RNS Number:4487Z
Axis-Shield PLC
08 March 2006
8 March 2006
AXIS-SHIELD PLC
PRELIMINARY RESULTS FOR YEAR ENDED 31 DECEMBER 2005
Axis-Shield plc (LSE:ASD, OSE:ASD), the in vitro diagnostics (IVD) company based
in Scotland and Norway, today announces its preliminary results for the year
ended 31 December 2005. These results have been prepared under International
Financial Reporting Standards ("IFRS").
Financial Highlights
* Revenues up 11% at #58.2 million, compared to 2004 turnover of #52.3
million
* First annual net operating profit of #1.9 million before tax (2004: loss
of #0.8 million)
* Net operating profit of #1.9 million includes redundancy costs of #0.5
million
* Gross margins improved to 53.9% (2004: 53.3%)
* R&D expenditure reduced as planned to #8.7 million (2004: #9.9 million)
* Strong balance sheet with cash of #11.5 million at year end (2004: #11.9
million)
Operating Highlights
* AFINIONTM Point-of-Care System and first test for HbA1c (for monitoring
treatment compliance in diabetes) received marketing clearance from US FDA;
CLIA waiver granted post-year end; manufacturing scale up on track for US
launch in H2 2006
* Abbott granted exclusive distribution rights for AFINIONTM in the USA
* NycoCardTM sales showed increase of 14.8% to #15.7 million (2004: #13.7
million)
* Homocysteine sales improved by 26% to #8.2 million (2004: #6.5 million),
with units reaching 10.1 million
* Sustained successful sales of BNP for diagnosis of heart failure on
Abbott's AxSYM(R) platform, and launch on Abbott IMx(R), generating total
revenues of #3.2 million, up 79% (2004: #1.8 million)
* Sales of anti-CCP kit for effective detection of early rheumatoid
arthritis reached #1.5 million (2004: #936,000)
* First markers developed under the Abbott AxSYM(R)xtra menu extension
programme due for launch H1 2006
* New Abbott contract for anti-CCP and homocysteine on its high throughput
ARCHITECT(R) system
Commenting on the results, Nigel Keen, Chairman of Axis-Shield said:
"This has been a very successful year for the Company with good all-round
performances across all divisions, enabling us to sustain the profitability we
reported at the half year and record the first full year of profits since the
1999 merger of Axis and Shield. This was achieved on the strength of our
existing products and without the benefit of sales from the AFINIONTM system,
the substantive roll-out of which is now planned for the second half of 2006, or
from our other major investment in developing new Axis-Shield labelled markers
for Abbott's AxSYM(R) platform."
"Market feedback on AFINIONTM has been very positive and we are confident that
this new system will make a substantial contribution to revenues going forward.
Additionally we will launch the first AxSYM(R)xtra tests in the first half of
2006 and continue the new programme to develop two of our tests for the
ARCHITECT(R) system. Together, these events will increase our industry and
customer profile and position the Company for strong revenue growth in the
coming years, creating increased shareholder value."
There will be an analyst group meeting at 9:30 am on Wednesday 8 March 2006 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 8:00 am on Thursday 9 March 2006
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 / Sarah MacLeod
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
Business Overview
This has been a very successful year for the Company with good all-round
performances across the divisions, enabling us to sustain the profitability we
reported at the half year and record the first full year of profits since the
1999 merger of Axis and Shield. This was achieved on the strength of our
existing products and without the benefit of sales from our new AFINIONTM
Point-of-Care system, the substantive roll-out of which is now planned for the
second half of 2006, or from our other major investment in developing new
Axis-Shield labelled markers for the AxSYM platform. Profit before tax for the
year came in at #1.9 million, despite redundancy costs of #0.5 million in Oslo
associated with restructuring in our Point-of-Care Division. Our three
divisional businesses of Laboratory Diagnostics, Point-of-Care Testing and
Medical Device Distribution recorded increased sales in 2005, with good growth
potential moving forward.
Our core competence remains the development of novel patentable diagnostic
solutions in areas of clinical need, making use of our special skills in protein
chemistry to devise more effective ways to measure technically challenging
markers. In addition, we are finding that our expertise in adapting assays to
run on automated platforms encompassing many different technologies is in
increasing demand. In this part of the business we develop system menu
extensions, including both novel and conventional markers, through OEM
partnerships with the major global diagnostic companies which dominate the
hospital laboratory marketplace. This is illustrated by our relationship with
Abbott, one of the world's leading IVD companies, for which we make tests to run
on IMx(R) and AxSYM(R), two of Abbott's widely placed instrument platforms. A
special contract to develop tests on the latter instrument enables us to market
our own-labelled products, thus giving us a quick route to the automated
instrument market for our novel markers without the substantial costs associated
with developing our own sophisticated high throughput instrumentation.
Importantly we are now also developing tests for Abbott's flagship highest
throughput ARCHITECT(R) analyser.
We are targeting the rapidly expanding market for point-of-care (PoC) testing,
particularly in the doctors' office. This sector is currently not dominated by
any large companies and we have capitalised on our existing presence in the
market established through our successful NycoCardTM system by our development
of a next generation PoC platform, the AFINIONTM system. Although we have
experienced some delays in scaling up instrument production, we recently
received Clinical Laboratory Improvement Amendments (CLIA) waiver from the US
FDA for the system and the first test, for HbA1c in monitoring treatment
compliance in diabetes, and this will facilitate doctors' office marketing for
the US launch in the second half of 2006. CLIA waiver permits use of the test
and system by non-professional staff, acknowledging that waived tests are easy
to use, accurate, reliable and very unlikely to produce false results.
We also market diagnostic tests and medical devices to end-users in our home
markets of the UK and the Nordic countries through Axis-Shield UK in
Cambridgeshire and Medinor (with offices in Norway, Sweden, Finland and
Denmark), and to the developing world through our Plasmatec subsidiary, based in
Bridport, Dorset.
Financial Overview
Revenues for 2005 were #58.2 million, compared to #52.3 million in 2004, an
increase of 11%. Gross margins continued to improve to 53.9 %, largely due to a
more favourable product mix, producing a gross profit of #31.4 million.
Operating profit before R&D was #10.6 million, compared to #9.1 million in 2004.
Operating expenses increased from #18.8 million to #20.8 million. This included
some "one-off" costs and a continuing investment in additional marketing
expenditure related to the launch of AFINIONTM and the upcoming introduction of
the AxSYM(R)xtra assays. Total R&D spend further decreased as planned by 12%,
falling to #8.7 million from #9.9 million in 2004. #0.5 million of the spend
during 2005 was attributable to the continuing but reducing external cost of the
engineering and manufacturing development of the AFINIONTM instrument and
cartridges (down from #2.9 million in 2004).
Axis-Shield reported its first annual net operating profit (under IFRS reporting
rules) of #1.9million before tax, which includes redundancy costs of #0.5
million in Norway (2004: loss of #0.8 million). Profitability was achieved on
the strength of our existing businesses, without the benefit of any significant
sales of the AFINIONTM system, which is undergoing instrument manufacturing
scale-up in the Swedish factory of one of our production partners, or from our
major R&D investment in new markers on AxSYM(R) and reflects strong trading
performances across all our divisions.
Our balance sheet remains strong with cash at the year end of #11.5 million,
compared to #11.9 million at the end of 2004.
It is important to recognise that a continuing key difference between
Axis-Shield and other emerging healthcare companies is the strong cash flow from
our commercial operations, derived from successful products which we have taken
to market and those which were developed through our own research and
development. This allows us to fund our substantial R&D programme without
repeated recourse to the capital markets. Our businesses have produced
increasingly favourable trading positions which have resulted in 2005
profitability and we expect to see further, sustainable growth as we reap the
benefits of our continued investment in both internal and external research and
development.
Operating highlights
Laboratory Division
Laboratory product revenues in 2005 reached #19.6 million (#16.0 million in
2004), an increase of 22.3%. Growth has been largely due to increased
homocysteine sales, together with the continued good performance of certain
products we manufacture for Abbott. In particular, good growth was achieved
through the AxSYM(R) BNP heart failure marker, the anti-Tg/anti-TPO thyroid
marker tests and the IMx(R) sirolimus test, needed to monitor blood levels of
this anti-rejection drug. Our anti-CCP kit for early diagnosis of rheumatoid
arthritis has also continued to enjoy good sales growth.
Further evidence of homocysteine clinical utility continues to be published,
including an important updated evaluation of current epidemiological data from
Dr David Wald at Southampton University Hospital, suggesting that a 15%
reduction in coronary heart disease risk and a 25% reduction in risk of stroke
are achievable by lowering serum homocysteine. In another important study Yang
and colleagues at the Center for Disease Control in Atlanta examined mortality
from stroke and ischaemic heart disease (IHD) in the USA before, and after,
folic acid fortification of flour, looking at over eight million deaths in
individuals over 40 years old. Average blood folate concentrations increased and
homocysteine concentrations decreased after fortification, and there was a
three-fold acceleration of decline in stroke mortality and a decline in
mortality from IHD in some but not all segments of the population. The authors
comment that the improvement in mortality for stroke and IHD were of the
magnitude predicted for, and occurred concomitantly with, the average reduction
in blood homocysteine concentration produced by folic acid fortification. A
study by Flicker and colleagues at the Universities of Western Australia and
Queensland suggests that not only is homocysteine a marker of cardiovascular
disease risk but also that it should be measured in older individuals to assess
risk of neurodegenerative disease so that, where necessary,
homocysteine-lowering vitamins can be employed to reduce the rate of increase of
amyloid protein levels, hopefully before brain plaque build-up becomes
substantial. The build-up of brain amyloid plaques is thought to be an important
parameter in the development of Alzheimer's disease.
This positive scientific climate has been reflected in an increase in
homocysteine sales to over 10 million units, compared to 8.0 million in 2004, an
increase of 25%, with revenues up from #6.5 million to #8.2 million. The October
launch of homocysteine testing on Dade Behring's BN platform assisted sales
growth and we expect to see further sales growth shortly through the
Instrumentation Laboratory launch on its Futura system, which is widely placed
particularly in coagulation laboratories. We are now seeing the benefits of
market stabilisation after the removal of certain unlicensed competition in the
United States and the resolution of the Competitive Technologies Inc ("CTT") US
patent dispute concerning homocysteine testing in vitamin deficiency. The
majority of significant test providers to US laboratories have now settled with
CTT, agreeing to pay royalties until patent expiry in 2007. All major
homocysteine test providers now directly employ Axis-Shield technology or other
Axis-Shield licensed methods.
The success of homocysteine has continued to spawn unlicensed products in the
marketplace, though none is believed to have any substantial sales. However we
will continue our policy of vigorous defence of our intellectual property and
the prosecution of any significant infringers of our patent rights. The
favourable agreement with Catch Inc. in 2004 resolved the principal element of
previously unlicensed competition and gave us commercialisation rights for
Catch's adaptable technology for clinical chemistry instruments. The agreement
between Beckman Inc. and Catch to use the Catch reagents on the popular Synchron
analyser continues to provide us with royalties on a per test basis. Roche has
decided not to pursue the Catch test for its clinical chemistry platforms,
though it will be possible for our distributors to make the Axis-Shield branded
test available for their customers to use on these open systems should they wish
to do so.
The Axis-Shield produced AxSYM(R) BNP assay marketed by Abbott continues to be
very successful, with sales augmented by the launch in October of a
complementary BNP assay on Abbott's widely-placed IMx(R) system, to service the
smaller laboratory. BNP is considered the marker of choice in the diagnosis of
heart failure and we expect further growth in sales of this test as the utility
of this marker is extended to screening for this major problem in elderly
populations. Sales in 2005 reached #3.2 million compared to #1.8 million in
2004, representing an increase of 79%. Food and Drug Administration (FDA)
marketing approval in April 2005 and the subsequent US launch of the Axis-Shield
manufactured Abbott IMx(R) assay for Wyeth's anti-rejection drug sirolimus,
which has the brand name Rapamune(R), helped to increase revenues to #748,000
for this product in 2005, against #232,000 in the previous year. Our sales of
AxSYM anti-Tg and anti-TPO thyroid tests to Abbott reached #1.4 million in 2005
(2004: #1.1 million). During the year we also began manufacturing an assay for
Beta-2-microglobulin (to detect renal dysfunction) on the IMx(R) instrument
platform, on behalf of Abbott.
We continue to work on products to measure variants of the Activated Factor XII
molecule and very encouraging results were presented at the November annual
meeting of the American Heart Association in Dallas. These data demonstrated
that our newly developed tests strongly predicted which patients admitted to
hospital with chest pain had a subsequent heart attack or died. It is likely
that we will commence development of commercial assays for two key species of
this clotting factor if further studies confirm their utility in this important
area.
Data continue to be published on the utility of our patented anti-CCP (cyclic
citrullinated peptides) test for early detection of rheumatoid arthritis (RA)
with many instances of patients having circulating antibodies to CCP in their
bloodstream several years before the appearance of symptoms. These findings
strongly link the use of this new test with the use of the new generation of
drugs to treat rheumatoid arthritis and we are now seeing significant interest
from pharmaceutical companies and physicians using those drugs in the more
widespread application of this test in the management of this debilitating
disease. In the USA a Current Procedural Terminology (CPT) code for the test has
been granted, making the test reimbursable at a set price, and we hope the
American Rheumatology Congress criteria for the diagnosis of RA will soon
incorporate an anti-CCP test alongside that for Rheumatoid Factor (RF). In 2005
our anti-CCP test sales reached #1.5 million, compared to #0.9 million in 2004.
Our collaboration with Abbott Laboratories to produce a range of Axis-Shield
kits for the AxSYM(R) analyser (branded AxSYM(R)xtra assays) has progressed and
the first products are approaching launch. We expect that kits to measure
anti-CCP, HoloTC (a more efficient method for the detection of vitamin B12
deficiency) and D-dimer for detection of deep vein thrombosis and pulmonary
embolism will be available on this important platform in the first half of 2006.
The launched assays will be in Axis-Shield livery and will be exclusively
distributed by Abbott, with a higher return to Axis-Shield compared to
conventional OEM arrangements. AxSYM(R) is one of the most successful automated
immunoassay platforms, with over 17,000 instruments in place worldwide. Our
access to AxSYM(R) instruments will not only substantially contribute to
revenues over the next 10 years and beyond, but also give us brand recognition,
particularly for our own unique markers, in an area where own-brand labelling by
large laboratory instrument suppliers such as Roche, Bayer and Abbott has
dominated up till now.
We continue to work with the major IVD companies in order to ensure the widest
commercialisation of our key markers, as these companies control the majority of
the installed instrument base and therefore dominate the laboratory diagnostics
market. Our most recent arrangement in this area has been to extend our
collaboration with Abbott to develop tests for homocysteine and anti-CCP on its
flagship highest throughput platform, known as ARCHITECT(R). This system
integrates immunoassay and clinical chemistry testing onto one easy-to-use
platform, delivering workstation integration, high throughput and fast
turnaround to diagnostic laboratories worldwide.
As a result of our ability to deliver assays onto various platforms utilising
different technologies our skills in adapting assays to automated instrument
platforms are now also being sought by large diagnostic organisations for OEM
contracts involving system menu extensions with markers which are not
proprietary to Axis-Shield.
Point-of-Care Division
Point-of-Care product revenues were #19.7 million compared to #18.3 million in
2004, representing an increase of 7.5%. The principal element of these sales
continues to be the NycoCardTM platform and particularly our tests for CRP (for
distinguishing between bacterial and viral infections) and HbA1c. NycoCardTM
sales were up by 14.8% over 2004 to #15.7 million (versus #13.7 million in 2004)
and 18% by volume, with good growth recorded in many markets including South and
East Asia. The installed base of instruments continues to increase and more than
2,000 new instruments were supplied during 2005 increasing the total to more
than 16,000 placements. CRP sales were assisted by a high incidence of influenza
in key markets in early 2005, coupled with continued concerns regarding avian '
flu.
Although our new AFINIONTM point-of-care system was launched at the end of 2004,
we have limited sales to a small number of customers in our home markets and we
are currently holding back on shipments to new accounts pending resolution of
some issues relating to manufacturing scale up by our instrument suppliers in
Sweden. We are determined to ensure that the system is completely robust and
able to deliver consistent high quality and rapid results in the hands of all
users and thus have delayed wider product availability and US launch until our
exhaustive testing is complete, estimated to be in H2 2006. We have also taken
the opportunity to restructure our Oslo operation to focus on our need for more
instrumentation skills.
Feedback from our current user base has been very positive, especially
concerning the ease of use of the system, coupled with the fact that the novel
and versatile detection technology employed in AFINIONTM will allow us to offer
a menu of tests using the same standardised procedure, including analytes
traditionally measured either by immunoassay or by clinical chemistry
technology. Our market research continues to confirm that the demand for tests
that can be performed quickly and accurately in doctors' surgeries is increasing
and that point-of-care diagnostics is becoming an important part of better
clinical practice, to the ultimate benefit of the patient.
HbA1c, the first test which we have developed for use on AFINIONTM, is working
well and during 2005 both the system and the HbA1c test received 510(k)
marketing clearance in July from the FDA in the USA. This was followed up by the
February 2006 receipt of CLIA waiver for the AFINIONTM platform with the HbA1c
test from the FDA, facilitating its use in primary care. There are more than
100,000 CLIA-registered Physicians' Office Laboratories (POL) in the United
States which can now use AFINIONTM, whereas without CLIA waiver, less than half
would be eligible to use the system. A Swedish External Quality Assurance
organisation (EQUALIS) has recently co-ordinated testing of the system across
several sites, using the HbA1c cartridge and reported very good reproducibility
of results. We were also pleased to see that the test was certified by the
National Glycohemoglobin Standardisation Program (NGSP), achieving a Coefficient
of Variation (the measure of variability of assay results) well within the
criterion set by the NGSP. NGSP is an independent quality assessment run by the
University of Missouri, USA. The importance of the certification is such that
the American Diabetes Association only recommends, and many health care
providers in the USA will only use, tests that are NGSP-certified.
We are building our US operations at our base near Boston, in readiness for the
AFINIONTM launch by Abbott Laboratories, our partner for the US distribution of
AFINIONTM. The arrangement with Abbott will give us full access to one of the
USA's strongest distribution networks and an extensive distribution support
organisation for POL customers. Abbott will also sell the product directly to
US hospitals using its own sales force. Outside the USA we continue to be
approached by companies seeking AFINIONTM distribution rights and several
exclusive arrangements have been signed.
In addition to the existing AFINIONTM HbA1c test, we have supplied a CE-marked
(permitting EU sale) test for CRP to our small panel of trial users and we
intend to launch a test for ACR (albumin/creatinine ratio used to measure renal
function) after we have commenced wider marketing of the instrument and received
the necessary regulatory clearance for the test from the FDA. An assay for PT
(prothrombin to measure anticoagulant efficacy) is planned for 2007 launch, with
further markers following. Each individual test is represented by a single
cartridge which is slotted into the front of the AFINIONTM instrument.
We announced in November that Axis-Shield was involved in a new #10 million
project co-ordinated and funded by ITI Techmedia to develop a biosensor-based
instrument platform for theranostic applications. Axis-Shield believes that
involvement in such cutting edge projects, particularly in helping to define
commercial performance targets and applications, reinforces the Company's
commitment to innovation in near patient diagnostic testing. ITI Techmedia is
one of three institutions set up by the Scottish Executive (the devolved
government for Scotland) to encourage and exploit Scottish innovations in
certain key areas including healthcare.
Direct Distribution
Our distribution businesses are valuable to us, not only because they continue
to grow with both Axis-Shield and third party distribution, but because they
also allow us to maintain direct contact with our end-user customer base in our
home markets.
Sales in the Nordic countries through Medinor reached #17.7 million for third
party products in 2005, against #16.6 million in 2004, an increase of 6.4%.
Total sales, including Axis-Shield products, reached #25.4 million, representing
a 2.7% increase over the previous year. Medinor's objective is to become a full
range medical device supplier in the Nordic region, allowing it to compete in
the tender process which favours suppliers with the widest portfolios. In
Norway, Medinor is already actively selling medical devices and has recently
added high margin endoscopy equipment to its range, with orthopaedic implants
brought in during early 2005. The State takeover of hospitals in Norway, with 5
regional authorities operating through a tender process, continues to make for
difficult and competitive trading conditions but Medinor is well placed to
benefit from this centralisation, particularly as it offers a wider range of
products. In 2005 it exceeded targeted net profit margins and those achieved in
2004. Until recently Medinor sales in the other Nordic countries were confined
to IVD and related products but this is changing, starting in Denmark where a
range of pulmonary devices has been introduced. Medinor has begun
commercialisation of AFINIONTM in the key Nordic markets, where PoC testing in
the doctor's office is well established, though this has been restrained by the
limited availability of instruments as explained above.
UK sales reached #1.9 million (2004: #2.1 million). #1.1 million of this figure
was from third party distributed products. The UK sales division has been
repositioned for a greater focus in the point-of-care market to capitalise on
the potential of AFINIONTM, and as a result this year's sales have suffered
through delays in instrument supply. There are signs that the traditionally poor
UK market potential for near patient testing will be improved by
Government-sponsored moves towards practice-based commissioning, giving general
practitioners more freedom to operate for the benefit of patients, to include
PoC test reimbursement. Axis-Shield UK's move to new premises, with local
warehousing and distribution, has worked well and the organisation is well
placed for future growth as it attracts new distribution agencies.
Plasmatec, our Dorset-based subsidiary selling mostly infectious disease assays
and low cost commodity diagnostics to developing countries, achieved sales of
#2.1 million, an increase of 5.4% over the corresponding period last year. This
has been helped by increasing penetration into Central and Latin American
markets.
Board
We announced today that we have appointed Staffan Ek as non-executive director.
Staffan has extensive knowledge of the healthcare sector, acquired over thirty
years in the industry, primarily with Pharmacia, Boehringer Mannheim and Roche
Diagnostics. He recently retired from Roche, where he was Head of Diabetes Care,
an Executive Director of Roche Diagnostics, and a permanent participant of the
Corporate Executive Committee of F Hoffmann-La Roche AG, Basle, Switzerland. His
wide experience within the healthcare sector at senior executive level will be
an invaluable asset to Axis-Shield, particularly as the Company continues its
expansion into primary care diagnostics via its AFINIONTM platform.
Outlook
We believe that our success during 2005 will be sustained and that our
substantial investments of recent years will produce increasing returns. Market
feedback on AFINIONTM has been very positive and we are confident that this new
system will make a substantial contribution to revenues going forward.
Additionally we will launch the first AxSYM(R)xtra markers in the first half of
2006 and continue the new programme to develop two of our tests for the
ARCHITECT(R) system. Together, these events will increase our industry and
customer profile and position the Company for strong revenue growth in the
coming years, creating increased shareholder value. Our positive cash flow and
strong balance sheet will allow us to continue to invest in our R&D and
operational capabilities and gain further momentum in our drive to build a
robust and profitable enterprise able to capitalise on the technological
opportunities which are a feature of this rapidly changing but critically
important area of healthcare.
Consolidated Income Statement
For the year ended 31 December 2005
2005 2004
#000 #000
Revenue - Continuing operations 58,174 52,288
Cost of Sales (26,802) (24,423)
_____ _____
Gross Profit 31,372 27,865
Operating expenses (20,774) (18,803)
_____ _____
Operating Profit before Research &Development 10,598 9,062
Research and Development
Point of Care (internal) (3,318) (3,207)
Point of Care (external) (520) (2,850)
Lab Division (internal) (4,651) (3,616)
Lab Division (external) (245) (8,734) (271) (9,944)
_____ _____ _____ _____
Operating profit/(loss) 1,864 (882)
Interest receivable 391 240
Interest payable (340) (142)
_____ _____
Profit/ (Loss) on Ordinary Activities before Taxation 1,915 (784)
Taxation (85) (51)
_____ _____
Profit/(Loss) for the Financial Period after Taxation
attributable to Equity Shareholders 1,830 (835)
_____ _____
Profit/(Loss) per ordinary 35p share
Basic 3.77p (1.72p)
Fully diluted 3.74p (1.72p)
Statement of Recognised Income and Expense
for the year ended 31 December 2005
2005 2004
#000 #000
Profit/(Loss) for the financial year 1,830 (835)
_____ _____
Net exchange adjustments offset in reserves (122) 422
Cash flow hedges - net fair value gains 68 -
_____ _____
Net (losses)/gains not recognised in income statement (54) 422
_____ _____
Total recognised income/(expense) for the financial year 1,776 (413)
_____ _____
Consolidated Balance Sheet
At 31 December 2005
Group Group
2005 2004
#000 #000
Non-current Assets
Goodwill 6,632 6,517
Development costs 546 355
Other intangible assets 9,670 11,113
Property, plant and equipment 13,480 10,156
Other non-current assets 67 108
_____ _____
30,395 28,249
_____ _____
Current Assets
Inventories 7,731 8,004
Trade and other receivables 10,934 9,820
Financial assets
- Derivative financial instruments 36 -
- Cash and cash equivalents 11,487 11,940
_____ _____
30,188 29,764
_____ _____
Current Liabilities
Trade and other payables 11,998 13,168
Financial liabilities
- Derivative financial instruments 3 -
- Borrowings 598 346
Provisions 773 223
_____ _____
13,372 13,737
_____ _____
Net Current Assets 16,816 16,027
_____ _____
Total Assets Less Current Liabilities 47,211 44,276
Non-current liabilities
Financial liabilities
- Borrowings 4,754 3,471
Retirement benefit obligations 1,779 1,795
Provisions 13 204
Other non-current liabilities 1,606 1,784
_____ _____
8,152 7,254
_____ _____
Net Assets 39,059 37,022
_____ _____
Equity
Share Capital 16,987 16,987
Other Equity 440 168
Share Premium 49,189 49,189
Capital Redemption Reserve 244 244
Merger Reserve 17,922 17,922
Cumulative Translation Reserve 755 877
Hedging Reserve 68 -
Retained Loss (46,546) (48,365)
_____ _____
Total Shareholders' Equity 39,059 37,022
_____ _____
Consolidated Cash Flow Statement
For the year ended 31 December 2005
2005 2004
#000 #000
Cash flows from operating activities
Cash generated from operations 3,130 3,359
Interest paid (340) (142)
Interest received 391 240
Tax paid (45) (38)
_____ _____
Net cash from operating activities 3,136 3,419
_____ _____
Cash flows from investing activities
Purchases of property, plant and equipment (PPE) (4,788) (2,622)
Proceeds from sale of PPE - 31
Purchases of intangible assets (302) (249)
Proceeds from disposal of associated business 26 -
_____ _____
Net cash used in investing activities (5,064) (2,840)
_____ _____
Cash flows from financing activities
Finance lease proceeds 1,995 1,121
Finance lease principal repayments (404) (40)
_____ _____
Net cash generating from financing activities 1,591 1,081
_____ _____
Net (decrease)/increase in cash and cash equivalents (337) 1,660
Cash and cash equivalents at beginning of period 11,924 10,106
Exchange (losses)/gains on cash and cash equivalents (122) 158
_____ _____
Cash and cash equivalents at end of period 11,465 11,924
_____ _____
Cash generated from operating activities
For the year ended 31 December 2005
2005 2004
#000 #000
Profit/(loss) for the financial period 1,830 (835)
Taxation 85 51
Depreciation of tangible fixed assets 1,486 1,337
Amortisation of intangible fixed assets 1,659 1,697
Capitalised development costs (233) (110)
Profit on sale of property, plant & equipment - (8)
Impairment of investment in associate 17 -
Provisions for investments - 2
Interest payable 340 142
Interest receivable (391) (240)
Share based payment - value of employee service 264 168
Increase/(Decrease) in provisions 528 (575)
Decrease in inventories 277 260
Increase in trade and other receivables (1,104) (249)
(Decrease)/increase in creditors (1,663) 1,719
Increase in derivative financial instruments at fair value through the income 35 -
statement
_____ _____
Cash generated from operations 3,130 3,359
_____ _____
1. Notes to the preliminary results
The financial information set out in the preliminary announcement does not
constitute the Group's statutory accounts within the meaning of Section 240 of
the Companies Act 1985 and has been extracted from the full accounts for the
years ended 31 December 2005 and 31 December 2004 respectively. The information
for the year ended 31 December 2004 does not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. A copy of the statutory
accounts for that year has been delivered to the Registrar of Companies. The
auditors' report on the financial statements was unqualified and did not include
a statement under section 237(2) or (3) of the Companies Act 1985. The
statutory financial statements for the year ended 31 December 2005 have yet to
be signed. They 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 in due course.
These financial statements have been prepared in accordance with the accounting
policies based on International Financial Reporting Standards ("IFRS") and IFRIC
interpretations endorsed by the European Union (EU) and with those parts of the
Companies Act 1985 applicable to companies reporting under IFRS. The financial
statements have been prepared under the historical cost convention as modified
by the revaluation of derivative financial instruments. The 2004 comparative
information has, as permitted by the exemption in IFRS 1, not been prepared in
accordance with IAS 32, Financial Instruments: Disclosure and Presentation, and
IAS 39, Financial Instruments: Recognition and Measurement. Instead, IAS 32 and
IAS 39 have been implemented with effect from 1 January 2005.
2. Segmental analysis
Pursuant to the "management approach" set out in IAS 14 our reporting follows
the Group's internal structure. Accordingly, business activities in the
Axis-Shield Group are divided into three business divisions. The Point of Care
division comprises all activities associated with tests performed at the point
of consultation with healthcare professionals. The Laboratory division
concentrates on in vitro diagnostics tests for use in the clinical laboratory.
The Distribution division is an independent arms-length operation which sells
both our in-house products and third party products.
Corporate consists of centralised corporate costs which are not allocated across
the three business divisions.
Inter-segment transfers or transactions are entered into under the normal
commercial terms and conditions that would be available to unrelated third
parties.
(a) Primary reporting format - business segments
The segmental results for the 12 months to 31 December 2005 are as follows:
Point-of-Care Laboratory Direct
Division Division Distribution Corporate Elimination Group
#000 #000 #000 #000 #000 #000
Total gross segment revenue 16,411 19,678 27,139 - - 63,228
Inter-segment revenue (4,637) (403) (14) - - (5,054)
_____ _____ _____ _____ _____ _____
Total revenue 11,774 19,275 27,125 - - 58,174
_____ _____ _____ _____ _____ _____
Segment result before R & D 2,097 8,136 1,578 (1,270) 57 10,598
Research & Development (3,838) (4,896) - - - (8,734)
_____ _____ _____ _____ _____ _____
Operating (Loss)/Profit (1,741) 3,240 1,578 (1,270) 57 1,864
Interest (payable)/receivable - net (508) (400) (154) 1,113 - 51
_____ _____ _____ _____ _____ _____
(Loss)/Profit on Ordinary (2,249) 2,840 1,424 (157) 57 1,915
Activities before Taxation
Taxation - - (85) - - (85)
_____ _____ _____ _____ _____ _____
(Loss)/Profit for the Financial
Period after Taxation (2,249) 2,840 1,339 (157) 57 1,830
_____ _____ _____ _____ _____ _____
The segmental results for the 12 months to 31 December 2004 are as follows:
Point-of-Care Laboratory Direct
Division Division Distribution Corporate Elimination Group
#000 #000 #000 #000 #000 #000
Total gross segment revenue 15,223 16,220 25,662 - - 57,105
Inter-segment revenue (4,439) (351) (27) - - (4,817)
_____ _____ _____ _____ _____ _____
Total revenue 10,784 15,869 25,635 - - 52,288
_____ _____ _____ _____ _____ _____
Segment result before R & D 2,925 5,676 1,558 (1080) (17) 9,062
Research & Development (6,057) (3,887) - - - (9,944)
_____ _____ _____ _____ _____ _____
Operating (Loss)/Profit (3,132) 1,789 1,558 (1080) (17) (882)
Interest (payable)/receivable - net (245) (230) (78) 651 - 98
_____ _____ _____ _____ _____ _____
(Loss)/Profit on Ordinary (3,377) 1,559 1,480 (429) (17) (784)
Activities before Taxation
Taxation - - (51) - - (51)
_____ _____ _____ _____ _____ _____
(Loss)/Profit for the Financial
Period after Taxation (3,377) 1,559 1,429 (429) (17) (835)
_____ _____ _____ _____ _____ _____
(b) Segmental Analysis by product area
2005 2005 2004 2004
#000 #000 #000 #000
Point of Care
Nycocard 15,745 13,717
Coagulation 2,849 3,440
Other Point of Care 1,136 1,192
_____ _____
Total Point of Care Products 19,730 18,349
_____ _____
Laboratory Products
Alcohol Related Diseases 1,002 1,458
Homocysteine 8,183 6,496
Infectious Disease 2,720 2,643
Autoimmune - 303
Anti-CCP 1,478 936
Anti-Tg/TPO 1,382 1,050
BNP 3,183 1,775
Sirolimus 748 232
Other 902 1,131
_____ _____
Total Laboratory Products 19,598 16,024
Distribution of third party products 18,846 17,915
_____ _____
58,174 52,288
_____ _____
(c) External Sales geographically by destination
2005 2004
#000 #000
Europe 39,911 37,312
North America 12,588 9,342
Rest of World 5,675 5,634
_____ _____
58,174 52,288
_____ _____
3. Profit/(Loss) per ordinary share
Basic earnings per share is calculated by dividing the profit/(loss) for the
financial period after taxation by the weighted average number of ordinary
shares in issue during the period.
The basic earnings per share are calculated as follows:-
Twelve months Twelve months
ended ended
December 2005 December 2004
Profit/(loss) after taxation (#000s) 1,830 (835)
_____ _____
Weighted -average number of ordinary shares in issue 48,532,875 48,532,875
_____ _____
Basic earnings/(loss) per share (pence) 3.77p (1.72p)
_____ _____
The difference between basic and diluted weighted-average shares results from
the assumption that dilutive share options were exercised. Only those share
options which have a dilutive effect were used for the purposes of calculating
the weighted-average shares outstanding. The diluted earnings per share is
calculated as follows:-
Twelve months Twelve months
ended ended
December 2005 December 2004
Profit/(loss) after taxation (#000s) 1,830 (835)
_____ _____
Weighted-average number of ordinary shares in issue 48,532,875 48,532,875
Adjustment for share options 371,877 -
_____ _____
Weighted-average number of ordinary shares for diluted earnings per share 48,904,752 48,532,875
_____ _____
Diluted earnings/(loss) per share (pence) 3.74p (1.72p)
_____ _____
There is no dilutive effect of the options outstanding in 2004, therefore no
dilutive share options are included in the 2004 comparative calculations.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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