RNS Number:2482J
Tepnel Life Sciences PLC
27 March 2003
FOR IMMEDIATE RELEASE
27 March 2003
Tepnel Life Sciences PLC ('Tepnel' or 'the Company')
Interim Results for the Six Months Ended 31 December 2002
Tepnel Life Sciences PLC (AIM: TED), the UK-based international life sciences
instrumentation and services company, is pleased to report its interim financial
results for the six months ended 31 December 2002.
Highlights
* Sales up 27% to #1.8m
* Pre-tax losses down 29% to #1.38m
* Tepnel Scientific Services Ltd (TSS) and Tepnel BioSystems Ltd (TBS) are
expected to be profitable and cash-generative during 2003
* Agreement signed with UK-based global pharmaceutical company for
development of 'Nucleopure' T2000 DNA purification system
* Completion of NAP service order with major UK-based global pharmaceutical
company
* Takara Biomedical has placed additional orders for 'Nucleoplex' T1000
systems for the Far East market
* Significant three-year drug stability study contract for #428,000 signed
by TSS with US-based global pharmaceutical company
* TBS peanut detection assay under review by FDA/AOAC International
(Association of Official Analytical Chemists)
Financial Results
In the six months to 31 December 2002, turnover for the Group increased 27% to
#1.8m (2002: #1.42m). Pre-tax losses for the period decreased more than 29% to
#1.38m (2002: #1.95m). The loss per share has decreased to 1.3p (2002: 2.1p).
Overview
In the final six months of 2002, the benefits of Tepnel's tri-polar business
strategy and the drive of the Company's new management team were reflected in
the results achieved. Tepnel's tri-polar strategy, which is based on providing
its pharmaceutical customers with automated DNA purification systems, manual DNA
kits and reagents as well as a range of scientific services, has greatly
improved its business relations with its key customer groups. This improvement
is reflected in the increasing number of leading pharmaceutical companies that
Tepnel is doing business with and this is consequently reflected in the sales
growth achieved.
Tepnel Life Sciences (TLS)
A key element of Tepnel's strategy is to extend the range of automated DNA
purification systems that it offers. Following a highly focused market research
study, the Company has developed the 'Nucleopure' T2000, a new automated system
based on Tepnel's patented Nucleon(R) chemistry, which is being developed for
the extraction and recovery of high yields of intact genomic DNA from hard
tissues.
The potential for this new system is highlighted by the fact that during the
interim period Tepnel signed an optimisation and development agreement for the
T2000 with a large UK-based global pharmaceutical company. The purified results,
that this system is now delivering, make us confident in the T2000's commercial
future. We have placed orders with our suppliers for additional T2000 systems.
Our confidence is also based on the positive responses that we have received
from a number of other potential pharmaceutical and CRO (contract research
organisations) customers. An important element of Tepnel's commercialisation
strategy for the T2000 system will come from reagent sales, given that the
reagent pull-through for each T2000 is estimated to be #20,000 to #50,000 per
annum.
Tepnel also provides contract nucleic acid purification (NAP) services to its
pharmaceutical customer base. This has been an important business for Tepnel
Life Sciences and during the course of 2002 we undertook and completed, ahead of
schedule, a major NAP contract for one of the UK's largest pharmaceutical
companies. We anticipate follow-on orders from this customer and we are also in
discussions with other large pharmaceutical customers that are interested in
utilising our NAP service capabilities.
In the latter half of 2002, Tepnel continued to develop new application
protocols for the 'Nucleoplex' T1000 plasmid purification system. The T1000,
targeted at academic and research laboratories within the life science
industries, is a cost-effective, dedicated system that combines ease-of-use with
complete automation.
Tepnel Scientific Services (TSS)
The strengthening of TSS following the acquisition of the Medicines Testing
Laboratory (MTL) in July 2001 has created a business unit that is already
bringing significant turnover to Tepnel. The merger of MTL with Tepnel's
BioAnalytical Services business to form TSS provides an expanded range of
analytical chemistry and microbiological services for Tepnel to offer its
pharmaceutical, biotechnology and healthcare customers.
The enlarged analytical offering of TSS has given the business a major boost.
The Company's customer base continues to grow at an attractive pace and now
includes UK, US, and European companies as well as international CROs. In the
second half of 2002, TSS won a significant contract worth #428,000 from a major
US-based global pharmaceutical company to undertake a three-year drug
combination stability study. The build up in TSS's customer base means that the
business in now operating profitably.
In order to further enhance the growth prospects for TSS, Tepnel is keen to
consolidate its analytical operations onto one purpose-built site in Livingston,
Scotland. TSS has already been awarded a grant to help with this relocation and
discussions are continuing with a number of parties to affect this move with the
minimal short-term impact on Tepnel's customers.
Tepnel BioSystems (TBS)
As with TSS, Tepnel's TBS business is anticipated to be profitable and cash
generative in 2003. This move into profitability is the result of several
factors including the rapid market growth for the testing of allergens in food,
as well as the increased use of external contractors for analytical work by the
food industry. In addition, sales have been boosted by the introduction of new
products that test for EU-approved genetically modified organisms (GMOs) and for
sesame and milk allergens in food.
TBS recent profitability has been constrained by its investment in the
development of a new peanut detection assay. This is now largely complete and
TBS is confident that it will receive AOAC 'Performance Tested' certification
shortly, paving the way for the commercialisation of this product.
Prospects
The current financial period has started well with the Group making rapid
progress towards its goal of achieving profitability. Sales growth in 2003 is
anticipated to accelerate as a result of the planned launch of the T2000 system
along with further growth in both the TSS and TBS businesses as important new
contracts come on-stream and significant new products are introduced. This
growth in sales, allied to the Company's tight control on costs, means that
losses in the 18-month period to December 2003 are expected to decrease
substantially.
By investing in both the sales capability and the new product development skills
needed to deliver our tri-polar strategy, Tepnel is confident that considerable
value will be generated for our shareholders. The progress that we have made
to-date means that Tepnel is aggressively looking for strategic M&A
opportunities that will enable our proven management team to better pursue its
highly rewarding tri-polar strategy on a truly international basis.
Peter Raymond, Chairman 27 March 2003
For Further Information:
Tepnel Life Sciences
Ben Matzilevich, CEO
Gron Ffoulkes-Davies, Finance Director
0161 946 2200
HCC De Facto Group
David Dible / Mark Swallow
020 7496 3300
Notes to Editors
Tepnel Life Sciences is a UK-based international life sciences instrumentation
and services company with a 'tri-polar' strategy focused on providing the
biomedical industry with high-throughput automated DNA purification systems,
manual DNA purification kits and reagents, as well as scientific services for
nucleic acid purification, drug analysis, genotyping and genetically modified
foods.
The Company was founded in 1992 to exploit DNA technology generated at UMIST
(University of Manchester Institute of Science and Technology) and is quoted on
the AIM segment of the London Stock Exchange (AIM: TED).
www.tepnel.com
Consolidated Profit and Loss Account for the six months ended 31 December 2002
Unaudited Unaudited Audited
6 months 6 months year
to 31 Dec to 31 Dec to 30 Jun
2002 2001 2002
#'000 #'000 #'000
Turnover 1,805 1,420 3,307
Cost of sales (1,096) (868) (1,752)
Gross profit 709 552 1,555
Research and development 515 917 1,976
Sales and marketing 469 457 992
Administrative expenses 1,153 939 1,641
Administrative expenses - exceptional - 288 552
Total administrative expenses 2,137 2,601 5,161
Operating loss (1,428) (2,049) (3,606)
Interest receivable 54 102 181
Interest payable (1) (1) (11)
Loss on ordinary activities before taxation (1,375) (1,948) (3,436)
Taxation 57 45 604
Loss on ordinary activities after taxation (1,318) (1,903) (2,832)
Basic loss per share 1.3p 2.1p 3.0p
Fully diluted loss per share 1.3p 2.1p 3.0p
The results for all periods include all recognised gains and losses.
Consolidated Balance Sheet as at 31 December 2002
Unaudited Unaudited Audited
31 Dec 31 Dec 30 Jun
2002 2001 2002
#'000 #'000 #'000
Fixed assets
Intangible assets 1,752 1,649 1,783
Tangible assets 1,886 1,263 1,471
3,638 2,912 3,254
Current assets
Stocks 918 724 840
Debtors - due within one year 1,031 910 1,411
Investments 20 20 20
Cash at bank and in hand 2,002 4,593 3,299
3,971 6,247 5,570
Creditors due within one year 1,328 1,053 1,478
Net current assets 2,643 5,194 4,092
Creditors due greater than one year 267 12 14
Total assets less liabilities 6,014 8,094 7,332
Capital and reserves
Called up share capital 973 958 973
Share premium account 26,578 26,426 26,578
Profit and loss account (21,537) (19,290) (20,219)
Equity shareholders' funds 6,014 8,094 7,332
All items under capital and reserves are equity.
Consolidated cash flow statement for the six months ended 31 December 2002
Unaudited Unaudited Audited
6 months 6 months year
to 31 Dec to 31 Dec to 30 Jun
2002 2001 2002
#'000 #'000 #'000
Reconciliation of operating loss
to net cash outflow from operating
activities
Operating loss (1,428) (2,049) (3,606)
Depreciation 151 129 267
Amortisation 31 32 62
Profit on disposal of fixed assets - - (4)
Increase in stocks (78) (172) (288)
Decrease/(increase) in debtors 126 (190) (437)
Increase in creditors 87 115 550
Net cash outflow from operating activities (1,111) (2,135) (3,456)
Consolidated cash flow statement
Net cash outflow from operating activities (1,111) (2,135) (3,456)
Return on investments 53 67 170
Acquisitions - (275) (275)
Corporation tax refund 327 45 350
Capital expenditure (566) (500) (794)
Net cash outflow before financing (1,297) (2,798) (4,005)
Management of liquid resources 1,474 - (2,802)
Financing - 7,039 6,952
Increase in cash 177 4,241 145
Reconciliation of net cash flow to
movements in net funds
Increase in cash 177 4,241 145
Cash (outflow)/inflow from short term deposits (1,474) - 2,802
Cash outflow from decrease in lease financing 21 9 17
Repayment of convertible loan - 1,000 1,000
Change in net funds resulting from cash flow (1,276) 5,250 3,964
New finance leases (486) - (6)
Net funds/(debt) at beginning of period 3,272 (686) (686)
Net funds at end of period 1,510 4,564 3,272
Notes
1 The Interim Report for the six months ended 31 December 2002 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 as at 30 June 2002 has been
extracted from the statutory accounts for the year ended 30 June 2002,
which have been delivered to the Registrar of Companies and contained an
unqualified auditor's report.
2 The directors do not recommend the payment of an interim dividend.
3 The operating loss is arrived at after writing off research and
development expenditure to the profit and loss account in the period in
which it was incurred.
4 The accounting policies used are consistent with those applied in the
latest published company accounts.
5 Turnover
Turnover by geographic destination Unaudited Unaudited Audited
6 months to 6 months to Year To
31 December 31 December 30 June
2002 2001 2002
#'000 #'000 #'000
UK 1,272 1,148 2,240
Rest of Europe 242 219 528
Americas 106 44 334
Asia 96 - 135
Rest of the World 89 9 70
1,805 1,420 3,307
Turnover by geographical origin
UK 1,805 1,420 3,307
6 Exceptional costs in the six months ended 31 December 2002 were #Nil
(2001: #288,000 - Non-recurring redundancy and restructuring costs
incurred after the acquisition of the Medicines Testing Laboratory).
7 The basic loss per share has been calculated on the following basis:
6 months to 6 months to Year To
31 December 31 December 30 June
2002 2001 2002
Loss for the period (#'000) (1,318) (1,903) (2,832)
Weighted average no. of shares 97,331,280 90,893,034 93,123,901
In the current period the average number of ordinary shares is the same on a
diluted basis.
8 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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