RNS Number:5242C
Axis-Shield PLC
02 September 2004
2 September 2004
Interim Results for the Six Months Ended 30 June 2004
Axis-Shield plc (LSE: ASD, OSE: ASD), the in vitro diagnostics company based in
Scotland and Norway, today announces its interim results for the six months
ended 30 June 2004.
Financial Highlights
* Revenues up 12.4% on a constant currency basis, and allowing for sale
of autoimmune business in 2003
* Gross margins improved to 53.2% (2003: 50.2%)
* Positive EBITDA at #0.8 million, compared to a loss of #2.6 million in
2003
* Increased gross profit and reduction in external R&D expenditure
contribute to a reduced loss of #0.9 million (2003: loss of #4.3 million)
* Strong balance sheet with cash of #9 million at period end
Operational Highlights
* On track to launch AFINION(TM) system in November
* Successful launch of BNP (diagnosis of heart failure) on Abbott AxSYM
system, generating revenues of nearly #1 million in the period
* Homocysteine revenues down 7.8% on constant currency basis, affected by
patent dispute in the USA
* Sales of anti-CCP test for detection of rheumatoid arthritis up 49.1%
Commenting on the results, Nigel Keen, Chairman of Axis-Shield, said:
"With the continuing development of our Laboratory operations and the imminent
launch of the AFINION system for the expanding point-of-care market, Axis-Shield
is well-placed for profitable growth. The Company is now firmly established as
a respected and innovative in vitro diagnostics organisation targeting clinical
market opportunities and I look forward to reporting further strong progress at
the year end."
There will be an analyst group meeting at 9am on Thursday 2 September 2004 in
London at the offices of Financial Dynamics at Holborn Gate, 26 Southampton
Buildings, WC2. There will be a simultaneous conference call and webcast. For
further details, please contact Mo Noonan on +44 (0)20 7831 3113.
A meeting for Oslo analysts will take place at 8am on Friday 3 September 2004 at
the Continental Hotel, Oslo. For further details, please contact Lilian
Manderson on +44(0)1382 422000.
Enquiries:
Axis-Shield plc Tel: +44 (0)1382 422000
Svein Lien, Chief Executive Officer
Paul Garvey, Finance Director
Financial Dynamics Tel: +44 (0)207 831 3113
David Yates / Sophie Pender-Cudlip
Notes to Editors:
Axis-Shield is an international in vitro diagnostics company, headquartered in
Dundee with R&D and manufacturing bases in Dundee and Oslo. The Group
specialises in the development, manufacture and marketing of innovative
proprietary diagnostics kits in areas of clinical need, including cardiovascular
and neurological diseases, rheumatoid arthritis, alcohol abuse and diabetes. It
has a special focus on effective testing at the point of care, for improved
patient management.
For more information on Axis-Shield, please refer to www.axis-shield.com
CHAIRMAN'S STATEMENT 2004 INTERIM REPORT
Introduction
During the first half of 2004, Axis-Shield has continued its development towards
becoming a full service diagnostic supplier, with an established position in
laboratory testing through patented tests for key markers and an increasing
presence in the growing market for near patient testing. We look forward to the
launch of our new AFINION(TM) Point-of-Care assay system for the doctor's office
later this year and the first introductions of new Axis-Shield assays onto the
Abbott AxSYM laboratory analyser in 2005. Homocysteine continues to attract much
interest as an important marker in a number of clinical areas and the
Axis-Shield-developed AxSYM assay for BNP, a marker for heart failure, has
achieved excellent sales since its launch in the USA in February.
Organisational changes coupled with a significant reduction in external research
and development expenditure have resulted in a greatly improved trading position
with a pre-tax loss of #886,000 for the half year, compared to a loss of #4.3
million in the first half of 2003. Revenues were up by 1.5% to #26.2 million
(2003: #25.8 million), but on a constant currency basis and allowing for the
disposal of the autoimmune business in 2003, this equates to a growth of 12.4%.
EBITDA was positive at #0.8 million compared to a deficit of #2.6 million in the
first half of 2003. Gross margins improved to 53.2% (2003: 50.2%) and our cash
position remains strong at #9 million.
Operational Review
Axis-Shield has had a very promising half year in both our Laboratory and
Point-of-Care (PoC) Divisions. In our Laboratory Division we continue to
progress our strategic objectives of developing patented diagnostic tests in
areas of clinical need and adapting them to the large throughput laboratory
systems of the major global diagnostic companies, primarily through OEM
arrangements.
We are well advanced with the initial tests being developed under the agreement
signed last year with the Diagnostics Division of Abbott Laboratories to produce
the next generation of markers for the highly respected and widely-placed AxSYM
automated laboratory analyser. This agreement represents a departure from normal
OEM contracts as it effectively gives us direct marketing of products in our own
livery on a successful instrument platform without the enormous costs associated
with the development and marketing of the system itself. It will enable us to
both greatly increase the commercialisation and profile of our own novel
patented markers and to generate an additional revenue stream from large volume
commodity assays not yet available on the AxSYM system, with both these
opportunities supported by Abbott's sales and marketing organisations worldwide.
We have always recognised that it is essential to work with the major companies
like Abbott in order to ensure the widest commercialisation of our key markers,
as the top six companies dominate the laboratory diagnostics market. The
validity and success of this strategy has become increasingly evident and our
skills in adapting assays to automated instrument platforms are now being sought
by many of these large diagnostic organisations for OEM contracts also involving
markers which are not proprietary to Axis-Shield.
The centralisation of our laboratory operations at our corporate headquarters in
Dundee and the commissioning of extra space available at this site have resulted
in improved efficiency in these expanding operations.
There is an increasing demand for key diagnostic parameters to be tested in the
presence of the patient to ensure optimal patient management. This is especially
important where management might involve the prescribing of specific
pharmaceuticals such as antibiotics, particularly as unnecessary intake of these
drugs is leading to reduced effectiveness against many pathogens. We are
responding to the growth of this new discipline, often known as "theranostics",
by seeking to build links with major pharmaceutical companies in areas where we
feel our tests can be used to influence prescribing decisions. An example of
this is the use of our anti-CCP assay (not yet available in PoC format) in the
early detection of rheumatoid arthritis, which is very important in the
effective use of the new generation of anti-rheumatic drugs and the control of
disease progression.
Clearly the availability of tests that can be performed quickly and accurately
in doctors' surgeries is an important part of better clinical practice. Over the
past decade Axis-Shield's NycoCard(R) system has capitalised on this with
several tests, including a CRP assay to differentiate between bacterial and
viral infections and thus to validate the appropriateness of antibiotic therapy,
and HbA1c for monitoring diabetic compliance. These tests have been particularly
successful in Northern European markets and in Switzerland, where the use of
point-of-care testing is more established, together with developing countries
where there are geographical constraints on centralised laboratory testing
services. However, the NycoCard(R) technology has some limitations regarding
menu expansion and the fact that it does not employ a completely automated
process. This means that the important CLIA-waiver status in the US, permitting
use by non-laboratory professionals, is not attainable.
We have therefore developed AFINION(TM), a fully automated doctors' office test
system capable of achieving US CLIA-waiver. As Axis-Shield is principally a
reagent developer and manufacturer with core skills in chemistry and
biochemistry, it was necessary for us to contract out the major part of the
intricate and demanding instrument development required to meet our
specifications. As a result, our external R&D costs have been significantly
increased during the period covering instrument development. This phase of
development is now largely complete and we will launch the system at the
International MEDICA show in Dusseldorf in November. The AFINION(TM) project has
been followed closely by both potential distributors and customers and this
interest has intensified as we have demonstrated system prototypes prior to
launch. The American market will be important for the success of AFINION(TM) and
to address this huge market we are creating a US organisation to manage local
distribution of the system. An experienced professional, John Sperzel from Bayer
Diagnostics, has been recruited to head this new unit.
Our successful direct distribution organisations in the Nordic countries
(Medinor) and the UK (Axis-Shield UK) are well placed to ensure early market
penetration of AFINION in our home markets.
Divisional Review
Laboratory Division
The transfer of laboratory operations from Oslo to one centralised site in
Dundee has progressed well. The fitting out of the unutilised space in the
Technology Park building at Dundee to accommodate the expanded operations and
the new workload expected from the contract with Abbott to develop and
manufacture the next range of markers for the AxSYM instrument platform is now
complete. The site improvement was partly financed by a grant from Scottish
Enterprise and the expanded premises were formally opened by Scotland's Deputy
First Minister, Jim Wallace, on July 27. We have also successfully completed the
post-sale transfer of the autoimmune product range manufacturing to
Euro-Diagnostica in Holland. Our reduced losses this half year partly reflect
reduced overheads and improved efficiency resulting from the consolidation and
rationalisation of our laboratory operations. The Laboratory Division revenue
growth has come primarily from new Abbott products and anti-CCP, which
demonstrates that we do not have to rely solely on increasing sales of our
market leading homocysteine products.
Scientific interest in homocysteine continues to build and new data have
recently been published showing that the marker could also have some utility in
the early detection of increased risk of osteoporosis, in addition to existing
applications in areas such as cardiovascular and neurodegenerative diseases.
However we believe that the total market for homocysteine testing grew only by
about 20% compared with the first half of 2003, which is lower growth than we
had anticipated. One factor which continues to impact US sales negatively is
the activity of Competitive Technologies Inc. (CTT). CTT controls a US patent
which expires in 2007, covering the use of homocysteine as a surrogate marker of
vitamin deficiency. The US Court of Appeal has recently upheld an earlier
judgement from a District Court in the USA which effectively supports the CTT
contention that all homocysteine testing can be considered as a measure of
vitamin status. Whilst we are pleased that the case has now been resolved, the
situation is negatively impacting the development of the US market for
homocysteine, with laboratories reluctant to offer and promote homocysteine
testing under the continuous threat of litigation from CTT. In addition, CTT has
announced, "it is expecting to reach licensing agreements with several
organisations, (including product suppliers like Abbott, Bayer and Axis-Shield)
in lieu of formal dispute." We believe that growth in the US market for
homocysteine testing may be held back until the CTT position is resolved, though
any solution is unlikely to affect our margins, as the patent covers end-use of
a homocysteine result. Therefore any licence fee is payable by the final user of
the test result, and would thus be passed on to the doctor and ultimately the
patient or health care provider.
Homocysteine revenues decreased by 12.9% to #3.1 million compared to #3.5
million in the first half of 2003, though at constant currency rates this
decline would have been reduced to 7.8%. Our shipments of homocysteine products
decreased by 18% compared to 2003, largely due to previously high inventory
levels being reduced by one of our main OEM partners (with the lowest unit price
to us, hence revenue decrease was not as great). Total units shipped by us,
together with units reported as shipped by our royalty-paying licensees, reached
3.6 million for the first half year.
As previously indicated, homocysteine sales during the first half of 2004 have
also been affected by substantial unlicensed competition. The favourable
resolution of our homocysteine patent dispute with Catch Inc. in April, coupled
with the agreement for Axis-Shield to become the global manufacturer and
distributor of homocysteine tests based on the Catch technology, has brought the
principal element of this unlicensed competition into our portfolio of licensed
products. The agreement with Catch has given us rights to use and license out an
adaptable and robust technology for clinical chemistry instruments, and, as a
result of our settlement, Beckman Inc. has now signed an agreement with Catch to
use the Catch reagents on its widely-placed Synchron instrument platform, with
royalties to Axis-Shield on a per test basis. Catch and Axis-Shield have now
established a working partnership and we expect to announce more agreements with
other organisations keen to commercialise this technology in the near future.
The financial benefits of our settlement with Catch should start to become
evident in the second half of this year.
In June 2004, we signed a licence agreement with the Japanese company, Azwell,
to allow it to sell its own homocysteine test through Polymedco and its Polychem
analyser in the USA, in return for per test royalty payments. Our collaborations
with Dade Behring and The Instrumentation Laboratory for homocysteine assays on
these companies' instrument platforms are nearing completion and should add to
homocysteine revenues in 2005.
The recent launch of the AxSYM BNP assay by Abbott has been very successful,
with revenues of #944,000 during the period. BNP is considered the marker of
choice in the definitive diagnosis of heart failure and we expect further growth
in sales of our test for measuring this important marker. In May, Abbott also
launched an AxSYM testosterone assay, developed and manufactured by Axis-Shield.
In August, Abbott launched the first immunoassay for the immunosuppressive drug
sirolimus, which is used predominantly in renal transplantation, on its IMx
analyser, after a three-way collaboration between Abbott, Axis-Shield and the
drug's developer, Wyeth. In May, we signed an agreement with Abbott to produce
an assay for Beta-2-microglobulin on the IMx instrument platform and this
should be ready for launch by the end of the year.
New published data on the utility of our patented anti-CCP test shows that many
patients with rheumatoid arthritis have circulating antibodies to cyclic
citrullinated peptides in their bloodstream several years before the appearance
of symptoms. This has helped to grow sales of our anti-CCP ELISA kit to
#434,000, up by 49% over the first half of 2003. The authors of the Swedish and
Dutch studies concerned conclude that early screening for anti-CCP is feasible
and would be of considerable help in the clinical management of patients in whom
rheumatoid arthritis is predicted to develop.
Point-of-Care Division
Revenues were #9.1 million compared to #8.7 million in the first six months of
2003, representing an increase of 4.5%, or 15.1% at constant currency rates.
This adverse currency effect reflects the weakness of the Norwegian Kroner (NOK)
during the period.
The NycoCard(R) instrument base has now increased to over 13,000, and we are
still seeing good growth in some export markets, particularly China, where the
nationwide project to investigate utility of the NycoCard(R) HbA1c test in
diabetics continues.
Our new AFINION(TM) Point-of-Care system will be launched in non-US markets in
November. The HbA1c and CRP assays, the first tests which we have developed for
use on AFINION(TM), are working well and the assembly line for reagent
cartridges is now fully operational in Oslo. Before the end of the year we are
planning to submit an application to the US FDA for AFINION(TM) marketing
clearance. For marketing in the US we have decided to appoint a network of local
distributors, supported by our own US organisation and are pleased that John
Sperzel has accepted the position to head that operation. Until recently, John
was Vice President of World Wide Marketing and Business Development for Near
Patient Testing at Bayer Diagnostics and he brings with him extensive experience
and knowledge in point-of-care marketing. In our principal point-of-care markets
in Scandinavia, Medinor, with its strong position and extensive sales force, is
playing an important role in the early market testing and launch of AFINION(TM).
Focussing our Oslo operations into this Division has improved efficiency and we
have seen tangible benefits in our AFINION(TM) project. We believe the system
represents a major advance in the marketplace which is increasingly receptive to
the need for rapid and reliable near patient testing. Previewing the system at
the recent annual meeting of the American Association of Clinical Chemistry
attracted much interest. Using the system, we were able to demonstrate accurate
fully automated HbA1c testing in less than 3 minutes in a number of volunteers.
Direct Distribution
Sales in the Nordic countries through Medinor were affected by the weak NOK and
reached #12.0 million compared with #12.3 million in 2003, of which #8.4 million
was from distribution of non-Axis-Shield products. UK sales reached #1.1 million
(of which #647,000 was from third party distributed products), compared to #1.3
million in 2003, but this result masks underlying sales growth, as in 2003 there
were a number of one-off sales to the UK Ministry of Defence.
Plasmatec, our Dorset-based subsidiary selling mostly infectious disease assays
and low cost commodity diagnostics to developing countries, achieved sales of
#914,000, an increase of 9.7% over the corresponding period last year.
Financial Review
Exchange Rates
The Group has again been affected by the material movements in key exchange
rates during the first six months of this year, and in particular the continuing
weakness of the US dollar has had a significant impact on revenues, gross profit
and net losses. In addition to the dollar, the NOK has been much weaker in 2004
than in 2003, adversely affecting the conversion of the revenues of our
Norwegian entities to sterling. However, we have not suffered at the profit
before tax level as the combined Norwegian entities made a loss before tax in
the period, as a result of our significant investment in R&D in Norway, in
connection with AFINION.
Turnover
Turnover increased by 1.5% to #26.2 million (2003: #25.8 million). The adverse
effect of currency on third party divisional revenues and translation of
Norwegian revenues to sterling was #2.1 million.
Gross Margin
The gross margin increased to 53.2% (gross profit: #13.9 million) from 50.2% in
2003 (gross profit: #13.0 million). Although affected by the weaker dollar, the
more beneficial product mix together with the disposal of the autoimmune
business is reflected in this increase in margin.
Operating Costs and Profit
We continue to invest heavily in R&D but our spending in the first half of 2004
decreased, in line with expectations, to #5.5 million from #6.6 million - a
decrease of 16.8%. This figure includes all development costs associated with
the new PoC AFINION(TM) instrument and assays, particularly external development
costs of #1.9 million (2003: #2.9 million). We expect this level of R&D
spending to continue to decrease in the second half as AFINION(TM) is launched.
Other operating expenses decreased by #610,000 (6.1%) from #10.0 million in 2003
to #9.4 million in 2004. Exchange rate differences accounted for virtually all
of this. There were no exceptional operating costs (2003: #832,000). Net
interest received decreased from #181,000 to #58,000. Loss before taxation was
#886,000 compared to #4.3 million in the first six months of 2003.
EBITDA
The Group reports positive earnings before interest, tax, depreciation and
amortisation (EBITDA) for the first six months of the year of #0.8 million
compared to a loss of #2.6 million in 2003, though the latter figure did include
exceptional costs of #0.8 million.
Cash Flow
The positive EBITDA less the working capital requirements led to a net cash
inflow from operating activities of #360,000 (2003: outflow of #2.4 million).
Capital expenditure remained steady at #2.1 million (2003: #2.1 million), due
mainly to the AFINION(TM) project and the building works at Dundee. This,
together with net interest received of #58,000 (2003: #181,000), lease finance
received of #749,000 (2003: #Nil) and a small hire purchase repayment led to a
decrease in our cash position at 30 June 2004 of #911,000 and a net cash
position of #6.9 million. Actual cash at bank at the end of the period was #9.0
million (2003: #9.2 million).
Balance Sheet
The Group's fixed assets at 30 June 2004 were #25.8 million (2003: #27.6
million), which were made up of tangible assets of #9.0 million, intangible
assets of #16.7 million and other investments of #93,000. The intangible assets
principally relate to the patents, trademarks and goodwill acquired when the
Point-of-Care Division was purchased in February 2000, together with the 2003
acquisition of a licence to produce AxSYM assays and a homocysteine licence
acquired in 2002. Stocks have decreased to #7.8 million (2003: #9.0 million);
debtors have increased to #9.8 million (2003: #9.3 million) while current
creditors, which include the current amount due on the AxSYM licencing
agreement, have increased to #10.8 million (2003: #9.9 million). Creditors due
after one year include further amounts owing on the AxSYM licencing agreement
together with long term finance leasing and have increased from #2.6 million to
#4.3 million, while provisions for liabilities and charges, which include the
provision for exceptional costs, have decreased from #1.4 million to #725,000.
Our shareholders' funds now stand at #36.4 million (2003: #41.4 million).
Outlook
We are now seeing the benefits of the combination of increased operational
efficiency, higher gross margins and reduced R&D costs. Our current products
should produce strong growth going forward, and this will be supported by a
substantial number of new products over the coming years. We now have access to
powerful instrument platforms in both the laboratory and point-of-care sectors
through AxSYM and AFINIONTM respectively and these will provide the main avenues
for commercialisation of our new products, generating long term growth and
profitability. I look forward to reporting further strong progress at the year
end.
Nigel Keen, Chairman
2 September 2004
Consolidated Profit and Loss Account
For the six months ended 30 June 2004
Notes Six months Six months Twelve months
ended ended ended
30 June 2004 30 June 2003 31 Dec 2003
unaudited unaudited audited
#000 #000 #000
Turnover - Continuing operations 2 26,225 25,835 50,327
Cost of Sales (12,281) (12,853) (25,163)
________ ________ ________
Gross Profit 13,944 12,982 25,164
Operating expenses 4 (9,359) (9,969) (19,127)
________ ________ ________
Operating Profit before Research & Development and 4,585 3,013 6,037
Exceptional Costs
Research and Development 4
Point-of-care (internal) (1,749) (1,517) (2,608)
Point-of-care (external) (1,939) (2,922) (5,655)
Lab Division (internal) (1,815) (2,040) (4,271)
Lab Division (external) (26) (164) (345)
________ ________ ________
(5,529) (6,643) (12,879)
Operating Loss after Research & Development (944) (3,630) (6,842)
Exceptional operating expenses 4 - (832) (2,230)
________ ________ ________
Operating Loss - Continuing operations (944) (4,462) (9,072)
Exceptional gain on disposal of Autoimmune business - - 2,042
________ ________ ________
Loss on Ordinary Activities before Interest and (944) (4,462) (7,030)
Taxation
Net interest receivable 58 181 303
________ ________ ________
Loss on Ordinary Activities before Taxation (886) (4,281) (6,727)
Taxation (40) - -
________ ________ ________
Loss for the Financial Period (926) (4,281) (6,727)
________ ________ ________
Loss per ordinary 35p share 5
Basic (1.91p) (8.82p) (13.86p)
Fully diluted (1.91p) (8.82p) (13.86p)
Earnings before interest, taxation, depreciation and
amortisation ("EBITDA")
Loss on Ordinary Activities before Interest & Taxation (944) (4,462) (7,030)
Depreciation 697 905 2,052
Goodwill amortisation 240 263 518
Intangible asset amortisation 809 663 1,507
________ ________ ________
EBITDA 802 (2,631) (2,953)
________ ________ ________
Consolidated Balance Sheet
As at 30 June 2004
Notes 30 June 2004 30 June 2003 31 Dec 2003
unaudited unaudited audited
#000 #000 #000
Fixed Assets
Intangible 6 16,701 19,526 18,505
Tangible 8,957 7,619 7,953
Other investments 93 493 98
________ ________ ________
25,751 27,638 26,556
________ ________ ________
Current Assets
Stocks 7,759 9,028 8,162
Debtors 9,774 9,316 9,426
Cash at bank 8,979 9,232 10,143
________ ________ ________
26,512 27,576 27,731
Creditors: Due within one year 6 10,809 9,882 10,662
________ ________ ________
Net Current Assets 15,703 17,694 17,069
________ ________ ________
Total Assets Less Current Liabilities 41,454 45,332 43,625
Creditors : Due after one year 6 4,349 2,616 3,771
Provision for Liabilities and charges 7 725 1,351 1,018
________ ________ ________
Net Assets 36,380 41,365 38,836
________ ________ ________
Capital and Reserves
Called up share capital 16,987 16,987 16,987
Share premium 49,189 49,189 49,189
Capital redemption reserve 244 244 244
Merger reserve 17,922 17,922 17,922
Profit and loss account (47,962) (42,977) (45,506)
________ ________ ________
Equity Shareholders' Funds 36,380 41,365 38,836
________ ________ ________
Statement of Total Recognised Losses
For the six months ended 30 June 2004
Six months Six months Twelve months
ended ended ended
30 June 2004 30 June 2003 31 Dec 2003
unaudited unaudited audited
#000 #000 #000
Total recognised losses after tax for the (926) (4,281) (6,727)
financial period
Exchange losses on retranslation of subsidiary (1,530) (1,841) (1,924)
results and balances
_____ _____ _____
Total recognised losses relating to the (2,456) (6,122) (8,651)
financial period
_____ _____ _____
Consolidated Cash Flow
For the six months ended 30 June 2004
Notes Six months Six months Twelve months
ended ended ended
30 June 2004 30 June 2003 31 Dec 2003
unaudited unaudited audited
#000 #000 #000
Net Cash inflow/(outflow) from Operating (A) 360 (2,442) (3,033)
Activities
_____ _____ _____
Returns on Investments and Servicing of Finance
Interest received 141 228 358
Interest paid (83) (47) (55)
_____ _____ _____
Net Cash inflow from Returns on Investment and 58 181 303
Servicing of Finance
_____ _____ _____
Capital Expenditure and Financial Investment
Purchase of tangible fixed assets (2,073) (2,119) (3,549)
Purchase of intangible fixed assets - (1,061) (1,061)
Proceeds of sale of tangible fixed assets 3 - 5
_____ _____ _____
Net Cash outflow from Capital Expenditure and (2,070) (3,180) (4,605)
Financial Investment
_____ _____ _____
Disposals
Disposal of subsidiary business/undertakings - - 1,650
Net Cash outflow before use of liquid Resources (1,652) (5,441) (5,685)
and Financing
Financing
Finance received on purchase of tangible fixed 749 - 1,439
assets
Hire purchase repayments (8) (16) (23)
_____ _____ _____
Net Cash inflow/(outflow) from Financing 741 (16) 1,416
_____ _____ _____
Decrease in Cash (911) (5,457) (4,269)
_____ _____ _____
(A) Reconciliation of Operating Loss to Net Cash from
Operations
Six months Six months Twelve months
ended ended ended
30 June 2004 30 June 2003 31 Dec 2003
unaudited unaudited audited
#000 #000 #000
Operating loss (944) (4,462) (9,072)
Depreciation of tangible fixed assets 697 905 2,052
Amortisation of intangible fixed assets 1,049 926 2,025
Reverse lease premium amortised in period - (17) (16)
Loss on disposal of fixed assets - - 1
Provision against investment - - 406
(Decrease)/increase in provisions (239) 1,020 651
Decrease /(increase) in stock 51 (111) 807
Increase in debtors (717) (446) (127)
Increase/(decrease) in creditors 463 (257) 240
_____ _____ _____
Net Cash Inflow/(outflow) 360 (2,442) (3,033)
_____ _____ _____
Reconciliation of Net Cash Flow to Movement in Net
Funds
#000 #000 #000
Decrease in cash in the period (911) (5,457) (4,269)
Cash (inflow)/outflow from decrease in debt and hire (741) 16 (1,416)
purchase
_____ _____ _____
Movement in net funds for the period (1,652) (5,441) (5,685)
Opening balance 8,701 14,733 14,733
Foreign exchange adjustment (144) (84) (347)
_____ _____ _____
Closing Balance 6,905 9,208 8,701
_____ _____ _____
Axis-Shield plc
Notes to the Financial Statements
For the six months ended 30 June 2004
1. BASIS OF PREPARATION
The financial information in this report does not comprise Statutory Accounts
for the purpose of Section 240 of the Companies Act 1985. The interim financial
statements for 30 June 2003 and 2004, which are unaudited, have been prepared on
the basis of accounting policies consistent with those set out on pages 35 and
36 of the 2003 Annual Report. The statutory accounts of Axis-Shield plc for the
year ended 31 December 2003 have been filed with the Registrar of Companies.
The report of the auditors on these accounts was unqualified and did not contain
a statement under either Section 237(2) or Section 237(3) of the Companies Act
1985.
2. SEGMENTAL ANALYSIS
a. Geographically by origin
Turnover Operating Research & Operating Profit/(Loss)
Profit before Development Profit/ on Ordinary
R &D Costs (Loss) Activities
Before Interest
And Tax
#000 #000 #000 #000 #000
United Kingdom 6,671 2,284 1,286 998 998
Nordic Region 19,554 3,426 4,243 (817) (817)
______ _____ _____ _______ _______
26,225 5,710 5,529 181 181
Corporate Costs - 1,125 - (1,125) (1,125)
______ _____ _____ _______ _______
26,225 4,585 5,529 (944) (944)
______ _____ _____ _______ _______
b. Turnover geographically by destination
Six months Six months
ended ended
June 2004 June 2003
#000 #000
Europe 19,088 19,947
North America 4,635 3,762
Rest of world 2,502 2,126
______ ______
26,225 25,835
______ ______
c. Turnover by product area
Six months Six months Six months Six months
ended ended ended ended
30 June 2004 30 June 2004 30 June 2003 30 June 2003
#000 #000 #000 #000
Point of Care
NycoCard 6,826 6,644
Coagulation 1,662 1,437
Other Point of Care 631 643
_____ _____
Total Point of Care Products 9,119 8,724
Laboratory Products
Alcohol Related Diseases 788 867
Homocysteine 3,057 3,510
Infectious Disease 1,277 1,221
Autoimmune 317 942
Anti-CCP 434 291
Anti-Tg/TPO 493 672
BNP 944 -
Other 787 260
_____ _____
Total Laboratory Products 8,097 7,763
Distribution of third party products 9,009 9,348
_____ _____
26,225 25,835
_____ _____
3. AMORTISATION
(A) Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the
consideration given over the fair value of the identifiable net assets acquired.
Purchased goodwill is eliminated by amortisation through the profit and loss
account over its economic useful life. The goodwill charged in the six months
ended 30 June 2004 comprises:
Six months Six months
ended ended
June 2004 June 2003
#000 #000
Axis-Shield ASA 13 14
Medinor 106 115
Point of Care Division 121 134
_____ _____
240 263
_____ _____
(B) Intangible Assets
Acquired research and development projects, patents and trademarks are
capitalised. Patents are written off over the period for which they are valid.
Other intangible assets are written off over their expected useful lives through
the Profit and Loss account over a period of 5 to 12 years. The amount
amortised in the six months ended 30 June 2004 comprises:
Six months Six months
Ended Ended
June 2004 June 2003
#000 #000
Lab Division 259 55
Point of Care Division 550 608
_____ _____
809 663
_____ _____
4. ANALYSIS OF TOTAL OPERATING EXPENSES
Six months Six months
ended ended
June 2004 June 2003
#000 #000
Research and Development 5,529 6,643
Marketing 4,976 5,296
Administration 4,383 4,673
______ ______
14,888 16,612
Exceptional operating expenses - 832
______ ______
14,888 17,444
______ ______
The operating expenses include depreciation and amortisation including goodwill
amortisation.
Research and Development include full allocation of administration cost.
5. LOSS PER ORDINARY SHARE
Loss per share is based on the weighted average number of shares in issue of
48,532,875 (31 December 2003 - 48,532,875; 30 June 2003 - 48,532,875) and the
loss for the period after taxation. The diluted earnings per share is calculated
in accordance with Financial Reporting Standard 14 'Earnings per share' and
reflects the potential impact of share options in existence at the period end.
The weighted average number of shares in issue on this basis is 48,554,761 (31
December 2003 - 48,532,875, 30 June 2003 - 48,532,875).
6. INTANGIBLE ASSETS
On 27 June 2003 the group acquired a licence to produce certain AxSYM assays for
#4,246,000, of which #1,061,000 was paid on acquisition. The balance of
#3,185,000 will be paid over five years from date of acquisition, with #606,000
included in creditors due within one year and the balance of #2,579,000 included
in creditors due after one year. The total amount of #4,246,000 will be
amortised over the ten year term of the licence agreement.
7. PROVISIONS
The amount of #725,000 comprises #92,000 arising from actuarial valuations of
pensions scheme deficits in respect of Medinor ASA and Axis-Shield PoC, and
#633,000 in respect of future costs anticipated to be incurred in the product
transfer from Oslo to Dundee.
8. INTERIM RESULTS
Copies of this statement are being circulated to shareholders and are available
at the Registered Office of Axis-Shield plc, The Technology Park, Dundee, DD2
1XA. They are also available from our Oslo address: Axis-Shield PoC AS,
Marstrandgata 6, PO Box 6863, Rodelokka, N-0504 Oslo, Norway, and they will
shortly be available on our website, www.axis-shield.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LBMLTMMBMBII
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