29 August 2013
Source BioScience plc
(`Source BioScience' or `the Group')
HALF YEAR REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2013
Source BioScience plc (LSE: SBS) the international diagnostics and genetic
analysis services business, announces its Half Year Report for the six months
ended 30 June 2013.
Financial highlights
* Revenue increased by 4% to £8.8 million (2012: £8.4 million)
* Adjusted EBITDA* increased by 21% to £1.5 million (2012: £1.3 million)
* Adjusted operating profit* increased by 60% to £0.8 million (2012: £0.5
million)
* Profit before tax increased by 42% to £0.6 million (2012: £0.4 million)
* EPS of 0.14p basic (2012: 0.20p basic)
* Cash balance of £2.0 million (31 December 2012: £2.2 million)
*Adjusted results are stated after eliminating the acquisition costs of £0.1
million for Inverclyde Biologicals. The adjusted results have been included to
present a fair comparison of the progress in the underlying business.
Operational highlights
* Advancement in the Healthcare business, delivering growth:
+ Acquisition of Inverclyde Biologicals for £1.4 million; bringing cross
selling opportunities, expertise in designing and manufacturing
clinical grade reagents and enabling geographic expansion into Scotland
+ Competitive tender won from Kent County and Medway Councils under the
National Chlamydia Screening Programme (`NCSP'); contract worth in
excess of £1.0 million over three years
+ Renewal of York Teaching Hospital NHS Foundation Trust cervical cancer
screening contract together with the implementation of BD FocalPoint™;
contract worth £1.3 million over three years
* Further developments in LifeSciences business:
+ Launch of Overnight Service for DNA sequencing for the Scottish life
science market following Inverclyde Biologicals acquisition
+ DNA sequencing has grown by 60% year on year, driven by Overnight
Service and expanded laboratory network
+ Launch of reSource™ own label products; high quality, cost effective
products for life science research, significantly increasing
addressable market for the Source BioScience product portfolio
Post period event
* On 7 August 2013 Source BioScience announced a £12.2 million recommended
cash offer for Vindon Healthcare plc. The proposed acquisition is expected
to bring multiple benefits including extended geographical reach,
additional in-house expertise and an enhanced offering of products and
services to customers. Detailed information regarding the proposed
acquisition can be found on the Group's website at www.sourcebioscience.com
Laurie Turnbull, Chairman of Source BioScience, said:
"We have delivered another period of progress across the business with revenue
growth, additional products and services and significantly enhanced
profitability compared with the first half of last year. We have also
demonstrated, through our acquisition of Inverclyde Biologicals, our strategy
to identify high quality businesses which we can integrate quickly and
effectively into the Group, to generate immediate commercial benefits.
"The encouraging first half of the year represents a continuation of the strong
growth and business performance achieved last year and reflects the substantial
opportunities we see for further development across both our Healthcare and
LifeSciences divisions."
--- ENDS ---
For further information, please contact:
Source BioScience plc
Dr Nick Ash
Chief Executive Officer
Tel: +44 (0) 115 973 9010
www.sourcebioscience.com
For investor and media enquiries:
N+1 Singer (Financial Advisor, Sponsor and Broker)
Aubrey Powell/Joe Stroud
Tel: +44 (0)207 496 3000
www.n1singer.com
College Hill (PR Agency to Source BioScience)
Melanie Toyne-Sewell/Claire Dickinson
Tel: +44 (0) 207 457 2020
sourcebioscience@collegehill.com
Cautionary statement
This business review may contain forward-looking statements. By their nature,
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances. Actual outcomes and results may differ
materially from any outcomes or results expressed or implied by such
forward-looking statements. Any forward-looking statements made by or on behalf
of Source BioScience speak only as at the date they are made and no
representation or warranty is given in relation to them, including as to their
completeness or accuracy or the basis on which they were prepared. Source
BioScience does not undertake to update forward-looking statements to reflect
any changes in the Group's expectations with regard thereto or any changes in
events, conditions or circumstances on which any such statement is based.
CHAIRMAN'S STATEMENT
Introduction
Source BioScience has continued its growth and development throughout the first
half of 2013. In our Interim Management Statement issued on 16 May 2013 we
reported a robust first quarter performance and this has been sustained for the
full six months to 30 June 2013.
Financial Review
Revenue for the six months ended 30 June 2013 increased by 4% to £8.8 million
(2012: £8.4 million) and the gross margin improved to 47% (2012: 45%).
Healthcare grew by 3% to £4.6 million (2012: £4.4 million) and LifeSciences
revenue grew by 6% to £4.2 million (2012: £4.0 million). Both divisions
delivered improved profitability and the combined divisional operating profit,
before central costs, increased by 22% to £2.3 million (2012: £1.9 million).
The Group's cost base has remained tightly controlled; normal administrative
expenses were broadly consistent at £2.4 million (2012: £2.3 million) and
represented 27% of revenue (2012: 28% of revenue).
As a result of the improved divisional performance and the management of the
cost base, adjusted EBITDA* increased by over 20% to £1.5 million (2012: £1.3
million). Profit before tax improved by 42% to £0.6 million (2012: £0.4
million) even after recognising the transaction costs associated with the
acquisition of Inverclyde Biologicals.
The financial position of the Group remains strong with net assets of £16.5
million (31 December 2012: £16.2 million). The Group's cash balance was £2.0
million at 30 June 2013 (31 December 2012: £2.2 million) and borrowings were £
2.7 million (31 December 2012: £3.1 million).
Cash generated from operating activities was £1.9 million in the period (2012:
£1.9 million) and net cash outflow was £0.2 million (2012: £0.8 million inflow)
after the acquisition of Inverclyde Biologicals for net £1.4 million (including
transaction costs) and capital expenditure of £0.4 million.
Healthcare division
The Healthcare division comprises our Cytology and Diagnostics operations
including cervical cancer screening and diagnostic testing services for cancer
and other diseases.
The division has delivered a strong performance in the period. Revenue of £4.6
million was ahead of the same period last year (2012: £4.4 million) and
divisional operating profit increased by 6% to £1.5 million (2012: £1.4
million).
Our Cytology (cell analysis) operation provides essential systems to the NHS
for the preparation and analysis of cervical smear samples as part of the NHS
Cervical Screening Programme and underpins approximately 50% of the cervical
cancer screening programme in England and Wales.
Implementation of our BD FocalPoint™ automated imaging solution for cervical
cancer screening continues. This is the only automated cervical screening
technology which has been approved for use by the NHS in England and Wales and
is the only one of its kind available. The technology can analyse and identify
up to 25% of screening samples that require no primary manual examination,
representing a significant reduction in laboratory workload and improved
turnaround times for reporting to patients.
In February we announced the renewal of the York Teaching Hospital NHS
Foundation Trust liquid based cytology contract, together with the installation
of the seventh BD FocalPoint™ platform. The contract is worth £1.3 million over
three years.
Our Diagnostics operations provide expert histopathology (tissue analysis),
molecular diagnostics (gene-based analysis) and companion diagnostic testing
services to public and private healthcare providers.
We continually evaluate our Diagnostics offering to ensure it meets the
requirements of our customers and addresses unmet demand in the healthcare
market. For example, the Group has successfully developed and validated
proprietary gene-based assays for use as diagnostic tests for cancer and other
diseases and launched a range of new services based on our existing expertise
and technology platforms.
This expansion of the portfolio of assays, coupled with continued growth in the
core expert histopathology service, generated an increase in Diagnostics
revenue of 40% in the period compared with the same period last year. We
believe the growing demand for gene-based testing for disease strengthens our
commercial advantage as we are one of only a limited number of accredited
laboratories in Europe with the capability to deliver this type of complex
testing.
Our expertise in gene-based testing, and significant experience of supporting
the UK Cervical Cancer Screening Programme, was instrumental in Source
BioScience winning the tender to provide testing services to Kent County and
Medway Councils under the National Chlamydia Screening Programme. The contract,
which commenced in August, is for the delivery of over 40,000 tests per annum
and is worth more than £1.0 million over three years. This contract award is an
example of the Group crystallising commercial opportunities which are
complementary to our existing activities and capabilities.
In April, the Group acquired Inverclyde Biologicals, based in Bellshill,
Scotland. Inverclyde Biologicals is a market leading manufacturer of high
quality diagnostic kits and blood group serology reagents; a product portfolio
which is complementary with the existing Source BioScience healthcare products
business. The acquisition creates cross selling opportunities, brings expertise
in designing and manufacturing clinical grade reagents and also enables
geographic expansion into Scotland, providing the opportunity to establish an
Overnight Service for DNA sequencing locally. Substantial progress has already
been made towards crystallising a number of these new opportunities.
LifeSciences division
The LifeSciences division provides ultra-fast DNA sequencing services and
related products, delivered by our international network of laboratories and
distributors to academic research groups, biotechnology and pharmaceutical
companies.
LifeSciences revenue increased by 6% to £4.2 million (2012: £4.0 million) and
divisional operating profit increased by 73% to £0.8 million (2012: £0.5
million) as a result of the increased revenue and operational enhancement of
technology platforms and laboratory processes.
Our ambition is to become Europe's leading commercial provider of DNA
sequencing and our Overnight Service, supported by our network of UK and
European laboratories, is instrumental in achieving this. The number of samples
sequenced for customers increased by over 30% compared with the same period
last year. This momentum is being sustained by the introduction of new services
and the expansion of our laboratory network including the launch of the
Overnight Service from our facilities in Bellshill, Scotland.
In March, we launched the reSource™ range of own branded products, initially
focused on the critical life science research work flow requirements for DNA
extraction and preparation. It is our intention to migrate the majority of our
product portfolio across to the reSource™ branding, which will eliminate
existing geographical commercial restrictions and expand our addressable
market.
GenomeCube®, our proprietary search engine and bioinformatics tool for our
clone and antibody portfolio, has been very successful during the period.
Website traffic has increased and internet orders are up compared with the same
period last year. We regard GenomeCube® as a major element of the growth
strategy for the medium to longer term and all of the Group's products,
including the reSource™ range, will be available through GenomeCube®. This will
enable the accelerated globalisation of the products business, enabling our
distributors, and customers, fast and ready access to the enhanced product
portfolio.
Outlook
The Group's strategy is to grow its Healthcare and LifeSciences businesses both
organically and by way of selected acquisitions to broaden the portfolio of
products and services. Acquisition opportunities must enhance the financial
performance of the Group, be readily integrated into existing operations and
provide realisable commercial benefits to deliver long term value.
Within our Healthcare division, the acquisition of Inverclyde Biologicals has
delivered enhanced financial performance and added blood banking and serology
products into the Healthcare portfolio. This acquisition has also afforded us
the opportunity to cross sell into existing customers as well as exploit our
existing international distribution network for the Inverclyde Biologicals
product portfolio. The integration of Inverclyde Biologicals operations is now
substantially complete.
In Healthcare services, the ability to provide many of the new and anticipated
genetic tests is outside the capability of all but a few hospital and
commercial laboratories, not just in the UK but across Europe. With ongoing
uncertainty surrounding healthcare resourcing, we see a significant opportunity
within Diagnostics to provide a broader and cost effective diagnostic service
to a wider customer base including infectious disease, cardiovascular and
metabolic disease, in addition to oncology.
In LifeSciences we have forged a leading position in Europe for the provision
of DNA sequencing services and genomic products. With our international network
of laboratories, we are ideally placed to meet the growing demand for genetic
analysis. Our share of the UK market for DNA sequencing has continued to grow
during the first half of 2013 and we have launched our Overnight Service from
our new facilities in Bellshill, Scotland.
The launch of the reSource™ range of products in March, has eliminated many of
the geographical commercial restrictions on our product portfolio and
significantly expanded the addressable market. Utilising the power of our
GenomeCube® platform, we will accelerate the globalisation of our products
business enabling distributors, and customers, fast and ready access to the
enhanced product portfolio.
The second half of the year has begun well and is trading in line with the
Board's expectations. We expect the excellent momentum that we saw in the first
half to continue through the remainder of the year.
Laurie Turnbull
Chairman
29 August 2013
Unaudited Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2013
Six months Six months Year
ended ended ended
30 June 30 June 31
2013 2012 December
2012
Note £'000 £'000 £'000
Revenue 2 8,773 8,411 16,431
Cost of sales (4,653) (4,664) (9,013)
Gross profit 4,120 3,747 7,418
Selling and distribution expenses (843) (725) (1,324)
Research and development (26) (106) (154)
Administrative expenses:
- normal (2,404) (2,346) (4,599)
- amortisation of intangibles arising (90) (96) (191)
from acquisitions
- acquisition costs (138) - -
Administrative expenses (2,632) (2,442) (4,790)
Operating profit 619 474 1,150
Finance income 5 3 8
Finance costs (52) (75) (195)
Profit on ordinary activities before tax 572 402 963
Taxation (279) - 2,508
Profit attributable to equity holders of 293 402 3,471
the Company
Other comprehensive income/(expense)
Exchange differences on translation of (58) 13 19
foreign operations
Total comprehensive income attributable 235 415 3,490
to equity holders of the Company
Earnings per share:
Basic profit per ordinary share 3 0.14p 0.20p 1.70p
Diluted profit per ordinary share 3 0.14p 0.20p 1.68p
Unaudited Condensed Consolidated Statement of Changes in Shareholders' Equity
For the six months ended 30 June 2013
Attributable to equity holders of the parent company
Share Share Merger Special Translation Profit Total
capital premium and reserve reserve and equity
other loss
reserves reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 4,075 - 2,408 10,788 17 (4,657) 12,631
2012
Currency translation - - - - 13 - 13
adjustments
Profit for the period - - - - - 402 402
Total comprehensive - - - - 13 402 415
income
for the period
Transactions with
owners, recorded
directly in equity
Employee share option
scheme:
- value of services - - - - - 22 22
provided
Balance at 30 June 2012 4,075 - 2,408 10,788 30 (4,233) 13,068
Balance at 1 July 2012 4,075 - 2,408 10,788 30 (4,233) 13,068
Currency translation - - - - 6 - 6
adjustments
Profit for the period - - - - - 3,069 3,069
Total comprehensive - - - - 6 3,069 3,075
income for the period
Transactions with
owners, recorded
directly in equity
Employee share option
scheme:
- value of services - - - - - 32 32
provided
- proceeds from shares 21 39 - - - - 60
issued
Balance at 31 December 4,096 39 2,408 10,788 36 (1,132) 16,235
2012
Balance at 1 January 4,096 39 2,408 10,788 36 (1,132) 16,235
2013
Currency translation - - - - (58) - (58)
adjustments
Profit for the period - - - - - 293 293
Total comprehensive - - - - (58) 293 235
(expense) / income
for the period
Transactions with
owners, recorded
directly in equity
Employee share option
scheme:
- value of services - - - - - 8 8
provided
Balance at 30 June 2013 4,096 39 2,408 10,788 (22) (831) 16,478
Unaudited Condensed Consolidated Statement of Financial Position
As at 30 June 2013
As at As at As at
30 June 30 June 31 December
2013 2012 2012
£'000 £'000 £'000
Non-current assets
Goodwill 9,564 8,341 8,343
Other intangible assets 761 1,066 884
Financial assets 91 60 50
Property, plant and equipment 5,156 4,938 5,309
Deferred tax 2,294 - 2,564
17,866 14,405 17,150
Current assets
Inventories 867 586 644
Trade and other receivables 3,037 3,163 2,558
Cash and cash equivalents 1,959 1,848 2,217
5,863 5,597 5,419
Current liabilities
Trade and other payables 4,527 3,921 3,214
Financial liabilities
- borrowings 755 629 754
5,282 4,550 3,968
Net current assets 581 1,047 1,451
Total assets less current liabilities 18,447 15,452 18,601
Non-current liabilities
Financial liabilities
- borrowings 1,936 2,384 2,316
Derivative financial instruments 33 - 50
1,969 2,384 2,366
Net assets 16,478 13,068 16,235
Equity
Issued share capital 4,096 4,075 4,096
Share premium 39 - 39
Special reserve 10,788 10,788 10,788
Other reserves 2,386 2,438 2,444
Profit and loss reserve (831) (4,233) (1,132)
Total equity 16,478 13,068 16,235
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2013
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
£'000 £'000 £'000
Cash flows from operating activities
Profit for the period 293 402 3,471
Adjustments for:
Depreciation of tangible fixed assets 534 542 1,098
Recognition of grant income (6) (6) (13)
Amortisation of capitalised development 124 114 204
costs
Amortisation of other intangibles 90 98 191
Profit on sale of property, plant and (11) (33) (36)
equipment
Fair value gain on investments (19) (22) (12)
Finance costs 52 75 195
Finance income (5) (3) (8)
Taxation 279 - (2,508)
Share-based payments - value of employee 8 22 26
service
(Increase)/decrease in inventories (189) 123 65
(Increase)/decrease in trade and other (370) - 605
receivables
Increase in creditors 1,207 674 198
Cash generated from operations 1,987 1,986 3,476
Interest paid (69) (78) (146)
Tax received 2 - -
Tax paid (1) - -
Net cash generated from operating 1,919 1,908 3,330
activities
Cash flows from investing activities
Acquisition of subsidiaries (1,600) - -
Cash acquired with subsidiaries 313
Share purchases (34) (52) (52)
Purchases of property, plant and (341) (690) (2,257)
equipment
Proceeds from sale of property, plant and 11 - 450
equipment
Proceeds from sale of investments 12 54 54
Purchases of intangible assets (78) (163) (222)
Interest received 5 3 8
Net cash used in investing activities (1,712) (848) (2,019)
Cash flows from financing activities
Proceeds from issue of shares - - 60
Repayment of borrowings (243) (245) (492)
Proceeds from finance leases - - 414
Finance lease principal repayments (136) (59) (169)
Net cash used in financing activities (379) (304) (187)
)0
Net (decrease)/increase in cash and cash (172) 756 1,124
equivalents
Cash and cash equivalents at beginning of 2,217 1,094 1,094
period
Exchange losses on cash and cash (86) (2) (1)
equivalents
Cash and cash equivalents at end of 1,959 1,848 2,217
period
Responsibility Statement
We confirm that to the best of our knowledge:
* The condensed consolidated interim financial statements for the six months
ended 30 June 2013 have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU; and
* the half year report includes a fair review of the information required by:
+ DTR 4.2.7R (indication of important events during the first six months
and description of principal risks and uncertainties for the remaining
six months of the year)
+ DTR 4.2.8R (disclosure of related party transactions and charges
therein)
By order of the Board
Laurie Turnbull Dr Nick Ash
Chairman Chief Executive Officer
29 August 2013 29 August 2013
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 30 June 2013
1. Basis of preparation
Source BioScience plc is a company domiciled in the United Kingdom. The
condensed consolidated interim financial statements of Source BioScience plc as
at and for the six months ended 30 June 2013 comprise those of Source
BioScience plc and its subsidiaries (together referred to as the `Group').
These condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting as endorsed and adopted for
use in the European Union. They do not include all of the information required
for full annual financial statements and should be read in conjunction with the
consolidated financial statements of the Group for the year ended 31 December
2012, which have been prepared in accordance with IFRS adopted by the European
Union.
These condensed consolidated interim financial statements have been prepared on
the basis of accounting policies consistent with those applied in the
preparation of the Group's published consolidated financial statements for the
year ended 31 December 2012 except as noted below.
The Group has adopted improvements to various standards within the
`Improvements to IFRS' programme, none of which have had a significant effect
on the reported results or financial position of the Group.
The condensed consolidated interim financial statements for the six months
ended 30 June 2013 have neither been audited nor reviewed by the Group's
auditor in accordance with International Standard on Review Engagements 2410
issued by the Auditing Practices Board.
The comparative figures for the financial year ended 31 December 2012 are not
the Group's statutory consolidated accounts for that financial year but
represent an extract from those accounts. Statutory accounts for the year ended
31 December 2012 were approved by the Board on 25 April 2013 and delivered to
the Registrar of Companies. The report of the auditor on those financial
statements was (i) unqualified, (ii) did not include reference to any matters
to which the auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006. The consolidated financial statements of the Group as
at and for the year ended 31 December 2012 are available on request from the
Group's registered office at 1 Orchard Place, Nottingham Business Park,
Nottingham NG8 6PX or at www.sourcebioscience.com.
The condensed consolidated interim financial statements are presented in pounds
sterling, rounded to the nearest thousand pounds. They are prepared on the
historical cost basis except for the valuation to fair value of certain assets
as indicated.
The preparation of the condensed consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key source of estimation uncertainty were the same as those
applied to the consolidated financial statements as at and for the year ended
31 December 2012.
There have been no related party transactions or changes in related party
transactions described in the latest annual report that could have a material
effect on the financial position or performance of the Group in the first six
months of this financial year.
The condensed consolidated interim financial statements for the six months
ended 30 June 2013 were approved by the Board of Directors on 29 August 2013.
2. Operating segments
Information about reporting segments
For the purposes of management reporting to the chief operating decision maker,
the commercial activities of the Group are organised into two divisions:
* Healthcare (comprising the business units of Cytology and Diagnostics)
* LifeSciences
During the period there were immaterial sales between business segments (six
months ended 30 June 2012: immaterial; year ended 31 December 2012: immaterial)
and where these do occur they are at arm's length pricing.
Unallocated costs represent corporate expenses and common operating costs.
Segment assets include intangible assets including goodwill, plant and
equipment, stocks and debtors. Unallocated assets include property, central
debtors and prepayments and operating cash. Segment liabilities comprise
operating liabilities and exclude borrowings. Segment capital expenditure
comprises additions to plant and equipment and capitalised development costs.
Six months ended 30 June 2013
Life
Healthcare Sciences Unallocated Group
£'000 £'000 £'000 £'000
Revenue 4,568 4,205 - 8,773
Segment result 1,492 791 (1,664) 619
Finance income 5 5
Finance costs (52) (52)
Profit before tax (1,711) 572
Taxation (279) (279)
Profit / (loss) for the 1,492 791 (1,990) 293
period
Segment assets 4,830 10,965 - 15,795
Unallocated assets
- property, plant and 2,787 2,787
equipment
- financial assets 91 91
- deferred tax asset 2,294 2,294
- debtors and prepayments 803 803
- cash and cash equivalents 1,959 1,959
Total assets 4,830 10,965 7,934 23,729
Segment liabilities 1,117 1,901 - 3,018
Unallocated liabilities
- borrowings 2,691 2,691
- derivative financial 33 33
instruments
- creditors and accruals 1,509 1,509
Total liabilities 1,117 1,901 4,233 7,251
Other segment items
Capital expenditure
- tangible assets 43 198 100 341
- intangible assets - 78 - 78
Depreciation 177 217 140 534
Amortisation of intangible 35 179 - 214
assets
Other non-cash expenses
- share option scheme - - 8 8
All results derive from continuing operations.
Six months ended 30 June 2012
Life
Healthcare Sciences Unallocated Group
£'000 £'000 £'000 £'000
Revenue 4,431 3,980 - 8,411
Segment result 1,410 457 (1,393) 474
Finance income 3 3
Finance costs (75) (75)
Profit before tax (1,465) 402
Taxation - -
Profit/(loss) for the period 1,410 457 (1,465) 402
Segment assets 3,405 11,273 - 14,678
Unallocated assets
- property, plant and 2,784 2,784
equipment
- financial assets 60 60
- debtors and prepayments 632 632
- cash and cash equivalents 1,848 1,848
Total assets 3,405 11,273 5,324 20,002
Segment liabilities 1,254 1,589 - 2,843
Unallocated liabilities
- borrowings 3,013 3,013
- creditors and accruals 1,078 1,078
Total liabilities 1,254 1,589 4,091 6,934
Other segment items
Capital expenditure
- tangible assets 666 224 40 930
- intangible assets - 163 - 163
Depreciation 116 293 133 542
Amortisation of intangible 30 182 - 212
assets
Other non-cash expenses
- share option scheme - - 22 22
All results derive from continuing operations.
Year ended 31 December 2012
Life
Healthcare Sciences Unallocated Group
£'000 £'000 £'000 £'000
Revenue 8,564 7,867 - 16,431
Segment result 2,752 1,167 (2,769) 1,150
Finance income 8 8
Finance costs (195) (195)
Profit before tax (2,956) 963
Taxation 2,508 2,508
Profit/(loss) for the 2,752 1,167 (448) 3,471
year
Segment assets 3,578 11,029 - 14,607
Unallocated assets
- property, plant and 2,706 2,706
equipment
- financial assets 50 50
- deferred tax asset 2,564 2,564
- debtors and prepayments 425 425
- cash and cash 2,217 2,217
equivalents
Total assets 3,578 11,029 7,962 22,569
Segment liabilities
Unallocated liabilities 836 1,358 - 2,194
- borrowings 3,070 3,070
- derivative financial 50 50
instruments
- creditors and accruals 1,020 1,020
Total liabilities 836 1,358 4,140 6,334
Other segment items
Capital expenditure
- tangible assets 1,143 538 524 2,205
- intangible assets 31 191 - 222
Depreciation 283 545 270 1,098
Amortisation of 60 335 - 395
intangible assets
Other non-cash expenses
- share option scheme - - 26 26
All results derive from continuing operations.
3. Earnings per share
Basic earnings per share amounts are calculated by dividing net result for the
period attributable to ordinary equity shareholders of the Company by the
weighted average number of shares outstanding during the period. Diluted
earnings per share amounts are calculated by dividing the net profit
attributable to ordinary equity shareholders by the weighted average number of
ordinary shares outstanding during the period adjusted for the effects of
dilutive options.
The calculation of basic and diluted earnings per share for each respective
period is outlined in the table below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2013 2012 2012
Earnings (£'000) 293 402 3,471
Basic earnings per share
Weighted average number of shares (`000s) 204,783 203,765 203,974
Earnings per share (pence) 0.14 0.20 1.70
Diluted earnings per share
Weighted average number of shares (`000s) 204,783 203,765 203,974
Dilutive options adjustment (`000s) 3,951 1,703 2,899
Weighted average number of shares adjusted 208,734 205,468 206,873
for dilutive options (`000s)
Diluted earnings per share (pence) 0.14 0.20 1.68
IAS 33 Earnings per share requires presentation of diluted earnings per share
when a company could be called upon to issue shares that would decrease net
profit or increase net loss per share. Assuming that option holders will not
exercise out of the money options, no adjustment has been made to the diluted
earnings per share for out of the money share options.
4. Acquisition of subsidiary
On 26 April 2013 the Company completed the acquisition of the entire ordinary
share capital of Inverclyde Biologicals Limited for gross consideration of £1.6
million. Transaction costs were £0.1 million and £0.3 million of cash was
acquired with the business, resulting in a net investment of £1.4 million. The
principal activity of Inverclyde Biologicals is the manufacture and
distribution of high quality diagnostic kits and blood group serology reagents.
The acquired business contributed revenue of £128,000 and net profit of £44,000
to the Group for the period from 26 April 2013 to 30 June 2013. If the
acquisition had occurred on 1 January 2013, Group revenue would have been £
375,000 higher and the net profit would have increased by £129,000 on a pro
forma basis.
The book and provisional fair values of the assets and liabilities acquired
were as follows:
Acquiree's Fair value
carrying
amount
£'000 £'000
Tangible assets - property, plant and equipment 24 24
Inventories 34 34
Other current assets 422 422
Current liabilities (101) (101)
Value of net assets acquired 379 379
Goodwill arising on acquisition 1,221 1,221
Consideration 1,600 1,600
Consideration is made up as follows:
Initial cash consideration 1,600
1,600
Cash flow:
Consideration paid, satisfied in cash (1,600)
Cash balance acquired 313
Net cash outflow of acquisition (1,287)
The goodwill represents future economic benefits arising from assets that are
not capable of being identified individually nor recognised as separate assets.
This will include acquirer specific synergies that arise in the
post-acquisition period such as cross selling opportunities and the enhancement
of technologies and processes between existing and acquired sites; the
technical skills and customer support provided by the business and attributable
to the workforce and access to Inverclyde Biologicals' product portfolio.
The fair value adjustments shown above are provisional figures, being the best
currently available. Detailed exercises to identify the fair value adjustments
are expected to be completed in the second half of the year.
5. Half Year Report
Copies of the Half Year Report for the six months ended 30 June 2013 will be
posted on the Group's website at www.sourcebioscience.com
--- ENDS ---
About Source BioScience
Source BioScience plc (LSE: SBS) is an international diagnostics and genetic
analysis services business serving the healthcare and research markets. The
LifeSciences division provides core laboratory research support from
conceptualisation to implementation, calling upon a wide range of cutting-edge
technology platforms including an online catalogue of biomolecular tools. The
Group is a trusted provider of a complete range of sophisticated microarray,
next generation and conventional sequencing services. GLP, GCP and CPA
accreditations make the sequencing offerings also very attractive for
applications in regulatory studies or clinical settings. Its Healthcare
operations provide screening and reference laboratory diagnostic testing for
cancer and other diseases in addition to complementary products for serology
and diagnostic applications. The Group has its headquarters in Nottingham, UK
and additional information about the Source BioScience Group, and its
activities, can be found at www.sourcebioscience.com
GLOSSARY
Antibodies Proteins that are found in blood or other bodily
fluids; they are naturally used by the immune
system to identify and neutralise foreign objects,
such as bacteria and viruses. Experimentally,
antibodies are also used as highly specific probes
for detecting proteins of interest in tissues. A
wide range of antibodies with a large variety of
cellular targets is available to research
scientists through distributors such as Source
BioScience.
BD FocalPoint™ (`FP') An automated imaging system for screening BD
SurePath™ liquid based cytology slides. Using
complex algorithms it interprets the images of
each slide using the same morphologic features
used during screening with the human eye. It can
archive up to 25% of cases as requiring "no
further review" (`NFR') which then do not need to
be manually primary screened.
BRAF The BRAF gene encodes a signalling protein.
Somatic mutations of the BRAF gene are quite
common in melanoma and colorectal cancer. In
colorectal cancer, such mutations make a tumour
resistant to inhibitors of the EGFR signalling
pathway.
Bioinformatics The application of information technology, and
computer science, to the field of molecular
biology. Common activities in bioinformatics
include mapping and analysing DNA and protein
sequences, aligning different DNA sequences to
compare them and handling and analysing huge data
sets generated by the latest sequencing
technologies.
Blood bank A cache or bank of blood or blood components,
gathered as a result of blood donation or
collection, stored and preserved for later use
Blood group serology A group of reagents which are used to test for the
reagents presence or absence of antigens in the blood an
determine the blood group.
Biomarkers Biomarkers often refer to substances found in
blood, urine or tissue, changes in which may be
used to indicate presence of disease or response
to treatment. More generally the term biomarker
refers to any molecule that can be used to monitor
a particular cellular process and may be a
protein, DNA or RNA molecule.
Capillary Electrophoresis DNA sequences are determined using a chemical
DNA Sequencing reaction that results in an array of products that
terminate in a different fluorescent coloured dye,
(also known as Sanger which vary in size by one nucleotide. The products
sequencing or conventional are separated, like the rungs of a ladder, by
sequencing) passing them through a capillary with an electric
current and determining the order in which they
emerge. This method was used for the large DNA
sequencing projects of the last 15 years and
remains the best way of inexpensively analysing
large numbers of small sets of samples (see also
Next Generation DNA Sequencing below).
Care Quality Commission As a provider of healthcare laboratory and
(`CQC') pathology services to the NHS, which is a
regulated activity under the Health and Social
Care Act 2008, we are required to be registered
with the CQC, a government body established to
regulate and inspect health and social care
services in England, and ensure organisations
maintain good standards and follow appropriate
procedures.
CYP2D6 Breast cancer patients with certain genetic
variations in the CYP2D6 gene may be slow
metabolisers of the drug tamoxifen to its active
metabolite endoxifen. In this case changes to the
treatment regime may be indicated because the
efficacy of the drug is reduced.
Circulating Tumour Cells The identification of small numbers of cancer
(`CTC') cells circulating in the blood has been shown to
be of potential prognostic significance in breast
cancer, colorectal or prostate cancer, and useful
for monitoring response to drug therapy.
Clinical Pathology CPA is the accreditation body for clinical
Accreditation pathology services in the UK. Accreditation
(`CPA') involves audit of the ability of a laboratory to
provide a service of high and consistent quality
by declaring a defined standard of practice, which
is performed by the CPA accreditation body.
Clone A section of DNA sequence, such as a gene, that is
isolated from an organism and can be endlessly
replicated by genetic engineering techniques.
Companion Diagnostic A test based on a biomarker (which might be a
protein, DNA or RNA molecule), the presence or
absence of which is associated with the likely
efficacy of a drug or other treatment. Companion
diagnostics are useful in stratifying patients
into groups which are known to respond in a
particular way to a drug. A good example of such a
test from the Source BioScience breast cancer
portfolio is the HER2 test, which assesses levels
of the HER2 protein, expression of which is
correlated with response to Herceptin™.
Deoxyribo Nucleic Acid (DNA) DNA is a large, complex molecule which, by virtue
and complementary DNA (cDNA) of a unique sequence of building blocks, contains
all the genetic information required to create a
cell or organism. cDNA can be made from all the
genes in a genome, from a single gene, or from
part of a gene. cDNA is DNA that has been
synthesised artificially using an RNA template
(see below) from the gene(s) selected.
Duty of Care Review An audit of a specific pathologist's practice.
Pathology departments have a duty of care to
patients whose treatment or clinical management
may need to be changed in the light of revised
opinions arising from a review of a pathologist's
or team's work. Where good practice is suspected
to have broken down it may be necessary to arrange
a systematic review of cases to fulfil a
department's duty of care to their patients.
Source BioScience offers a full duty of care
review service to pathology departments that need
specialist second opinion in these circumstances.
EGFR mutation testing Human EGFR is a cellular transmembrane receptor
found on the surface of cells. Clinicians wishing
to prescribe Gefitinib™ (Iressa) for lung cancer
patients are required to confirm the presence of
any mutations found in the tyrosine kinase domain
on the EGFR gene.
Fluorescence in situ in situ Hybridisation (`ISH') is a powerful
Hybridisation technique, not unlike immunohistochemistry
(`FISH') (below), for visualising the presence of specific
sequences of DNA or RNA in cells. The technique
uses short synthetic sequences of DNA or RNA which
will bind, or hybridise, to the tissue with high
specificity for the DNA or RNA of interest within
the issue. Fluorescent `tags' are attached to
these synthetic sequences, allowing them to be
visualised with a special microscope, even when
present at very low levels (FISH).
GenomeCube® Source BioScience's proprietary database, search
engine and e-commerce tool for Life Science
products. GenomeCube® contains over 26 million
clones and over 200,000 antibodies all of which
contain downloadable annotation. GenomeCube is
available in foreign language and foreign currency
versions.
Genomics The study of an organism's genome, where the
genome of an organism is its whole hereditary
information and is encoded in the DNA (see above)
and RNA (see below). This includes both the genes
and the non-coding sequences of the DNA.
Genomic clone libraries A clone library is a collection of clones
containing complementary DNA (`cDNA') (see above)
and is often intended to represent the genes that
are expressed within a given cell or tissue type
at a given period.
Genomic products and In this instance, DNA or RNA extracted and
reagents purified from a range of species and provided in a
variety of forms for research purposes.
Genotyping and sequencing DNA sequencing is the process of precisely
determining the order of the building blocks, or
nucleotides, of an organism's DNA. The method can
be used to determine short sequences of DNA or, in
larger experiments, to sequence the entire genome
of an organism. Genotyping, in turn, is the
process whereby DNA is characterised and then
compared to reference data or, if large numbers of
samples are genotyped, the data can be examined
for patterns which might lead to discoveries of
the fundamental causes of inherited diseases.
Genotyping is commonly performed by PCR (below) or
DNA sequencing.
Good Clinical Practice GCP is an international ethical and scientific
(`GCP') quality standard for designing, conducting,
recording and reporting clinical trials that
involve the participation of human subjects.
Compliance with this standard provides public
assurance that the rights, safety and well-being
of trial subjects are protected, consistent with
principles that have their origin in the
Declaration of Helsinki. Compliance with the
principles of GCP is assured via monitoring by a
governmental agency, the Medicines and Healthcare
products Regulatory Agency (`MHRA').
Good Laboratory Practice GLP is a set of principles that provides a
(`GLP') framework within which laboratory studies are
planned, performed, monitored, recorded, reported
and archived. These studies are undertaken to
generate data by which the hazards and risks to
users can be assessed for pharmaceuticals (only
preclinical studies). GLP helps assure regulatory
authorities that data submitted is a true
reflection of the results obtained during the
study and can therefore be relied upon when making
risk/safety assessments. Compliance with the
principles of GLP is assured via monitoring by the
Medicines and Healthcare products Regulatory
Agency (`MHRA').
Human Epidermal Growth HER2 is a protein the over-expression of which
Factor Receptor 2 (HER2) within a breast or gastric/gastro-oesophageal
tumour sample may indicate a patient is suitable
for treatment with Herceptin™. A test for such
over-expression is carried out on all new breast
cancer patients or patients with advanced stomach
cancer.
Human Papilloma Virus HPV is a family of viruses that commonly infect
(`HPV') human tissues. Several members of this family in
particular genotype 16 & 18 are sexually
transmitted and persistent infection with these
subtypes plays a key role in the development of
cervical intraepithelial neoplasia (CIN) and
invasive cancer of the cervix. HPV infection is
also associated with other cancers, including
those of the head and neck.
Histopathology The study of changes in tissues and cells as a
consequence of some disease or toxic processes.
Human Tissue Authority The HTA licenses organisations that store and use
(`HTA') human tissue for purposes such as research,
patient treatment, post-mortem examination,
teaching and public exhibitions. The HTA also
inspect organisations to check that they maintain
good standards and follow appropriate procedures
against the legislation of the Human Tissue Act
2004.
Immunohistochemistry (`IHC') IHC is a technique for visualising proteins and
other molecules in thin sections of tissue. This
technique uses antibodies raised in other species
against the protein of interest as a tool, and
exploits their exquisite sensitivity and
specificity for binding to that protein.
K-RAS K-RAS is a gene that produces an important cell
signalling protein responsible for cell growth.
The presence of a mutated form of the K-RAS gene
in colorectal cancer may indicate that a patient
is unsuitable for new anti-EGFR drugs such as
Erbitux™ and Vectibix™.
Liquid based cytology LBC is a process for collecting and processing
(`LBC') cervical cytology samples from epithelial tissues
such as the cervix. It produces a cleaner
preparation of cells, without the other materials
which frequently contaminate the sample such as
blood or mucus.
Microarray Microarrays are a microscopic series of nucleic
acid spots of known sequence which are deposited
in a regular array typically onto a glass slide. A
DNA or RNA probe can then be hybridised to the
slide which results in a DNA or RNA fingerprint of
the sample in the probe enabling scientists to
determine genotypes or gene expressions levels.
Next Generation DNA NGS refers generically to a set of recent
Sequencing (`NGS'), Illumina technologies, in our case Illumina HiSeq 2000™ and
HiSeq 2000™ and Illumina Illumina MiSeq™, in which extremely large numbers
MiSeq™ of short sequences can be determined in a single
experiment; for example the Illumina HiSeq 2000™
selected by Source BioScience can sequence two
human genomes in ten days.
No further review (`NFR') A unique feature of the BD FocalPoint™ automated
cytology imaging platform that can identify up to
25% of cytology slides that are considered to be
negative. These slides do not require further
primary manual review, thereby improving the
turnaround time and efficiency in the laboratory
operations, saving time and cost for the NHS.
Polymerase Chain Reaction PCR is a laboratory technique which specifically
(`PCR') and exponentially amplifies a single or a few
copies of a segment of DNA. The resulting product
is an indicator of the presence of the original
segment of DNA or the product can be used as the
material for further experiments, for example
genotyping or DNA sequencing.
Proteomics The study of specific amino acids, proteins or the
entire proteome (a complete translated genome, see
above) of an organism. Proteomic techniques
include, for example, surveying complex biological
samples for protein content, or determining the
level of specific proteins in tissues using
techniques like immunohistochemistry (IHC, see
above).
reSourceTM Brand name carried by the Source BioScience
LifeSciences product portfolio.
RiboNucleic Acid (`RNA') RNA is a molecule similar to DNA, but is an
intermediate product between the DNA of the gene,
and the ultimate protein product of that gene. The
level of expression of a gene can be gauged by the
amount of RNA synthesised from that gene, a
process usually measured by quantitative real-time
polymerase chain reaction (`Q-PCR').
RNA expression analysis A process to measure the activity of a number of
genes simultaneously, generating a global picture
of cellular function. The expression analyses, or
profiles, can distinguish between cells that are
actively dividing, for example, or show how the
cells react to a particular treatment. Testing of
genome-wide RNA expression levels have been
performed by microarray analysis but the
experiments are now as likely to be performed by
NGS.
Serology The study of general antigen-antibody reactions in
a laboratory setting and the specific blood test
conducted to test for the presence of antibodies.
A serology test is performed to determine a
patient's blood type and to test for, and
identify, an infection.