TIDMSBI
RNS Number : 5193U
SourceBio International PLC
02 August 2022
SourceBio International plc
('SourceBio', the 'Company' or the 'Group')
First Half Trading Update
Solid first half results, with significant revenue growth in
core business units
311% growth in Cellular Pathology revenues, accelerated by
transformational LDPath acquisition
Strong balance sheet with no borrowings
SourceBio International plc (AIM: SBI), a leading international
provider of integrated state-of-the-art laboratory services ,
provides a trading update for the six months ended 30 June 2022,
confirming strong trading in core business units, particularly
Cellular Pathology which has also been significantly enhanced by
the LDPath acquisition that was completed in March 2022.
Key half year highlights, unaudited
-- Revenues from the core Healthcare Diagnostics, Genomics and
Stability Storage business units up 63% to GBP13.8 million (H1
2021: GBP8.5 million)
-- This included Cellular Pathology and Digital Pathology
revenues up more than fourfold to GBP6.8 million (H1 2021: GBP1.7
million) including the contribution from LDPath since acquisition
in March
-- Successful integration and strong delivery from LDPath.
Revenues above comprising organic Cellular Pathology revenues of
GBP4.6 million, up 179% like-for-like plus acquired LDPath revenues
of GBP2.2 million, up 82% on a like-for-like basis, and 14% above
plan
-- Total revenues of GBP20.5 million (H1 2021: GBP37.3 million),
including COVID-19 PCR revenues of GBP6.6 million (H1 2021: GBP28.4
million) which is no longer considered a core business line
-- Adjusted EBITDA (1) of approximately GBP2.1 million (H1 2021:
GBP11.2 million), largely reflecting the reduction in COVID-19 PCR
volumes, as expected
-- Cash at 30 June 2022 totalled GBP15.2 million (30 June 2021:
GBP17.2 million) and the Group has no borrowings
As noted in the Company's AGM trading update in June, the Board
is focussed on utilising the Group's strong balance sheet and cash
to accelerate growth in its three core business units - Healthcare
Diagnostics, Genomics and Stability Storage.
The highlight of the period has been the exceptionally strong
market demand for our Cellular Pathology and Digital Pathology
services within the Healthcare Diagnostics business unit, which was
driven by the continued shortage of pathologists coupled with the
increasing momentum of elective surgeries. This business is
operating at record volumes and the principal challenge remains to
rapidly increase capacity and throughput to meet this unprecedented
market demand.
The Genomics business unit, including the recently launched
Precision Medicine business line, continues to expand its testing
services offering and reported revenue growth of approximately 11%
compared to H1 2021.
The Stability Storage business unit's focus is to further grow
its highly profitable Stability Storage Services and Service &
Validation business lines with recurring revenues, which together
grew approximately 9% compared to H1 2021.
The first half results include earnings from COVID-19 PCR
testing which have reduced significantly and are not expected to
continue at a material level. Significant efforts have been
undertaken to re-size the Group's cost base and a reorganisation
charge of approximately GBP0.7 million has been included within
exceptional costs in the period. Added to the LDPath acquisition
related fees of approximately GBP0.7 million, inventory provisions
in relation to the rapid reduction of demand for COVID-19 offerings
of GBP0.9 million and the discontinuation of manufacturing
operations of GBP0.2 million, total exceptional costs incurred in
the first half amount to approximately GBP2.5 million.
The Group remains well positioned to support its customers and
their requirements. The Board believes the Group is currently
trading in line with expectations. We remain optimistic for the
remainder of the year and beyond.
Update on dispute with HMRC
As previously reported, in December 2021, HMRC issued a letter
to the Group that challenged the Group's VAT treatment of COVID-19
PCR testing services provided. On professional advice, the Group
treated the accounting for COVID-19 PCR services as VAT exempt.
HMRC suggested that some of those services should have been treated
as standard rated for VAT purposes. The Group took advice, which
supported the accounting treatment adopted. HMRC have since
reverted to its policy team and its solicitors office and on 25
July, HMRC verbally informed the Group's tax advisors that it did
not intend to pursue its claim for VAT to be chargeable on COVID-19
PCR services. The Group has been told that this decision is
expected to be put in writing in September. The Board continues to
conclude that no provision should be made in its financial
statements.
Full details of the Group's financial performance for the first
half of 2022 together with a fuller outlook for 2022 will be
provided in the Company's unaudited interim results. The date of
these will be advised in due course.
Jay LeCoque, Executive Chairman, commented: "We are encouraged
with the progress in the first half and are looking forward to
capitalising on further opportunities that we expect in the second
half across all core business units. Our operational focus is the
continued rapid scale-up of Cellular Pathology and Digital
Pathology volumes through the rest of the year and beyond. We
expect a very busy second half and look forward to updating further
in due course."
(1) Adjusted EBITDA is earnings before interest, tax,
depreciation and amortisation, excluding exceptional items and
share based payments
Contacts:
SourceBio International plc www.sourcebiointernational.com
Jay LeCoque, Executive Chairman Via Walbrook PR
Tony Ratcliffe, Chief Financial Officer
Liberum (Nominated Advisor and Broker) Tel: 020 3100 2000
Richard Lindley / William Hall / Miquela
Bezuidenhoudt
Walbrook PR Limited Tel: 020 7933 8780 or sourcebio@walbrookpr.com
Paul McManus / Sam Allen Mob: 07980 541 893 / 07502
558 258
About SourceBio International plc
www.sourcebiointernational.com
SourceBio is a leading international provider of integrated
state-of-the-art laboratory services with clients in the
pharmaceutical, healthcare, clinical, drug development and life
sciences research industries, with a focus on improving patient
diagnosis, management and care. Group revenues are derived from
four business units:
-- Healthcare Diagnostics - Histopathology cancer screening, including
Digital Pathology and clinical diagnostic services for the NHS and
private healthcare providers across the UK
-- Genomics - DNA sequencing services and Precision Medicine offering
for pharmaceutical and biotechnology industries, academia, contract
research organisations (CROs) and other research groups in the UK,
Europe and North America
----------------------------------------------------------------------
-- Stability Storage Controlled environmental storage services and
laboratory equipment validation services for pharmaceutical industry
in the UK, Ireland and North America
----------------------------------------------------------------------
-- Infectious Disease Testing - A range of COVID-19 testing services
for commercial enterprises, private healthcare groups and the NHS,
including PCR testing under ISO 15189 accreditation
----------------------------------------------------------------------
More details on Group operations can be found here:
www.sourcebioscience.com
SourceBio International plc (SBI) is listed on the AIM market of
the London Stock Exchange.
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