Press Release 22 March 2012

Transcription

1 Press Release 22 March 2012 Cyprotex PLC ( Cyprotex or the Company or the Group ) Final results for the year ended 31 December 2011 Record year for Cyprotex Cyprotex PLC (AIM: CRX), the preclinical ADME-Tox services company, today reports its final results for the year ended 31 December Financial Highlights Revenues up 33.6% to 7.91 million (2010: 5.92 million) Continued profitability with operating profits up 203% to 0.67 million (2010: 0.22 million) Underlying EBITDA^, an indicator of cash generation, remains consistently strong up 70% to 1.31 million (2010: 0.77 million) Profit after taxation up 42% to 0.88 million (2010: 0.62 million) Earnings per share at 0.39 pence (2010: 0.31 pence) ^ excluding share-based payment charge and expensed acquisition costs Operational Highlights Won 157 new customers (2010: 81) including important strategic contracts Revenues associated with proprietary CellCiphr TM high content mechanistic toxicology technology exceeded 1.0 million (2010: 0.1 million) Increased revenue from new assays contributing 0.35 million in 2011 Introduction of new genomic ADME (gadme TM ) technology to interpret genetic variation in drug metabolism and for the design of personalised dosing strategies Successful delivery in partnership with Solvo Biotechnologia ZRT of a wide range of drug transporter services to Cyprotex clients, in response to recent FDA guidance Extension of successful strategic alliance with Sygnature Discovery Limited to offer integrated drug discovery services As a result of collaborative relationships with our strategic customers, significant improvements have been made to our pharmacokinetic prediction software, Cloe PK, and our proprietary high content toxicology technology, CellCiphr TM Major expansion with a near doubling of our US facility to meet growing demand in North America for Cyprotex s services completed in Q Increased front line sales team to five in total with three located in the US Steve Harris, Chairman of Cyprotex PLC, said: After two years of investment to enhance and expand our services and geographic footprint, our objective for 2012 is to leverage the competitive advantages we have created to drive revenue and profit growth. Cyprotex has now established itself as a thought leader in the ADME Tox field, with a strong position in the fast-growing in vitro toxicology market. Indeed, our laboratories in both the UK and US have had major expansions to accommodate increased demand. With these improvements to our services, together with the sector trend towards outsourcing R&D and the continued easing of the recession, we believe that Cyprotex is well placed for further strong growth.

2 For further information: Cyprotex PLC Tel: +44 (0) Dr Anthony Baxter, Chief Executive Officer John Dootson, Chief Financial Officer Mark Warburton, Chief Operating Officer and Legal Counsel Singer Capital Markets Limited (broker to Cyprotex) Tel: +44 (0) Shaun Dobson Claes Spang FTI Consulting Tel: +44 (0) Simon Conway Ben Atwell Mo Noonan Notes to Editors: Cyprotex PLC Cyprotex is the world s largest contract research organisation (CRO) specialising in ADME Tox, which is the analysis of the Absorption, Distribution, Metabolism, Excretion, and Toxicity properties of potential drugs, cosmetics, and agrochemicals. It is the only company in the world with in-house capabilities for both in vitro (test tube) and in silico (computer modelling) ADME Tox. Cyprotex was founded in 1999 and listed on the AIM in It has laboratories in Macclesfield, Cheshire, UK (near Manchester), and Watertown, Massachusetts, USA (near Boston), making it one of only three ADME Tox CROs with international operations.

3 Chairman and Chief Executive Officer s Report Fruition of near-term strategic objectives bodes well for future growth 2011 was a year of substantial growth in both revenues and offerings for Cyprotex. Our entry into the in vitro toxicology market has proven to be very successful. In eighteen months, our toxicology revenues have risen from less than 6% to over 23% of our total revenues. Our 2010 acquisition of Apredica, which gave us a US operational platform, has proven timely as drug discovery investment in Europe has fallen and demand has shifted towards US-based organisations. As a result, the percentage of revenues Cyprotex receives from the US grew from 24% in 2009 to 44% in The strong growth of our toxicology and US business has necessitated a near doubling of our laboratory capacity in Watertown, Massachusetts, which was completed in January We believe Cyprotex has now repositioned itself as a scientific thought leader in the ADME Tox field. Cyprotex has demonstrated that we are able to rapidly commercialise cutting edge technologies that answer the most pressing needs of the pharmaceutical, agrichemical and cosmetic industries. These technologies are aimed at significantly improving the odds of developing safer, more efficacious drugs and other commercial chemicals faster and with considerations of specific needs to special populations. In 2010, we expanded into the nascent in vitro toxicology market. In 2011, we launched a novel genomic ADME (gadme TM ) service, opening a totally new market of interpreting genetic variation in drug metabolism. We also continue to develop new and innovative assays to match our customer s needs. Our continued investment in the business during a period when the market has been weak and many of our competitors have been suffering has been a crucial strategic move. European and North American ADME Tox companies have been under increasing competition from Asia for the most common assays. Cyprotex s scientific innovation has allowed us to move into new markets where Asian competition is weak or nonexistent, and where growth prospects are better. In doing so, this has provided a halo effect for our existing high-throughput ADME assays, enabling us to grow this business as well by selling these services to clients won on the basis of our newer, more scientifically advanced offerings. Operational Performance Increasing diversification of customer base gives resilience to revenues Proprietary test offerings play well with pharmaceutical customers where pressures on R&D costs favour fail early/fail cheaply approaches Market conditions have been gradually improving as the US works its way out of the current recession. While conditions are not as favourable as they were prior to the recession, we have begun to see signs of recovery. We have strived to increase and diversify our customer base, shifting the business away from being dominated by a handful of overly large customers. Our current revenue exposure from any single customer is now down to 13%, versus 16% in 2010, 22% in 2009, and 34% in We have also expanded into new markets such as agrochemicals, cosmetics and supporting academic and charitable organisations. We believe this diversification has enabled Cyprotex to weather the economic downturn better than some of our competitors. We are now experiencing a sea change in the drug discovery market. Larger pharmaceutical companies are cutting back sharply on in-house R&D. In some cases this is leading to wholesale site and programme closures. At the beginning of 2011, our second largest customer at the time closed three sites which caused a setback in our revenues. However, our strong growth rate has enabled us to fill the gap left by these closures in the first half of the year and by year-end, we were in-line with the market s expectations for total annual revenues. Whilst the changes taking place in the pharmaceutical industry have some highly visible negative effects, it also produces positive opportunities for Cyprotex. R&D work that previously would have been performed in house is now being increasingly outsourced, as pharmaceutical companies have become reluctant to invest in R&D infrastructure. The trend towards outsourcing is both direct, through outsourcing of internal R&D programmes to Contract Research Organisations such as Cyprotex, and indirect, as drug discovery is increasingly shifting to smaller companies who are more likely to outsource than larger companies are.

4 As pressure on R&D costs mounts, pharmaceutical companies are increasingly turning to outsourcing as a solution and this increases the value of Cyprotex s services, by reducing cost and risk. Similarly, the increasing complexity of preclinical research entail equally sophisticated assays that require specialist which is infrequently needed, or are proprietary, such as Cyprotex s gadme and CellCiphr assays. Such proprietary preclinical tests are gaining importance as the industry strives to limit the impact of drug discovery attrition with fail early/fail cheaply approaches gaining traction. Such newer complex assays are helping us gain business from customers that have historically been committed to in-sourcing. We believe that our scientific expertise and understanding of what our clients need, is helping us to gain traction in all areas of our business. Financial Performance Despite the reduction in revenue from our then second largest customer early into 2011, our underlying strong growth rate has enabled Cyprotex to increase revenues by 33.6% to 7.91 million, and to record a fourth consecutive year of profitability, positive cash flows from operations and with operating profits of 0.67 million (2010: 0.22 million). The balance sheet remains strong with net assets up 1.1 million at 6.8 million (2010: 5.7 million) with the increase principally due to profitable trading. The Group has invested over 0.58 million in R&D (2010: 0.56 million) including 172,500 in further developing CellCiphr TM technologies specifically targeted at improved automation of the predictive engine which has substantially reduced turnaround times allowing the Group to service much larger volumes. Revenues associated with CellCiphr TM technologies have contributed over 1.0 million to turnover which compares very favourably with last year at 0.1 million. The Group continues to invest in spending 0.31 million in the year (2011: 0.64 million) including adding a Xevo mass spectrometer to its analytical capabilities. Further investments are planned in When non-cash items and acquisition costs are deducted, the underlying EBITDA recorded for the year was 1.31 million, up from 0.77 million in the previous year. This is a key indicator of the Group's ability to generate cash from operations. The Group s cash position at 31 December 2011 was 1.13 million (2010: 1.04 million) Following an expansion of our sales team to manage the increased demand we are seeing, our headcount now stands at 70. Outlook and Summary After two years of investment to enhance and expand our services and geographic footprint, our objective for 2012 is to leverage the competitive advantages we have created. Cyprotex has now established itself as a thought leader in the ADME Tox field, with a strong position in the fast-growing in vitro toxicology market with laboratories in both the UK and US, both of which have had major expansions to accommodate increased demand. In late 2011 we completed a recruiting effort to bring our sales team up to full strength. We have created a robust platform to focus our strategic emphasis towards revenue and profit growth whilst continuing to develop new and innovative offerings for our rapidly expanding customer base. With our enhanced strategic advantages and the continued easing of the recession, we believe that Cyprotex is poised for further strong growth. Steve Harris Non-Executive Chairman Dr Anthony D Baxter Chief Executive Officer 21 March 2012

5 Consolidated income statement year to 31 December 2011 Continuing operations Note Revenue 4 7,911,672 5,924,387 5,001,042 Cost of sales (1,327,968) (868,068) (649,319) Gross profit 6,583,704 5,056,319 4,351,723 Administrative costs (5,912,523) (4,834,461) (3,893,074) Operating profit 671, , ,649 Finance income 4,111 6,337 19,632 Finance cost (86,802) (26,855) (17,868) Profit before tax 588, , ,413 Income tax 288, ,300 - Profit for the period 877, , ,413 Attributable to the owners of the parent 877, , ,413 Earnings per share Basic earnings per share p 0.31p 0.26p Diluted earnings per share p 0.31p 0.26p Consolidated statement of comprehensive income year to 31 December Continuing operations Profit for the period 877, , ,413 Exchange differences on retranslation of overseas operations 82,149 (1,923) - Total comprehensive income for the period 959, , ,413 Attributable to the owners of the parent 959, , ,413

6 Consolidated statement of financial position at 31 December ASSETS Notes Non current assets Property, plant and 8 2,102,964 2,148,013 1,234,149 Intangible fixed assets 9 3,607,964 3,485,218 - Deferred tax assets 643, ,494-6,354,850 6,030,725 1,234,149 Current assets Inventories 349, , ,714 Trade receivables 1,095, , ,706 Other receivables 405, , ,827 Cash and cash equivalents 1,127,680 1,036,888 2,074,132 2,978,534 2,375,590 3,015,379 Total assets 9,333,384 8,406,315 4,249,528 LIABILITIES Current liabilities Trade payables 331, , ,998 Other payables 563, , ,916 Obligations under finance leases 81,532 98,101 10,729 Income tax payable 7, Provisions 149, Short-term borrowings 150, ,759 - Current portion of long term borrowings 67,100 30,000 30,000 1,351,365 1,137, ,643 Non current liabilities Long term borrowings 614, , ,100 Obligations under finance leases 108, ,924 - Other borrowings - 150,000 - Provisions 176, ,100 - Deferred tax liabilities 265, ,980-1,164,358 1,553, ,100 Total liabilities 2,515,723 2,691, ,743 Net Assets 6,817,661 5,715,077 3,296,785 EQUITY Equity attributable to equity holders of the parent Share capital 7 223, , ,957 Share premium account 12,210,140 12,210,140 10,594,395 Other reserve 128, , ,070 Share based payment reserve 704, , ,410 Profit and loss account (6,448,846) (7,408,330) (8,023,047) Total equity 6,817,661 5,715,077 3,296,785

7 Consolidated statement of changes in equity year to 31 December 2011 Share capital Share premium account Other reserve Share based payment reserve Profit and loss account Balance at 1 January ,687 12,210, , ,510 (7,408,330) 5,715,077 Share based payments , ,100 Transactions with owners 223,687 12,210, , ,610 (7,408,330) 5,858,177 Profit for the period , ,335 Other comprehensive income Exchange differences on translation ,149 82,149 Total equity Total comprehensive income for the period , ,484 Balance at 31 December ,687 12,210, , ,610 (6,448,846) 6,817,661 Balance at 1 January ,957 10,594, , ,410 (8,023,047) 3,296,785 Share based payments , ,100 Issue of share capital 44,730 1,632, ,677,386 Share issue costs - (16,911) (16,911) Transactions with owners 223,687 12,210, , ,510 (8,023,047) 5,100,360 Profit for the period , ,640 Other comprehensive income Exchange differences on translation (1,923) (1,923) Total comprehensive income for the period , ,717 Balance at 31 December ,687 12,210, , ,510 (7,408,330) 5,715,077 Balance at 1 January ,698 10,594, , ,202 (8,483,460) 2,796,710 Share based payments ,208-39,208 Issue of share capital Transactions with owners 178,957 10,594, , ,410 (8,483,460) 2,836,372 Profit for the period , ,413 Other comprehensive income Total comprehensive income for the period , ,413 Balance at 31 December ,957 10,594, , ,410 (8,023,047) 3,296,785

8 Consolidated statement of cash flows year to 31 December Cash flows from operating activities Profit after taxation 877, , ,413 Adjustments for: Depreciation 363, , ,259 Amortisation 140,199 53,959 - Share based payment charge 143, ,100 39,208 Finance income (4,111) (6,337) (19,632) Interest expense 86,802 26,855 17,868 Taxation recognised in the income statement (288,845) (415,300) - (Increase)/decrease in trade and other receivables (441,494) (190,527) 446,880 Increase in inventories (58,819) (80,499) (48,157) Increase/(decrease) in trade and other payables 263,327 (85,957) (260,991) Cash generated from operations 1,081, , ,848 Interest paid (70,019) (19,506) (17,868) Net cash from operating activities 1,011, , ,980 Cash flows from investing activities Purchase of property, plant and (312,610) (640,075) (313,746) Expenditure on intangibles (172,543) - - Acquisition (net cash paid) - (339,482) - Interest received 4,111 6,337 19,632 Net cash used in investing activities (481,042) (973,220) (294,114) Cash flows from financing activities (Costs)/proceeds from issue of share capital - (16,911) 454 Proceeds from long-term borrowings 200, Proceeds from finance lease obligations 83, Repayment of long-term borrowings (54,900) (34,700) (34,400) Payment of finance lease liabilities (105,047) (108,823) (61,670) Payment of contingent consideration (156,060) (10,900) - Payment of short term borrowings (408,695) (205,738) - Net cash used in financing activities (440,936) (377,072) (95,616) Net increase/(decrease) in cash and cash equivalents 89,050 (1,038,178) 489,250 Exchange differences on cash and cash equivalents 1, Cash and cash equivalents at beginning of year 1,036,888 2,074,132 1,584,882 Cash and cash equivalents at end of year 1,127,680 1,036,888 2,074,132

9 Notes to the final results year to 31 December Nature of operations and general information Cyprotex PLC ( Cyprotex ) and subsidiaries (together the Group ) principal activity is the provision of in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity/Pharmacokinetic) information to the pharmaceutical industry. Cyprotex s vision is to provide, in partnership with our customers in drug discovery and development, the highest quality, fastest turnaround and most cost effective ADME and pharmacokinetic data to those customers. Cyprotex PLC is the Group s ultimate parent company. It is incorporated and domiciled in England and Wales. The address of Cyprotex PLC s registered office is 100 Barbirolli Square, Manchester M2 3AB. The address of its principal places of business are 15 Beech Lane, Macclesfield, Cheshire, United Kingdom, SK10 2DR and 313 Pleasant Street, Watertown, Massachusetts MA USA. It trades through its wholly owned subsidiaries: Cyprotex Discovery Limited based in Macclesfield in the UK and Apredica, LLC in Watertown in the USA. Cyprotex PLC s shares are listed on the Alternative Investment Market of the London Stock Exchange. The consolidated financial information set out in this announcement are presented in Pounds Sterling ( ), which is also the functional currency of the parent. The consolidated financial information has been approved for issue by the Board of Directors on 21 March The information in this preliminary announcement does not constitute statutory accounts within the meaning of sections 434 to 436 of the Companies Act 2006 and no statutory accounts have yet been filed with the Registrar of Companies for the year ended 31 December Statutory accounts for the year ended 31 December 2010 have been filed with the Registrar of Companies. The auditors report on these accounts was unqualified and did not contain an emphasis of matter, nor did it contain a statement under section 498 of the Companies Act The statutory accounts for the year ended 31 December 2011 will be delivered to the registrar of Companies following the Company's Annual General Meeting. The Group s statutory financial statements for the year ended 31 December 2010 and 31 December 2009, prepared under International Financial Reporting Standards (IFRS) have been filed with the Registrar of Companies. Whilst the financial information included in this final results announcement has been computed in accordance with IFRS, this announcement in itself does not contain sufficient information to comply with IFRS. 2. Basis of preparation The consolidated final results are for the year ended 31 December They have been prepared in accordance with the requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), including International Accounting Standards (IAS) and interpretations issued by the International Financial Reporting Committee (IFRIC) and applied in accordance with the Companies Act Practice is continuing to evolve on the application and interpretation of IFRS. Further standards may be issued by the International Accounting Standards Board (IASB), and standards currently in issue and endorsed by the EU may be subject to interpretations issued by IFRIC. The consolidated final results have been prepared in accordance with the accounting policies set out in the Group s statutory financial statements for the year ended 31 December The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this consolidated financial information. 3. Going concern The Group recorded a profit after taxation of 877,335 in the year ended 31 December 2011 and cash and deposits are 1,127,680. The Directors have reviewed the budget, financial forecasts including cash flow forecasts and other relevant information and believe that the Group has adequate resources to continue in operation for the foreseeable future.

10 4. Segmental information Revenue represents the amounts derived from the provision of goods and services which fall within the Group s ordinary activities and is stated net of value added tax and trade discounts. The Group has a single operating and reportable segment, that of providing in vitro and in silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity/Pharmacokinetic) information to the pharmaceutical and biotechnology industries. The revenue and operating profit for the year are derived from the Group s single operating and reportable segment. The Group has made an acquisition during the second half of the year ended 31 December 2010 which falls into this reporting segment. The Group gives a geographic analysis of revenue by destination. Key markets for the Group are identified as North America, Mainland Europe and the United Kingdom United Kingdom 1,732,705 1,422,935 1,407,293 Rest of Europe 2,528,202 2,319,184 2,319,428 North America 3,484,408 2,099,855 1,191,308 Rest of the World 166,357 82,413 83,013 7,911,672 5,924,387 5,001, Earnings per share The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of diluted earnings per share is based on the basic earnings per share, adjusted to allow for the issue of shares and the post tax effect of dividends and/or interest, on the assumed conversion of all dilutive options and other dilutive potential ordinary shares. Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below Continuing operations Profit after tax and earnings attributable to ordinary shareholders ( ) 877, , ,413 Weighted average number of ordinary shares in issue (number used for basic earnings per share) 223,687, ,216, ,725,641 Dilutive effect of options (number) 448, , ,287 Weighted average number of ordinary shares in issue (number used for diluted earnings per share) 224,135, ,666, ,348,928 Basic earnings per share (pence) 0.39p 0.31p 0.26p Diluted earnings per share (pence) 0.39p 0.31p 0.26p 6. Taxation At 31 December 2011, the Group has tax losses and deductibles totalling approximately 7.3 million that are available for offset against future profits arising from the same trade.

11 7. Share issues The authorised share capital of the Company was increased by 100,000,000 ordinary shares of 0.1p each to 300,000,000 on 14 July The Company has only one class of shares. During the year to 31 December 2011, no ordinary shares were issued. Shares issued may be summarised as follows: Number Year to 31 December 2011 At 1 January ,687, ,687 At 31 December ,687, ,687 Year to 31 December 2010 At 1 January ,957, ,957 Issues of shares purchase of Apredica, LLC 44,730,297 44,730 At 31 December ,687, ,687 Year to 31 December 2009 At 1 January ,697, ,698 Issues of shares on exercise of share options 259, At 31 December ,957, , Additions and disposals of property, plant and The following tables show the significant additions and disposals of property, plant and. Year to 31 December 2011 Long leasehold and buildings Office Computer Laboratory Carrying amount at 1 January ,375 19,543 85,940 1,071,155 2,148,013 Additions , , ,610 Exchange - - 2,285 3,609 5,894 Depreciation (21,562) (5,025) (46,832) (290,134) (363,553) at 31 December ,813 14, , ,688 2,102,964 Total Year to 31 December 2010 Long leasehold and buildings Office Computer Laboratory Carrying amount at 1 January ,471 20,322 38, ,968 1,234,149 Acquisitions , , ,943 Additions 181,661 5,052 52, , ,075 Exchange ,204 6,532 Depreciation (19,757) (5,831) (33,181) (210,917) (269,686) at 31 December ,375 19,543 85,940 1,071,155 2,148,013 Total Year to 31 December 2009 Long leasehold and buildings Office Computer Laboratory Total Carrying amount at 1 January ,705 22,511 41, ,489 1,181,662 Additions 17,665 3,373 28, , ,746 Depreciation (17,899) (5,562) (32,145) (205,653) (261,259) at 31 December ,471 20,322 38, ,968 1,234,149

12 9. Intangible assets The following tables show the significant additions to intangible fixed assets. Goodwill Trade names Customer relationships Technology & know-how Total Cost or valuation At 1 January ,562, , , ,625 3,539,177 Additions , ,543 Exchange 65,701 4,824 8,157 17,597 96,279 At 31 December ,628, , , ,765 3,807,999 Depreciation and impairment At 1 January ,839 26,510 19,610 53,959 Amortisation during the year - 18,696 63,230 58, ,199 Exchange ,706 2,371 5,877 At 31 December ,335 92,446 80, ,035 Net book value At 31 December ,628, , , ,511 3,607,964 Goodwill Trade names Customer relationships Technology & know-how Total Cost or valuation At 1 January Acquisition of subsidiary 2,562, , , ,625 3,539,177 At 31 December ,562, , , ,625 3,539,177 Depreciation and impairment At 1 January Amortisation during the year - 7,839 26,510 19,610 53,959 At 31 December ,839 26,510 19,610 53,959 Net book value At 31 December ,562, , , ,015 3,485,218 At 31 December Goodwill and other intangible assets relate to the acquisition of Apredica, LLC in August 2010, Additions in the year relate to development work carried out on CellCiphr TM technologies. 10. The Annual Report The 2011 Annual Report and Accounts of the Group will be available to shareholders on the 1 June Copies will be available on request from the Company Secretary, Cyprotex PLC, 15 Beech Lane, Macclesfield, Cheshire, SK10 2DR. 11. Annual General Meeting The Annual General Meeting will be held at 10:00am on Tuesday, 17 July 2012 at The Royal Society of Medicine, 1 Wimpole Street, London, W10 0AE.