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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Axis-Shield | LSE:ASD | London | Ordinary Share | GB0008039975 | ORD 35P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 469.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:5242C Axis-Shield PLC 02 September 2004 2 September 2004 Interim Results for the Six Months Ended 30 June 2004 Axis-Shield plc (LSE: ASD, OSE: ASD), the in vitro diagnostics company based in Scotland and Norway, today announces its interim results for the six months ended 30 June 2004. Financial Highlights * Revenues up 12.4% on a constant currency basis, and allowing for sale of autoimmune business in 2003 * Gross margins improved to 53.2% (2003: 50.2%) * Positive EBITDA at #0.8 million, compared to a loss of #2.6 million in 2003 * Increased gross profit and reduction in external R&D expenditure contribute to a reduced loss of #0.9 million (2003: loss of #4.3 million) * Strong balance sheet with cash of #9 million at period end Operational Highlights * On track to launch AFINION(TM) system in November * Successful launch of BNP (diagnosis of heart failure) on Abbott AxSYM system, generating revenues of nearly #1 million in the period * Homocysteine revenues down 7.8% on constant currency basis, affected by patent dispute in the USA * Sales of anti-CCP test for detection of rheumatoid arthritis up 49.1% Commenting on the results, Nigel Keen, Chairman of Axis-Shield, said: "With the continuing development of our Laboratory operations and the imminent launch of the AFINION system for the expanding point-of-care market, Axis-Shield is well-placed for profitable growth. The Company is now firmly established as a respected and innovative in vitro diagnostics organisation targeting clinical market opportunities and I look forward to reporting further strong progress at the year end." There will be an analyst group meeting at 9am on Thursday 2 September 2004 in London at the offices of Financial Dynamics at Holborn Gate, 26 Southampton Buildings, WC2. There will be a simultaneous conference call and webcast. For further details, please contact Mo Noonan on +44 (0)20 7831 3113. A meeting for Oslo analysts will take place at 8am on Friday 3 September 2004 at the Continental Hotel, Oslo. For further details, please contact Lilian Manderson on +44(0)1382 422000. Enquiries: Axis-Shield plc Tel: +44 (0)1382 422000 Svein Lien, Chief Executive Officer Paul Garvey, Finance Director Financial Dynamics Tel: +44 (0)207 831 3113 David Yates / Sophie Pender-Cudlip Notes to Editors: Axis-Shield is an international in vitro diagnostics company, headquartered in Dundee with R&D and manufacturing bases in Dundee and Oslo. The Group specialises in the development, manufacture and marketing of innovative proprietary diagnostics kits in areas of clinical need, including cardiovascular and neurological diseases, rheumatoid arthritis, alcohol abuse and diabetes. It has a special focus on effective testing at the point of care, for improved patient management. For more information on Axis-Shield, please refer to www.axis-shield.com CHAIRMAN'S STATEMENT 2004 INTERIM REPORT Introduction During the first half of 2004, Axis-Shield has continued its development towards becoming a full service diagnostic supplier, with an established position in laboratory testing through patented tests for key markers and an increasing presence in the growing market for near patient testing. We look forward to the launch of our new AFINION(TM) Point-of-Care assay system for the doctor's office later this year and the first introductions of new Axis-Shield assays onto the Abbott AxSYM laboratory analyser in 2005. Homocysteine continues to attract much interest as an important marker in a number of clinical areas and the Axis-Shield-developed AxSYM assay for BNP, a marker for heart failure, has achieved excellent sales since its launch in the USA in February. Organisational changes coupled with a significant reduction in external research and development expenditure have resulted in a greatly improved trading position with a pre-tax loss of #886,000 for the half year, compared to a loss of #4.3 million in the first half of 2003. Revenues were up by 1.5% to #26.2 million (2003: #25.8 million), but on a constant currency basis and allowing for the disposal of the autoimmune business in 2003, this equates to a growth of 12.4%. EBITDA was positive at #0.8 million compared to a deficit of #2.6 million in the first half of 2003. Gross margins improved to 53.2% (2003: 50.2%) and our cash position remains strong at #9 million. Operational Review Axis-Shield has had a very promising half year in both our Laboratory and Point-of-Care (PoC) Divisions. In our Laboratory Division we continue to progress our strategic objectives of developing patented diagnostic tests in areas of clinical need and adapting them to the large throughput laboratory systems of the major global diagnostic companies, primarily through OEM arrangements. We are well advanced with the initial tests being developed under the agreement signed last year with the Diagnostics Division of Abbott Laboratories to produce the next generation of markers for the highly respected and widely-placed AxSYM automated laboratory analyser. This agreement represents a departure from normal OEM contracts as it effectively gives us direct marketing of products in our own livery on a successful instrument platform without the enormous costs associated with the development and marketing of the system itself. It will enable us to both greatly increase the commercialisation and profile of our own novel patented markers and to generate an additional revenue stream from large volume commodity assays not yet available on the AxSYM system, with both these opportunities supported by Abbott's sales and marketing organisations worldwide. We have always recognised that it is essential to work with the major companies like Abbott in order to ensure the widest commercialisation of our key markers, as the top six companies dominate the laboratory diagnostics market. The validity and success of this strategy has become increasingly evident and our skills in adapting assays to automated instrument platforms are now being sought by many of these large diagnostic organisations for OEM contracts also involving markers which are not proprietary to Axis-Shield. The centralisation of our laboratory operations at our corporate headquarters in Dundee and the commissioning of extra space available at this site have resulted in improved efficiency in these expanding operations. There is an increasing demand for key diagnostic parameters to be tested in the presence of the patient to ensure optimal patient management. This is especially important where management might involve the prescribing of specific pharmaceuticals such as antibiotics, particularly as unnecessary intake of these drugs is leading to reduced effectiveness against many pathogens. We are responding to the growth of this new discipline, often known as "theranostics", by seeking to build links with major pharmaceutical companies in areas where we feel our tests can be used to influence prescribing decisions. An example of this is the use of our anti-CCP assay (not yet available in PoC format) in the early detection of rheumatoid arthritis, which is very important in the effective use of the new generation of anti-rheumatic drugs and the control of disease progression. Clearly the availability of tests that can be performed quickly and accurately in doctors' surgeries is an important part of better clinical practice. Over the past decade Axis-Shield's NycoCard(R) system has capitalised on this with several tests, including a CRP assay to differentiate between bacterial and viral infections and thus to validate the appropriateness of antibiotic therapy, and HbA1c for monitoring diabetic compliance. These tests have been particularly successful in Northern European markets and in Switzerland, where the use of point-of-care testing is more established, together with developing countries where there are geographical constraints on centralised laboratory testing services. However, the NycoCard(R) technology has some limitations regarding menu expansion and the fact that it does not employ a completely automated process. This means that the important CLIA-waiver status in the US, permitting use by non-laboratory professionals, is not attainable. We have therefore developed AFINION(TM), a fully automated doctors' office test system capable of achieving US CLIA-waiver. As Axis-Shield is principally a reagent developer and manufacturer with core skills in chemistry and biochemistry, it was necessary for us to contract out the major part of the intricate and demanding instrument development required to meet our specifications. As a result, our external R&D costs have been significantly increased during the period covering instrument development. This phase of development is now largely complete and we will launch the system at the International MEDICA show in Dusseldorf in November. The AFINION(TM) project has been followed closely by both potential distributors and customers and this interest has intensified as we have demonstrated system prototypes prior to launch. The American market will be important for the success of AFINION(TM) and to address this huge market we are creating a US organisation to manage local distribution of the system. An experienced professional, John Sperzel from Bayer Diagnostics, has been recruited to head this new unit. Our successful direct distribution organisations in the Nordic countries (Medinor) and the UK (Axis-Shield UK) are well placed to ensure early market penetration of AFINION in our home markets. Divisional Review Laboratory Division The transfer of laboratory operations from Oslo to one centralised site in Dundee has progressed well. The fitting out of the unutilised space in the Technology Park building at Dundee to accommodate the expanded operations and the new workload expected from the contract with Abbott to develop and manufacture the next range of markers for the AxSYM instrument platform is now complete. The site improvement was partly financed by a grant from Scottish Enterprise and the expanded premises were formally opened by Scotland's Deputy First Minister, Jim Wallace, on July 27. We have also successfully completed the post-sale transfer of the autoimmune product range manufacturing to Euro-Diagnostica in Holland. Our reduced losses this half year partly reflect reduced overheads and improved efficiency resulting from the consolidation and rationalisation of our laboratory operations. The Laboratory Division revenue growth has come primarily from new Abbott products and anti-CCP, which demonstrates that we do not have to rely solely on increasing sales of our market leading homocysteine products. Scientific interest in homocysteine continues to build and new data have recently been published showing that the marker could also have some utility in the early detection of increased risk of osteoporosis, in addition to existing applications in areas such as cardiovascular and neurodegenerative diseases. However we believe that the total market for homocysteine testing grew only by about 20% compared with the first half of 2003, which is lower growth than we had anticipated. One factor which continues to impact US sales negatively is the activity of Competitive Technologies Inc. (CTT). CTT controls a US patent which expires in 2007, covering the use of homocysteine as a surrogate marker of vitamin deficiency. The US Court of Appeal has recently upheld an earlier judgement from a District Court in the USA which effectively supports the CTT contention that all homocysteine testing can be considered as a measure of vitamin status. Whilst we are pleased that the case has now been resolved, the situation is negatively impacting the development of the US market for homocysteine, with laboratories reluctant to offer and promote homocysteine testing under the continuous threat of litigation from CTT. In addition, CTT has announced, "it is expecting to reach licensing agreements with several organisations, (including product suppliers like Abbott, Bayer and Axis-Shield) in lieu of formal dispute." We believe that growth in the US market for homocysteine testing may be held back until the CTT position is resolved, though any solution is unlikely to affect our margins, as the patent covers end-use of a homocysteine result. Therefore any licence fee is payable by the final user of the test result, and would thus be passed on to the doctor and ultimately the patient or health care provider. Homocysteine revenues decreased by 12.9% to #3.1 million compared to #3.5 million in the first half of 2003, though at constant currency rates this decline would have been reduced to 7.8%. Our shipments of homocysteine products decreased by 18% compared to 2003, largely due to previously high inventory levels being reduced by one of our main OEM partners (with the lowest unit price to us, hence revenue decrease was not as great). Total units shipped by us, together with units reported as shipped by our royalty-paying licensees, reached 3.6 million for the first half year. As previously indicated, homocysteine sales during the first half of 2004 have also been affected by substantial unlicensed competition. The favourable resolution of our homocysteine patent dispute with Catch Inc. in April, coupled with the agreement for Axis-Shield to become the global manufacturer and distributor of homocysteine tests based on the Catch technology, has brought the principal element of this unlicensed competition into our portfolio of licensed products. The agreement with Catch has given us rights to use and license out an adaptable and robust technology for clinical chemistry instruments, and, as a result of our settlement, Beckman Inc. has now signed an agreement with Catch to use the Catch reagents on its widely-placed Synchron instrument platform, with royalties to Axis-Shield on a per test basis. Catch and Axis-Shield have now established a working partnership and we expect to announce more agreements with other organisations keen to commercialise this technology in the near future. The financial benefits of our settlement with Catch should start to become evident in the second half of this year. In June 2004, we signed a licence agreement with the Japanese company, Azwell, to allow it to sell its own homocysteine test through Polymedco and its Polychem analyser in the USA, in return for per test royalty payments. Our collaborations with Dade Behring and The Instrumentation Laboratory for homocysteine assays on these companies' instrument platforms are nearing completion and should add to homocysteine revenues in 2005. The recent launch of the AxSYM BNP assay by Abbott has been very successful, with revenues of #944,000 during the period. BNP is considered the marker of choice in the definitive diagnosis of heart failure and we expect further growth in sales of our test for measuring this important marker. In May, Abbott also launched an AxSYM testosterone assay, developed and manufactured by Axis-Shield. In August, Abbott launched the first immunoassay for the immunosuppressive drug sirolimus, which is used predominantly in renal transplantation, on its IMx analyser, after a three-way collaboration between Abbott, Axis-Shield and the drug's developer, Wyeth. In May, we signed an agreement with Abbott to produce an assay for Beta-2-microglobulin on the IMx instrument platform and this should be ready for launch by the end of the year. New published data on the utility of our patented anti-CCP test shows that many patients with rheumatoid arthritis have circulating antibodies to cyclic citrullinated peptides in their bloodstream several years before the appearance of symptoms. This has helped to grow sales of our anti-CCP ELISA kit to #434,000, up by 49% over the first half of 2003. The authors of the Swedish and Dutch studies concerned conclude that early screening for anti-CCP is feasible and would be of considerable help in the clinical management of patients in whom rheumatoid arthritis is predicted to develop. Point-of-Care Division Revenues were #9.1 million compared to #8.7 million in the first six months of 2003, representing an increase of 4.5%, or 15.1% at constant currency rates. This adverse currency effect reflects the weakness of the Norwegian Kroner (NOK) during the period. The NycoCard(R) instrument base has now increased to over 13,000, and we are still seeing good growth in some export markets, particularly China, where the nationwide project to investigate utility of the NycoCard(R) HbA1c test in diabetics continues. Our new AFINION(TM) Point-of-Care system will be launched in non-US markets in November. The HbA1c and CRP assays, the first tests which we have developed for use on AFINION(TM), are working well and the assembly line for reagent cartridges is now fully operational in Oslo. Before the end of the year we are planning to submit an application to the US FDA for AFINION(TM) marketing clearance. For marketing in the US we have decided to appoint a network of local distributors, supported by our own US organisation and are pleased that John Sperzel has accepted the position to head that operation. Until recently, John was Vice President of World Wide Marketing and Business Development for Near Patient Testing at Bayer Diagnostics and he brings with him extensive experience and knowledge in point-of-care marketing. In our principal point-of-care markets in Scandinavia, Medinor, with its strong position and extensive sales force, is playing an important role in the early market testing and launch of AFINION(TM). Focussing our Oslo operations into this Division has improved efficiency and we have seen tangible benefits in our AFINION(TM) project. We believe the system represents a major advance in the marketplace which is increasingly receptive to the need for rapid and reliable near patient testing. Previewing the system at the recent annual meeting of the American Association of Clinical Chemistry attracted much interest. Using the system, we were able to demonstrate accurate fully automated HbA1c testing in less than 3 minutes in a number of volunteers. Direct Distribution Sales in the Nordic countries through Medinor were affected by the weak NOK and reached #12.0 million compared with #12.3 million in 2003, of which #8.4 million was from distribution of non-Axis-Shield products. UK sales reached #1.1 million (of which #647,000 was from third party distributed products), compared to #1.3 million in 2003, but this result masks underlying sales growth, as in 2003 there were a number of one-off sales to the UK Ministry of Defence. Plasmatec, our Dorset-based subsidiary selling mostly infectious disease assays and low cost commodity diagnostics to developing countries, achieved sales of #914,000, an increase of 9.7% over the corresponding period last year. Financial Review Exchange Rates The Group has again been affected by the material movements in key exchange rates during the first six months of this year, and in particular the continuing weakness of the US dollar has had a significant impact on revenues, gross profit and net losses. In addition to the dollar, the NOK has been much weaker in 2004 than in 2003, adversely affecting the conversion of the revenues of our Norwegian entities to sterling. However, we have not suffered at the profit before tax level as the combined Norwegian entities made a loss before tax in the period, as a result of our significant investment in R&D in Norway, in connection with AFINION. Turnover Turnover increased by 1.5% to #26.2 million (2003: #25.8 million). The adverse effect of currency on third party divisional revenues and translation of Norwegian revenues to sterling was #2.1 million. Gross Margin The gross margin increased to 53.2% (gross profit: #13.9 million) from 50.2% in 2003 (gross profit: #13.0 million). Although affected by the weaker dollar, the more beneficial product mix together with the disposal of the autoimmune business is reflected in this increase in margin. Operating Costs and Profit We continue to invest heavily in R&D but our spending in the first half of 2004 decreased, in line with expectations, to #5.5 million from #6.6 million - a decrease of 16.8%. This figure includes all development costs associated with the new PoC AFINION(TM) instrument and assays, particularly external development costs of #1.9 million (2003: #2.9 million). We expect this level of R&D spending to continue to decrease in the second half as AFINION(TM) is launched. Other operating expenses decreased by #610,000 (6.1%) from #10.0 million in 2003 to #9.4 million in 2004. Exchange rate differences accounted for virtually all of this. There were no exceptional operating costs (2003: #832,000). Net interest received decreased from #181,000 to #58,000. Loss before taxation was #886,000 compared to #4.3 million in the first six months of 2003. EBITDA The Group reports positive earnings before interest, tax, depreciation and amortisation (EBITDA) for the first six months of the year of #0.8 million compared to a loss of #2.6 million in 2003, though the latter figure did include exceptional costs of #0.8 million. Cash Flow The positive EBITDA less the working capital requirements led to a net cash inflow from operating activities of #360,000 (2003: outflow of #2.4 million). Capital expenditure remained steady at #2.1 million (2003: #2.1 million), due mainly to the AFINION(TM) project and the building works at Dundee. This, together with net interest received of #58,000 (2003: #181,000), lease finance received of #749,000 (2003: #Nil) and a small hire purchase repayment led to a decrease in our cash position at 30 June 2004 of #911,000 and a net cash position of #6.9 million. Actual cash at bank at the end of the period was #9.0 million (2003: #9.2 million). Balance Sheet The Group's fixed assets at 30 June 2004 were #25.8 million (2003: #27.6 million), which were made up of tangible assets of #9.0 million, intangible assets of #16.7 million and other investments of #93,000. The intangible assets principally relate to the patents, trademarks and goodwill acquired when the Point-of-Care Division was purchased in February 2000, together with the 2003 acquisition of a licence to produce AxSYM assays and a homocysteine licence acquired in 2002. Stocks have decreased to #7.8 million (2003: #9.0 million); debtors have increased to #9.8 million (2003: #9.3 million) while current creditors, which include the current amount due on the AxSYM licencing agreement, have increased to #10.8 million (2003: #9.9 million). Creditors due after one year include further amounts owing on the AxSYM licencing agreement together with long term finance leasing and have increased from #2.6 million to #4.3 million, while provisions for liabilities and charges, which include the provision for exceptional costs, have decreased from #1.4 million to #725,000. Our shareholders' funds now stand at #36.4 million (2003: #41.4 million). Outlook We are now seeing the benefits of the combination of increased operational efficiency, higher gross margins and reduced R&D costs. Our current products should produce strong growth going forward, and this will be supported by a substantial number of new products over the coming years. We now have access to powerful instrument platforms in both the laboratory and point-of-care sectors through AxSYM and AFINIONTM respectively and these will provide the main avenues for commercialisation of our new products, generating long term growth and profitability. I look forward to reporting further strong progress at the year end. Nigel Keen, Chairman 2 September 2004 Consolidated Profit and Loss Account For the six months ended 30 June 2004 Notes Six months Six months Twelve months ended ended ended 30 June 2004 30 June 2003 31 Dec 2003 unaudited unaudited audited #000 #000 #000 Turnover - Continuing operations 2 26,225 25,835 50,327 Cost of Sales (12,281) (12,853) (25,163) ________ ________ ________ Gross Profit 13,944 12,982 25,164 Operating expenses 4 (9,359) (9,969) (19,127) ________ ________ ________ Operating Profit before Research & Development and 4,585 3,013 6,037 Exceptional Costs Research and Development 4 Point-of-care (internal) (1,749) (1,517) (2,608) Point-of-care (external) (1,939) (2,922) (5,655) Lab Division (internal) (1,815) (2,040) (4,271) Lab Division (external) (26) (164) (345) ________ ________ ________ (5,529) (6,643) (12,879) Operating Loss after Research & Development (944) (3,630) (6,842) Exceptional operating expenses 4 - (832) (2,230) ________ ________ ________ Operating Loss - Continuing operations (944) (4,462) (9,072) Exceptional gain on disposal of Autoimmune business - - 2,042 ________ ________ ________ Loss on Ordinary Activities before Interest and (944) (4,462) (7,030) Taxation Net interest receivable 58 181 303 ________ ________ ________ Loss on Ordinary Activities before Taxation (886) (4,281) (6,727) Taxation (40) - - ________ ________ ________ Loss for the Financial Period (926) (4,281) (6,727) ________ ________ ________ Loss per ordinary 35p share 5 Basic (1.91p) (8.82p) (13.86p) Fully diluted (1.91p) (8.82p) (13.86p) Earnings before interest, taxation, depreciation and amortisation ("EBITDA") Loss on Ordinary Activities before Interest & Taxation (944) (4,462) (7,030) Depreciation 697 905 2,052 Goodwill amortisation 240 263 518 Intangible asset amortisation 809 663 1,507 ________ ________ ________ EBITDA 802 (2,631) (2,953) ________ ________ ________ Consolidated Balance Sheet As at 30 June 2004 Notes 30 June 2004 30 June 2003 31 Dec 2003 unaudited unaudited audited #000 #000 #000 Fixed Assets Intangible 6 16,701 19,526 18,505 Tangible 8,957 7,619 7,953 Other investments 93 493 98 ________ ________ ________ 25,751 27,638 26,556 ________ ________ ________ Current Assets Stocks 7,759 9,028 8,162 Debtors 9,774 9,316 9,426 Cash at bank 8,979 9,232 10,143 ________ ________ ________ 26,512 27,576 27,731 Creditors: Due within one year 6 10,809 9,882 10,662 ________ ________ ________ Net Current Assets 15,703 17,694 17,069 ________ ________ ________ Total Assets Less Current Liabilities 41,454 45,332 43,625 Creditors : Due after one year 6 4,349 2,616 3,771 Provision for Liabilities and charges 7 725 1,351 1,018 ________ ________ ________ Net Assets 36,380 41,365 38,836 ________ ________ ________ Capital and Reserves Called up share capital 16,987 16,987 16,987 Share premium 49,189 49,189 49,189 Capital redemption reserve 244 244 244 Merger reserve 17,922 17,922 17,922 Profit and loss account (47,962) (42,977) (45,506) ________ ________ ________ Equity Shareholders' Funds 36,380 41,365 38,836 ________ ________ ________ Statement of Total Recognised Losses For the six months ended 30 June 2004 Six months Six months Twelve months ended ended ended 30 June 2004 30 June 2003 31 Dec 2003 unaudited unaudited audited #000 #000 #000 Total recognised losses after tax for the (926) (4,281) (6,727) financial period Exchange losses on retranslation of subsidiary (1,530) (1,841) (1,924) results and balances _____ _____ _____ Total recognised losses relating to the (2,456) (6,122) (8,651) financial period _____ _____ _____ Consolidated Cash Flow For the six months ended 30 June 2004 Notes Six months Six months Twelve months ended ended ended 30 June 2004 30 June 2003 31 Dec 2003 unaudited unaudited audited #000 #000 #000 Net Cash inflow/(outflow) from Operating (A) 360 (2,442) (3,033) Activities _____ _____ _____ Returns on Investments and Servicing of Finance Interest received 141 228 358 Interest paid (83) (47) (55) _____ _____ _____ Net Cash inflow from Returns on Investment and 58 181 303 Servicing of Finance _____ _____ _____ Capital Expenditure and Financial Investment Purchase of tangible fixed assets (2,073) (2,119) (3,549) Purchase of intangible fixed assets - (1,061) (1,061) Proceeds of sale of tangible fixed assets 3 - 5 _____ _____ _____ Net Cash outflow from Capital Expenditure and (2,070) (3,180) (4,605) Financial Investment _____ _____ _____ Disposals Disposal of subsidiary business/undertakings - - 1,650 Net Cash outflow before use of liquid Resources (1,652) (5,441) (5,685) and Financing Financing Finance received on purchase of tangible fixed 749 - 1,439 assets Hire purchase repayments (8) (16) (23) _____ _____ _____ Net Cash inflow/(outflow) from Financing 741 (16) 1,416 _____ _____ _____ Decrease in Cash (911) (5,457) (4,269) _____ _____ _____ (A) Reconciliation of Operating Loss to Net Cash from Operations Six months Six months Twelve months ended ended ended 30 June 2004 30 June 2003 31 Dec 2003 unaudited unaudited audited #000 #000 #000 Operating loss (944) (4,462) (9,072) Depreciation of tangible fixed assets 697 905 2,052 Amortisation of intangible fixed assets 1,049 926 2,025 Reverse lease premium amortised in period - (17) (16) Loss on disposal of fixed assets - - 1 Provision against investment - - 406 (Decrease)/increase in provisions (239) 1,020 651 Decrease /(increase) in stock 51 (111) 807 Increase in debtors (717) (446) (127) Increase/(decrease) in creditors 463 (257) 240 _____ _____ _____ Net Cash Inflow/(outflow) 360 (2,442) (3,033) _____ _____ _____ Reconciliation of Net Cash Flow to Movement in Net Funds #000 #000 #000 Decrease in cash in the period (911) (5,457) (4,269) Cash (inflow)/outflow from decrease in debt and hire (741) 16 (1,416) purchase _____ _____ _____ Movement in net funds for the period (1,652) (5,441) (5,685) Opening balance 8,701 14,733 14,733 Foreign exchange adjustment (144) (84) (347) _____ _____ _____ Closing Balance 6,905 9,208 8,701 _____ _____ _____ Axis-Shield plc Notes to the Financial Statements For the six months ended 30 June 2004 1. BASIS OF PREPARATION The financial information in this report does not comprise Statutory Accounts for the purpose of Section 240 of the Companies Act 1985. The interim financial statements for 30 June 2003 and 2004, which are unaudited, have been prepared on the basis of accounting policies consistent with those set out on pages 35 and 36 of the 2003 Annual Report. The statutory accounts of Axis-Shield plc for the year ended 31 December 2003 have been filed with the Registrar of Companies. The report of the auditors on these accounts was unqualified and did not contain a statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. 2. SEGMENTAL ANALYSIS a. Geographically by origin Turnover Operating Research & Operating Profit/(Loss) Profit before Development Profit/ on Ordinary R &D Costs (Loss) Activities Before Interest And Tax #000 #000 #000 #000 #000 United Kingdom 6,671 2,284 1,286 998 998 Nordic Region 19,554 3,426 4,243 (817) (817) ______ _____ _____ _______ _______ 26,225 5,710 5,529 181 181 Corporate Costs - 1,125 - (1,125) (1,125) ______ _____ _____ _______ _______ 26,225 4,585 5,529 (944) (944) ______ _____ _____ _______ _______ b. Turnover geographically by destination Six months Six months ended ended June 2004 June 2003 #000 #000 Europe 19,088 19,947 North America 4,635 3,762 Rest of world 2,502 2,126 ______ ______ 26,225 25,835 ______ ______ c. Turnover by product area Six months Six months Six months Six months ended ended ended ended 30 June 2004 30 June 2004 30 June 2003 30 June 2003 #000 #000 #000 #000 Point of Care NycoCard 6,826 6,644 Coagulation 1,662 1,437 Other Point of Care 631 643 _____ _____ Total Point of Care Products 9,119 8,724 Laboratory Products Alcohol Related Diseases 788 867 Homocysteine 3,057 3,510 Infectious Disease 1,277 1,221 Autoimmune 317 942 Anti-CCP 434 291 Anti-Tg/TPO 493 672 BNP 944 - Other 787 260 _____ _____ Total Laboratory Products 8,097 7,763 Distribution of third party products 9,009 9,348 _____ _____ 26,225 25,835 _____ _____ 3. AMORTISATION (A) Goodwill Goodwill arising on consolidation represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. Purchased goodwill is eliminated by amortisation through the profit and loss account over its economic useful life. The goodwill charged in the six months ended 30 June 2004 comprises: Six months Six months ended ended June 2004 June 2003 #000 #000 Axis-Shield ASA 13 14 Medinor 106 115 Point of Care Division 121 134 _____ _____ 240 263 _____ _____ (B) Intangible Assets Acquired research and development projects, patents and trademarks are capitalised. Patents are written off over the period for which they are valid. Other intangible assets are written off over their expected useful lives through the Profit and Loss account over a period of 5 to 12 years. The amount amortised in the six months ended 30 June 2004 comprises: Six months Six months Ended Ended June 2004 June 2003 #000 #000 Lab Division 259 55 Point of Care Division 550 608 _____ _____ 809 663 _____ _____ 4. ANALYSIS OF TOTAL OPERATING EXPENSES Six months Six months ended ended June 2004 June 2003 #000 #000 Research and Development 5,529 6,643 Marketing 4,976 5,296 Administration 4,383 4,673 ______ ______ 14,888 16,612 Exceptional operating expenses - 832 ______ ______ 14,888 17,444 ______ ______ The operating expenses include depreciation and amortisation including goodwill amortisation. Research and Development include full allocation of administration cost. 5. LOSS PER ORDINARY SHARE Loss per share is based on the weighted average number of shares in issue of 48,532,875 (31 December 2003 - 48,532,875; 30 June 2003 - 48,532,875) and the loss for the period after taxation. The diluted earnings per share is calculated in accordance with Financial Reporting Standard 14 'Earnings per share' and reflects the potential impact of share options in existence at the period end. The weighted average number of shares in issue on this basis is 48,554,761 (31 December 2003 - 48,532,875, 30 June 2003 - 48,532,875). 6. INTANGIBLE ASSETS On 27 June 2003 the group acquired a licence to produce certain AxSYM assays for #4,246,000, of which #1,061,000 was paid on acquisition. The balance of #3,185,000 will be paid over five years from date of acquisition, with #606,000 included in creditors due within one year and the balance of #2,579,000 included in creditors due after one year. The total amount of #4,246,000 will be amortised over the ten year term of the licence agreement. 7. PROVISIONS The amount of #725,000 comprises #92,000 arising from actuarial valuations of pensions scheme deficits in respect of Medinor ASA and Axis-Shield PoC, and #633,000 in respect of future costs anticipated to be incurred in the product transfer from Oslo to Dundee. 8. INTERIM RESULTS Copies of this statement are being circulated to shareholders and are available at the Registered Office of Axis-Shield plc, The Technology Park, Dundee, DD2 1XA. They are also available from our Oslo address: Axis-Shield PoC AS, Marstrandgata 6, PO Box 6863, Rodelokka, N-0504 Oslo, Norway, and they will shortly be available on our website, www.axis-shield.com. This information is provided by RNS The company news service from the London Stock Exchange END IR LBMLTMMBMBII
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