Final Results

RNS Number:1354Z
Celsis International PLC
27 May 2004

                            CELSIS INTERNATIONAL PLC

             Preliminary Results For The Year Ended 31st March 2004

Celsis International plc ("Celsis"), a leading international manufacturer of
rapid diagnostic testing systems for the world's pharmaceutical, personal care,
dairy and beverage industries (the Product Group) and a leading US supplier of
cGMP analytical services for the pharmaceutical industry (the Laboratory Group).

Financial Highlights:

*      Profits before tax up 22.5% to $4.83 million (2003: $3.94 million) on
       turnover up 4.5% to $27.6 million (2003: $26.4 million) following 
       discontinuation of Laboratory Group toxicology unit for which turnover 
       was $ nil (2003: $0.7million)
*      Gross margins up to 65.8% (2003: 61.5%)
*      Diluted earnings per share up 24.5% to 6.00 cents (2003: 4.82 cents)
*      Strong cash position including short term  investments as of 31 March
       2004 with $14.2 million (2003:$6.5 million)
*      Maiden dividend announced of 0.86 cents per share

Operational Highlights:

*      Product Group adds Wyeth and Dow Corning to global customer list
*      Product Group successfully launches new CellScan Innovate and Innovate.im
       rapid diagnostic testing system and secures significant worldwide 
       customer wins
*      Product Group secures Gillette agreement to adopt Adenylate Kinase (AK)
       testing system
*      Laboratory Group secures contract with Lonza to provide both analytical
       chemistry and microbiological testing services to support the 
       qualification of raw material supply

Jay LeCoque, Chief Executive Officer of Celsis, commented:

"I am pleased to announce that Celsis has achieved another year of significant
profit growth on strong sales from our Product Group.  Customer orders continue
to increase across market segments and we have successfully launched a new
testing system that is rapidly gaining market share while strengthening our
margin position.  Our Laboratory Group finished the year strongly with fourth
quarter revenues being the largest of the year.

We are also very pleased to announce the Board will recommend a maiden dividend
of 0.86 cents per share to our shareholders.  This represents a milestone for
Celsis investors and communicates the confidence of our Board in our future
business expansion and continued ability to deliver solid and sustained earnings
growth."


                                                                     27 May 2004
ENQUIRIES:

Celsis International plc                               Tel:      [phone]
Jay LeCoque, Chief Executive Officer                   Today:    020 7457 2020
Christian Madrolle, Finance Director                   Today:    020 7457 2020

College Hill                                           Tel:      [phone]
Nicholas Nelson


Operational Review

Celsis has continued to achieve significant increases in profitability on strong
sales growth from the Product Group.  Our Product Group continues to focus on
higher margin business opportunities across market segments.  In combination
with maintaining our low cost manufacturing position, this focus on higher
margin business enables us to secure improved margins at both the premium priced
and volume intensive sides of the market.

Our Global Corporate Account Management (GCAM) team is expanding into new areas
of business as well as new geographic regions where corporate headquarters may
be present, beyond the traditional areas of GCAM focus in the US and the UK.
This enlargement of our commercial abilities increases our global business
potential and expands our core business development.

Our Laboratory Group weathered a temporary slowdown in spending by our major
pharmaceutical customers that had reversed by the end of our third quarter.
Fourth quarter revenues were the strongest of the year and we are now confident
that our Laboratory Group is poised to expand on solid business fundamentals.

As highlighted in our Interim Statement, we have completed the shut down of our
animal toxicology business and are working to strengthen our in-vitro toxicology
(non-animal) services offering.  We continue to focus on higher margin service
offerings and are leveraging our GCAM sales channel into our Laboratory Group
customer mix.

Results

Total revenues for the year ended 31 March 2004 were up 4.5% to $27.6 million
compared to $26.4 million after taking into account the withdrawal of animal
toxicology at our Saint Louis Laboratory.  This analytical service offering was
loss making and non-strategic, which represented revenue of $ Nil (2003 : $0.7
million)

Profit before taxation was up 22.5% to $4.83 million and represented 17.5% of
total revenues this year compared with a profit of $3.94 million and 14.5% of
total revenues the previous year.  The return on capital has reached 28.6%,
based on average net assets during the year.

Product Group

The Product Group, which represented 51% of group revenues this past year,
increased 14.6% to $14.0 million and is developing according to plan.  Our drive
and focus to provide our customers with leading edge microbial detection
technologies while at the same time leveraging the cost efficiencies of the
higher volume testing businesses continues to improve our ability to
competitively offer the highest quality products and superior technical and
customer service to our customer base.

Reagents represented 75.1% of Product Group revenues although we did see a
healthy increase in instrument sales, as levels of capital spending increased as
we had anticipated.  Our ability to offer a better service to our growing list
of worldwide customers was augmented with the addition of several new
distributors in Eastern Europe, Asia and Latin America.

Our Personal Care and Pharmaceutical Products business increased 18.0% and now
represents almost two thirds of our entire Products business.  Our GCAM customer
focus has continued to expand the number of instruments placed in all geographic
regions and the numbers of products tested, using our system, also continues to
increase through our dedicated technical validation services teams.

Our business growth in the pharmaceutical sector is building rapidly as the
industry begins to seriously focus on cost reduction and manufacturing
efficiencies.  This focus has become more acute in recent years during the
current climate of rising health care costs and reduced government tolerance for
passing cost increases onto health care providers or government ministries.

We are confident that our consultative sales approach which focuses on improved
manufacturing efficiencies while enhancing product quality through rapid methods
testing will resonate strongly as this focus on reducing costs by our customers
continues.  We are currently working with Wyeth on several new application
projects that could open up significant new testing opportunities for us across
the pharmaceutical sector.

Our Personal Care business remains robust and continues to expand into new
areas.  We have added Dow Corning, a raw materials supplier to many of our GCAM
customers, an example of the business opportunity expansion within manufacturing
supply chain of this industrial sector.  Within our current customer base, we
are expanding both the number of products tested and the numbers of facilities
using our testing systems.  Our approach to potential customers who can benefit
from moving away from traditional agar based methods in favour of our rapid
testing system remains as constant and focused as ever.

The rate of conversion to AKuScreenTM, our proprietary Adenylate Kinase (AK)
enzyme testing system, remains strong and we are pleased to announce that
Gillette is the latest global customer to validate this new testing system.  Our
AK technology provides significant advantages in both speed to result and
sensitivity when compared to standard ATP testing and we are now positioning
AKuScreen as our primary test offering to the personal care industry.

Our Dairy business increased 7.0% and we expect increased growth from this
segment following the successful launch of our new CellScan Innovate and
Innovate.im testing system coupled with our RapiScreen Dairy kit (patent
applied) that delivers significantly enhanced detection capabilities.  This new
system has been very well received by new customers as well as existing
customers who are looking to expand their current testing regimens.  The
Innovate.im has the potential to establish a new industry standard as our
Advance and Advance.im software accomplished in the Personal Care industry.

We continue to explore new developments to further expand the capabilities of
ATP bioluminescence and are also keenly focused on emerging microbial detection
technologies.  We are working with some of the leaders in genomics, antibody
research and other molecular-based technologies to develop leading edge,
value-adding products for our growing customer base.  We believe our GCAM sales
channel offers significant route-to-market advantages to some of our potential
partners in this technology development activity and we hope to be in a position
to announce some new business opportunities in the near future.

Laboratory Group

The Laboratory Group, which represented 49.0% of group revenues this past year,
showed a modest decline of (4.2%) to $13.6 million that followed a slowdown in
our pharmaceutical customers spending in the first half.  As stated previously,
orders were strongest in the fourth quarter of the year and orders to date this
year have been healthy and in line with expectations.

Our new operating structure aligned toward customers' needs has dramatically
improved our ability to communicate and interface with our customers.  This new
structure, with centres-of-excellence in    Chemical Sciences and Biological
Sciences, more closely aligns with the pharmaceutical market.  We have now
completed the standardization of SOPs, audit and compliance procedures across
the Laboratory Group that allows us much greater flexibility in allocating the
appropriate resources for customer projects.

Our business development team secured a strong year-end with the addition of
Lonza, leading supplier of active ingredients, chemical intermediates and
biotechnology solutions to the pharmaceutical and agrochemical industries, as a
corporate customer.  The scope of the agreement is to provide both chemical and
biological testing services to support the qualification of Lonza's raw material
supply chain in North America. The agreement with Lonza should provide high-six
figure revenues to the Laboratory Group however this year it did not have a
material impact.

We invested in a new class 100 sterility suite into our New Jersey facility and
intend to focus on medical device testing and other sterility services
offerings.  This move into class 100 services in the New Jersey  corridor of the
pharmaceutical industry underscores our intent to migrate the Laboratory Group
into higher value and higher margin service offerings to our growing list of
Laboratory Group customers.

Lastly and as mentioned above, our move into in-vitro toxicology services also
allows our Laboratory Group to offer cutting edge technologies with significant
higher margins than those of standard animal toxicology testing.  We intend to
leverage our consultative selling expertise of rapid diagnostic testing systems
into the in-vitro toxicology business development activity, as it has similar
validation issues that need to be addressed as part of the overall industrial
adoption of in-vitro toxicology testing.

Financial Review

Introduction

The consistent application of the Group's foreign exchange policy has mitigated
currency fluctuations due to the relative strength of the Euro versus the US
Dollar, during most of the financial year under  review.

The operational performance continues to be best assessed with reference to the
US Dollar, as a large component of Celsis' revenues arises in the Americas and
Asia.

Earnings and Taxation

Celsis has accumulated over the years a significant amount of tax losses and has
recognised a deferred tax credit of $1.82 million in the profit and loss account
reflecting the Board's confidence in the group's ability to deliver future
earnings.

The group's profit for the financial year before dividend was $6.66 million
against $5.16 million the previous year. The Product Group and the Laboratory
Group both contributed to the total earnings growth, but the Product Group's
contribution was significantly stronger.

Last year the Group was not in a position to declare a dividend due to the
negative reserves of the parent company. This situation has now been reversed
and the company has distributable reserves allowing it to recommend to the next
annual general meeting of shareholders to declare the payment of a dividend of
0.86 cents per share. This dividend payment will not be detrimental to the
further significant strengthening of shareholder funds.  After recognising the
new deferred tax asset, and before dividend, equity shareholders' funds have
grown 51.6% from $18.6 million to $28.2 million. After dividend the equity
shareholders' funds have grown 46.6% fro; $ 18.6 million to $27.2 million.

Fully diluted earnings for the year were up 24.5% at 6.00 cents a share compared
to 4.82 cents a share the previous year.

Gross Margin

Gross margins this year have shown remarkable growth increasing from 61.5% to
65.8%, due to our strategic focus on more profitable business opportunities,
discontinuation of unprofitable business areas, and lowering manufacturing
costs, which have delivered the expected gross margin improvements.

Operating Expenses

Our operating costs increased 6.8% from $12.69 million last year to $13.55
million this year.  Sales and marketing expenses represented 35.1% of revenues,
compared to 33.9% in the previous year, due to the continued strengthening of
our sales and marketing management teams. Administrative expenses increased to
11.1% of revenue versus 9.6% the previous year due to increased insurance and
legal costs, reflecting the state of the global insurance market.

Our research & development efforts have focused on the development of the
Innovate instrument platform and more sensitive reagents.  Our overall R&D
expenses have decreased from $891,000 to $782,000.  The R&D activities have
achieved increased efficiencies, in reducing lead times for introduction of new
products resulting from closer co-operation with the manufacturing operations.

Cash Flow

Cash generation has continued to be strong across the group with $6.5 million of
operating cash flow  this year, significantly higher than last year when it was
$5.07 million.

Capital expenditure for the year to 31 March 2004 was $1.33 million, compared
with the previous year's figure of $0.61 million, reflecting the investment made
in the new scientific data management software Nugenesis to allow the Laboratory
Group operations to be CFR21, part 11 compliant.

The total cash inflow before financing increased to $5.26 million during the
year against $4.40 million last year.  After the issue, in August 2003, of
5,349,300 new ordinary shares at 29.5p per share, raising $2.44 million, the
total cash position including cash and cash equivalents has improved
significantly to $14.2 million against $6.51 million last year, generating a
total net cash inflow of $7.69 million.

Group cash balances are invested in short-term money-market instruments
exclusively in the UK.  With a substantial proportion of the Group's revenue and
profits earned in US$, and the decision to adopt the US$ as the group's
functional currency, we are no longer subject to any significant foreign
currency transaction exposure.

Interest receivable has substantially increased from $97,000 last year to
$263,000 this year.

Balance Sheet

The inventory value has decreased further from $3.09 million, in the previous
year, to $2.76 million this year.  Most of this decrease, like last year, can be
attributed to better management of stock levels and reordering procedures.
Debtors due within one year decreased from $6.02 million to $5.92 million,
confirming the effectiveness of our credit control policies.  Current
liabilities increased from $3.31 million to $3.57 million before accrual for
dividend payment of $ 0.97 million and long term liabilities decreased from
$0.45 million to $0.28 million.  The creditors/cash ratio (acid test ratio)
before accrual for dividend payment has continued to improve to 0.25 (2003:
0.51).

The balance sheet structure has continued to strengthen, and with no long term
debt and a growing free cash generation, the Group expects that it will finance
its operating costs, normal levels of capital expenditure, and other commitments
including dividends and tax without any difficulty.

The Group may in the future have additional demands for finance, such as for
acquisitions, but has access to other sources of liquidity from banks, in
addition to the cash flow from operations, for such needs.

Treasury

The Group maintains treasury control systems and procedures to monitor foreign
exchange, interest rates, liquidity, credit and other financial risks.  Liquid
assets surplus to the immediate operating requirements of Group companies are
invested and managed centrally by Corporate Finance.

Exchange rates

Euro and Sterling-denominated transaction exposure arising from normal trade
flows both in respect of external or inter-company trade is not hedged against
US$ equivalents.  The Group's policy is to minimise the exposure of Euro and
Sterling-operating subsidiaries to transaction risk by matching local currency
income with local currency costs.  For this purpose inter-company trading
transactions are matched centrally to reduce risk.

On average the Euro strengthened 18% against the US dollar from last year to
this year.  The adverse currency impact on our manufacturing and distribution
Euro-denominated costs has been totally offset by the positive currency impact
on Euro-denominated revenues when retranslated in US Dollar.

Celsis' financial strategy is to maintain a robust financial position through
the rigorous control of costs and strong financial management of all aspects of
the business. This approach enables Celsis to generate sufficient cash to make
the appropriate investments in its business and also take advantage of external
opportunities as and when they arise.

Outlook

We are pleased with the success of our Product Group and remain bullish on its
future development in remaining a leading supplier of rapid diagnostic testing
products.  The rate of adoption of our rapid diagnostics products is increasing
and we intend to further expand our product offering through customer driven as
well as alliance partner co-developments.  We remain confident that our
Laboratory Group has the business development expertise to remain a leader in
the analytical services markets in North America, where the rate of outsourcing
laboratory services continues to increase.

The market for our products and services is expanding and we have again
demonstrated that we can grow our profits via a combination of disciplined sales
growth in targeted higher margin businesses and cost containment across
divisions. We are actively engaged in identifying new business opportunities
that can further expand the market potential of our business.  We intend to use
the same disciplined approach at higher value business opportunities that will
enhance long-term shareholder value.

                                            Jay LeCoque, Chief Executive Officer
                                             Jack Rowell, Non-Executive Chairman


Consolidated Profit and Loss Account
for the year ended 31 March 2004                                                    Unaudited        Audited
                                                                                         2004           2003
                                                                          Notes          $000           $000

Turnover                                                                               27,595        27,107
Cost of Sales                                                                         (9,449)       (10,445)

Gross profit                                                                           18,146        16,662

Overheads
Sales & marketing expenses                                                            (9,692)        (9,191)
Administrative expenses                                                               (3,072)        (2,604)
Research & development expenditure                                                      (782)          (891)
Total operating expenses                                                             (13,546)       (12,686)

Profit on ordinary activities before interest                                           4,600         3,976

Interest receivable and similar income                                                    263            97
Interest payable and similar charges                                                     (35)          (133)

Profit on ordinary activities before taxation                                           4,828          3,940

Taxation                                                                                1,829         1,220

Profit for the Financial Year                                                           6,657         5,160

Dividends                                                                                 966         5160

Retained Profit                                                                         5,691          5,160

Earnings per Ordinary Share
Earnings per Ordinary Share                                             2               6.04c          4.82c

Diluted earnings per share                                              2               6.00c          4.82c

Statement of group total recognised gains and
losses

Profit for the financial period                                                         5,691         5,160
Currency translation differences on foreign                                               499           435
 currency net investments

Total gains recognised since last annual report                                         6,190         5,595


Consolidated Balance Sheet
at 31 March 2004


                                                                               Unaudited        Audited
                                                                                    2004           2003
                                                                  Notes             $000           $000

Fixed Assets
Intangible assets                                                                  1,314         1,403
Tangible assets                                                                    4,113         3,889
Investments                                                                           24            11
                                                                                   5,451         5,303
Current Assets
Stocks                                                                             2,761         3,088
Debtors: amounts falling due after more than one year                                152            150
Debtors: amounts falling due within one year                                       5,916          6,021
Deferred tax asset                                                  1              3,559          1,228
Short-term investments                                                                 -         4,896
Cash at bank and in hand                                                          14,207         1,653
                                                                                  26,595        17,036

Creditors: amounts falling due within one year                                   (4,536)        (3,310)

Net Current Assets                                                                22,059        13,726

Total Assets less Current Liabilities                                             27,510        19,029

Creditors: amounts falling due after more than one year                            (226)          (349)
Provision for liabilities and charges                                               (51)          (102)

Net Assets                                                                        27,233        18,578

Capital and Reserves
Called up share capital                                                            1,611         1,525
Share premium account                                                             23,120        20,741
Profit and loss account                                             6              1,020        (5,170)
Reserve arising on consolidation                                                   1,482         1,482

Equity shareholders' funds                                                        27,233        18,578




Cashflow Statement
for the year ended 31 March 2004


                                                                     Notes       Unaudited        Audited
                                                                                       2004          2003
                                                                                       $000          $000
Net cash inflow from operating activities                                 3           6,502        5,072

Returns on investments and servicing of finance
Interest received                                                                       263           97
Interest paid                                                                          (35)         (133)

Net cash inflow/(outflow) from returns on investments and servicing                     228          (36)
of finance

Taxation
Corporation tax paid                                                                  (149)          (25)

Capital expenditure and financial investment
Purchase of tangible fixed assets                                                   (1,333)         (611)
Sale of tangible fixed assets                                                             9            -
                                                                                    (1,324)         (611)

Net cash outflow from capital expenditure and financial investment

Cash inflow before financing                                                          5,257        4,400

Management of liquid resources
Sale/(purchase) of short-term investments                                             4,896       (4,896)

Financing
Issue of shares                                                                       2,441             -
Proceeds from share options exercised                                                    24             -
Repayment of principal under finance leases                                           (161)         (215)
Net cash inflow/(outflow) from capital expenditure and financing                      2,304         (215)

Increase/(decrease) in cash in the year                              4               12,457         (711)



Notes to the Financial Statements (Unaudited)
for the year ended 31 March 2004

1.  Deferred tax asset                                                       Unaudited         Audited
                                                                                  2004            2003
                                                                                  $000            $000

Amounts falling due within one year                                              1,500           1,228
Amounts falling due after more than one year                                     2,059               -
                                                                                 3,559           1,228


2.  Basic & diluted profit per Ordinary Share                                Unaudited         Audited
                                                                                  2004            2003
                                                                                  $000            $000
Profit on ordinary activities after taxation                                     6,657           5,160
Basic weighted average number of Ordinary Shares in issue                  110,205,337     106,946,566
Diluted weighted average number of Ordinary Share in issue                 111,000,910     107,116,812



                                                                             
                                                                             Unaudited         Audited

3.  Reconciliation of operating profit to net cash inflow from operating activities
                                                                             
                                                                                  2004            2003
                                                                                  $000            $000
Operating profit                                                                 4,600          3,976
Depreciation of tangible fixed assets                                            1,212          1,156
Movement in provision against shares held by ESOT                                 (13)            (5)
Amortisation of intangible assets                                                   94            101
Loss on disposal of tangible fixed assets                                            1              6
Decrease in debtors                                                                179            185
Decrease in stocks                                                                 352            532
Increase in creditors                                                              128             83
Costs of fundamental reorganisation provided - provision expended                 (51)           (962)
Net cash inflow from continuing operating activities                             6,502          5,072



4.  Reconciliation of net cash flow to movement in net funds                 Unaudited         Audited
                                                                                  2004            2003
                                                                                  $000            $000

Increase/(decrease) in cash in the year                                         12,457           (711)
(Sale)/purchase of short-term investments                                      (4,896)          4,896
Repayment of finance lease and loan obligations                                    161            215
Changes in net funds resulting from cashflows                                    7,722          4,400

New finance leases                                                                   -            (68)
Exchange adjustment                                                                128             28

Movement in net funds in the year                                                7,850           4,360
Net funds at the beginning of the year                                           6,103          1,743
Net funds at the end of the year                                                13,953          6,103



Notes to the Financial Statements (Unaudited)

Continued


5.  Analysis of net funds                                                       Audited                       Unaudited
                                                                                   At 1  Cashflow    Exchange     At 31
                                                                                  April           differences     March
                                                                                   2003                            2004
                                                                                   $000      $000        $000      $000

Cash at bank and in hand                                                          1,653    12,426         128    14,207
Short-term investments                                                            4,896   (4,896)           -         -
Bank overdrafts                                                                    (35)        31           -       (4)
Finance leases                                                                    (411)       161           -     (250)

                                                                                  6,103     7,722         128    13,953



6.  Profit and loss account                                                                         Unaudited
                                                                                                         2004
                                                                                                         $000

At 1 April 2003                                                                                       (5,170)

Retained profit for the year                                                                            5,691
Exchange difference                                                                                       499

At 31 March 2004                                                                                        1,020


7.  Preparation of Preliminary Statement

The foregoing financial information, which has been prepared on the basis of the
accounting policies set out in Celsis International plc's accounts for the year
to 31 March 2003, does not amount to full accounts within the meaning of section
240 of the Companies Act 1985 (as amended).

The auditors reported on the statutory accounts for the year ended 31 March
2003; their report was unqualified and did not contain a statement under either
section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the
year ended 31 March 2004 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will
be delivered to the Registrar of Companies following the Company's Annual
General Meeting.

8.  Dividend

The Directors have decided to recommend to the Annual General Meeting of
Shareholders the declaration of a dividend of  0.86 cents per share.  The
dividend will be payable, subject to approval at the Annual General Meeting, on
28 August 2004 to shareholders on the register on 30 July 2004.

9.  Annual Report and Accounts

Copies of the Annual Report and Accounts will be sent to holders of Celsis
International plc's Ordinary Shares. Copies of this announcement and of the
Annual Report and Accounts will be made available to the public at Celsis
International plc's offices at Suite 15, Lyndon House, Kings Court, Newmarket,
CB8 7SG, UK.




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