RNS Number:2152Z
Genetix Group PLC
29 July 2002
PRESS RELEASE
GENETIX GROUP PLC ANNOUNCES INTERIM FINANCIAL RESULTS FOR THE PERIOD ENDED 30
JUNE 2002
New Milton, UK, 29 July 2002 - Genetix Group plc (LSE: GTX), the genomics and
proteomics technology group, today announces its financial results for the six
months ended 30 June 2002.
Highlights:
First half recovery from second half 2001
• Strong growth in sales and profits compared to previous
half year
• Consumables and services sales sharply higher
• R&D investment delivering important additions to product
range
• Prestigious DTI LINK grant awarded for protein
collaboration with MRC's Human Genome Mapping Project Resource Centre
• Sales presence in key markets strengthened
• Cash balance increased to £21.1 million
First half First half Second half Change Change
2002 2001 2001 First half Second half
£000 £000 £000 2001 2001
Turnover
Instrumentation 4,451 5,760 3,595 -23% +24%
Consumables & Services 1,878 1,528 1,536 +23% +22%
______ ______ ______ ______ ______
Total 6,329 7,288 5,131 -13% +23%
______ ______ ______ ______ ______
Profit before tax* 1,149 2,371 224 -52% +413%
Earnings per share* 1.11p 2.19p 0.19p -49% +484%
*excluding amortisation of goodwill
Commenting on the results, Mark Reid, Chief Executive of Genetix, said:
"Although sales were below the record level seen in the first half of 2001, we
staged a strong recovery from the second half of last year. We have strengthened
our sales force, broadened our range of products and increased our development
pipeline, leaving us well positioned to improve our market penetration and
benefit fully from the eventual upturn in spending by research companies and
other clients. The announcement earlier this month of the protein-protein
collaboration with the Human Genome Mapping Project places Genetix at the
forefront of the next key stage of the genomics revolution. "
Enquiries:
Genetix Group plc
Mark Reid, Chief Executive Tel: +44 (0) 1425 624600
Gary Corsi, Finance Director
Financial Dynamics
Jonathan Birt / Sarah Mehanna: Tel: + 44 (0) 20 7831 3113
Notes to editors
Genetix Group plc
Genetix Group plc provides automated systems and services for genomic and
proteomic research. It supplies many leading academic institutions world-wide
including the Max Planck Institute and major international companies involved in
the drug discovery process including GSK, AstraZeneca and Novartis. Genetix made
a significant contribution to the Human Genome Project by supplying
high-throughput equipment to seven of the leading eight laboratories of the
consortia. Genetix through its R&D expertise and scientific resource is
committed to the continual development of innovative solutions to accelerate the
rate of global scientific discovery. Genetix is quoted on the London Stock
Exchange and is based in New Milton, Hampshire, UK. www.genetix.com
Chairman's Statement
Financial review
Genetix generated turnover of £6.3m in the first six months of the year, a
performance achieved in a difficult trading environment. Like many companies in
our sector, we have encountered cash conservation among customers, which has
slowed the pace of order placement. Despite this, turnover was up 23% on the
previous six months but down 13% compared to the very strong first half of 2001.
Higher turnover and improved gross margins produced a profit before tax
(excluding goodwill amortisation) of £1.1m (2001: £2.4m), much improved from the
second half of 2001 at £0.2m.
Sales of instruments rose 24% compared with the last six months of 2001 but were
still well below the levels seen during the same period last year. Sales of
consumables and services, however, grew by 22% compared to the previous six
months, and 23% against the same period last year.
The Group's gross margin was robust at 50% (2001: 53%) compared to 46% during
the previous six months as higher sales volumes were achieved with minimal
increases in direct costs. The operating margin was 12% despite a significant
increase in research and development expenditure, recruitment of sales staff and
higher amortisation charges on licensed intellectual property. Research and
development expenditure was £0.7m (2001: £0.5m), which is in line with our
target of around 10% of sales.
The Group's earnings per share excluding amortisation of goodwill were 1.11p
(2001: 2.19p).
The Group generated cash during the first six months through its sound trading
performance, modest capital expenditure requirements and the benefit of a UK
corporation tax refund. Cash increased by £0.9m in the period bringing the
balance at the end of June 2002 to £21.1m.
The current intention of the Directors is that any earnings will be retained in
the business and no dividend is proposed for 2002.
Operational review
Notwithstanding a challenging economic climate, Genetix continued to make good
progress in several key areas of the business and we have sharpened our focus on
key prospects for growth in the medium-term.
Emphasis was given to sales recruitment, expanding our direct sales force in the
US, UK and Germany, and this process will be complete by the end of the year.
In July, we leased office space in Boston and will establish this as our
principal base for promoting new products in the US. A new US distributor was
appointed for consumable products and small equipment and discussions are
underway to sign up a new partner in Italy.
In addition, there has been intense R&D activity resulting in the development of
a new range of scanners, adaptation of the QBot for liquid handling and use of
our platform of specialist technologies to build a new proteomics instrument for
measuring protein-protein interactions, a key area in the future of medical
research. On the consumables side of the business, new reagents and
microarraying products were developed, enabling us to offer customers a wider
range of solutions - equipment, consumables, specialist services - for their
scientific research. In line with our longer-term strategy, we are developing
products for specific markets identified within the growing sectors of genomics,
proteomics, cellomics and high throughput screening.
New products were successfully introduced during the first six months resulting
in sales of the new gelPix (an automated eight channel 2-D protein excisor),
QSelect (a clone library management robot) and the QArrayMini (desktop biochip
instrument). Our latest range of aQuire scanners is now in production and ready
for demonstration to customers.
Research collaborations
Our growing position in proteomics was strengthened earlier this month by a
research grant to develop and build a verified human protein-protein interaction
map in collaboration with the Medical Research Council's Human Genome Mapping
Project Resource Centre. This £2.5m project is being funded by the UK
Department of Trade and Industry under the LINK Applied Genomics Programme,
supported by the MRC and Genetix. The collaboration is aimed at enabling the
mapping of all human protein-protein interactions to be undertaken with a high
degree of accuracy and in considerably less time than is currently possible,
helping to bring forward the medical benefits of this knowledge. We are
delighted to have our expertise recognised in this field and look forward to
working closely with our academic partners and commercialising any spin-off
technologies resulting from this project.
Outlook
During the last six months we have focused heavily on strengthening the
fundamentals of our business. We have strengthened the number, quality and
reach of our sales force, broadened our range of products and increased our
development pipeline. We are now well positioned to improve market penetration
and take advantage of opportunities arising in our areas of interest.
Despite a solid recovery in the first half of the year, we remain cautious about
prospects for the full year given the continued unpredictability of the current
market and monthly variations in order placement. Although our markets are
experiencing an unusual period of weakness and uncertainty, we are confident
that underlying medical and technological advances underpin promising medium and
long-term prospects for the sector and we continue to develop enabling solutions
to meet these challenges and opportunities.
John Morgan
Chairman
Unaudited consolidated profit & loss account
for the six months ended 30 June 2002
Unaudited Unaudited Audited
first half first half full year
2002 2001 2001
£000 £000 £000
Turnover - continuing operations 6,329 7,288 12,419
Cost of sales (3,186) (3,653) (6,742)
______ ______ ______
Gross profit 3,143 3,635 5,677
Research and development (689) (532) (1,179)
Administrative expenses (1,686) (1,261) (2,893)
Amortisation of goodwill (181) (181) (362)
______ ______ ______
Total administrative expenses (2,556) (1,974) (4,434)
______ ______ ______
Operating profit - continuing operations 587 1,661 1,243
Net interest receivable 381 529 990
______ ______ ______
Profit on ordinary activities before taxation 968 2,190 2,233
Tax on profit on ordinary activities (290) (687) (752)
______ ______ ______
Profit for the period 678 1,503 1,481
______ ______ ______
Adjusted earnings per share 1.11p 2.19p 2.38p
Earnings per share 0.87p 1.96p 1.91p
Unaudited consolidated statement of total recognised gains and losses
for the six months ended 30 June 2002
Unaudited Unaudited Audited
first half first half full year
2002 2001 2001
£000 £000 £000
Profit for the period 678 1,503 1,481
Currency translation differences on foreign currency (8) 9 3
net investments ______ ______ ______
Total recognised gains and losses for the period 670 1,512 1,484
______ ______ ______
Unaudited consolidated balance sheet
at 30 June 2002
Unaudited Unaudited Audited
30 June 30 June 31 December
2002 2001 2001
£000 £000 £000
Fixed assets 200
Intangible assets 6,996 6,994 7,190
Tangible assets 2,366 2,303 2,348
Investments 3 4 3
______ ______ ______
9,365 9,301 9,541
______ ______ ______
Current assets
Stocks 1,929 1,395 1,777
Debtors 2,161 2,306 1,776
Cash at bank and in hand 21,050 21,003 20,142
______ ______ ______
25,140 24,704 23,695
Creditors due within one year
Bank loans and overdrafts - (203) -
Other (2,824) (2,878) (2,325)
______ ______ ______
Net current assets 22,316 21,623 21,370
______ ______ ______
Total assets less current liabilities 31,681 30,924 30,911
Provisions for liabilities and charges (238) (144) (158)
______ ______ ______
Net assets 31,443 30,780 30,753
______ ______ ______
Capital and reserves
Share capital, premium, merger and other reserves 25,463 25,442 25,443
Profit and loss account 5,980 5,338 5,310
______ ______ ______
Equity shareholders' funds 31,443 30,780 30,753
______ ______ ______
Unaudited consolidated cash flow statement
for the six months ended 30 June 2002
Unaudited Unaudited Audited
first half first half full year
2002 2001 2001
£000 £000 £000
Net cash inflow from operating activities 456 2,012 2,136
______ ______ ______
Returns on investments and servicing of finance
Interest received 381 545 1,010
Interest paid - (16) (20)
______ ______ ______
381 529 990
______ ______ ______
Taxation
Corporation tax refund / (paid) 183 (485) (1,102)
______ ______ ______
Capital expenditure and financial investment
Purchase of tangible fixed assets (153) (199) (364)
Purchase of intangible fixed assets (33) (18) (394)
Sale of tangible fixed assets - 883 894
______ ______ ______
(186) 666 136
______ ______ ______
Acquisitions
Purchase of subsidiary undertakings - (59) (67)
______ ______ ______
Net cash inflow before use of liquid resources
and financing 834 2,663 2,093
______ ______ ______
Financing
Issue of share capital (net of expenses) 20 5 4
Decrease in debt - (1,699) (1,699)
______ ______ ______
Net cash inflow / (outflow) from financing 20 (1,694) (1,695)
_____ ______ ______
Increase in cash 854 969 398
______ ______ ______
Notes to the unaudited interim results
1. Basis of preparation of interim report
The interim financial information of Genetix Group plc is made up to 30 June
2002. It has been prepared in accordance with the accounting policies set out
in, and is consistent with, the audited financial statements for the year ended
31 December 2001, except that the Group has adopted FRS19 (Deferred Tax) in the
preparation of the interim financial report, although the impact of this is not
significant.
The results for the year ended 31 December 2001 have been extracted from the
audited financial statements, which have been filed with the Registrar of
Companies. The auditor's report on those accounts was unqualified.
The unaudited profit and loss account for each of the six month
periods and the unaudited balance sheet as at 30 June 2002 do not amount to full
accounts within the meaning of section 240 of the Companies Act 1985 and have
not been delivered to the Registrar of Companies.
The interim report was approved by the Board of Directors on 29
July 2002.
2. Turnover
In the opinion of the Directors, the Group operates only one class of business,
namely the provision of instrumentation, consumables and services for genomic
research. Turnover can be analysed as follows:
Unaudited Unaudited Audited
first half first half full year
2002 2001 2001
£000 £000 £000
By geographic destination
UK 992 613 1,228
Rest of Europe 1,329 1,519 2,783
North America 2,767 3,368 5,883
Rest of World 1,241 1,788 2,525
______ ______ ______
6,329 7,288 12,419
______ ______ ______
Unaudited Unaudited Audited
first half first half full year
2002 2001 2001
£000 £000 £000
By type
Instrumentation 4,451 5,760 9,355
Consumables and services 1,878 1,528 3,064
______ ______ ______
6,329 7,288 12,419
______ ______ ______
3. Tax on profit on ordinary activities
The tax charge for the period is based upon the estimated effective rate for the
year of 30.0% (December 2001 - 33.7%).
4. Earnings per share
Adjusted earnings per share are calculated on earnings of £678,000 (2001:
£1,503,000) adjusted for amortisation of goodwill of £181,000 (2001: £181,000)
and weighted average shares in issue of 77,532,696 (2001: 76,843,137).
Earnings per share are calculated on earnings of £678,000 (2001: £1,503,000) and
weighted average shares in issue of 77,532,696 (2001: 76,843,137).
The diluted weighted average number of shares in issue during the period was
80,345,177 (2001: 79,312,579).
5. Notes to the consolidated cash flow statement
(a) Reconciliation of operating profit to net cash inflow from
operating activities
Unaudited Unaudited Audited
first half first half full year
2002 2001 2001
£000 £000 £000
Operating profit 587 1,661 1,243
Depreciation 181 89 206
Amortisation of goodwill 181 181 362
Profit on sale of fixed assets - (49) (49)
Increase in stocks (152) (344) (725)
(Increase) / decrease in debtors (385) 575 1,096
Increase / (decrease) in creditors 98 (75) (58)
Exchange (gain) / loss on foreign currency (54) (26) 61
______ ______ ______
Net cash inflow from operating activities 456 2,012 2,136
______ ______ ______
(b) Analysis of changes in net funds
At 1 January 2002 Cash Exchange At 30 June
movement
£000 flow 2002
£000
£000 £000
Cash at bank and in hand 20,142 854 54 21,050
______ ______ ______ ______
Total 20,142 854 54 21,050
______ ______ ______ ______
6. Copies of this report are being sent to all shareholders and
copies are available from the Company's registered office at Queensway, New
Milton, Hampshire, BH25 5NN.
Independent review report by the auditors to Genetix Group plc
Introduction
We have been instructed by the Company to review the financial statements for
the six months ended 30 June 2002 which comprise the consolidated profit and
loss account, the consolidated statement of total recognised gains and losses,
the consolidated balance sheet, the consolidated cash flow statement, and the
related notes 1 to 6. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial statements.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to interim figures should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial statements as presented for the six months ended
30 June 2002.
Deloitte & Touche Mountbatten House
Chartered Accountants 1 Grosvenor Square
29 July 2002 Southampton
Hampshire
SO15 2BZ
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