Biofocus results not too shabby. (Though the chairman sold 40K out of his 140K holding...)
BioFocus plc, a leading drug discovery company, is pleased to announce its
results for the year ended 31 December 2003.
Highlights:
• Turnover up by 9.6% to £15.84m (2002: £14.45m)
• Profit before exceptional costs, amortisation of goodwill and tax
£1.62m (2002: £1.56m)
• Basic EPS before goodwill amortisation 5.71p (2002: 9.6p)
• Strong cash balance of £4.18m (2002: £3.49m)
• Research and development expenditure increased to £2.06m (2002:
£1.58m)
• Downstream interest in 38 discrete discovery programmes
• New collaborations with AstraZeneca and Ferring
• We have worked with 24 out of the 30 top pharmaceutical companies
worldwide during the 2002/2003 period
Chief Executive, Geoff McMillan, said:
'We are very pleased with the progress of BioFocus this year. The consolidations
both operationally and geographically have led to greater efficiencies within
the business. Our highly effective and efficient drug discovery process is
achieving success levels of 60%, compared with an industry average of 25%, and
BioFocus is well placed to move forward as market conditions continue to
improve.'
For further information, please contact:
BioFocus +44 (0)1799 533500
Geoff McMillan, Chief Executive
Stephen France, Finance Director
Buchanan Communications +44 (0)20 7466 5000
Tim Anderson/Mark Court/Rebecca Skye Dietrich
Business Review
A strong performance from our Discovery Products division and growth in income
from technology access and milestone payments more than compensated for a
decrease in fee for service income, leading to overall growth in revenues of
9.6% to £15.84m (2002: £14.45m) and profit before exceptional costs,
amortisation of goodwill and tax of £1.62m (2002: £1.56m), at the upper end of
market expectations.
Exceptional costs relating to the relocation and surrender of the lease at
Sittingbourne totalled £847,000. After deducting these costs, and amortisation
of goodwill of £1.09m, we report a loss before tax of £0.32m (2002: profit of
£0.72m).
Basic earnings per share before amortisation of goodwill was 5.71p (2002:
9.36p). Fully diluted earnings per share before amortisation of goodwill was
5.67p (2002: 9.34p).
The Company's cash position continued to improve with balances at 31st December
2003 of £4.18m (2002: £3.49m).
Our achievements are all the more encouraging in the context of the very tough
trading climate, which the whole industry experienced last year. The tightening
of pharmaceutical company budgets and continuing cash constraints on the biotech
sector were exacerbated by uncertainties in the Middle East and led to
substantial reductions in new business opportunities through the first half of
2003.
The improvements seen in the second half, particularly the final quarter, are
reflected in the announcements made with respect to new collaborations with
AstraZeneca and Ferring which join a customer base that includes Roche, Amgen
and Axxima. The impact of this overall improvement is expected to be seen in the
second half of 2004 as the pipeline of new business improves and new
collaborations build.
In the 2002 and 2003 period, we are proud to list some 24 of the top 30
pharmaceutical companies worldwide as customers, as well as many high quality
mid tier pharmaceutical companies and innovative biotechnology businesses.
The Group continued its investment in research and development, spending £2.06m
(2002: £1.58m). We now have a number of programmes ready to be out-licensed,
some of which are owned jointly with Biovitrum and some of which are wholly
owned. In all, we either own, partly own or have a downstream interest in 38
discrete discovery programmes, making our economic participation in a marketed
drug a real possibility.
We have a highly effective and efficient drug discovery process. Compared with a
published industry average of 25 percent of targets yielding quality drug leads,
we have achieved success levels of 60 percent.
Projecting this improved productivity forward, again using published industry
figures, we would anticipate that the number of drugs reaching late stage
clinical development would more than double.
This, together with shortening of the discovery phase timescale, where in
several programmes we moved from screen to lead in less than six months,
provides a strong indication that our approach can help address the major
challenges facing the pharmaceutical and biotechnology industries today.
2003 was also a year of considerable change within BioFocus. On 1st May, Geoff
McMillan succeeded me as Chief Executive. He has made a number of important
organisational changes, which have led to greater efficiencies. In December, we
closed our site at Sittingbourne and relocated the staff to Saffron Walden,
where we took a lease on a second building. I am pleased to report that we have
agreed terms to surrender the lease at Sittingbourne and this should be
completed by the end of March.
It is to the credit of the management and staff that these wide ranging changes
were made with the minimum of disruption to our business and within budget.
In 2004, as well as seeking to out-license one or two of our programmes, we will
also undertake a rigorous process aimed at selecting a therapeutic focus for our
company. This will enable us potentially to select one or two leads for
pre-clinical development with the aim of partnering these at a later stage when
more value has been added and the returns from such partnering have been
substantially enhanced.
Corporate Governance
One of the major challenges we face in providing robust guidance to the equity
market is that a disproportionate percentage of sales fall in December primarily
due to the way that pharmaceutical companies manage their library acquisition
budgets. Consequently some 25% to 30% of our revenues typically accrue in
December. In order to address this issue, the board has decided to change the
year-end to 31st March from 2005.
Outlook
We have a balanced business where rises in income from some activities
compensate for decreases elsewhere. We have strengthened our team and
consolidated our operations more closely geographically. After such a difficult
year in terms of trading and organisational change, I am pleased to report that
BioFocus is in a strong position to move forward as markets improve.
David Stone
Chairman
2 March 2004
Consolidated Profit and Loss Account
Audited Results for the year ended 31st December 2003.
Year to Year to
31.12.03 31.12.02
Excluding
exceptional Exceptional
costs costs Total
£'000s £'000s £'000s £'000s
Turnover 15,837 - 15,837 14,445
Operating profit before research and 3,878 (847) 3,031 3,302
development costs and amortisation of goodwill
Research and development costs (2,055) - (2,055) (1,575)
Operating profit before amortisation of 1,823 (847) 976 1,727
goodwill
Amortisation of goodwill (1,088) - (1,088) (1,088)
Operating (loss) profit 735 (847) (112) 639
Interest receivable 36 68
Interest payable (240) (239)
Exceptional discount on early redemption of - 525
loan note
(Loss) profit on ordinary activities before (316) 993
taxation
Taxation 156 (560)
(Loss) profit on ordinary activities after (160) 433
taxation
Basic earnings per share (0.99p) 2.66p
Fully diluted earnings per share (0.99p) 2.66p
Basic earnings per share before amortisation of 5.71p 9.36p
goodwill
Fully diluted earnings per share before 5.67p 9.34p
amortisation of goodwill
Consolidated Balance Sheet
Audited Results for the year ended 31st December 2003.
At At
31.12.03 31.12.02
£'000s £'000s
FIXED ASSETS
Intangible fixed assets 19,284 20,083
Tangible fixed assets 5,146 5,059
Investments 263 300
24,693 25,442
CURRENT ASSETS
Stock and work in progress 2,863 2,181
Deferred tax asset 2,248 2,618
Debtors and prepayments 7,220 6,046
Cash at bank and in hand 4,181 3,486
16,512 14,331
CREDITORS
Amounts falling due within one year (5,178) (3,290)
Net Current Assets 11,334 11,041
Total Assets less Current Liabilities 36,027 36,483
CREDITORS
Amounts falling due after more than one year (858) (1,371)
Provisions for Liabilities and Charges (425) (210)
(1,283) (1,581)
NET ASSETS 34,744 34,902
EQUITY CAPITAL AND RESERVES
Called-up Share Capital 4,067 4,065
Share Premium Account 29,232 29,232
Profit and Loss Account 1,445 1,605
EQUITY SHAREHOLDERS' FUNDS 34,744 34,902
Consolidated Cash Flow Statement
Audited Results for the year ended 31st December 2003.
Year to Year to
31.12.03 31.12.02
£'000s £'000s
Net cash inflow from operating activities 2,386 2,094
Returns on investments and servicing of finance:
Interest received 36 68
Interest paid (60) (19)
Interest element of finance lease rental payments (180) (220)
(204) (171)
Taxation:
Corporation tax received 14 113
Corporation tax paid - (43)
Overseas taxation paid (2) -
12 70
Capital Expenditure:
Payments to acquire intangible fixed assets (37) (92)
Payments to acquire tangible fixed assets (1,327) (2,184)
Receipts from sales of tangible fixed assets - 61
Payment to acquire fixed asset investment (45) (300)
Receipt from sale of fixed asset investment 182 -
(1,227) (2,515)
Financing:
Issue of share capital 2 3
Repayment of loan notes - (475)
Proceeds of sale and lease back of tangible fixed assets - 1,950
Loan received - 350
New hire purchase agreements 594 327
Capital element of finance lease rental payments (617) (746)
Loan repayments (101) (25)
Hire purchase repayments (150) (55)
(272) 1,329
Increase in cash 695 807
Notes:
1. Analysis of Turnover
Year to 31.12.03 Year to 31.12.02
£'000s £'000s
Discovery Products 6,576 3,917
Technology access fees / milestones 2,412 2,150
Contract services 6,849 8,378
15,837 14,445
2. The auditors have indicated that they intend to give an unqualified report on
these statutory accounts.
3. The group had no recognised gains or losses other than the results shown
above.
4. The basic earnings per share is calculated on the weighted average number
of shares in issue during each year. The fully diluted earnings per share takes
account of outstanding share options.
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