RNS Number:0451O
Genetix Group PLC
29 July 2003
Genetix Group plc announces Interim Financial Results
for the six months ended 30 June 2003
New Milton, UK, 29 July 2003 - Genetix Group plc (LSE:GTX), the genomics and
proteomics technology group, today announces its interim financial results for
the six months ended 30 June 2003.
Summary:
* Sales of #4.9 million (2002: #6.3 million) in continuing difficult trading
environment
* Pre-tax profit of #0.4 million (excluding goodwill of #0.2 million) (2002:
#1.1 million); pre-tax profit #0.2 million (2002: #1.0 million)
* Sustained investment in R&D and sales and marketing
* Strengthened sales presence in key US market
* New aQuire scanner successfully launched; aliQuot micro-dispenser ready for
launch
* Cash balance increased to #21.4 million (2002: #21.1 million)
Commenting on the results, Mark Reid, Chief Executive of Genetix, said:
"In line with many other companies in our sector, Genetix faced challenging
conditions throughout the first six months of 2003. Difficulties for the
biotechnology sector in raising funds, cutbacks and delays in academic grants,
and pressure on pharmaceutical companies to orientate their R&D towards
late-stage products have put pressure on supplier companies such as Genetix. We
have reacted by sustaining investment in R&D and sales and marketing, to ensure
we will benefit fully from the expected upturn in our core markets. In
particular, we are focusing our new products more towards the biopharmaceutical
sector, strengthening our US sales team through key appointments and
concentrating on improving sales opportunities across all areas of the business.
Despite these tough conditions, Genetix remains profitable overall and
financially strong with #21.4 million of cash in the bank and an innovative
pipeline of new products to generate future revenue."
Enquiries:
Genetix Group plc
Mark Reid, Chief Executive
Gary Corsi, Finance Director
Tel: 01425 624600
Financial Dynamics
Jonathan Birt/Sarah MacLeod
Tel: 020 7831 3113
The release will be available on the Company's website: www.genetix.com
Notes to Editors
About Genetix Group plc
Genetix Group plc is leading developer of automated systems for the
understanding of systems biology. Genetix made a significant contribution to
the Human Genome Project by supplying high-throughput equipment to seven of the
leading eight laboratories in the consortia. Genetix, through its R&D expertise
and scientific resource, is committed to the continual development of innovative
solutions to accelerate the rate of global scientific discovery. Genetix is
quoted on the London Stock Exchange and is based in New Milton, Hampshire, UK.
Chairman's Statement
Financial review
Genetix generated turnover of #4.9 million in the first six months of the year.
Like many companies in our sector, we encountered cash conservation among
customers that has slowed the pace of order placement. Consequently, turnover
was down 23% compared to the same period last year and the resultant loss of
gross margin produced #0.4 million profit before tax (excluding goodwill of #0.2
million).
Sales of instruments fell 29% to #3.2 million compared with #4.5 million in the
same period last year; sales of consumables and services were down 9% to #1.7
million from #1.9 million in 2002.
The Group's gross margin was stable at 49% (2002: 50%). An operating profit of
#0.1 million (excluding goodwill of #0.2 million) was achieved despite increased
investment in sales and marketing expenditure and continued commitment to
research and development. R&D expenditure was #0.7 million (2002: #0.7 million)
before taking credit for UK governmental LINK grant recoveries of #0.1 million
(2002: nil).
The Group's earnings per share excluding goodwill were 0.49p (2002: 1.11p).
In May 2003, Genetix purchased and cancelled 1,000,000 ordinary shares at a
price of 24p.
The Group generated cash during the first six months through careful management
of working capital, interest received and modest capital expenditure
requirements. Cash increased by #0.7 million (including exchange gains) before
funding the share buy-back of #0.2 million, bringing the balance at the end of
June 2003 to #21.4 million.
The current intention of the Directors is that any earnings will be retained in
the business and no dividend is proposed for 2003.
Operational review
Despite the challenging economic climate, Genetix continued to make progress
against its key objectives for 2003.
We established four business groups to concentrate our sales opportunities on
our main areas of interest - Picking, Microarraying, Liquid Handling and
Consumables and Services. This is the first stage of a reallocation of
responsibilities within the business, with direct accountability for the
strategic development of our product groups. By the fourth quarter of 2003, we
will have completed the recruitment of key people to operate the new structure.
We recruited a senior sales executive to manage North America (which now
represents 52% of total sales) and have added sales staff for consumables and
applications support, based in our Boston office. In the second half of the
year, we will be recruiting another US sales person to cover the mid-West
territory.
We have made further improvements to our aQuire scanner since its launch at the
end of 2002, including new software and imaging. We have already made initial
sales and plan to follow this up with marketing campaigns during the second half
of the year.
Our new micro-dispensing instrument, the aliQuot, has moved from prototype to
finished product within the last six months. We are excited about prospects for
this product in view of its potential applications within the pharmaceutical
sector and, in general, the wider opportunities for new liquid handling products
over the medium-term given our growing expertise in this area.
We have developed a new cell picker based on our QPix and gelPix technologies
that will be launched at the end of 2003. This product has many applications
within the cell biology sector, with the bio-pharmaceutical market being
targeted as one of the fastest growing areas of interest for Genetix.
Research collaborations
We continue to make good progress on the LINK research project for
protein-protein interaction. Genetix has produced its first prototype of an
automated system and validated it against the standard manual method of
measuring protein-protein interactions. We have also demonstrated a method of
measuring protein-protein interactions in mammalian cells using modified Genetix
equipment.
Our expertise in genomics was further recognised by the award of an EU grant to
investigate environmental effects on gene regulation. Genetix is contracted to
provide genomics-based reagents and services worth Euro0.2 million over 3 years to
members of the consortium.
Outlook
Genetix continues to be a significant player in the markets it serves and we
remain confident in the Company's ability to increase its share of these as well
as the opportunities to enter new markets. Whilst the external environment
continues to remain tough, we will continue to do what is necessary to position
the business to take advantage of current and future opportunities arising,
including the positioning of new products into growing sectors.
In view of the continuing uncertain trading environment, we remain cautious
about prospects for 2003, but anticipate maintaining a strong cash position of
over #20 million throughout the year. We are encouraged by recent signs of a
return of investor confidence in the biotech sector on the back of promising
clinical data and product approvals, which underline the long-term promise of
the industry. We believe that the changes we are making in sales and marketing
will begin to improve our sales performance towards the end of the year and
leave Genetix well positioned to respond to the challenges of this dynamic
market place.
John Morgan
Chairman
Unaudited consolidated profit & loss account
for the six months ended 30 June 2003
Unaudited Unaudited Audited
first half first half full year
2003 2002 2002
#000 #000 #000
______ ______ ______
Turnover - continuing operations 4,889 6,329 12,572
Cost of sales (2,503) (3,186) (6,255)
______ ______ ______
Gross profit 2,386 3,143 6,317
Research & development (591) (689) (1,448)
Sales & administrative expenses (1,743) (1,686) (3,356)
Amortisation of goodwill (181) (181) (362)
______ ______ ______
Total administrative expenses (2,515) (2,556) (5,166)
______ ______ ______
Operating (loss) / profit - continuing operations (129) 587 1,151
Net interest receivable 379 381 799
______ ______ ______
Profit on ordinary activities before taxation 250 968 1,950
Tax on profit on ordinary activities (75) (290) (585)
______ ______ ______
Profit for the period 175 678 1,365
______ ______ ______
Adjusted earnings per share 0.49p 1.11p 2.23p
Earnings per share 0.24p 0.87p 1.76p
Unaudited consolidated statement of total recognised gains and losses
for the six months ended 30 June 2003
Unaudited Unaudited Audited
first half first half full year
2003 2002 2002
#000 #000 #000
______ ______ ______
Profit for the period 175 678 1,365
Currency translation differences on foreign
currency net investments (5) (8) (28)
______ ______ ______
Total recognised gains and losses for the
period 170 670 1,337
______ ______ ______
Unaudited consolidated balance sheet
at 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
#000 #000 #000
______ ______ ______
Fixed assets
Intangible assets 6,627 6,996 6,826
Tangible assets 2,291 2,366 2,329
Investments 1 3 1
______ ______ ______
8,919 9,365 9,156
______ ______ ______
Current assets
Stocks 1,518 1,929 1,522
Debtors 2,081 2,161 2,255
Cash at bank and in hand 21,372 21,050 20,867
______ ______ ______
24,971 25,140 24,644
Creditors due within one year (2,813) (2,824) (2,654)
______ ______ ______
Net current assets 22,158 22,316 21,990
______ ______ ______
Total assets less current liabilities 31,077 31,681 31,146
Provisions for liabilities and charges (403) (238) (401)
______ ______ ______
Net assets 30,674 31,443 30,745
______ ______ ______
Capital and reserves
Share capital, premium, merger and other reserves 25,464 25,463 25,464
Profit and loss account 5,210 5,980 5,281
______ ______ ______
Equity shareholders' funds 30,674 31,443 30,745
______ ______ ______
Unaudited reconciliation of movements in consolidated shareholders' funds
for the six months ended 30 June 2003
Unaudited Unaudited Audited
first half first half full year
2003 2002 2002
#000 #000 #000
______ ______ ______
Profit for the period 175 678 1,365
Currency translation differences (5) (8) (28)
Share capital issued (net of costs) - 20 21
Share capital re-purchased (including fees) (241) - (1,366)
______ ______ ______
Net movement in shareholders' funds (71) 690 (8)
Opening shareholders' funds 30,745 30,753 30,753
______ ______ ______
Closing shareholders' funds 30,674 31,443 30,745
______ ______ ______
Unaudited consolidated cash flow statement
for the six months ended 30 June 2003
Unaudited Unaudited Audited
first half first half full year
2003 2002 2002
#000 #000 #000
______ ______ ______
Net cash inflow from operating activities 593 456 1,234
______ ______ ______
Returns on investments and servicing of finance
Interest received 379 381 808
Interest paid - - (9)
______ ______ ______
379 381 799
______ ______ ______
Taxation
Corporation tax (paid) / refund (259) 183 13
______ ______ ______
Capital expenditure and financial investment
Purchase of tangible fixed assets (99) (153) (289)
Purchase of intangible fixed assets (37) (33) (61)
Sale of tangible fixed assets 7 - -
______ ______ ______
(129) (186) (350)
______ ______ ______
Net cash inflow before use of liquid
resources and financing 584 834 1,696
______ ______ ______
Financing
Issue of share capital (net of expenses) - 20 21
Share capital re-purchased (including expenses) (241) - (1,366)
______ ______ ______
Net cash (outflow) / inflow from financing (241) 20 (1,345)
______ ______ ______
Increase in cash 343 854 351
______ ______ ______
Notes to the unaudited interim results
1. Basis of preparation of interim report
The interim financial information of Genetix Group plc is made up to 30 June
2003. It has been prepared in accordance with the accounting policies set out
in, and is consistent with, the audited financial statements for the year ended
31 December 2002.
The results for the year ended 31 December 2002 have been extracted from the
audited financial statements, which have been filed with the Registrar of
Companies. The auditor's report on those accounts was unqualified.
The unaudited profit and loss account for each of the six month
periods and the unaudited balance sheet as at 30 June 2003 do not amount to full
accounts within the meaning of section 240 of the Companies Act 1985 and have
not been delivered to the Registrar of Companies.
The interim report was approved by the Board of Directors on 29 July
2003.
2. Turnover
In the opinion of the Directors, the Group operates only one class of business,
namely the provision of instrumentation, consumables and services for systems
biology. Turnover can be analysed as follows:
Unaudited Unaudited Audited
first half first half full year
2003 2002 2002
#000 #000 #000
______ ______ ______
By geographic destination
UK 683 992 1,487
Rest of Europe 1,066 1,329 2,402
North America 2,563 2,767 6,565
Rest of World 577 1,241 2,118
______ ______ ______
4,889 6,329 12,572
______ ______ ______
Unaudited Unaudited Audited
first half first half full year
2003 2002 2002
#000 #000 #000
______ ______ ______
By type
Instrumentation 3,179 4,451 9,063
Consumables and services 1,710 1,878 3,509
______ ______ ______
4,889 6,329 12,572
______ ______ ______
3. Tax on profit on ordinary activities
The tax charge for the period is based upon the estimated effective rate for the
year of 30% (December 2002 - 30%).
4. Earnings per share
Adjusted earnings per share are calculated on earnings of #175,000 (2002:
#678,000) adjusted for amortisation of goodwill of #181,000 (2002: #181,000) and
weighted average shares in issue of 72,461,119 (2002: 77,532,696).
Earnings per share are calculated on earnings of #175,000 (2002: #678,000) and
weighted average shares in issue of 72,461,119 (2002: 77,532,696).
5. Notes to the consolidated cash flow statement
(a) Reconciliation of operating profit to net cash inflow from operating
activities
Unaudited Unaudited Audited
first half first half full year
2003 2002 2002
#000 #000 #000
______ ______ ______
Operating (loss) / profit (129) 587 1,151
Depreciation and amortisation of patents and licences 192 181 367
Amortisation of goodwill 181 181 362
(Profit) / loss on sale of fixed assets (7) - 2
Decrease / (increase) in stocks 4 (152) 255
Decrease / (increase) debtors 175 (385) (479)
Increase / (decrease) in creditors 339 98 (50)
Exchange gain on foreign currency (162) (54) (374)
______ ______ ______
Net cash inflow from operating activities 593 456 1,234
______ ______ ______
(b) Analysis of changes in net funds
At 1 January Cash Exchange At 30 June
2003 flow movement 2003
#000 #000 #000 #000
______ ______ ______ ______
Cash at bank and in hand 20,867 343 162 21,372
______ ______ ______ ______
Total 20,867 343 162 21,372
______ ______ ______ ______
6. Copies of this report are being sent to all shareholders and copies
are available from the Company's registered office at Queensway, New Milton,
Hampshire, BH25 5NN.
Independent review report by the auditors to Genetix Group plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2003 which comprise the consolidated profit and
loss account, the consolidated statement of total recognised gains and losses,
the consolidated balance sheet, the consolidated cash flow statement, and the
related notes 1 to 6, together with the reconciliation of movements in
consolidated shareholders' funds. We have read the other information contained
in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the company in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the Company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to interim figures should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Deloitte & Touche
Chartered Accountants
Southampton
29 July 2003
This information is provided by RNS
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