RNS Number:7899V
Celsis International PLC
14 December 2000
CELSIS INTERNATIONAL PLC
Interim Results for the Six Months Ended 30th September 2000
Celsis International plc ("Celsis" or "the Company") announces its unaudited
interim results for the six months ended 30th September 2000.
Overview
* Profit before tax #0.43 million (1999: #1.06 million)
* Earnings per share of 0.51p (1999: #1.03p)
* Total revenues #7.62 million (1999: #8.75 million)
* Gross margin of #4.8 million or 62% of turnover (1999: #5.9 million or
67%)
* End Screening business unit delivers revenue of #3.9 million (1999: #4.6
million)
* Americas End Screening division shows good sales growth up 38% to #2.2
million
* European End Screening revenue down due to price competition
* Celsis Laboratory Group ("CLG") revenues at #3.7 million (1999: #3.7
million)
* New management team in place
* Planned acquisition of Biotec Laboratories, a UK based innovative
diagnostic company, in an all share offer
Commenting on the results Jack Rowell, Chairman of Celsis, said: "Celsis
continues to maintain a leading market position despite regional
pressure experienced during the first half in the European Dairy segment of
the End Screening business. We are encouraged by the strong business growth in
the Americas, in both the Personal Care and Dairy sectors. The new management
team has acted swiftly to implement measures to counteract challenges in the
European Dairy segment, aiming to consolidate the Company's position in its
established Dairy market, and maintain its growth in the Personal Care
sector."
"The planned acquisition of Biotec laboratories marks an exciting move into
the Rapid Healthcare Diagnostics market for Celsis. Biotec has developed an
innovative rapid test for tuberculosis (TB) and has a marketing agreement with
Organon Teknika, a subsidiary of Akzo Nobel, who will distribute this and
other related products to the areas worst affected by TB."
"Our commitment to providing complete, cost effective solutions to our
customers within our core markets remains undiminished, while the Company
continues to develop new and existing technologies to improve and complement
our current product offering. I am confident we have made the first step into
a new era for Celsis, and that the new management team lead by Jay LeCoque
will successfully deliver growth both organically and through acquisition."
Enquiries:
Celsis International plc Jay LeCoque,
Chief Executive +44(0)1223 426008
Christian Madrolle
Finance Director
Peter Grant
Business Development Director
Brunswick Group Limited Melissa Miller/
Juliet Marshall +44 (0) 207 404 5959
Financial Review
Results for the period showed strong performance within the Americas End
Screening business with revenues up 38%. This was offset by a reduction in
sales and margin experienced by the European Dairy sector.
Sales for the six months ended 30th September 2000 were #7.62M for the Group
(1999: #8.75M) The end screening business achieved #3.9M sales whilst the
laboratory division maintained its income at #3.7M (1999: #3.7M).
Gross margins, whilst still healthy, have been reduced to 62% (1999: 67%)
primarily as a result of increased price competition in the European Dairy
sector. Whilst reinforcing our leadership in the Dairy market, the Company
will also continue to focus on higher quality revenues obtained in the PCP and
Pharmaceutical sectors.
Central and R&D costs have decreased by 9% at #1.36M (1999: #1.55M). The
process of Global Corporate Account Management (GCAM) has proven a very
effective means of implementing sales and marketing programmes and will enable
the Company to consolidate its position within the marketplace.
The new management team is committed to improving the cash to cash cycle and
reducing working capital. Given the high level of trading receivables,
management is conducting a detailed review into the recoverability of these
balances. The directors do not believe that this exercise will lead to
material adjustments, and accordingly no additional provisions have been made
in the balance sheet at 30 September 2000. Management will make appropriate
adjustments on the completion of the review.
The net result for the Company is to report a profit before tax of #0.43M
(1999: #1.06M) with an earnings per share of 0.51p.
The planned acquisition of Biotec will be satisfied by the issue of new
ordinary shares. It will be necessary to obtain shareholder approval to
increase the share capital and further details of the acquisition and notice
of the Extraordinary General Meeting are expected to be sent to shareholders
in the new year.
Review of Operations
During the first half the Company operated as three distinct business units,
each with its own profit centre accountability. These were End Screening,
Hygiene Monitoring and the Celsis Laboratory Group (CLG). Hygiene monitoring
has now been merged with the End Screening unit to become the Products
division, while CLG will remain a distinct operating division. The planned
acquisition of Biotec will provide a third business unit called Rapid
Healthcare Diagnostics. During the second half the Products division will be
organised into four profit centres; North America, Latin America, Europe and
Asia. Growing opportunities in Latin America and Asia will require focussed
resources within these respective regions.
Products Business
Total revenues in the period #3.9M (1999: #4.6M)
End Screening
The Company continued to expand its PCP and Pharmaceutical products businesses
through its GCAM programme. Multinational companies from the US and the UK
are rolling out their implementation of Celsis technology to smaller
manufacturing sites, as the financial value of Celsis' rapid methods becomes
increasingly apparent.
GCAM is also beginning to have an impact on the sale of PCP and Pharmaceutical
products on the European continent and in Eastern Europe, where the Company's
local sales force and distributors have traditionally favoured an emphasis on
the core Dairy products business. China is also seeing the positive impact of
GCAM where the company recently installed three Advance systems for two
multinational PCP companies.
The company's Dairy products business remains fundamentally strong, especially
in the United States where Celsis has just signed a multi-plant supply
agreement with Suiza, the largest US Dairy conglomerate, and in Latin America
where the company continues to expand its presence in Brazil, Argentina and
Mexico.
In addition, the new management team is organising the products division into
four regional profit centres which is partially intended to increase the
company's focus on the emerging Asian market for the company's products. Asia
has the potential to become the largest market for the Company's products,
even though the Latin American expansion is well underway. Each of these four
profit centres will report directly into the CEO to enhance the focus of the
entire Group on both customer service and operating performance.
The entrance of a new competitor into the European market, offering similar
products at a significant discount to Celsis' pricing, had a substantial
impact on the Company's sales and profits in the region. The effect of this
was particularly evident in Germany, where the company lost several of its
large Dairy customers, coupled with margin erosion to retain the remaining
accounts.
The entire revenue and profit shortfall seen within the Products division is a
direct result of the loss of market share and margin erosion in the European
dairy segment.
The Company has responded aggressively to minimise the impact of this type of
competitive move into Europe, or any other market, although German customers
have been returning to Celsis having realised that price is not the only
consideration when selecting a rapid methods supplier. Management initiatives
include: the launch of liquid stable reagents with increased sensitivity,
upgraded instruments and software platforms, and importantly, an increased
emphasis on application development and customer support that is unmatched by
any competitor worldwide.
Hygiene Monitoring
The Hygiene Monitoring business has been incorporated into the larger Products
division in order to leverage customer bases. The Company has signed a supply
agreement with Medical Packaging Corporation in the USA for the manufacture of
Snapshot, a new integrated hygiene monitoring device. Snapshot has undergone
successful validation trials with customers and was launched by Celsis in
October.
Snapshot replaces several older tests and existing customers have
enthusiastically converted to the "one shot" format and reliability of the
unique liquid reagent. Snapshot is generating significant new business and, in
conjunction with the systemSURE luminometer, has displaced competitor systems
in several significant accounts.
The introduction of SpotCheck, the first colour ATP hygiene test, had been
delayed due to a manufacturing problem that has now been resolved. Global
market response and interest in the product remains very high. Initial sales
have been made into both the Food Processing and Food Service sectors in the
UK and USA. The Food Service sector offers the greatest potential for this
technology since it does not require instrumentation and can be used anywhere
at anytime by anyone. Discussions with an international fast food provider are
in progress.
The introduction of Snapshot, one of a select number of new products planned
to advance hygiene monitoring sales, indicates the Company's continued
commitment to the Hygiene Monitoring market. International food safety
concerns have been heightened following recent outbreaks of BSE and food
poisoning, fuelling renewed interest from all food producers in detection and
protection technology.
Celsis Laboratory Group (CLG)
Total revenues in the period #3.7M (1999: #3.7M)
Major initiatives taken last year to improve turn-around time and the quality
of sales were successfully completed, and the Group is maintaining this
increased level of customer service. The loss of two major customers, Ganes
and Merck, has resulted in sales similar to the previous period. Ganes filed
for bankruptcy and testing ceased immediately, whilst Merck made a strategic
decision to bring the majority of all out-sourced testing into a central
facility. This resulted in a loss of about #0.4M sales in the first half.
Gross margins in the business have been maintained at 50% (1999: 50%) with the
management team continuing to control costs in line with performance. CLG
continues with its capital expenditure programme to develop its capacity to
face increasing demand for their services.
Biotec Laboratories
The planned acquisition of Biotec Laboratories will represent a new and
exciting addition to the Celsis portfolio. The acquisition will allow Celsis
to leverage its core capabilities in rapid methods and marketing into the
medical diagnostics field. Biotec is a small innovative diagnostic company
based in the United Kingdom and employs approximately 30 people. Currently
Biotec is loss making with a turnover in the region of #1.35 million. It's
principle new product is a rapid new test for TB, due to be introduced in the
second half of 2001. The market for TB testing is currently estimated to be
$1.9 billion with the Biotec platform poised to enter at a time when TB is
considered to be a global emergency by the World Health Organisation. More
people die of TB in the world than any other single infectious disease
(estimated at 2 million pa). The alliance with Organon Teknika provides a
route to market for the product. In addition to the proven TB product, the
technology platform from which it is derived can be developed for the testing
of specific organisms such as food pathogens.
Prospects
The End Screening business continues to exceed expectations, with the one
exception being the European Dairy segment. The PCP segment continues to
expand internationally, as does the Pharmaceutical segment, although the
growth curve contains slightly extended timelines due to the conservative
nature of the pharmaceutical industry.
Underscoring this growth is the success of the Company's global account
program that combines the strengths of Celsis' international presence with the
multinational growth of its customer base. New management intends to increase
the role of global account management by having this function also report
directly into the CEO.
The company feels that it is important to highlight that the European Dairy
end screening products business is undergoing the strong growth rate that
fuels increased competition. However, the management is maximising the
Company's market position in this area, and is seeking to consolidate its
position.
Competition in this area is likely to force a shakeout among these new
competitors, and Celsis, the largest supplier in this segment does not intend
to lose this battle. The company has the lowest cost to manufacture, the
broadest distribution reach, the most comprehensive technical support network
and database generated over years in the business.
In addition, the planned launch of new liquid stable reagents, new instrument
and software platforms and an increased emphasis on application development
and customer support will prove invaluable in retaining customers and growing
market share.
These advantages are not easily matched by competitors solely offering lower
prices, and the Company is already seeing signs to that effect. The company
believes that the current shortfall in Europe is a temporary setback, and one
that is unlikely to be repeated.
Future sales and profit from the Laboratory business also remain solidly in
line with expectations. The loss of two large water-testing customers created
a slight decline in revenues, but CLG continues its trend toward year end
budget projections. Increased demand for services from the Pharmaceutical
sector will be met by CLG through the prudent management of capital
expenditure in line with demand.
The planned acquisition of Biotec provides Celsis with the platform to expand
its core competence of rapid microbial detection (using patented Phage
technology) into the rapid medical diagnostics arena with its first product,
the Fastplaque TB tuberculosis test. Lastly, the Phage technology can be
applied to Celsis' core industrial microbiology business as the next step in
identifying pathogens, especially in food and dairy products.
Celsis International plc
Unaudited Consolidated Profit and Loss Account
For the six month period ended 30 September 2000
Six mths Six mths Year to
to 30 to 30 31 Mar
Sep Sep 2000
Notes 2000 1999 #'000
#'000 #'000
________ _______ ______
Turnover 7,623 8,751 19,235
Cost of sales (2,869) (2,891) (6,409)
________ _______ ______
Gross profit 4,754 5,860 12,826
Sales & marketing
expenses
(2,951) (3,246) (7,035)
General &
administrative
expenses (474) (856) (1,425)
Research &
development
expenditure (890) (691) (1,352)
________ _______ _______
Operating profit
/(loss) 439 1,067 3,014
Interest
receivable &
similar income 31 32 55
Interest payable (39) (44) (62)
________ _______ _______
Profit/(loss)on
ordinary
activities before
taxation 431 1,055 3,007
Tax on profit /
(loss) on ordinary
activities 95 - (299)
________ _______ _______
Retained profit /
(loss) for the
period 526 1,055 2,708
======== ======= =======
Earnings / (loss)
per Ordinary Share 1 0.51p 1.03p 2.63p
Diluted earnings /
(loss) per
Ordinary Share
1 0.50p 1.02p 2.59p
IIMR earnings /
(loss) per
Ordinary Share 0.51p 1.03p 2.63p
Statement of total recognised profits /
(losses)
Profit / (loss) for the financial period 526 1,055 2,708
Currency translation differences on foreign
currency net investments 180 (267) (403)
________ _______ ______
Total gains / (losses) recognised in the
period 706 788 2,305
======== ======= ======
Celsis International plc
Unaudited Consolidated Balance Sheet
at 30 September 2000
Notes At 30 At 30 At 31
Sep Sep Mar
2000 1999 2000
#'000 #'000 #'000
________ ________ _______
Fixed assets
Intangible assets 401 429 414
Tangible assets 4,165 4,054 4,100
Investments 13 10 19
4,579 4,493 4,533
________ ________ _______
Current assets
Stocks 2,440 2,426 2,162
Debtors: amounts falling due
after one year 703 377 953
Debtors: amounts falling due
within one year 10,494 7,382 9,593
Cash at bank and in hand 299 907 591
________ ________ _______
13,936 11,092 13,299
Creditors: amounts falling
due within one year (2,916) (2,092) (2,819)
________ ________ _______
Net current assets 11,020 9,000 10,480
Total assets less current
liabilities 15,599 13,493 15,013
Creditors: amounts falling
due after more than one year (452) (601) (579)
________ ________ _______
Net assets 15,147 12,892 14,434
======== ======== =======
Capital and reserves:
Called up share capital 1,032 1,029 1,030
Share premium account 6 13,990 13,961 13,985
Profit and loss account 5 (916) (3,139) (1,622)
Reserve arising on
consolidation 1,041 1,041 1,041
________ ________ _______
Equity shareholders' funds 15,147 12,892 14,434
======== ======== =======
Celsis International plc
Unaudited Cashflow Statement
For the six month period ended 30 September 2000
Six mths Six mths Year to
to to 31 Mar
30 Sep 30 Sep 2000
Notes 2000 1999 #'000
#'000 #'000
_________ ________ _______
Net cash outflow from
continuing activities 2 (1,093) (191) (116)
Returns on investments and
servicing of finance
Interest received from
investments 31 11 55
Interest paid (39) (33) (62)
_________ ________ _______
(8) (22) (7)
_________ ________ _______
Taxation
Corporation tax paid (91) - (136)
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (274) (548) (986)
Sale of tangible fixed
assets - 4 10
Purchase of intangible fixed
assets - (3) (3)
_________ ________ _______
(274) (547) (979)
Cash outflow before
management of liquid
resources and financing (1,466) (760) (1,238)
Financing
Issue of shares 7 - 30
Repayment of principal under
finance leases (47) (28) (63)
Repayment of loan principal (10) (9) (18)
_________ ________ _______
(50) (37) (51)
========= ======== =======
(Decrease) in cash in the
period (1,516) (797) (1,289)
========= ======== =======
Notes to the Accounts
For the six month period ended 30 September 2000
Six mths to Six mths to Year to
30 Sep 30 Sep 31 Mar
2000 1999 2000
__________ ___________ __________
1. Basic & diluted profit /
(loss) per Ordinary Share
Profit / (loss) on ordinary
activities after taxation
(#'000) 526 1,055 2,708
Basic weighted average
number of Ordinary Shares
in issue 103,065,415 102,725,398 102,837,935
Diluted weighted average
number of Ordinary Share in
issue 104,424,651 103,433,817 104,612,237
=========== =========== ===========
2.Reconciliation of
operating profit to net
cash outflow from
continuing operating
activities #'000 #'000 #'000
___________ ___________ ___________
Operating profit before
exceptional costs 439 1,067 3,014
Exchange gain (411) - -
Depreciation of tangible
fixed assets 440 478 980
Provision for change in
value of shares held by
Employee Share Ownership
Trust 6 2 (9)
Amortisation of intangible
assets 15 15 30
(Profit) / loss on disposal
of tangible fixed assets - (4) 2
(Increase) in debtors (651) (1,034) (3,889)
(Increase) in stocks (278) (187) (11)
(Decrease) in trade & other
creditors (653) (528) (233)
____________ ___________ ___________
Net cash outflow from
continuing operating
activities (1,093) (191) (116)
============ =========== ===========
3. Reconciliation of net
cash flow to movement in
net funds
(Decrease) in cash in the
period (1,516) (797) (1,289)
Repayment of finance lease
and loan obligations 57 37 81
____________ ___________ ___________
Movement in net funds in
the period (1,459) (760) (1,208)
New finance leases - - (59)
Exchange adjustment 406 (168) (13)
Net funds at beginning of
the period 22 1,302 1,302
____________ ___________ ___________
Net funds at end of the
period (see Note 4) (1,031) 374 22
============ =========== ===========
4. Analysis of net funds
At Non- Exchange At end
start Cashflow Cash differences of
of #'000 Changes #'000 period
period #'000 #'000
#'000
Six months ended
30 September 2000
Cash at bank and
in hand 591 (742) - 450 299
Overdrafts - (774) - 2 (772)
Loans (348) 10 - (29) (367)
Finance leases (221) 47 - (17) (191)
______ ________ _______ __________ _______
22 (1,459) - 406 (1,031)
====== ======== ======= ========== =======
Six months ended
30 September 1999
Cash at bank and
in hand 1,887 (797) - (183) 907
Loans (363) 9 - 9 (345)
Finance leases (222) 28 - 6 (188)
______ ________ _______ __________ _______
1,302 (760) - (168) 374
====== ======== ======= ========== =======
Year ended 31
March 2000
Cash at bank and
in hand 1,887 (1,289) - (7) 591
Loans (363) 18 - (3) (348)
Finance leases (222) 63 (59) (3) (221)
______ ________ _______ __________ _______
1,302 (1,208) (59) (13) 22
====== ======== ======= ========== =======
5. Profit and loss Six Six mths to Year to
account mths to 30 Sep 31 Mar
30 Sep 1999 2000
2000
_______ __________ _______
#'000 #'000 #'000
Retained loss
brought forward (1,622) (32,024) (32,024)
Retained profit /
(loss) for the
period 526 1,055 2,708
Reduction in share
premium
- 28,100 28,100
Goodwill written
off - (3) (3)
Exchange
difference 180 (267) (403)
_______ __________ _______
Retained loss
carried forward (916) (3,139) (1,622)
======= ========== =======
6. Reduction of Share Premium Account
On 29th June 1999 the Company passed a special resolution for the proposed
reduction of the Company's share premium account by #28,100,000. A
successful application was made to the High Court and the proposed Special
resolution was confirmed by the Court on 28th July 1999. The effect of this
resolution was to clear the accumulated deficit on the Company's profit and
loss account reserve.
7. Preparation of preliminary statement
The abridged figures for the year ended 31 March 2000 are from the accounts
of Celsis International plc for that year. These accounts have been
reported on by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did not contain a
statement under section 237 of the Companies Act 1985.
The figures for the period to 30 September 2000 are consolidated figures for
Celsis International plc. The foregoing financial information, which has
been prepared on the basis of the accounting policies set out in Celsis
International plc's accounts for the year to 31 March 2000, does not amount
to full accounts within the meaning of section 240 of the Companies Act 1985
(as amended).
8. Dividend
The Directors have not declared an interim dividend.
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