RNS Number:5452S
Axis-Shield PLC
7 March 2002
7 March 2002
Axis-Shield plc
Preliminary Results for the Year Ended 31 December 2001
Axis-Shield plc ("Axis-Shield") announces its preliminary results for the year
ended 31 December 2001.
Financial Highlights
• Turnover up 22%, with strong growth across all divisions
• Revenues from lead product, homocysteine, up 57% and volumes up 69%
• Positive EBITDA of £2.3m (2000: loss of £2.1m)
• Net cash generated of £0.7m, increasing net funds to £9.5m
• Substantial growth of sales in key US market (up 83%)
• Gross profit margins rise to 51% (2000: 46%)
• R&D expenditure up 23% to £6.7m
• Loss before tax reduced to £0.4m (2000: loss of £8.2m)
Corporate Highlights
• Agreement with Dade Behring, one of the world's leading diagnostic
companies, announced today (see separate news release) for supply of
homocysteine assays
• Agreements signed with Abbott for development of heart failure marker BNP
in March and testosterone diagnostic in November
• Recent major study in New England Journal of Medicine links homocysteine
with increased risk of dementia and Alzheimer's disease. Further adaptation
of homocysteine measurement technology to different instrument platforms
• Significant progress in the development of a new generation point-of-care
system
• Diastat autoimmune panel strengthened by launch of new test for rheumatoid
arthritis
Commenting on the results, Nigel Keen, Chairman of Axis-Shield, said:
"2001 has been a year of significant progress for Axis-Shield, characterised by
growing demand for our lead product, homocysteine, and substantial revenue
growth across all divisions of the Group.
"Trading to date in 2002 is encouraging and we are confident of achieving our
challenging growth targets. Axis-Shield is now well positioned for a healthy and
prosperous future as we continue the commercialisation phase of our development
and move towards sustained profitability and self-funded research."
Enquiries:
Axis-Shield plc Tel: +44 (0) 1382 422000
Svein Lien, Chief Executive Officer Today: +44 (0) 207 831 3113
Paul Garvey, Finance Director Today: +44 (0) 207 831 3113
Financial Dynamics Tel: +44 (0) 207 831 3113
David Yates / Fiona Noblet
CHAIRMAN'S STATEMENT 2001
Introduction
2001 has been a year of exceptional progress for Axis-Shield and a year in which
the performance of all divisions within the Group achieved or exceeded
expectations. The Group has consolidated its organisation and operations
following the acquisitions of Medinor in 1999 and Nycomed Diagnostics in 2000,
and moved towards long-term profitability.
Turnover for the year increased by 22% to £42.8 million, compared to £35.2
million in 2000. The positive earnings before interest, tax, depreciation and
amortisation (EBITDA) reported at the half year was sustained for 2001 as a
whole. EBITDA before research and development (R&D) amounted to £9.0 million
(2000: £3.3 million). Expenditure on R&D increased to £6.7 million from £5.4
million in 2000. EBITDA after R&D was £2.3 million compared to a loss of £2.1
million in 2000. After taking account of amortisation of intangibles arising
from our acquisition programme and of interest received, the loss before tax in
the second half of the year was £34,000, with the full year showing a loss of
£435,000 (2000: loss of £8.2 million). As anticipated the second half of the
year was strongly cashflow positive and as a result net funds increased over the
whole year by £669,000.
Our strategic goals remain to identify and patent novel markers in key areas of
medical need, to demonstrate their clinical utility, particularly in primary
healthcare and disease management, and to offer test formats suitable for our
partners with global instrument platforms and ultimately for our own PoC
portfolio. This strategy has proven to be successful as we differentiate
ourselves from others in our sector by the ability to fund our own research and
development and create a profitable enterprise. Our skills in innovation and IPR
protection have been key factors in this success and we are now also achieving
brand recognition with Medinor in the Nordic countries, Axis-Shield in the UK
and NycoCard and Axis-Shield PoC in near-patient testing. Axis-Shield's
reputation amongst OEM manufacturers, where we supply them with products for
their own branding, has also grown strongly in recent years and we are now
recognised as a supplier of choice by our OEM partners and distributors.
Operating Highlights
Laboratory Division
Sales of homocysteine continue to increase, with Abbott launching a version of
the test on its new AxSYM platform to add to the product available on its IMx
system. 2002 will also see the launch of the test on the Bayer automated
instrument. In addition, the new marketing arrangement announced today with Dade
Behring on its BN II system will further broaden distribution of our
homocysteine tests, helping to meet future demand in 2003 and beyond. New
collaborative agreements are to be expected during 2002 as Axis-Shield ensures
that all high throughput homocysteine testing involves the use of one of the
Group's assays.
Validation of the importance of homocysteine continues to accrue and scientific
opinion suggests that utility could be extended to pregnancy, neonatal screening
and cancer as well as cardiovascular and neurodegenerative diseases. The recent
major report in the New England Journal of Medicine, based on patients from the
prestigious Framingham Study in the USA, has firmly linked elevated homocysteine
with an increased risk of dementia and Alzheimer's disease in the elderly, and
this has stimulated much interest. We intend to continue working with our
marketing partners to facilitate the collation and dissemination of the large
and expanding homocysteine literature database to healthcare professions.
New data generated on Activated Factor Twelve (AFT), demonstrating the use of
AFT in identifying those most at risk of re-infarction after an initial heart
attack, has further invigorated interest in this marker. We are continuing our
efforts to produce automated formats of this assay to add to the ELISA currently
available, to encourage further uptake of the test.
We are also encouraged by the scientific attention being paid to Holo-TC as a
more effective marker of subclinical vitamin B12 deficiency than measurement of
total levels of the vitamin. The clinical data linking B12 deficiency with
Alzheimer's disease suggest that the ultimate market for this marker could
significantly exceed the $85 million currently attributed to conventional
measurement of total B12.
Other highlights from the Laboratory Division include further contract
development and manufacturing agreements with Abbott Laboratories (for brain
natriuretic peptide (BNP) and testosterone), the increasing interest in CDT, our
marker of excessive alcohol consumption, and the launch of the anti-CCP assay
for rheumatoid arthritis as a new major driver in our Diastat autoimmune
portfolio.
Point of Care (PoC) Division
Our PoC Division has delivered a strong performance in its first full year
within Axis-Shield. The NycoCard range of point-of-care assays continues to
perform well in the marketplace and a global distribution network is being
created to assist sales expansion. The Group's success has encouraged the Board
to approve a major programme of investment to develop a small, low-cost,
multi-analyte instrument for the doctor's office, which will capitalise on the
continued moves to facilitate more effective diagnosis and treatment of patients
within primary healthcare. The search for this next generation diagnostic
solution originally began as a global investigation of competitor systems with a
view to potential acquisition, but it was soon realised that what was available
did not meet the criteria of what was required by healthcare professionals and
that expertise in the PoC Division could be tailored to developing a solution
in-house. This development illustrates the powerful combination that now exists
within Axis-Shield - a wealth of experience in point-of-care markets and
instrumentation coupled with a long-established analytical capability in the
Laboratory Division. We plan that the new system will become available in 2004.
Direct Sales
Our direct sales groups in the Nordic countries (Medinor) and the UK
(Axis-Shield Diagnostics) both turned in good performances and each continues to
attract quality third party products for local distribution to augment sales of
the Group's own products in its home markets.
Plasmatec, our subsidiary in Dorset selling largely low cost assays to
developing countries, produced another good performance, and achieved budgeted
sales targets.
Research and Development
A key factor in the success of Axis-Shield is its Research and Development
group, currently comprising some 70 scientists based in Dundee, Scotland and
Oslo and Bodo, Norway. This division is responsible for Axis-Shield's large
intellectual property portfolio and the delivery of the strategy to identify,
protect and develop novel disease markers in areas of clinical need. In order to
maximise the contribution of this function we have recently created an
Exploratory and Early Phase Research team, under Erling Sundrehagen, our Chief
Scientific Officer. The team also has the added responsibility of protecting the
intellectual property it creates through an aggressive patent filing programme.
The Laboratory Division, under Ian Gilham, and the PoC Division, under Olav
Steinnes, have responsibility for the final development of products into
market-friendly format for launch. We believe that this will provide the
Exploratory Group with the freedom to identify and bring in new ideas, which
will ultimately contribute to the organisation's long-term future.
Financial Highlights
EBITDA
The Group reports positive earnings before interest, tax, depreciation and
amortisation (EBITDA) for the year. EBITDA before research and development (R&
D) amounted to £8,996,000 (2000: £3,330,000) and, after increased R&D
expenditure of £6,662,000 (2000: £5,403,000), EBITDA was £2,334,000 (2000: loss
£2,073,000). It is a major achievement for the Group to reach positive EBITDA
this year, with results from all divisions attaining or beating the targets set
for them at the beginning of the year.
Cash flow
The positive EBITDA also contributed to cash flow. After interest received of
£321,000, capital expenditure of £1,076,000 and increased working capital
requirements arising from the substantial increase in turnover, net funds
increased by £669,000, to leave the Group with net funds of £9,476,000 at 31
December 2001.
Turnover
Turnover increased by 22% to £42,793,000 (2000: £35,184,000), and on a like for
like basis by 19%. All divisions contributed to this increase. In the
Laboratory Division, we are particularly pleased with the sales of homocysteine,
which increased to £6,262,000 (2000: £3,982,000) for the year. This 57% jump in
revenues reflects significantly increasing demand for homocysteine testing in
the marketplace with a 69% rise in end user tests during the period. We also
increased our geographic spread of sales, particularly in the USA, where sales
were £6,879,000 compared to £3,761,000 in 2000, an increase of 83%.
Turnover by product area
2001 2000
Total Total
£000 £000
Point of Care 15,970 12,525
Alcohol Related Disease ("ARD") 1,385 1,186
Homocysteine 6,262 3,982
Cardiovascular 219 214
Infectious Disease 2,855 3,075
Autoimmune 2,350 1,967
TTP - 842
Other 767 357
______ ______
29,808 24,148
Distribution of third party products 12,985 11,036
______ ______
42,793 35,184
______ ______
Some other companies' products included as Point of Care sales in year ended 31
December 2000 have been reclassified as Distribution of third party products for
correct comparison.
Geographical breakdown of turnover
2001 2000
Total Total
£000 £000
Europe 31,846 27,328
North America 6,879 3,761
Rest of World 4,068 4,095
______ ______
42,793 35,184
______ ______
Gross Margin
The gross margin increased to 51.0% (gross profit: £21,840,000) from 45.5% in
2000 (gross profit: £16,023,000). The increase reflects the efficiency of
higher volumes of products passing through our production process and the growth
in the revenue stream from higher margin products, especially homocysteine.
Operating Costs and Profit
We continue to invest heavily in R&D and our spending in 2001 rose to £6,662,000
from £5,403,000 - an increase of 23%. Our other operating expenses rose by
1.2%, increasing from £12,693,000 in 2000 to £12,844,000 in 2001. There were no
exceptional costs in 2001 (2000: £3,669,000). Depreciation and amortisation of
intangibles, including goodwill, increased marginally to £3,090,000 from
£3,016,000 (excluding exceptional amortisation), and net interest received
decreased from £538,000 to £321,000, leaving the loss before taxation
substantially reduced at £435,000 compared to £8,220,000 in 2000.
Balance Sheet
The Group's fixed assets at 31 December 2001 were £21,759,000 (2000:
£23,675,000) which were made up of tangible assets of £6,392,000, intangible
assets of £14,917,000 and other investments of £450,000 (primarily relating to
our investment in A/C Diagnostics LLC). The intangible assets principally
relate to the patents, trademarks and goodwill acquired when the PoC Division
was purchased in February 2000. The Group does not capitalise internal
expenditure on Research and Development, patents and trademarks. Stocks and
debtors have increased to £7,524,000 (2000: £7,155,000) and £7,406,000 (2000:
£6,546,000) respectively, reflecting the increased turnover and activity during
the period, while current creditors, which now includes the Nycomed vendor loan
note of £887,000, have increased to £9,742,000 (2000: £8,410,000). Cash
increased to £10,446,000 from £9,955,000 in 2000. Our shareholders' funds now
stand at £36,726,000 (2000: £37,124,000).
Outlook
Recent advances in medicine, particularly in genomics and proteomics, mean that
integrated healthcare is becoming a reality. As we move towards a system where
prevention becomes as important as therapy, diagnostics will provide the
critical link. Axis-Shield is leading the way by providing innovative new
markers that cover all aspects of disease management - from pre-disposition
testing through early diagnosis to therapy selection and monitoring, both in the
laboratory and at the point of care.
We will continue to explore expansion via acquisition and also seek ways to
accelerate our drive to become a major force in the near-patient market under
the Axis-Shield brand.
Trading to date in 2002 is encouraging and we are confident of achieving our
challenging growth targets. Axis-Shield is now well positioned for a healthy and
prosperous future as we continue the commercialisation phase of our development
with self funded research and a move towards sustained profitability.
Nigel Keen
Chairman
CONSOLIDATED PROFIT & LOSS ACCOUNT
For the year ended 31 December 2001
Notes 2001 2000
£000 £000
TURNOVER - Continuing Operations 42, 793 35,184
COST OF SALES 20,953 19,161
______ ______
GROSS PROFIT 21,840 16,023
Other operating expenses 12,844 12,693
______ ______
EBITDA BEFORE RESEARCH & DEVELOPMENT AND EXCEPTIONAL COSTS 8,996 3,330
Research & Development 6,662 5,403
______ ______
EBITDA BEFORE EXCEPTIONAL COSTS 2,334 (2,073)
Depreciation and amortisation 2,716 2,343
Goodwill amortisation 374 673
______ ______
OPERATING LOSS BEFORE EXCEPTIONAL COSTS (756) (5,089)
Exceptional operating expenses 1 - 2,779
TOTAL OPERATING EXPENSES 22,596 23,891
OPERATING LOSS - Continuing Operations (756) (7,868)
Exceptional - loss on disposal of TTP - 890
______ ______
LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION (756) (8,758)
Net Interest receivable 321 538
______ ______
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (435) (8,220)
TAXATION 4 (1)
______ ______
LOSS FOR THE FINANCIAL YEAR AFTER TAXATION (431) (8,221)
______ ______
Loss per ordinary 35p share 3
Basic (0.93p) (17.96p)
Basic before exceptional items (0.93p) (9.94p)
Fully diluted (0.93p) (17.93p)
Fully diluted before exceptional items (0.93p) (9.92p)
STATEMENT OF TOTAL RECOGNISED LOSSES for the year ended 31 December 2001
2001 2000
£000 £000
Total recognised losses after tax for the financial year (431) (8,221)
Exchange gain/(loss) 64 (236)
______ ______
Total recognised losses relating to the financial year (367) (8,457)
______ ______
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS for the year ended 31 December
2001
2001 2000
£000 £000
Loss for the financial year (431) (8,221)
Nominal value of share capital issued - 1,416
Premium on shares issued - 25,171
Expenses relating to share issues - (403)
Foreign exchange gains/(losses) 64 (236)
Goodwill resurrected on disposal of TTP - 2,457
Other movements (31) 448
______ ______
Net movement (398) 20,632
Opening shareholders' funds 37,124 16,492
______ ______
Closing shareholders' funds 36,726 37,124
______ ______
NOTE OF HISTORICAL COST LOSSES for the year ended 31st December 2001
There is no material difference between the loss on ordinary activities before
taxation and the retained loss for the financial year stated above, and their
historical cost equivalents.
BALANCE SHEETS
At 31 December 2001
Group Group Company Company
2001 2000 2001 2000
£000 £000 £000 £000
FIXED ASSETS
Intangible 14,917 16,235 - -
Tangible 6,392 6,993 - -
Other investments 450 447 - -
Investments in subsidiary undertakings - - 53,933 53,933
______ ______ ______ _____
21,759 23,675 53,933 53,933
CURRENT ASSETS
Stocks 7,524 7,155 - -
Debtors 7,406 6,546 8,537 8,480
Cash at bank 10,446 9,955 406 387
______ ______ ______ ______
25,376 23,656 8,943 8,867
CREDITORS: Due within one year 9,742 8,410 959 924
______ ______ ______ _____
NET CURRENT ASSETS 15,634 15,246 7,984 7,943
______ ______ ______ ______
TOTAL ASSETS LESS CURRENT LIABILITIES 37,393 38,921 61,917 61,876
CREDITORS: Due after one year 285 1,234 63 69
PROVISION FOR LIABILITIES AND CHARGES 382 563 - -
______ ______ ______ ______
NET ASSETS 36,726 37,124 61,854 61,807
______ ______ ______ ______
CAPITAL AND RESERVES
Called up share capital 16,182 16,182 16,182 16,182
Share premium account 42,034 42,034 42,034 42,034
Capital redemption reserve 244 244 244 244
Merger reserve 17,922 17,922 4,005 4,005
Profit and loss account (39,656) (39,258) (611) (658)
_______ _______ _______ ______
EQUITY SHAREHOLDERS' FUNDS 36,726 37,124 61,854 61,807
_______ _______ ______ ______
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2001
Note 2001 2000
£000 £000
Net cash INFLOW/(outflow) from operating activities A 1,477 (5,094)
______ ______
Returns on investment and servicing of finance
Interest received 415 746
Interest paid (94) (208)
______ ______
Net cash inflow from returns on investment and servicing 321 538
of finance
______ ______
Taxation 4 -
Capital Expenditure and Financial Investment
Purchase of tangible fixed assets (1,048) (1,484)
Purchase of intangible fixed assets (87) (44)
Proceeds of sale of tangible fixed assets 59 41
______ ______
Net Cash Outflow from Capital Expenditure and Financial (1,076) (1,487)
Investment
______ ______
Acquisitions and Disposals
Purchase of subsidiary business/undertakings - (20,724)
Disposal of subsidiary business/undertakings - 1,568
Cash acquired with subsidiaries - 23
______ ______
Net Cash Outflow From Acquisitions - (19,133)
______ ______
Net Cash Outflow Before Use of Liquid Resources and 726 (25,176)
Financing
______ ______
Management of Liquid Resources - 580
Financing
Proceeds of share issue - 26,183
Hire purchase repayments D (71) (120)
______ ______
Net Cash (OUTLFOW)/ Inflow From Financing E (71) 26,063
______ ______
Increase in Cash B 655 1,467
______ ______
A. RECONCILIATION OF OPERATING LOSS TO NET CASH FROM OPERATIONS
2001 2000
£000 £000
Operating loss (756) (7,868)
Depreciation of tangible fixed assets 1,616 1,376
Amortisation of intangible fixed assets - includes exceptional costs 1,474 2,157
Reverse lease premium amortised in period (88) (88)
Gain on disposal of fixed asset investments - (65)
Discount on share options issued (31) 448
Gain on disposal of fixed assets (8) -
Provision for investment - 383
Increase in amount due from investment in A/C Diagnostics - (383)
(Increase)/decrease in provisions (185) -
(Increase)/decrease in stock (335) (524)
(Increase)/decrease in debtors (912) (1,558)
Increase/(decrease) in creditors 702 1,028
______ _______
Net Cash inflow/(outflow) 1,477 (5,094)
______ ______
B. ANALYSIS OF NET FUNDS
2000 Cashflow Exchange Movements 2001
£000 £000 £000 £000
Net cash 9,825 655 (52) 10,428
Vendor loan note acquired (882) - (5) (887)
with Point of Care
Hire Purchase < 1 year (71) 29 - (42)
Hire Purchase > 1 year (65) 42 - (23)
______ ______ ______ ______
Net funds 8,807 726 (57) 9,476
______ ______ ______ ______
C RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
2001 2000
£000 £000
Increase in cash in the period 655 1,467
(Decrease)/Increase in other liquid resources - (580)
Cash outflow from decrease in debt and hire purchase 71 120
______ ______
Change in net funds resulting from cash flows 726 1,007
Vendor loan note acquired with Point of Care - (882)
______ ______
Movement in net funds for the period 726 125
Opening balance 8,807 8,751
Foreign exchange adjustment on retranslation of opening balance (57) (69)
______ ______
9,476 8,807
______ ______
D ANALYSIS OF HIRE PURCHASE MOVEMENT
2001 2000
£000 £000
Opening balance 136 256
Repayments made (71) (120)
______ ______
Closing balance 65 136
______ ______
E ANALYSIS OF CASH OUTFLOW FROM FINANCING
2001
£000
Finance lease payments (71)
______
Notes
1. Exceptional operating expenses:
Year to Year to
31 December 31 December
2001 2000
£000 £000
Provision for investment - 383
Merger and acquisition costs - 1,121
Re-organisation costs - 758
Amortisation of acquired R&D - 517
______ ______
- 2,779
______ ______
2. The financial statements for Axis-Shield plc have yet to be
signed for the year ended 31 December 2001. The financial information set out
in the announcement does not constitute the Company's statutory accounts for the
years ended 31 December 2001 or 31 December 2000. The financial information for
the year ended 31 December 2000 is derived from the statutory accounts for that
year which have been delivered to the Registrar of Companies. The auditors
reported on those accounts; their report was unqualified and did not contain a
statement under either Section 237 (2) or Section 237 (3) of the Companies Act
1985. The statutory accounts for the year ended 31 December 2001 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. The report will be
sent to shareholders and will be made available for members of the public at the
Group's registered office, the Technology Park, Dundee DD2 1XA and on our
website, www.axis-shield.com.
3. The loss per ordinary 35p share is calculated on the loss for
the period divided by the weighted average number of shares in issue during the
period (46,232,875) (31 December 2000: 45,781,664). For diluted losses per
share, the weighted average number of shares in issue is adjusted to assume
conversion of potentially dilutive ordinary shares (46,233,361) (31 December
2000: 45,861,157).
Exceptional costs charged against operating profit and non-operating exceptional
costs do not relate to the profitability of the Group on an ongoing basis.
Therefore an adjusted earnings per share is presented, as follows:
2001 2000
Earnings Earnings Per share Earnings Earnings Per share
£000 pence £000 pence
Earnings per share (431) (0.93) (8,221) (17.96)
Exceptional items:
Operating - - 2,779 6.07
Loss on disposal of TTP - - 890 1.95
Merger transaction costs - - - -
______ ______ ______ ______
(431) (0.93) (4,552) (9.94)
______ ______ ______ ______
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