Clinigen Group plc Interim results (7190Y)

TIDMCLIN

RNS Number : 7190Y

Clinigen Group plc

27 February 2013

Clinigen Group plc

Interim results for the six months ended 31 December 2012

Pre-tax profits up 53% at GBP9.7m on sales up 86% at GBP61.0m

27 February 2013 - Burton-on-Trent, UK - Clinigen Group plc (AIM: CLIN, "Clinigen" or "the Group"), the global specialty pharmaceuticals and pharmaceutical services business, has today published its maiden half year results for the six months ended 31 December 2012.

Financial highlights

   -   Sales growth 86% at GBP61.0m (H1 11/12: GBP32.8m) 
   -   Underlying EBITDA up 48% to GBP10.5m (H1 11/12: GBP7.1m) 
   -   Underlying profit* before tax 54% higher at GBP9.7m (H1 11/12: GBP6.3m) 

o Statutory profit before tax of GBP3.7m (H1 11/12: GBP4.0m)

   -   Underlying earnings*per share up 64% to 9.0p (H1 11/12: 5.5p) 

o Statutory earnings per share is 3.5 pence (H1 11/12: 5.5p); diluted earnings per share is 2.9 pence (H1 11/12: 3.6p)

   -   Maiden interim dividend of 0.6p per share 
   -   Cash and cash equivalents of GBP22.3m at 31 December 2012 (30 June 2012: GBP5.2m) 

- Successful Admission to AIM on 25 September 2012 - raising GBP43.1m (net) for selling shareholders and GBP6.8m (net) for the Group

Business highlights

   -   Clinical Trial Supply ("CTS") 

o Sales increased by 113%

o Gross profit up 83%

o Strong sales performance largely driven by sourcing for sizable anti-viral studies

   -   Global Access Programs ("GAP") 

o Significant growth with a 222% increase in sales

o Strong gross profit performance, gross profit up 146%

o Number of programs under management extended to 32, from 26

o Sanofi's Campath and Astellas' MDV3100 early access programs running as planned

   -   Specialty Pharmaceuticals ("SP") 

o Continued growth in Foscavir(R) sales

o On track to add further products to portfolio

*Underlying PBT and EPS excludes one off costs and share based payments arising wholly as a result of IPO. Underlying EPS is based on the weighted average number of shares in issue post IPO.

Peter George, Chief Executive Officer, said:

"The first half of the financial year has been eventful with the achievement of some key strategic and operational developments. We listed successfully on AIM and saw excellent growth across the three divisions. We also made significant investments in our underlying infrastructure and have continued our evaluation of product acquisitions and in-licensing opportunities.

"The second half of the financial year has started well and we remain confident that the underlying performance of the business will enable us to meet our full year expectations."

-Ends-

For further information, please contact:

 
     Clinigen Group plc                        Tel: [phone] 
                                                495 010 
     Peter George, Group Chief Executive 
      Officer 
     Robin Sibson, Group CFO and Company 
      Secretary 
 
     Numis Securities Limited                  Tel: +44 (0) 20 
                                                7260 1000 
     Michael Meade/Freddie Barnfield 
      (Nominated Adviser) 
     James Black/Tom Ballard (Corporate 
      Broking) 
 
     College Hill                              Tel: +44 (0) 20 
                                                7457 2020 
     Melanie Toyne-Sewell/Stefanie 
      Bacher                                   Email: [e-mail] 
 

Overview

In the six months to 31 December 2012, the Group has undergone many changes, both financial and strategic. There has been significant organic growth in both revenues and operating profit with contributions from all three operating businesses.

The strongest organic growth has come from CTS which has been the dominant revenue generator historically. This has been driven by the expansion into the US markets and winning new business on the basis of Clinigen's credibility and global distribution network.

GAP has changed its focus over the past two years from a UK to a global business. Now that this change is complete, the business is developing and growing its existing 32 programs, whilst seeking new contracts. The Board expects to expand the customer base further across the large pharmaceutical companies that are already clients of the other operational businesses.

Sales from SP are from the hospital-based, anti-infective Foscavir which the Group acquired from Astra Zeneca in February 2010. The Group's focus, since its acquisition, has been expansion of market coverage, seeking new indications to increase patient exposure and ensure pricing is competitive across all markets. Further progress is expected in the second half of the year. Coupled with the organic growth strategy, additional growth will be driven by acquisition or in-licensing of other hospital-based products which meet the Group's specific criteria. The SP team continues to review various opportunities that arise from Clinigen's connections with the pharma sector and through synergies with the other two businesses to add further products to the portfolio.

A notable highlight in the first half of the financial year was Clinigen's successful admission to AIM, raising GBP6.8m (net) for the Group and GBP43.1m (net) for selling shareholders. The rationale for the IPO was to raise funds to support the SP acquisition programme, invest in infrastructure and for working capital. In addition, it enabled the departing Chairman/founder, Andrew Leaver to realise the majority of his investment. The Group successfully maintained operational momentum during the IPO process, a reflection of the strong management team.

Current trading and outlook

The Group had a strong first half, producing solid financial results and making good operational progress. Overall, trading in the second half of the year has started well. The Board expects sales to be ahead of market forecast, largely due to CTS, and profits to be in line with expectations, therefore margin percentages will be reduced.

By operating business, the largest proportion of organic growth is expected to continue from CTS, but with a growing influence from GAP, which remains on target to more than treble its sales and profit year on year. SP sales are expected to grow ahead of expectations due to increased US demand for Foscavir in H1. This organic growth is expected to continue steadily, with acquisitions and in-licensing of new products a priority in the second half.

Financial review

Revenues in the half year grew by 86% (H1 11/12: GBP32.8m) to GBP61.0m as a result of strong organic growth in all three operating businesses.

Underlying EBITDA increased by 48% to GBP10.5m (H1 11/12: GBP7.1m) as a result of gross profit growth, from all three operating businesses, of GBP4.8m, offset by overhead growth of GBP1.4m supporting the significant organic growth.

Underlying pre-tax profit, which excludes a non-cash, share based payment charge of GBP2.1m, associated social security costs of GBP0.5m and GBP3.4m from costs arising as a result of the Admission to AIM, jumped by 53% to GBP9.7m (H1 11/12: GBP6.3m). The Group reported a statutory profit before tax of GBP3.7m (H1 11/12: GBP4.0m).

Allowable UK corporation tax (CT) deductions arise from the exercise, pre IPO, of two equity-settled share based remuneration schemes. This generates a reduction in CT payable in current and future years of GBP10.0m.

Underlying earnings per share, excluding one off exceptional costs and share based payments arising wholly as a result of IPO and based on the number of shares in issue post IPO, is 9.0p. The reported earnings per share is *3.5p and reported diluted earnings per share is 2.9p. In line with our stated dividend policy, the Board approved the payment of a maiden interim dividend of 0.6p per share. The dividend will be payable on 28 March 2013 to all shareholders on the register at 8 March 2013.

The Group is in a healthy cash position with cash and cash equivalents at GBP22.3m, up from GBP5.2m at 30 June 2012. Loans from the pre IPO principal shareholder were paid down in full and the Group is debt free at the period end. The working capital model continues to be self-funding.

The cash increase in the period of GBP17.1m is generated by cash from operations of GBP11.0m, net proceeds from share issue of GBP8.7m, offset by loan repayments of GBP1.6m and tax payments and investing activities of GBP1.0m.

Performance by operational businesses

Clinigen CTS

CTS works with 15 of the top 20 pharmaceutical companies providing global procurement and supplies of drugs to meet clinical trial needs from phase ll through IV.

Top-line growth for the Group has been predominantly driven by CTS, which grew by 113% along with gross profit growth of GBP2.6m (83%). CTS revenue growth was supported by biologic drug studies. As previously reported, 35 of these biologic drugs will come off patent between 2013 and 2020 and Clinigen has now sourced and supplied 20 of these medicines for biosimilar comparator studies.

Sales in CTS can be lumpy. In H1 there have been particularly strong sales for a number of anti-viral comparator studies amounting to GBP24.0m, 52% (c.GBP8m) higher than the equivalent sales in the full year 2011/12. These studies have been largely supplied now and this activity is unlikely to continue at this level into H2. GBP20.0m of these sales came through three large projects with scale-related lower margins, leading to margins on a like-for-like basis on anti-virals being reduced by 8% on the full year 2011/12. Larger projects are typically lower margin contracts by nature, but given the operational gearing within CTS, these contracts are significantly value accretive. This has led to an overall dilution on margin percentage to 13% (FY 2011/12: gross margin of 17%).

Whilst the current pipeline suggests there might not be margin percentage improvements in H2 this year, the Board expects margin improvements in the longer term.

Clinigen GAP