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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Genosis | LSE:GNOS | London | Ordinary Share | GB00B0NVFD79 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 1.125 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:5662R Genosis PLC 04 April 2008 For Immediate Release 4 April 2008 GENOSIS PLC Preliminary Results Announcement for the year ended 31 December 2007 Genosis PLC (AIM - GNOS), the AIM listed company, specialising in consumer products for reproductive health, announces its preliminary results for the year ended 31 December 2007. Highlights * Introduction of the Fertell couples test into the US market and on www.fertell.com for the first time in June 2007. CVS and Longs Drugs, two of the largest drug store chains in the US, are selling the product; * Launch in February 2007 of the Fertell ovarian reserve test on the UK high street through Alliance Boots and through www.fertell.co.uk; * Secondary equity financing of £2.3million (gross) completed in June 2007. * Initial stocking orders in the US were below expectations, and ongoing order levels in the second half of the year have been disappointing, despite the extensive media campaign. Recently, the Company announced a strategic review of operations given the slower than anticipated take up of the product in the US and has decided to place the Company and its assets up for sale. In addition to its IP portfolio the Company has tax losses of £12 million and cash and other assets. * The President of Genosis' operations in the US, Mr Bob Thompson left the Group to pursue other interests. Key financials: 12 months to 12 months to 31 Dec 2007 31 Dec 2006 £'000 £'000 Revenue 856 221 Gross loss (103) (80) Operating loss (4,464) (3,954) Cash at bank 1,759 3,632 Loss per share (pence) (17.0p) (23.5p) For further details, please contact: Today on: Genosis plc Paul Bateman, Jonathan Pockson +44 (0)14 8377 4050 Buchanan Communications Lisa Baderoon +44 (0)20 7466 5000 Evolution Securities Tim Worlledge, Bobbie Hilliam +44 (0)20 7071 4300 Commercial and Operations The Group's principal activity is the development and commercial exploitation of technology in the field of human reproduction. This Commercial and Operations Report and the Financial Report which follows are addressed solely to the shareholders of Genosis PLC and have been prepared to meet the statutory purpose of assisting shareholders to assess the Company's strategies and their potential for success. Forward looking statements included in these reviews should not be relied upon by shareholders or any other party and should not be used for any other purpose and they are included here, in good faith, based simply upon the knowledge and information available to the Directors up to the time of their approval of this report. These statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. Genosis is an AIM listed consumer products company focused on reproductive health. Fertell is the world's only US Food and Drug Administration ("FDA") cleared "at home" fertility test for men and women. The product has been sold throughout the UK and Ireland since 2006 through Alliance Boots ("Boots"). From February 2007 the Company extended the range of Fertell products available from Boots with the launch of its ovarian reserve test. Sales in the UK have been broadly in line with expectations. In June 2007 the Company successfully completed a secondary fundraising of £2.3million. The proceeds were used to help fund Genosis' US consumer marketing campaign and also to cover other overhead and marketing expenses. Also in June 2007, Genosis launched the Fertell product in the US through the chain drugstores CVS and Longs Drugs. However, despite being well accepted by the media on launch, unit sales of Fertell through retail have been significantly below expectations. This has had a detrimental impact upon gross margins and operating losses. In September 2007, the Company announced that due to the very disappointing US retail sales, it was reviewing its strategic options and had also significantly reduced its ongoing operational costs. The Fertell product The Fertell couples kit, comprising one male and one female fertility testing device, is the only over the counter ("OTC") product available with FDA clearance on the high street that allows couples to test accurately their fertility quickly and simply in the privacy of their own home. Fertell addresses the fact that fertility is a "couple" issue, since successful conception is dependent on both partners. However, since it is usually the woman who leads the family planning efforts, Fertell is positioned as a home-use OTC product, targeting the female-driven nature of the purchase. The positioning is focused on: Early confirmation - to save valuable time during the process of trying to conceive, in order to take the most appropriate course of action; Convenience, economy and privacy - enabled by the home-use of the test; Ability to ease the psychological stress and reduce anxiety, prior to the one year timeline - recommended under National Institute for Health and Clinical Excellence guidelines; and Control - allowing couples to determine for themselves important decisions about fertility planning. CURRENT TRADING AND OUTLOOK Fertell went on sale in the US in June 2007 and is being sold by CVS, the largest drug store chain in the US with over 6,000 stores across 43 states and through Longs Drugs with over 500 stores on the west coast. The product launch generated good media coverage across print, television, radio and online. Notably, Fertell was featured on "Good Morning America" (ABC News), "The Early Show" (CBS) and "The Big Story" (Fox News). The PR programme was complemented by an advertising campaign across print and web media. Despite Genosis' significant US marketing launch campaign, US sales for the period to 31 December 2007 were well below forecast and extremely disappointing. Cash at the end of December 2007 was £1.8million. BUSINESS RISKS AND GOING CONCERN The Directors have identified specific risks of the business. Genosis has only one product, Fertell, and its future is totally dependent upon that product. In addition, the Group is dependent upon key distributors to retail Fertell in the UK and US markets. Competition may also arise in the future and also customers may not be able to distinguish readily between different product categories in the area of human fertility. Genosis' business depends on products and services provided by third parties, if there are problems with those suppliers and the resultant quality and sourcing of product then Genosis may not be able to find replacement manufacturers on a timely basis or at all. The Directors believe that the key market for the success of Fertell is the USA. Despite the extensive media campaign, US sales since June 2007 have not reached the targets set and have been disappointing. The Group have an ongoing commitment to this marketing campaign in the short-term. The ability of the Group to continue as a going concern is dependent on the generation of future sales and reduction of costs. In the light of this information, while the Group will continue with the US marketing campaign in the short-term, the Directors are now reviewing their strategic options with regards to the company and, in the meantime, are carrying out a review of operations so as to reduce costs in the absence of an immediate and significant increase in sales. The Directors have considered detailed profit and loss account and cash flow forecasts for different strategic options and have a reasonable expectation that the Group has adequate resources to continue as an operational business for the foreseeable future. These financial statements have been prepared on the going concern basis, however, material uncertainty remains over the Group's ability to generate future sales and to reduce costs, which may cast significant doubt on the ability of the Group to continue as a going concern. Therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. These financial statements do not contain any adjustments that would result if the company was not able to continue as a going concern as it is not practicable to determine or quantify them. However, such adjustments might include the impairment of certain intangible, tangible and current assets. Financials ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) For all periods up to and including the year ended 31 December 2006, the Group prepared its financial statements in accordance with United Kingdom General Accepted Accounting Practice (UK GAAP). The Group's financial statements for the year ending 31 December 2007 are the first annual financial statements that comply with International Financial Reporting Standards (IFRS). This financial information is therefore prepared in accordance with IFRS. All comparative information has been restated to comply with the new accounting policies adopted. The most significant change involved in the adoption of IFRS is the creation of a foreign exchange reserve as required under IAS 21 (The Effects of Changes in Foreign Exchange Rates). The change to equity arising from the introduction of IFRS is a credit of £211k as at 1 January 2006 following a fair value adjustment required under IAS 32 (Financial Instruments: Disclosure and Presentation) and IAS 39 (Financial Instruments: Recognition and Measurement) and a credit of £7k as at 31 December 2006. RESULTS Group revenue was £0.9 million (2006: £0.2 million) resulting entirely from the sale of the Fertell product. The Group's gross loss for the year was £103k (2006: loss £80k). During 2007 the cost of sales was adversely impacted by the high costs of low volume manufacturing runs, the write off of obsolete components and reflects the relatively low volumes of production. Operating expenses include charges in relation to the Group's share option plans of £50k (2006: £100k) The Group's operating loss for the year was £4,464k (2006: £3,954k). Net interest income was £18k (2006:£38k) mainly comprising the balance of interest received on cash deposits and the costs of servicing the venture loan taken out on 31 March 2005. The Group received payment of a tax credit during the year (relating to the 2006 trading year) of £192k (2006: £60k) in respect of the UK government's R&D tax credit scheme and intends to apply for the payment of a credit in respect of 2007, however the Directors have been prudent in not recognising this in the current year prior to submission to and agreement by HM Revenue and Customs. Basic loss per share was 17.0p (2006: loss of 23.5p) based on a weighted average number of shares in issue of 25.1 million (2006: 15.5 million). The Group employed 7 people at 1 January 2008 (including 2 Non-Executive Directors) (1 January 2007: 17, of whom 2 were Non-Executive Directors). CASH FLOW The Group's net decrease in cash and cash equivalents for the year was £1.9 million (2006: net cash decrease of £4.2 million) of which the main elements were: *Cash outflow from operating activities £3.5 million (2006: £3.9 million); *Repayment of loans £0.5 million (2006: £0.4 million); *Cash from share issues £2.3 million (2006: £1k); *Working capital fell to £1.3 million (2006: £3.4 million); and *Cash at the year end was £1.8 million (2006: £3.6 million). FUNDING The Group raised external funding during 2007 of £2.3 million through the issue of further ordinary shares. The venture loan, originally drawn down in March 2005 is being repaid in 36 monthly instalments as set out in the loan agreement. The principal amount of the loan outstanding at 31 December 2007 was £0.1 million (2006: £0.6 million). The loan was fully repaid on 1st February 2008. Consolidated profit and loss account for the year ended 31 December 2007 2007 2006 £'000 £'000 Revenue 856 221 Cost of sales (959) (301) Gross loss (103) (80) Distribution costs (2,114) (1,690) Administrative expenses (1,312) (986) Other expenses (935) (1,198) Operating loss (4,464) (3,954) Interest receivable 120 246 Interest payable (102) (208) Fair value charges - 211 Loss before tax (4,446) (3,705) Income tax credit 192 60 Loss after tax (4,254) (3,645) Loss per share Basic (17.0p) (23.5p) Diluted (17.0p) (23.5p) All amounts derive from continuing operations. Consolidated statement of changes in equity at 31 December 2007 Attributable to equity holders of the group Foreign Share Share Other Retained exchange capital premium reserves deficit reserve Total £'000 £'000 £'000 £'000 £'000 £'000 At 1 January 2006 1,549 8,430 8,270 (11,126) - 7,123 Loss for the period - - - (3,645) - (3,645) Foreign currency - - - - (61) (61) translation difference Total recognised loss for - - - (3,645) (61) (3,706) the period Credit in respect of share - - - 101 - 101 option plans Issued share capital 1 - - - - 1 At 31 December 2006 1,550 8,430 8,270 (14,670) (61) 3,519 Loss for the period - - - (4,254) - (4,254) Foreign currency - - - - (20) (20) translation difference Total recognised loss for - - - (4,254) (20) (4,274) the period Credit in respect of share - - - 52 - 52 option plans Issue of share capital 1,784 535 - - - 2,319 At 31 December 2007 3,334 8,965 8,270 (18,872) (81) 1,616 Group balance sheet as at 31 December 2007 2007 2006 £'000 £'000 Assets Non-current assets Intangible assets 132 123 Property, plant and equipment 114 153 Total non-current assets 246 276 Current assets Inventories 376 373 Trade and other receivables 76 470 Cash and cash equivalents 1,759 3,632 Total current assets 2,211 4,475 Total assets 2,457 4,751 Equity and liabilities Equity attributable to equity holders Share capital 3,334 1,550 Share premium 8,965 8,430 Other reserve 8,270 8,270 Retained deficit (18,872) (14,670) Foreign exchange reserve (81) (61) Total equity 1,616 3,519 Non-current liabilities Long-term borrowings - 146 Total non-current liabilities - 146 Current liabilities Trade and other payables 588 539 Current portion of long-term borrowings 146 505 Short-term provisions 107 42 Total current liabilities 841 1,086 Total liabilities 841 1,232 Total equity and liabilities 2,457 4,751 These financial statements were approved by the Board of Directors on 14th March 2008. Consolidated cash flow for the year ended 31 December 2007 2007 2006 £'000 £'000 Cash flows from operating activities Operating loss (4,464) (3,954) Adjustments to reconcile operating loss to net cash flows from operating activities Depreciation 65 59 Amortisation 244 93 Share option plans 52 101 Foreign exchange (17) (105) (4,120) (3,806) Working capital adjustments Decrease in trade and other receivables 394 327 Increase in inventories (3) (100) Increase/(decrease) in payables 52 (257) Increase in provisions 65 38 Cash generated from operations (3,612) (3,798) Interest paid (102) (208) Taxation received 192 60 Net cash used in operating activities (3,522) (3,946) Cash flows from investing activities Purchase of property, plant and equipment (26) (56) Purchase intangibles (253) - Interest received 120 246 Net cash from investing activities (159) 190 Cash flows from financing activities Proceeds from issue of share capital 2,319 1 Repayment of long-term borrowings (505) (397) Net cash from/(used in) financing activities 1,814 (396) Net decrease in cash (1,867) (4,152) Exchange movement in cash (6) 27 Net decrease in cash and cash equivalents (1,873) (4,125) Cash and cash equivalents at the beginning 3,632 7,757 of the period Cash and cash equivalents at the end of the 1,759 3,632 period Notes to the preliminary results announcement for the year ended 31 December 2007. 1. Nature of financial information These financial results do not constitute the Group's full statutory financial statements for the year ended 31 December 2007 or 2006 however they have been extracted from those statutory financial statements. Statutory accounts for 2006 have been delivered to the Registrar of Companies and those for 2007 will be delivered following the Company's Annual General Meeting. The auditors have reported on these accounts and the audit reports for Genosis PLC for both the years ended 31 December 2007 and 2006 were unqualified but modified to include an emphasis of matter paragraph due to the uncertainty (as discussed below) which may cast significant doubt on the Group's ability to continue as a going concern. The audit reports for both years did not contain statements under section 237(2) of the Companies Act 1985 (regarding adequacy of accounting records and returns) or under section 237(3) (regarding provision of necessary information and explanations). The consolidated results of Genosis PLC for the year to 31 December 2007 have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee interpretations that have been adopted for use in the European Union, and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The comparative financial information for the year ended 31 December 2006 has been extracted from the published accounts and restated to reflect IFRS adjustments. Going concern The Directors believe that the key market for the success of Fertell is the USA. Despite the extensive media campaign, US sales since June 2007 have not reached the targets set and have been disappointing. The Group have an ongoing commitment to this marketing campaign in the short-term. The ability of the Group to continue as a going concern is dependent on the generation of future sales and reduction of costs. In the light of this information, while the Group will continue with the US marketing campaign in the short-term, the Directors are now reviewing their strategic options with regards to the company and, in the meantime, are carrying out a review of operations so as to reduce costs in the absence of an immediate and significant increase in sales. The Directors have considered detailed profit and loss account and cash flow forecasts for different strategic options and have a reasonable expectation that the Group has adequate resources to continue as an operational business for the foreseeable future. These financial statements have been prepared on the going concern basis, however, material uncertainty remains over the Group's ability to generate future sales and to reduce costs, which may cast significant doubt on the ability of the Group to continue as a going concern. Therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. These financial statements do not contain any adjustments that would result if the company was not able to continue as a going concern as it is not practicable to determine or quantify them. However, such adjustments might include the impairment of certain intangible, tangible and current assets. 2. Loss per share Fully diluted loss per share is calculated after showing the effect of outstanding options in issue. The calculation of loss per share is based on the following loss and numbers of shares: 2007 2006 £'000 £'000 Loss on ordinary activities after taxation (4,254) (3,645) Weighted average number of shares ('000): For basic earnings per share 25,079 15,496 Dilutive effect of share options - - For fully diluted earnings per share 25,079 15,496 Basic and diluted loss per share (pence) (17.0) (23.5) 3. Share capital Share capital AUTHORISED ISSUED Ordinary shares of £0.10 Ordinary shares of £0.10 Number Nominal Number Nominal At 31 December 2006 20,000,000 £2,000,000 15,496,556 £1,549,656 Shares issued during the 17,834,611 £1,783,461 17,842,515 £1,784,251 period At 31 December 2007 37,834,611 £3,783,461 33,339,071 £3,333,907 7,904 Ordinary shares were issued on 11 April 2007 following the exercise of certain share options at an exercise price of £0.10 per share. 17,834,611 new Ordinary shares of £0.10 per share were authorised and issued at £0.13 per share on 19 June 2007. Share premium The share premium account has been established to represent the excess of the issued share price over the nominal value of the shares. Foreign exchange reserve The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. Other reserves The other reserve represents the share premium account of Genosis Inc, and the reserve created at the time of the group reconstruction that took place in 2005. This represents the difference between the nominal value of the shares issued as consideration and the nominal value of the shares acquired in the reconstruction. 4. Segmental reporting The Group has one line of business operating in both UK and US. 2007 2006 £'000 £'000 Revenue UK 259 221 US 597 - 856 221 Operating loss UK (2,427) (3,241) US (2,037) (713) (4,464) (3,954) All of the Group's operating assets and liabilities are located in the UK with the exception of net operating liabilities of £90k ($181k) (2006: net liabilities of £92k ($181k)) located in the USA. All the Group's capital expenditure occurred in the UK. Depreciation and amortisation charges of £307k were incurred in the UK and £2k was incurred in the US. NOTES TO EDITORS (THIS DOES NOT FORM PART OF THE PRELIMINARY RESULTS ANNOUNCEMENT) Genosis is a consumer products company focused on reproductive health. Genosis' first product Fertell(R), an at-home fertility testing kit for men and women, went on sale in the UK in January 2006. Fertell(R) was designed and developed by Genosis and is the first and currently the only OTC product on the high street that allows couples to accurately test both male and female fertility quickly and simply in the privacy of their own home. Genosis' product Fertell(R) makes the breakthrough of taking accepted technology from the laboratory into easy to use fertility testing devices for testing at home. Fertell(R) is easy to use. The woman's test is used in a similar way to a pregnancy test but, unlike any other test that is available for use at home, it assesses the quality of the egg she releases. For the male test, the man has to produce a sample, push a button and twist a switch and, in just over an hour, the test will show him if he has enough motile sperm that can swim to reach an egg (based on WHO standards). Fertell(R) has been through clinical trials in the UK and the US and has been shown to be more than 95% accurate when compared with established laboratory tests run in fertility clinics. Fertell(R) has been cleared for sale in the US by the FDA and has received CE marking for sale in Europe. The Company's first retail distribution agreement is with Alliance Boots, the UK's biggest healthcare retailer with more than 1200 stores nationwide. The Boots Distribution Agreement is exclusive for the UK until November 2008. Boots sells Fertell(R) through its high street branches in the UK and the Republic of Ireland and through the internet. The Fertell(R) kit is also available through Genosis' own website, www.fertell.co.uk. In the US the product is sold through CVS and Longs Drugs and also through the internet www.fertell.com. The market for Fertell(R) could potentially be quite large. There are in excess of 500 million couples of reproductive age worldwide, and approximately 1 in 7 or about 80 million have problems conceiving. There is a significant increase in the industrialised world in the number of women deferring childbearing until after 30. This has a marked effect on fertility. Although male factor infertility is the single most common cause of infertility, the key prognostic indicator of a couple's fertility is the age of the female partner, with fertility rates, upon treatments such as IVF, halving between the ages of 30 and 38. In the UK, couples most frequently turn to their medical providers for assistance, but typically are advised to wait and try to conceive for a further period of up to 12 months before returning for tests and treatment. The key benefit of Fertell(R) is that it allows men and women to assess their fertility status in the privacy of their own home and, the earlier couples can identify whether a problem exists, the earlier they can seek treatment and the more likely they are to conceive. www.genosis.com www.fertell.com www.fertell.co.uk - E N D S - This information is provided by RNS The company news service from the London Stock Exchange END FR IJMATMMMMBRP
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