RNS Number:8876P
Bioquell PLC
18 September 2003
Date: 18 September 2003
On behalf of: BIOQUELL PLC
For immediate release
BIOQUELL PLC
Interim Results
BIOQUELL PLC, the UK provider of a range of unique bio-decontamination
solutions, today announced its interim results for the six months ended 30 June
2003. The highlights were:
Financial
* Revenues up 10% to #6.4m (2002: #5.8m)
* Loss post tax #1.0m (2002: loss of #1.5m), including #0.2m of
exceptional costs relating to US litigation provision
* R&D expenditure #0.8m (2002: #0.9m)
* Cash #1.1m (31 December 2002: #2.6m)
Operational
* Roll out of Room Bio-Decontamination Service (RBDS) proceeding well -
systems now ready for deployment in the US and Europe
* RBDS contract for Singapore hospitals relating to SARS successfully
completed
* Successful research work into "superbugs" in hospitals - paper written
jointly with a leading London hospital and submitted for publication
* Work continues relating to bio-defence opportunities - commercial
discussions started in the US and UK
* US subsidiary now operational - significant opportunities in the US
* Defence of US litigation proceeding well - Steris has unilaterally
withdrawn its injunction leaving BIOQUELL free to sell in the US
* Challenging markets continue for laboratory equipment, the Group's
original core business
* Cape performing well - further investment in specialist equipment and
the recruitment of a team of finite element experts
Commenting on the interim results, John Salkeld, Chairman of BIOQUELL, said:
"It is clear in today's highly competitive global markets that innovation and
service businesses provide a number of key advantages. Whilst BIOQUELL will
continue to manufacture laboratory equipment and specialist bio-decontamination
equipment, its primary focus is the development of its unique
bio-decontamination service business. In particular, hospital acquired infection
(so-called "superbugs") and bio-defence remain key areas of interest for the
Group. BIOQUELL intends to achieve rapid international market share by licensing
its bio-decontamination service technology. "Bugs" - whether bacteria, viruses
or fungi - remain a large and ever increasing international problem which
represents a substantial opportunity for BIOQUELL."
Enquiries
Nick Adams BIOQUELL PLC 01264 835900
Mark Bodeker
Emma Kane Redleaf Communications 020 7955 1410
2003 Interim results
CHAIRMAN'S STATEMENT
Results
Group revenues for the period ended 30 June 2003 were #6.4 million (2002: #5.8
million) with a loss after tax of #1.0 million (2002: loss of #1.5 million).
The increase in revenues by some 10 % was due to a number of factors including
the launch of the Group's new Room Bio-Decontamination Service (RBDS) in April
and a stronger performance by Cape, the Group's environmental stress testing
business.
Gross margins were up two percentage points at 35% (2002: 33%). Whilst the
laboratory equipment business remains extremely competitive, the overall margin
was helped by the contribution from the Group's service businesses.
The loss before tax of #1.1 million (2002: loss of # 1.5 million) includes
exceptional costs of some #266,000 (2002: #554,000), substantially all of which
relate to a provision for US litigation legal costs, referred to below.
Expenditure on research and development was #0.8 million - a slight reduction on
the prior year figure of #0.9 million.
Bio-decontamination
Bio-decontamination services
The development of BIOQUELL's bio-decontamination service business is proceeding
well. Discussions are underway to license the Room Bio-Decontamination Service
to a number of companies internationally. We are continuing to develop and build
the infrastructure to support the RBDS service and now have bio-decontamination
systems ready for deployment in Europe and the US.
Hospital acquired infection and the healthcare sector
A significant proportion of the research and development work in the first half
related to the application of BIOQUELL's technology in the healthcare sector. In
particular, we have achieved good results from a number of tests using our
technology to bio-deactivate several commonly found nosocomial infections.
Further research work is taking place in the UK and continental Europe. A paper
has been jointly written by BIOQUELL and a team from a leading London hospital
and submitted for publication to a medical journal. Nosocomial infection is the
technical term used to describe hospital acquired infection - ie infections
contracted by patients in hospitals. These types of infection are sometimes
referred to as "superbugs" with the most common being MRSA (Methicillin
resistant Staphylococcus aureus). Nosocomial infection is a significant and
growing problem worldwide. For example, the US Center for Disease Control
estimates that some two million Americans are affected each year by nosocomial
infection and 88,000 die - costing the US healthcare system more than US$4.5
billion.
In May BIOQUELL secured a RBDS contract in Singapore to bio-decontaminate three
hospitals which were concerned about potential contamination from the SARS
virus. The bio-decontamination contract was swiftly and efficiently carried out
- and demonstrated in a real world environment the ability to use BIOQUELL's
RBDS service to bio-decontaminate hospitals. Notwithstanding the significant
publicity and public concern over SARS, it is worth noting that the total number
of SARS-related deaths worldwide attributable to the outbreak earlier this year
have been estimated at being less than 900 - which is under a quarter of the
deaths attributed each year to hospital acquired infection in the UK alone.
Bio-defence
There remains considerable governmental and public concern about weapons of mass
destruction, including bio-terrorism. Work continues in the UK as well as in the
US on the optimal way of deploying BIOQUELL's technology against biological and
chemical weapons. Trials of BIOQUELL's technology have now started on behalf of
US Homeland Security, the American government body responsible for, among other
things, countering bio-terrorism. We are at an early stage in discussing with a
number of US companies opportunities for commercialising BIOQUELL's technology
for this application. We are also in discussions on the application of
BIOQUELL's technology to bio-defence in the UK.
United States
BIOQUELL Inc, located near Philadelphia, was opened earlier this year and is now
operational and experiencing strong levels of interest. It is evident that in
the US the life sciences and healthcare markets, including universities and
corporates, are significantly better funded than in Europe and a number of good
opportunities exist for BIOQUELL's services and equipment. We are confident that
our US subsidiary will enable us to accelerate the development of this important
market and is a key element of our overall sales and marketing strategy.
US litigation
At the time of the preliminary results in April we announced that Steris
Corporation, a US company and the Group's principal competitor, had started
legal proceedings against BIOQUELL. A significant part of their action was an
application for an injunction to stop BIOQUELL selling its products in the US.
However, just prior to the relevant court hearing Steris unilaterally withdrew
its injunction application leaving BIOQUELL free to sell in the US market.
BIOQUELL has received advice from its US lawyers that its products do not
infringe the Steris patent - which in any event expires at the end of 2004 - and
that the action is without merit. BIOQUELL will continue to fight the remaining
elements of the action which it has been advised are vexatious. Substantially
all of the exceptional costs of #266,000 are for a provision for legal costs
relating to the defence of this litigation. BIOQUELL has brought its own
counterclaims against Steris to recover legal costs and damages. BIOQUELL has
also brought a motion requesting a declaration of non-infringement from the US
Court.
Laboratory equipment business
The market for laboratory equipment products, the Group's original core
business, remains highly competitive and manufacturing in the UK remains
challenging. The decline of sterling against the euro earlier in the year did
assist export sales and margins. We keep costs and efficiencies constantly under
review and the results of a recent cost reduction programme, which largely
related to the laboratory equipment business and included a number of
redundancies, will be seen in the second half. The annualised cost savings
exceed #1.0 million and cost less than #50,000 to achieve.
Cape Engineering
Cape had a good first half with a significant increase in revenues, albeit by
comparison with a period which was badly affected by the deferral of contracts
due to concerns relating to the 11 September disaster in New York the year
before. We are continuing to invest in Cape, which is cash generative, and have
recently recruited a team of finite element analysis experts and purchased new
specialist vibration testing equipment which will help Cape to increase its
revenues and profits.
Finance
Net assets at 30 June were #7.2 million (31 December 2002: #8.2 million). Cash
on the balance sheet was #1.1million (31 December: #2.6 million). No part of the
Group's #2 million overdraft facility was drawn down.
Capital expenditure in the first half was #0.4 million (2002: #0.1 million),
relating largely to the manufacture of the specialist bio-decontamination
equipment needed to carry out RBDS.
The Board is proposing the payment of an interim dividend on the first
preference shares of 3.75p per share, payable on 28 February 2004 (representing
a total payment of #5,625). The record date for this payment will be 30 January
2004. The Board does not believe it to be appropriate to pay a dividend on the
ordinary shares at this stage.
Prospects
It is clear in today's highly competitive global markets that innovation and
service businesses provide a number of key advantages. Whilst BIOQUELL will
continue to manufacture laboratory equipment and specialist bio-decontamination
equipment, its primary focus is the development of its unique
bio-decontamination service business. In particular, hospital acquired infection
(so-called "superbugs") and bio-defence remain key areas of interest for the
Group. BIOQUELL intends to achieve rapid international market share by licensing
its bio-decontamination service technology. "Bugs" - whether bacteria, viruses
or fungi - remain a large and ever increasing international problem which
represents a substantial opportunity for BIOQUELL.
John Salkeld
Chairman
18 September, 2003
BIOQUELL PLC
Group Profit & Loss Account
Unaudited interim results for the six months ended 30 June 2003
------------------------- ----------- ----------- -----------
6 months 6 months 12 months
to 30.06.2003 to 30.06.2002 to 31.12.2002
(restated) (restated)
# 000s # 000s # 000s
------------------------- ----------- ----------- -----------
Turnover 6,447 5,773 12,243
Cost of sales (4,209) (3,854) (8,044)
------------------------- ----------- ----------- -----------
Gross profit 2,238 1,919 4,199
35% 33% 34%
------------------------- ----------- ----------- -----------
Operating loss before R&D and (104) (47) (127)
exceptional items
R&D (776) (898) (1,656)
Exceptional items (266) (554) (763)
------------------------- ----------- ----------- -----------
Net operating expenses (3,398) (3,397) (6,728)
------------------------- ----------- ----------- -----------
Operating loss (1,160) (1,478) (2,529)
Net interest receivable/ 7 (48) (6)
(payable) and similar ----------- ----------- -----------
charges
-------------------------
Loss on ordinary activities (1,153) (1,526) (2,535)
before tax
Tax credit on loss on 157 - 300
ordinary activities ----------- ----------- -----------
-------------------------
Loss on ordinary activities (996) (1,526) (2,235)
after tax
Dividends on non equity (6) (6) (11)
shares ----------- ----------- -----------
-------------------------
Retained loss for the (1,002) (1,532) (2,246)
period ----------- ----------- -----------
-------------------------
Loss per share - basic and (2.5p) (4.2p) (5.9p)
diluted ----------- ----------- -----------
-------------------------
Notes:
1. The financial information for the six months ended 30 June 2003 and the
comparative figures for the six months ended 30 June 2002 have not been reviewed
or audited by the Group's auditors and have been prepared on the basis of the
accounting policies set out in the Group's financial statements for the year
ended 31 December 2002.
2. The comparative figures for the 6 months to 30 June 2002 and the 12
months to 31 December 2002 have been restated as a result of the
reclassification of certain employee costs from net operating expenses to cost
of sales. The comparative figures for the 12 months to 31 December 2002 are
abridged from the statutory accounts and do not constitute statutory accounts.
The unqualified audited accounts for the 12 months ended 31 December 2002 have
been filed with the Registrar of Companies.
3. Exceptional operating costs relate to the litigation with STERIS (2003)
and the consolidation of manufacturing onto one site at Andover (2002).
4. Loss per share for the half-year have been calculated on the loss on
ordinary activities after taxation, after deducting dividends on non-equity
(preference) shares due but not paid, divided by the weighted average number of
ordinary shares in issue during the period. The Group's basic and fully diluted
earnings per share are equal.
5. Copies of this statement will be available to members of the public at
the company's registered office: 34A Walworth Road, Andover, Hampshire SP10 5PY.
BIOQUELL PLC
Group Balance Sheet
Unaudited interim results for the six months ended 30 June 2003
30 June 2003 30 June 2002 31 Dec 2002
# 000s # 000s # 000s
----------------------- ----------- ----------- -----------
Fixed assets
Tangible assets 2,409 2,433 2,393
----------------------- ----------- ----------- -----------
Current assets
Stocks 3,073 2,482 2,753
Debtors 3,633 2,781 3,263
Cash at bank and in hand 1,088 4,095 2,594
----------------------- ----------- ----------- -----------
7,794 9,358 8,610
----------------------- ----------- ----------- -----------
Creditors due within one year
Finance leases (7) (33) (21)
Other creditors (2,468) (2,256) (2,292)
----------------------- ----------- ----------- -----------
Net current assets 5,319 7,069 6,297
----------------------- ----------- ----------- -----------
Total assets less current 7,728 9,502 8,690
liabilities
----------------------- ----------- ----------- -----------
Creditors due after more than one
year
Long term loan (404) (378) (377)
Finance leases - (8) -
Provisions (103) (146) (123)
----------------------- ----------- ----------- -----------
Net assets 7,221 8,970 8,190
----------------------- ----------- ----------- -----------
Capital and reserves
Called up share capital 4,117 4,112 4,112
Share premium 10,124 10,180 10,110
Capital reserve 255 255 255
Profit and loss account (7,275) (5,577) (6,287)
----------------------- ----------- ----------- -----------
Shareholders' funds 7,221 8,970 8,190
----------------------- ----------- ----------- -----------
Shareholders' funds may be
analysed as
Equity interests 7,071 8,820 8,040
Non equity interests 150 150 150
----------------------- ----------- ----------- -----------
7,221 8,970 8,190
----------------------- ----------- ----------- -----------
BIOQUELL PLC - Group Cash Flow Statement
Unaudited interim results for the six months ended 30 June 2003
--------------------------- ----------- ----------- -----------
6 months to 6 months 12 months
30.06.2003 to to
30.06.2002 31.12.2002
# 000s # 000s # 000s
--------------------------- ----------- ----------- -----------
Net cash outflow from operating (1,105) (776) (1,882)
activities
Returns on investments and servicing 1 (54) (17)
of finance
Taxation - - -
Capital expenditure and financial (407) (99) (441)
investment
Financing 5 6,361 6,271
--------------------------- ----------- ----------- -----------
(Decrease) / increase in cash in the (1,506) 5,432 3,931
period ----------- ----------- -----------
---------------------------
--------------------------- ----------- ----------- -----------
Reconciliation of operating loss to
net cash outflow from operating
activities
Operating loss (1,106) (1,499) (2,546)
Depreciation 391 415 799
--------------------------- ----------- ----------- -----------
Changes in working capital and
other non cash items (390) 308 (135)
--------------------------- ----------- ----------- -----------
Net cash outflow from operating (1,105) (776) (1,882)
activities ----------- ----------- -----------
---------------------------
--------------------------- ----------- ----------- -----------
Reconciliation of net cash flow to
movement in net funds/(debt)
(Decrease) / increase in cash in the (1,506) 5,432 3,931
period
Cash flow from debt financing 14 16 36
--------------------------- ----------- ----------- -----------
Change in net debt resulting from cash (1,492) 5,448 3,967
flows
Translation difference (27) (13) (12)
--------------------------- ----------- ----------- -----------
Movement in net (debt) / funds in the (1,519) 5,435 3,955
year ----------- ----------- -----------
---------------------------
Opening net funds/ (debt) 2,196 (1,759) (1,759)
--------------------------- ----------- ----------- -----------
Closing net funds 677 3,676 2,196
--------------------------- ----------- ----------- -----------
Notes to editors
* BIOQUELL's equipment and services are used in the following sectors:
pharmaceutical, biotechnology, healthcare, laboratory, defence and food;
* BIOQUELL has developed the Clarus range of unique, patent protected
and residue-free bio-decontamination technology which uses hydrogen peroxide
vapour to bio-deactivate micro-organisms found in rooms and equipment;
* BIOQUELL also designs and manufactures specialist filtration
equipment, principally for the laboratory and defence sector, using HEPA
filtration to filter airborne particulates, including bacteria, and activated
carbon to absorb chemicals;
* Cape Engineering is BIOQUELL's specialist environmental stress testing
service which is provided to a broad range of blue-chip companies in the
aerospace, automotive, defence, rail and telecoms sectors. Cape also provides a
software-based stress analysis service.
* Further information on BIOQUELL can be found on the Company's website:
www.bioquell.com;
This information is provided by RNS
The company news service from the London Stock Exchange
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