmaceutical and Genotyping markets.
The significant investment made in Tepnel's new facilities and its new products and services development, means the Group is well placed
for future growth.
Alec Craig
Chairman
31 July 2008
Group Income Statement
for the 6 months ended 30 June 2008 (unaudited)
6 months ended30 6 months ended30 Year ended31 December2007
June2008 June2007
Notes �*000 �*000 �*000
Aggregate revenue 2 11,770 9,022 18,337
Revenue * discontinued 2,4 - (255) (518)
operations
Revenue * continuing 2 11,770 8,767 17,819
operations
Cost of sales (4,906) (3,658) (7,676)
Gross profit 6,864 5,109 10,143
Selling and distribution costs (1,626) (1,447) (2,813)
Research and development costs (1,273) (1,011) (2,069)
Administrative expenses (2,464) (2,048) (3,871)
Operating profit * continuing 1,501 603 1,390
operations
Finance income 46 64 115
Finance expense (161) (69) (232)
Profit before taxation * continuing 1,386 598 1,273
operations
Tax credit - 22 95
Profit for the period * continuing operations 1,386 620 1,368
Loss for the period * discontinued operations - (100) (124)
Profit for the period 1,386 520 1,244
Basic EPS * continuing 3 0.60p 0.27p 0.59p
operations
Diluted EPS * continuing 3 0.55p 0.25p 0.55p
operations
Basic EPS * profit for the 3 0.60p 0.23p 0.54p
period
Diluted EPS * profit for the 3 0.55p 0.21p 0.50p
period
Group Statement of Recognised Income and Expense
for the 6 months ended 30 June 2008 (unaudited)
6 months ended30 June2008 6 months ended30 Year ended31
June2007 December2007
�*000 �*000 �*000
Income and expenses recognised directly in equity
Exchange differences on retranslation of foreign operations (14) 77
79
Profit for the period 1,386 520 1,244
Total recognised income and expenses for the period 1,465 506 1,321
Group Balance Sheet
as at 30 June 2008 (unaudited)
30 June2008 30 June2007 31 December2007
Notes �*000 �*000 �*000
Non-current assets
Property, plant and equipment 6,020 4,241 5,567
Intangible assets 2,015 1,843 2,047
Deferred tax asset 140 104 140
8,175 6,188 7,754
Current assets
Inventories 2,777 2,495 2,586
Trade and other receivables 5,035 4,229 4,514
Income tax receivable 194 110 168
Cash and short-term deposits 8 3,670 2,380 3,499
11,676 9,214 10,767
Total assets 19,851 15,402 18,521
Current liabilities
Trade and other payables (7,428) (6,054) (8,075)
Financial liabilities 8 (393) (192) (216)
Income tax payable (261) (152) (242)
(8,082) (6,398) (8,533)
Non-current liabilities
Financial liabilities 8 (1,526) (1,289) (1,274)
Provisions (120) - (120)
Total liabilities (9,728) (7,687) (9,927)
Net assets 10,123 7,715 8,594
Capital and reserves
Equity share capital 5 36,878 36,878 36,878
Foreign exchange reserve 5 98 (72) 19
Retained earnings 5 (26,853) (29,091) (28,303)
Total equity 10,123 7,715 8,594
Group Cash Flow Statement
For the 6 months ended 30 June 2008 (unaudited)
6 months ended30 June2008 6 months ended30 Year ended31
June2007 December2007
�*000 �*000 �*000
Operating activities
Profit for the period 1,386 520 1,244
Adjustments to reconcile profit for the period to net cash flow from operating activities:
Tax credit - (22) (95)
Net finance costs 115 5 117
Depreciation of property, plant and equipment 384 264 606
Amortisation of intangible 14 6 12
fixed assets
Share based payments 64 36 100
(Increase)/decrease in trade and other receivables (423) (1,186) (1,390)
(Increase)/decrease in (140) 115 95
inventories
Increase/(decrease) in trade and other payables 134 69 984
Cash generated from operating 1,534 (193) 1,673
activities
Income tax received - 44
-
Net cash inflow/(outflow) from operating activities 1,534 (193) 1,717
Investing activities
Interest received 46 64 102
Government grants received - - 100
Purchase of subsidiary - - (75)
undertakings
Cash held by subsidiary undertakings on - - 48
acquisition
Investment in fixed deposit - - 200
Payments to acquire property, plant and equipment (1,185) (1,301) (2,092)
Proceeds from sale of property, plant and - 8 -
equipment
Payments to acquire intangible (16) (2) (6)
assets
Net cash outflow from investing activities (1,155) (1,231) (1,723)
Financing activities
Interest paid (144) (10) (41)
Repayment of capital element of finance leases (74) (40) (85)
New borrowings 34 - -
Repayment of borrowings (49) - (43)
Net cash inflow from financing (233) (50) (169)
activities
Increase/(decrease) in cash and cash equivalents 146 (1,474) (175)
Cash and cash equivalents - beginning of the period 3,499 3,657 3,657
Effect of exchange rates on cash and cash equivalents 25 (3) 17
Cash and cash equivalents - end of the period 3,670 2,180 3,499
Notes to the Group Financial Statements
1. Significant accounting policies
Basis of preparation
The consolidated financial statements of Tepnel Life Sciences plc for the 6 months ended 30 June 2008 were authorised for issue by the
Directors on31 July 2008.
The interim financial information has been prepared on the basis of accounting policies consistent with those applied in the 2007 financial
statements.
The financial information contained in this interim statement is unaudited and does not constitute statutory accounts as defined in section
240 of the Companies Act 1985. The audited financial statements for the year ended 31 December 2007 have been filed with the Registrar of
Companies and contain an unqualified audit opinion.
These consolidated interim financial statements are presented in Sterling and all values are rounded to the nearest thousand (�*000) except
where otherwise indicated.
2. Segmental analysis
The primary segment reporting format is determined to be business segments as the Group*s risks and returns are affected predominantly by
differences in the products and services provided. Secondary segment information is reported geographically.
The Group operates in two business segments which reflect the risks and returns inherent in the two segments and the internal organisation
and management structure of the Group. These segments are Molecular Diagnostics (MD) and Research Products and Services (RPS).
Business Segments
6 months ended30 6 months ended30 Year ended31 December2007�*000
June2008�*000 June2007�*000
Research Products and Services 4,938 3,851 7,538
Molecular Diagnostics 6,832 4,916 10,281
Revenue * continuing 11,770 8,767 17,819
operations
Molecular Diagnostics - - 255 518
discontinued operations
Aggregate revenue 11,770 9,022 18,337
Geographical Segments
6 months ended 30 June 2008
Research Products and Services Molecular Diagnostics Total
�*000 �*000 �*000
UK 2,927 732 3,659
Rest of Europe 1,507 2,334 3,841
US 339 2,242 2,581
Asia 41 940 981
Rest of world 124 584 708
Revenue * continuing 4,938 6,832 11,770
operations
6 months ended 30 June 2007
Research Molecular Diagnostics Total
Products
and
Services
�*000 �*000 �*000
UK 2,286 540 2,826
Rest of Europe 1,024 1,500 2,524
US 269 2,100 2,369
Asia 25 381 406
Rest of world 247 395 642
Revenue * continuing 3,851 4,916 8,767
operations
Discontinued operations - US - 255 255
Aggregate revenue 3,851 5,171 9,022
Year ended 31 December 2007
Research Molecular Diagnostics Total
Products and
Services
�*000 �*000 �*000
UK 4,563 1,196 5,759
Rest of Europe 2,124 2,835 4,959
US 456 3,796 4,252
Asia 80 1,635 1,715
Rest of world 315 819 1,134
Revenue * continuing 7,538 10,281 17,819
operations
Discontinued operations - US - 518 518
Aggregate revenue 7,538 10,799 18,337
3. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent
by the weighted average number of ordinary shares outstanding during the period.
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).
Continuing operations 6 months ended30 6 months ended30 Year ended31 December2007�*000
June2008�*000 June2007�*000
Earnings attributable to
ordinary shareholders:
- continuing 1,386 620 1,368
operations
- discontinued - (100) (124)
operations
Total 1,386 520 1,244
Number000*s Number000*s Number000*s
Basic weighted average number 230,211 230,211 230,211
of ordinary shares
Dilutive effect of:
- employee share 2,391 2,166 2,284
options
- warrants 18,361 15,507 16,864
Diluted weighted average 250,963 247,884 249,359
number of shares
Basic EPS * continuing 0.60p 0.27p 0.59p
operations
Diluted EPS * continuing 0.55p 0.25p 0.55p
operations
Basic EPS - profit for period 0.60p 0.23p 0.54p
Diluted EPS - profit for 0.55p 0.21p 0.50p
period
4. Discontinued operations
The Transplant Diagnostics business comprised two business lines: the Transplant Diagnostics Service business and Transplant Diagnostics
Product business.
On 1 October 2007, the Board decided to discontinue its Transplant Diagnostics Services business to focus on the Transplant Diagnostics
division's core competency of product sales. These operations ceased permanently on 31 December 2007 and have been classified as
discontinued operations in the profit and loss account.
6 months ended30 6 months ended30 June2007 Year ended31 December2007
June2008
�*000 �*000 �*000
Revenue - 518
255
Cost of sales - (295) (519)
Gross loss - (40) (1)
Selling and distribution costs - (60) (123)
Operating loss - (100) (124)
Loss for the year * - (100) (124)
discontinued operations
5. Reconciliation of movements in equity
Equity share capital Foreign exchange reserve Retained earnings
�*000 �*000 �*000
At 1 January 2007 36,878 (58) (29,647)
Total recognised income and - (14) 520
expense
Share-based payments - - 36
At 30 June 2007 36,878 (72) (29,091)
Total recognised income and - 91 724
expense
Share-based payments - - 64
At 31 December 2007 36,878 19 (28,303)
Total recognised income and - 79 1,386
expense
Share-based payments - - 64
At 30 June 2008 36,878 98 (26,853)
6. Additional financial information
Reconciliation of operating profit to earnings before interest, tax, depreciation and amortisation (EBITDA)
6 months ended30 6 months ended30 Year ended31 December2007
June2008 June2007
Continuing operations �*000 �*000 �*000
Operating profit 1,501 603 1,390
Depreciation 384 264 603
Amortisation 14 6 12
EBITDA 1,899 873 2,005
7. Foreign currency
The principal exchange rates used were as follows:
6 months ended30 6 months ended30 June2007 Year ended31 December2007
June2008
US dollar - 1.98 1.97 2.00
average
2.00 2.00 1.99
- closing
Euro - 1.29 1.48 1.46
average
1.26 1.49 1.36
- closing
6 months ended30 6 months ended30 June2007 Year ended31 December2007
June2008
US dollar - 1.98 1.97 2.00
average
2.00 2.00 1.99
- closing
Euro - 1.29 1.48 1.46
average
1.26 1.49 1.36
- closing
2008 results compared with 2007 at constant 2007 exchange rates
6 months ended30 June2008 6 months ended30 June2007
Revenue * continuing �*000 �*000 % change
operations
Research Products and Services 4,800 3,851 25%
Molecular Diagnostics 6,493 4,916 32%
Total revenue 11,293 8,767 29%
8. Analysis of net funds
1 January2008 Cash flow Non-cash movement 30 June2008
�*000 �*000 �*000 �*000
Cash and cash equivalents 3,499 146 25 3,670
Loans (1,257) 15 - (1,242)
Finance leases (233) 74 (518) (677)
Net funds 2,009 235 (493) 1,751
9. Dividends
The Directors do not recommend the payment of an interim dividend in respect of the 6 months ended 30 June 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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