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Tepnel Life Sciences PLC
30 September 2003
Tepnel Life Sciences PLC ('Tepnel' or 'the Company')
Interim statement for twelve months ended 30 June 2003
Manchester, UK. 30 September 2003...Following its stated change of year-end from
June to December, Tepnel Life Sciences PLC (AIM: TED), the UK-based
international life sciences instrumentation and services company, is pleased to
provide an interim statement for the twelve months ended 30 June 2003.
Highlights
* Sales increase 13.0% to # 3.74m (2002: #3.31m)
* Operating losses down 32.6% to #2.43m (2002: #3.61m loss)
* Second six month period net loss after tax reduced 30.9% to #0.91m
from first six month period loss after tax of # 1.32m
* First sales to leading UK-based global pharmaceutical company of two '
Nucleopure' DNA purification systems (formerly T2000 systems)
* Tepnel Scientific Services Ltd (TSS) profitable and cash-generative in
second six month period
* First regulatory approval of peanut detection assay awarded by AOAC
International to assay developed by Tepnel BioSystems Ltd (TBS)
Post-period events
* Appointment of Seymour Pierce as nominated advisor and broker
* #1.51 million raised in placing with new and existing institutional
investors
Financial Results
In the twelve months to 30 June 2003, turnover for the Group increased by 13.0%
to #3.74m (2002: #3.31m). Pre-tax losses for the period decreased 30.9% to
#2.37m (2002: #3.44m). The loss per share has decreased to 2.3p (2002: 3.0p). In
addition, the Company's cash burn for the period is down 47.1% on the same
period last year.
In July, we raised #1.51 million in a placing from both existing and new
institutional shareholders. These funds, in combination with our tight internal
control on costs and increasing revenues from existing automated systems,
products and services, puts Tepnel in an excellent position to further grow its
business both organically and by acquisition.
Overview
Tepnel's tri-polar business strategy and the drive of the Company's new
management team continued to deliver better financial results during the first
six months of 2003. The tri-polar strategy, which is based on Tepnel providing
its customers with automated DNA purification systems and reagents, manual DNA
kits, DNA purification services as well as a range of bioanalytical services and
products, has moved the Company forward across all areas. Consequently, the
Company has greatly improved its business relations with its key customers, and
this is reflected in the increasing number of leading pharmaceutical companies
that Tepnel is doing business with.
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 launched the 'Nucleopure' automated system (formerly the
T2000) for the purification of intact genomic DNA from hard tissues.
The potential of this new system is highlighted by the fact that a UK-based
global pharmaceutical company purchased two Nucleopure systems and associated
reagents during May and June of this year. This follows a period during which
TLS and the pharmaceutical company collaborated closely to optimise the system.
The performance and quality of results that the Nucleopure is now delivering
make us confident in its commercial success. This confidence is enhanced further
by the positive responses we have received from other potential pharmaceutical
and CRO (contract research organisations) customers. Consequently, we have
placed orders with our suppliers for additional systems. An important element of
Tepnel's commercialisation strategy for the Nucleopure system comes from reagent
sales, given that the annual reagent pull-through for each system is estimated
to be between #20,000 and #80,000.
Another important business for TLS is the provision of contract nucleic acid
purification (NAP) services to its pharmaceutical customer base. Current service
contracts from existing and new customers will ensure that we are operating near
to capacity for the remainder of 2003 and into 2004.
On the research side, the Company is collaborating with a leading academic group
at UMIST (University of Manchester Institute of Science and Technology) led by
Professor John McCarthy to develop novel RNA-based anti-microbial screening
technologies for the discovery of new antibiotics.
Tepnel Scientific Services (TSS)
TSS provides a wide range of analytical chemistry, bioanalytical and
microbiological services for Tepnel to offer its biopharmaceutical and
healthcare customers. TSS's customer base continues to grow at an attractive
pace and now includes UK, US, and European companies as well as international
CROs. The build up in TSS's customer base means that the business is now both
profitable and cash-generative.
In order to further enhance the growth prospects for TSS, Tepnel has been
working to consolidate its analytical operations into one purpose-built site in
Livingston, Scotland. TSS has already been awarded a grant to help with this
relocation and additional funding from the recently completed financing will be
used to facilitate this move. A site has been identified and heads of terms have
been agreed. TSS is expected to move into this facility before the end of
September 2004 with minimal short-term impact on TSS's customers.
Tepnel BioSystems (TBS)
Tepnel's TBS business was cash-generative during the period and is expected to
be profitable for 2003 as a whole. Factors contributing to this move into
profitability include the expected 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.
The level of TBS's profitability was constrained, however, by Tepnel's
investment in the development and commercialisation of a new BioKits assay for
detecting peanut allergens in food. This investment was rewarded when TBS became
the first company to be awarded 'Performance Tested' certification from the AOAC
Research Institute in the US for its peanut detection assay. This global first
gives TBS an important commercial advantage over potential competitors in this
area, particularly when the US FDA begins to enforce the use of authorised
allergen-testing assays in combination with stricter food-safety labelling
guidelines.
TBS is continuing to develop the peanut detection assay in other formats (such
as a rapid test) in order to expand the commercial potential of this product.
Similar development work is also ongoing for other products in the BioKits
range.
Post-period events
In July, Tepnel appointed Seymour Pierce as nominated broker and advisor.
Seymour Pierce has extensive knowledge and experience of the AIM Market and also
has growing expertise in the life sciences sector, which we believe puts them in
an excellent position to support Tepnel's future growth.
Shortly after its appointment, Seymour Pierce helped Tepnel raise #1.51 million
in a placing of shares to new and existing investors. These funds will be used
for the accelerated development of the Nucleomax (T3000) DNA purification
system, Tepnel's latest automated system, which is being designed for the rapid
purification of DNA from blood samples for pharmacogenomic applications. In
addition, the new funds will be used to extend Tepnel's activities for its
existing automated instruments, such as the Nucleopure, and to facilitate the
move from TSS's existing premises to the new purpose-built facility in
Livingston.
Prospects
The Group continues to make solid progress towards its goal of achieving overall
profitability. Sales growth for the rest of 2003 is anticipated to accelerate as
a result of further orders for the Nucleopure system, and perhaps more
importantly, with the significant and recurring revenue stream that will be
generated by reagent pull-through associated with the operation of these
systems. We expect further growth in both the TSS and TBS businesses as
important new contracts come on-stream and new products are introduced. This
growth in sales, allied to the Company's tight control on costs, means that
losses in the six-month period to December 2003 are expected to decrease
further.
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 and the new funds raised means that Tepnel is aggressively pursuing
strategic M&A opportunities that will enable our proven management team to
better pursue its tri-polar strategy on a more international basis. Tepnel is
currently in negotiations on two acquisition opportunities and a further
announcement will be made in due course.
Alec Craig, Non-Executive Chairman 30 September 2003
For Further Information:
Tepnel Life Sciences
Ben Matzilevich, CEO
Gron Ffoulkes-Davies, Finance Director
0161 946 2200
De Facto Communications
Richard Anderson
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 & Loss account for the 12 months ended 30 June 2003
Unaudited Audited
12 Months ended 12 Months ended
30 June 2003 30 June 2002
#'000 #'000
Turnover 3,738 3,307
Cost of sales (2,008) (1,752)
Gross profit 1,730 1,555
Research and development 1,158 1,976
Sales and marketing 840 992
Administrative expenses 2,162 1,641
Administrative expenses - - 552
exceptional
Total administrative expenses 4,160 5,161
Operating loss (2,430) (3,606)
Interest receivable 80 181
Interest payable (23) (11)
Loss on ordinary activities (2,373) (3,436)
before taxation
Taxation 144 604
Loss on ordinary activities (2,229) (2,832)
after taxation
Basic loss per share 2.3p 3.0p
Fully diluted loss per share 2.3p 3.0p
The results for all periods include all recognised gains and losses.
Consolidated Balance Sheet as at 30 June 2003
Unaudited Audited
30 June 2003 30 June 2002
#'000 #'000
Fixed assets
Intangible assets 1,719 1,783
Tangible assets 1,843 1,471
3,562 3,254
Current assets
Stocks 841 840
Debtors - due within one year 1,198 1,411
Investments - 20
Cash at bank and in hand 1,060 3,299
3,099 5,570
Creditors due within one year 1,354 1,478
Net current assets 1,745 4,092
Creditors due greater than one year 204 14
Total assets less liabilities 5,103 7,332
Capital and reserves
Called up share capital 973 973
Share premium account 26,578 26,578
Profit and loss account (22,448) (20,219)
Equity shareholders' funds 5,103 7,332
All items under capital and reserves are equity.
Consolidated cash-flow statement for the 12 months ended June 30 2003
Audited
Unaudited 12 Months
12 Months ended ended
30 June 2003 30 June 2002
#'000 #'000
Reconciliation of operating loss
to net cash outflow from operating activities
Operating loss (2,430) (3,606)
Depreciation 304 267
Amortisation 66 62
Profit on disposal of fixed assets 1 (4)
Decrease/(Increase in stocks) (1) (288)
Decrease/(increase) in debtors 339 (437)
(Increase)/decrease in investments 20 -
(Decrease)/increase in creditors 23 550
Net cash outflow from operating (1,678) (3,456)
activities
Consolidated cash flow statement
Net cash outflow from operating (1,678) (3,456)
activities
Return on investments - 170
Acquisitions - (275)
Corporation tax refund - 350
Capital expenditure (676) (794)
Net cash outflow before financing (2,354) (4,005)
Management of liquid resources 115 (2,802)
Financing - 6,952
Increase in cash (2,239) 145
Reconciliation of net cash flow to
movements in net funds
(Decrease)/Increase in cash (2,239) 145
Cash (outflow)/inflow from short term - 2,802
deposits
Cash outflow from decrease in lease 170 17
financing
Repayment of convertible loan - 1,000
Change in net funds resulting from cash (2,069) 3,964
flow
New finance leases (487) (6)
Net funds/(debt) at beginning of period 3,272 (686)
716 3,272
Net funds at end of period
Notes
1 The Interim Report for the twelve months ended 30 June 2003 is un-audited
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 Unaudited 12 Months Audited
destination ended 12 Months ended
30 June 2003 30 June 2002
#'000 #'000
UK 2,797 2,240
Rest of Europe 528 528
Americas 182 334
Asia 116 135
Rest of World 115 70
3,738 3,307
Turnover by geographical
origin
UK 3,738 3,307
6 Exceptional costs in the twelve months ended 30 June 2003 were #Nil
(2002: #552,000 - 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:
Unaudited Audited
12 Months ended 12 Months ended
30 June 2003 30 June 2002
Loss for the period #'000 (2,229) (2,832)
Weighted Ave No. of shares 97,331,280 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
END
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