RNS Number:4140L
Celsis International PLC
22 May 2003
CELSIS INTERNATIONAL PLC
Preliminary Results For The Year Ended 31st March 2003
Celsis International plc, is a world leading manufacturer of rapid diagnostic
systems used to detect and measure microbial contamination for many of the major
international pharmaceutical, personal care, beverage and dairy companies. The
Company is also a leading US supplier of cGMP analytical services for the
pharmaceutical industry.
Highlights:
* Profits before tax of $3.94 million (#2.54 million) (2002: loss of
$5.67 million (#3.98 million))
* Group Revenue increased 8.5% to $27.1 million (#18.52 million) at
constant rate of exchange (2002: $25.0 million (#17.54 million) on
continuing operations)
* Strong cash position as of 31 March 2003 with $6.55 million (#4.15
million) cash at bank and in short term investments
(2002: $2.55 million (#1.79 million))
* Functional currency changed to US$ providing more accurate accounting
of business growth
* Product Group revenues up 8.5% to $12.2 million (2002: $11.24 million)
* Product Group Personal Care and Pharmaceutical revenues up 24% to $7.3
million (2002: $5.9 million)
* Laboratory Group revenues up 8.5% to $14.9 million (2002: $13.7
million)
* Order book remains strong for both Product and Laboratory Group
* Healthy growth in new customers including recently announced agreement
with Boots Manufacturing
Jay LeCoque, Chief Executive Officer of Celsis, commented:
"I am pleased to announce that Celsis has achieved significant increase in
profits as well as solid revenue growth during this important year for our
business. We have achieved growth in all market segments and continue to lead
our respective industries in technology innovation and customer care. Our
Personal Care and Pharmaceutical customer base now represents 82% of our
revenues and the synergies between the Product Group and Laboratory Group are
increasingly being realised."
Christian Madrolle, Finance Director of Celsis, added:
"By reporting in US$, we shall eliminate a substantial amount of
currency-related volatility from our reported results. Taking Asia into
account, we generate more than 85 % of our revenue in US$.
It makes it sensible to report in this currency, which underlines the dedication
of the Executive Directors and the Board to the development of a spirit of
transparency, accountability and integrity."
22 May 2003
ENQUIRIES:
Celsis International plc Tel: 01638 600151
Jay LeCoque, Chief Executive Officer Today: 020 7457 2020
Christian Madrolle, Finance Director Today: 020 7457 2020
College Hill Tel: 020 7457 2020
Nicholas Nelson
Financial Review
Introduction
Following the requirements of UK GAAP (SSAP 20) we have regarded the US dollar
as our functional currency from 1 April 2002. This will provide the investment
community with a more accurate measurement of the performance of the Company and
how it creates value.
Celsis' largest market is the Americas, which accounted for 76% of total sales
in 2002-2003, whilst Europe and Asia accounted for 24%. The US$ being the
currency of the primary economic environment in which Celsis operates, and it is
also the currency in which the majority of cash is generated and expended by
both the Products and Laboratories Group.
Celsis has historically measured and presented the financial statements in
Sterling. Effective from 1 April, 2002, the Financial Statements will be
presented in US$ and all comparative figures have been reclassified to conform
to the current year's presentation. The Interim Results at 30 September 2002
have been presented in Sterling, but comparative figures from the previous
year's annual accounts are reported in US$.
Results
Total revenues for the year ended 31 March 2003 were up 7.5% at $27.10 million
against $25.21 million in the year ended 31 March 2002.
Profit before taxation was $3.94 million (#2.54 million) and 14.53% of revenues
compared with a loss of $5.67 million (#3.98 million) the previous year. The
return on capital has reached 25%, based on average net assets during the year.
Earnings and Taxation
Celsis has accumulated over the years a significant amount of tax losses carried
forward and is now in a position to recognise the fact that these tax losses
represent an asset, which, it is considered likely, will be recoverable in the
foreseeable future.
As we expect existing tax losses will begin to be utilised by future profits, we
have, in accordance with UK GAAP, recognised an amount of $1.22 million as a
deferred tax asset. The situation of the tax losses carried forward will be
reviewed at each subsequent balance sheet date to ascertain if some or all of
the remaining unrecognised balance should be recognised then.
The group's retained profit after tax was $5.16 million (#3.32 million) to be
compared with a loss of $5.54 million (#3.898 million) in the previous year.
The Product Group and the Laboratory Group both contributed to the total
earnings growth.
We believe the recognised deferred tax asset of $1.22 million, signals
confidence in the ability of the company to deliver future earnings and, in the
absense of a dividend, which cannot be distributed with our current tax losses
carried forward, benefits shareholders with significant strengthening of
shareholder funds.After recognising the deferred tax asset, equity shareholders'
funds have grown 43% from $12.98 million to $18.58 million
Fully diluted earnings for the year were 4.82 cents a share compared to a loss
of 4.27 cents per share the previous year.
Gross Margin
Gross margins for 2003 have shown a remarkable resilience amid a generally
depressed global economic environment and have remained at 61.5%, the same level
as the previous year.
Operating Expenses
As a result of the rationalisation and restructuring efforts made in the
previous year, our operating costs have been significantly reduced from $16.99
million to $12.69 million this year. More effective sales and marketing
expenses represented 33.9% of revenues, against 41.9% the previous year, and
administrative expenses 9.6% of revenues, against 21.1% the previous year.
In line with our strategy of focusing our research & development efforts on
rapid microbial detection systems and following the disposal of our hygiene
monitoring division last year and the subsequent discontinuation of research and
development in hygiene monitoring, our overall R&D expenses have been decreased
from $1.1 million to $891,000. However, the funding being focused on the
Product Group's core and continuing finished product screening business, has
increased quite substantially.
The restructuring costs provision of $1.07 million (#750,000) which had been
made at the end of last year, has been fully utilised and the benefits in costs
reduction have begun to flow through. Further benefits of this restructuring
exercise are anticipated for the coming years.
Cash Flow
Cash generation has continued to be strong across the group with $5.07 million
of operating cash flow for 2003, significantly higher than in 2002, when it was
$2.20 million. Higher profits before depreciation contributed $5.23 million
whilst a marginal working capital outflow of $162,000 brought the cash flow from
operations to $5.07 million.
Capital expenditure for the year to 31 March 2003 was $611,000, compared with
the previous year's figure of $788,000; the total cash position increased by
$4.36 million during the year to reach total net funds at the end of the period
of $6.10 million against $1.74 million at the end of the previous year.
Group cash balances are invested in short term money market instruments
exclusively in the UK. With a substantial proportion of the Group's revenue and
profits earned in US$, and the decision to adopt the US$ as the group's
functional currency, we are no longer subject to any significant foreign
currency transaction exposure.
Balance Sheet
Our stock value has decreased from $3.57 million the previous year to $3.09
million this year. Most of this decrease can be attributed to better management
of stock levels and reordering procedures. Trade debtors increased from $4.19
million to $5.06 million reflecting the last quarter increased trading activity.
Current liabilities decreased from $3.57 million to $3.31 million and long
term liabilities from $1.51 million to $451,000. The creditors/cash ratio (acid
test ratio) has continued to improve to 0.51 (2002: 1.40). The group's net
assets have increased 43% during the year moving from $12.98 million to $18.58
million.
With a very strong balance sheet structure, no debt, and growing free cash
generation, we are well positioned to capture any adequate acquisition
opportunities in the near future and continue to increase earnings and
shareholder's funds.
Operational Review
Celsis has achieved significant profit growth on solid sales increases and is
now in a position to build upon a stable and sustainable business model. Our
Product Group continues to develop leading edge microbial detection systems
coupled with a lowest cost to manufacture, forming a lethal combination to
ensure a leadership position in this business. Our Global Corporate Account
Management (GCAM) programmes are demonstrating results in existing and new areas
of our business development, with our business expanding in every region of the
globe. Our Laboratory Group is implementing a leading edge and paperless data
management system that offers complete information sharing and data integration
with our Pharmaceutical customer base. In addition, we are also implementing a
new quality management system focusing on the "cost of quality" and "price of
non-conformance" to our operational performance. Both of these new initiatives
help underscore our overall strategy to insure we retain our leadership position
in the analytical services arena.
Product Group
The Products Group, which represents 45% of group revenues, increased 8.5% to
$12.2 million and has been developing according to plan. While there was some
softness in capital equipment spending, our reagent growth and global customer
expansions have more than outweighed this and contributed to the increase in
revenues this past year. Reagents represented 75% of Product Group revenues
this past year, although with the anticipated increase in capital equipment
spending in the coming year we expect our instrument sales to offset that
percentage in the coming year.
As mentioned in our recent interim statement, we are seeing an increased
adoption of our newest testing system utilizing Adenylate Kinase (AK) among our
key global Personal Care and Pharmaceutical customers. Celsis has an exclusive
licence for AK from the Defence and Scientific Testing Laboratories (Dstl)
division of the UK Ministry of Defence and we are working on additional
enhancements to AK that will dramatically reduce testing times further.
Our Personal Care and Pharmaceutical Products business was up 24% to $7.3
million and continues to expand as more products are validated with the help of
our Laboratory Group facilities. By supporting the validation of additional
product ranges for our customers, we can effectively eliminate one of the key
barriers to adoption of any new technology and we intend to use this approach
for other parts of our growing Products business. Our European Personal Care
and Pharmaceutical business surpassed our European Dairy business in revenues
for the first time this past year. This highlights both the relative decline in
European Dairy but also the success and portability of our GCAM customer focus
and value-selling approach into the newly restructured selling regions of our
business.
Revenues in our Dairy Products business registered some decline primarily due to
European pricing pressure. That being said, the new strategy of providing
superior products at competitive prices is indeed securing results as we see
have seen new business being developed with several large European dairy
companies. We remain very confident that with the implementation of our new
manufacturing processes and team, we can continue to offer our customers new and
competitively higher value products while maintaining or even improving our
operating margins.
Our current R&D activities in partnership with some of our global customers in
both personal care and pharmaceuticals, is developing new rapid methods
technologies beyond our existing ATP bioluminescence (ATP) technology, and is
allowing Celsis to further expand its presence into the realm of leveraging new
developments for AK, antibodies, DNA probes and other leading detection
technologies. The common objectives for all R&D projects is to develop rapid
detection systems that are more sensitive in detection capability, more
affordable and more easily validated by our global customer base.
Our Beverage business, while relatively small in current revenue terms, remains
a focus and we are actively growing this business. Leading customer gains are
happening and we have taken the approach to retain some confidentiality over
this new customer base thus protecting Celsis' competitive position.
We intend to implement more customer facing and customer care programmes into
our Products business to more effectively highlight the value of superior
manufacturing quality systems with ISO 9001 credibility, CFR Part 11 compliant
software (that is now the global standard in laboratory instrumentation), and
unmatched reagent technology for continued advancement of detection
capabilities. Following the internally focused disruptions to our business that
occurred during its substantial restructuring over the past two years, we now
are in a position, with the cash in hand and the human resources available, to
focus on our customers in ways that have yet to be seen.
Celsis Laboratory Group
The Laboratory Group, which represents 55% of group revenues, increased revenues
by 8.5% to $14.9 million, in a year of significant slowdown in global
pharmaceutical industry spending. Healthy revenue growth was seen in our
stronger service areas of microbiology and chemistry, with a decline of business
in our biology arena. We are strategically evaluating the potential of
broadening our services capabilities and marketing activities into in-vitro
toxicology services as a way to strengthen our position in the Biology testing
arena.
The Laboratory Group has initiated a Customer Care Programme (CCP) offered to
existing key customers that provides enhanced service performance information
and quality metrics. This Programme also enables our Laboratory Group better
access to renewal and new business opportunities within the same customer site
or sites to more effectively meet the needs of these important customers. This
has also allowed the creation of a new business development team that is
exclusively focused on securing new business from new customers for the
Laboratory Group.
Our Laboratory Group is implementing NuGenesis software, an enterprise-wide
Scientific Data Management System that is 21 CFR Part 11 compliant, will allow
paperless data management of most testing regimens, and direct linkage and
integration with our pharmaceutical customers' allowing them seamless FDA
submissions, data maintenance and storage. The FDA has established 21 CFR Part
11 as a way for companies to file for drug approvals electronically and there
are strict controls over how data can be captured and manipulated within the
operations of pharmaceutical R&D and manufacturing environments as a direct
result. NuGenesis offers our Laboratory Group the opportunity to truly partner
with its customer base, many of which have already installed NuGenesis as their
Scientific Data Management System. The FDA and US Pharmacopoeia have also
installed and implemented NuGenesis systems as well.
As a management team, we are proactively implementing the Philip Crosby Quality
System, which uses "price of non-conformance" and "cost of quality" metrics into
both our New Jersey and St Louis operations. The growth of the Laboratory Group
from two privately owned and relatively smaller enterprises to one leading US
analytical services company has meant that these quality metrics are
increasingly important factors in managing both the quality, as well as the
profitability of our operations. Implementation of an updated quality system
into our Product Group manufacturing facility will be Phase II of this quality
focus initiative.
We are also increasingly co-branding the Laboratory Group and Product Group as a
way to more effectively utilize marketing spend but also establish a "One Celsis
" brand to our growing customer base. Leveraging the respective strengths of
our Product and Laboratory Groups into one stronger entity is a key strategy in
our corporate development. This 1+1=3 approach means not only more effective
use of sales and marketing spend, but it also allows our customers to more
effectively manage their vendor relationships. Customer care remains a top
priority for every Celsis employee and we will continue to leverage
relationships from both sides of our respective businesses to augment to
successes of the other.
Outlook
The many tough decisions taken last year have significantly reduced our
operational cost structure but have not impacted our abilities this year to
interface with our customers or to provide superior products and services to our
growing customer base. We are very grateful to all of our employees for their
individual contributions toward making this year a success, and we thank you,
our shareholders for your continued support of the new Celsis.
We are acutely aware of the many undervalued business opportunities in our
respective sectors that could benefit from the synergies Celsis can now offer
and we will look to pursue these opportunities as they present themselves. The
marketplace available to Celsis continues to expand both in breadth as well as
in depth and we remain confident that we have established a sound foundation on
which to deliver sustained earnings growth for the foreseeable future.
Jay LeCoque, Chief Executive Officer
Jack Rowell, Non-Executive Chairman
Consolidated Profit and Loss Account (Unaudited)
for the year ended 31 March 2003 Continuing Discontinued
Total operations operations Total
Year to Year to Year to Year to
31 March 31 March 31 March 31 March
2003 2002 2002 2002
$000 $000 (1) $000 (1) $000 (1)
Notes
Turnover 27,107 24,980 231 25,211
Cost of Sales (10,445) (9,550) (151) (9,701)
Gross profit 16,662 15,430 80 15,510
Overheads
Sales & marketing expenses (9,191) (9,551) (1,003) (10,554)
Administrative expenses (2,604) (3,090) - (3,090)
Exceptional administrative expenses - bad - (2,486) - (2,486)
debts
Exceptional administrative expenses - foreign - 252 - 252
exchange
Total administrative expenses (2,604) (5,324) - (5,324)
Research & development expenditure (891) (1,045) (63) (1,108)
Total operating expenses (12,686) (15,920) (1,066) (16,986)
Operating profit/(loss) before fundamental 3,976 (490) (986) (1,476)
restructuring
Costs of fundamental restructuring - (579) (3,577) (4,156)
Profit/(loss) on ordinary activities before interest 3,976 (1,069) (4,563) (5,632)
Interest receivable and similar income 97 83 - 83
Interest payable and similar charges (133) (118) - (118)
Profit/(loss) on ordinary activities before taxation 3,940 (1,104) (4,563) (5,667)
Taxation 1,220 125 - 125
Retained profit/(loss) for the year 5,160 (979) (4,563) (5,542)
Earnings/(loss) per Ordinary Share
Earnings/(loss) per Ordinary Share 2 4.82c (0.91c) (4.27c) (5.18c)
Diluted earnings/(loss) per share 2 4.82c (0.91c) (4.27c) (5.18c)
Statement of group total recognised gains and
losses
Profit/(loss) for the financial period 5,160 (5,542)
Currency translation differences on foreign 435 (241)
currency net investments
Total profit/(losses) recognised since last annual 5,595 (5,783)
report
(1) The comparative figures have been translated into US$ at a rate of
$1.4241 /#. See note 1.
Consolidated Balance Sheet (Unaudited)
at 31 March 2003
At 31 March At 31 March
2003 2002
Notes $000 $000 (1)
Fixed Assets
Intangible assets 1,403 1,492
Tangible assets 3,889 4,221
Investments 11 6
5,303 5,719
Current Assets
Stocks 3,088 3,567
Debtors : amounts falling due after one year 150 231
Debtors : amounts falling due within one year 7,249 5,997
Short-term investments 4,896 -
Cash at bank and in hand 1,653 2,549
17,036 12,344
Creditors - amounts falling due within one year (3,310) (3,567)
Net Current Assets 13,726 8,777
Total Assets less Current Liabilities 19,029 14,496
Creditors - amounts falling due after more than one year (349) (449)
Provision for liabilities and charges (102) (1,064)
Net Assets 18,578 12,983
Capital and Reserves:
Called up share capital 1,525 1,525
Share premium account 20,741 20,741
Profit and loss account 6 (5,170) (10,765)
Reserve arising on consolidation 1,482 1,482
Equity shareholders' funds 18,578 12,983
(1) The comparative figures have been translated into US$ at a rate of
$1.4241 /#. See note 1.
Cashflow Statement (Unaudited)
for the year ended 31 March 2003
Year to Year to
31 March 31 March
2003 2002
$000 $000 (1)
Net cash inflow from operating activities 5,072 2,197
Returns on investments and servicing of finance
Interest received 97 13
Interest paid (133) (118)
Net cash outflow from returns on investments and servicing of finance (36) (105)
Taxation
Corporation tax paid (25) (3)
(25) (3)
Capital expenditure and financial investment
Purchase of tangible fixed assets (611) (788)
Sale of hygiene monitoring division - 175
Net cash outflow from capital expenditure and financial investment (611) (613)
Cash inflow before financing 4,400 1,476
Management of liquid resources
Purchase of short-term investments (4,896) -
Financing
Repayment of principal under finance leases (215) (181)
Net cash outflow from financing (215) (181)
(Decrease)/increase in cash in the year (711) 1,295
(1) The comparative figures have been translated into US$ at a rate of
$1.4241 /#. See note 1.
Notes to the Financial Statements (Unaudited)
for the year ended 31 March 2003
1. Rate of Exchange
The comparative figures have been translated into US$ at a rate of $1.4241 / #1.
2. Basic & diluted profit/(loss) per Ordinary Share Year Year
to 31 March to 31 March
2003 2002
Profit/(loss) on ordinary activities after taxation 5,160,000 (5,542,000)
Basic weighted average number of Ordinary Shares in issue 106,946,566 106,946,566
Diluted weighted average number of Ordinary Share in issue 107,116,812 106,946,566
3. Reconciliation of operating profit/(loss) to net cash inflow from operating
activities
$000 $000 (1)
Operating profit/(loss) before costs of fundamental reorganisation 3,976 (1,476)
Depreciation of tangible fixed assets 1,156 1,203
Movement in provision against shares held by ESOT (5) 1
Amortisation of intangible assets 101 124
Loss on disposal of intangible fixed assets - 407
Loss on disposal of tangible fixed assets 6 387
Decrease in debtors 185 6,146
Decrease in stocks 532 73
Increase/(decrease) in creditors 83 (1,401)
Costs of fundamental reorganisation provided - provision expended (962) (3,267)
Net cash inflow from continuing operating activities 5,072 2,197
4. Reconciliation of net cash flow to movement in net funds
Year to Year to
31 March 31 March
2003 2002
$000 $000 (1)
(Decrease)/increase in cash in the year (711) 1,295
Purchase of short-term investments 4,896 -
Repayment of finance lease and loan obligations 215 181
Changes in net funds resulting from cashflows 4,400 1,476
New finance leases (68) (222)
Exchange adjustment 28 1
Movement in net funds in the year 4,360 1,255
Net funds at the beginning of the year 1,743 488
Net funds at the end of the year 6,103 1,743
(1) The comparative figures have been translated into US$ at a rate of
$1.4241 /#. See note 1.
Notes to the Financial Statements (Unaudited)
Continued
5. Analysis of net funds
At 1 April Cashflow Non-cash Exchange At 31 March
2002 changes differences 2003
$000 $000 $000 $000 $000
Cash at bank and in hand 2,549 (924) - 28 1,653
Short-term investments - 4,896 - - 4,896
Bank overdrafts (248) 213 - - (35)
Finance leases (558) 215 (68) - (411)
1,743 4,400 (68) 28 6,103
6. Profit and loss account Year
to 31 March
2003
$000
At 1 April 2002 (10,765)
Retained profit for the year 5,160
Exchange difference 435
At 31 March 2003 (5,170)
7. Preparation of Preliminary Statement
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 2003, does not amount to full accounts within the meaning of section
240 of the Companies Act 1985 (as amended).
The auditors reported on the statutory accounts for the year ended 31 March
2002; their report was unqualified and did not contain a statement under either
section 237(2) or (3) of the Companies Act 1985. Comparative information in
these financial statements has been restated for the effect of a change in
functional currency from Sterling to US Dollar as from 1 April 2002. The
Interim results of 30 September 2002 were published in Sterling. The statutory
accounts for the year ended 31 March 2003 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.
8. Dividend
The Directors have not declared a final dividend.
9. Annual Report and Accounts
Copies of the Annual Report and Accounts will be sent to holders of Celsis
International plc's Ordinary Shares. Copies of this announcement and of the
Annual Report and Accounts will be made available to the public at Celsis
International plc's offices at Suite 15, Lyndon House, Kings Court, Newmarket,
CB8 7SG, UK.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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