Interim Results
Fulcrum Pharma PLC
12 May 2004
For Immediate Release 12 May 2004
Fulcrum Pharma plc
Interim Results for the six months to 29 February 2004
Fulcrum Pharma plc (AIM: FUL), the independent drug development company that
offers virtual drug development and strategic outsourcing services to the
pharmaceutical and biotechnology industries, today announces its interim audited
results for the six months ended 29 February 2004.
Highlights:
• Group sales in the first half have increased 120 % to £5,490,000 (2003:
£2,498,000)
• Fees in EU have doubled
• US subsidiary profitable
• Cross sales from Japanese subsidiaries continue to grow
• Domestic sales in Japan were flat but now improving
• Group on track for profitable year end
• Interim pre-tax result before exceptionals improved with loss of £96,000
(2003: loss £703,000)
• Dividend maintained at 0.2p per share
• First preferred supplier arrangement (PSA) signed with Addex
Pharmaceuticals
- Second PSA signed with BTG in March 2004
Commenting on the results, Chairman Prof. Sir Charles George said:
'Continuing on from last year's strong finish, the performance in the first six
months of this year has been encouraging. With a healthy current funding
environment and a continuing trend towards outsourcing we believe the Group can
look forward positively to the full year.'
FOR FURTHER INFORMATION, PLEASE CONTACT :
Fulcrum Pharma PLC Tel: 0870 710 7152
Jon Court, Chief Executive
Buchanan Communications Tel: 020 7466 5000
Mary-Jane Johnson
REPORT OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
INTRODUCTION
We are pleased to announce the interim results to 29 February 2004. The period
under review has seen trading in Fulcrum's markets improve significantly.
Provided sentiment in the industry remains healthy, we believe the outsourcing
market will continue to grow and therefore we have confidence in the areas where
Fulcrum operates. In Europe, biotech and small pharmaceutical companies
continue to consolidate, creating uncertainty within this client base. In
contrast the larger players are investing significant sums in alliances with
biotech companies to maximise their portfolios and we believe an improvement in
the funding environment for such companies has created further opportunities for
Fulcrum.
In Japan there is now a growing domestic biotech industry offering a new market
for Fulcrum's local and international services. There is increased cost
containment pressure within the established Japanese pharmaceutical industry
which is slowing the rate of sales to that market segment.
In the US, funding of biotech companies has strengthened making the business
environment for Fulcrum more favourable.
Fulcrum's overall performance in the first half of the year is encouraging and
reflects the historic split between the two halves of the year. The majority of
Fulcrum's investment in new business occurs in the first half, with a
corresponding benefit to profits in the second half.
FINANCIAL REVIEW
The results for the six months ended 29 February 2004 show a loss before tax and
exceptional items of £96,000 (2003: loss of £703,000). The loss includes
exchange losses of £117,000 (2003: £42,000). The loss per share of 0.30p
compares with 0.44p loss per share in 2003.
Exceptional Items
The exceptional charges of £312,000 represent the cost of Fulcrum's new venture
JRiCo Ventures Ltd.
Dividend
The dividend has been maintained at 0.2 pence per share reflecting your
Directors' confidence in the Group's results for the remainder of the year.
OPERATIONAL REVIEW
Commercial Strategy and client update
The number of clients continues to grow across the Group resulting in a balanced
mix of targeted customers amongst global, regional, small and medium biopharma
plus non-governmental organisations (NGOs). Our goals are to establish long term
business relationships with our customers within their domestic markets and to
cross sell between our Japanese, US and European offices to leverage our global
structure.
• Long term business relationships: At the end of last year we
signed our first preferred supplier arrangement with Addex Pharmaceuticals, an
emerging European pharmaceutical company. To further the development of this
partnership Fulcrum is investing in Addex in its current funding round. Recently
we were pleased to be selected by BTG to be its preferred provider of
pre-clinical and clinical development services. BTG and Fulcrum have been
working successfully together since 2002 and this agreement represents a
broadening of the relationship. Further, an agreement with a global pharma has
been extended out to 2007.
• Cross selling: The strategy of cross selling between Japan, US and
Europe has continued to grow, in particular the management of technology
transfer from Japan and the US has expanded. Further several new contracts have
been signed in Europe with a Japanese virtual biotech company.
• NGOs: Fulcrum continues to work on behalf of the Medicines for
Malaria Venture, using its resources to support the development of potentially
important and novel anti-malarials.
Business Regions
• Europe
Encouragingly, sales in Europe have doubled compared with the same period in the
last financial year when trading conditions were difficult. The signing of long
term contracts described above gives confidence for the future.
• United States
The US has had a good start to the period and the business appears to have
thrived well in only its second year. The client base of biotech and emerging
companies has increased in size and the overall business is benefiting from
cross sales from Japan. The US operation which has its main office in North
Carolina has now been strengthened by a Business Development office on the West
Coast.
• Japan
Sales were flat in the first half but are now improving. This has been
due to the delay of some major contracts which we had hoped to sign early in the
period. At the end of the second quarter there had been some recovery based on
the signing of some smaller contracts. Encouragingly, since the end of this
period a major contract has been signed, which should improve performance in
this and the next two financial years. Japan continues to make an important
contribution to global business through cross selling for the US and EU
companies.
• Partnership strategy
JRiCo Ventures Ltd was established last year as a new subsidiary to obtain and
develop oncology products for marketing in Japan and thus leverage our
specialist regional and therapeutic knowledge. Discussions with potential
Japanese investors are at an early stage. Relationships established with product
owners and funders are being used to generate business for our Japanese
subsidiaries, Fulcrum Pharma KK and Niphix KK.
PROSPECTS
Continuing on from last year's strong finish, the performance in the first 6
months of this year has been encouraging and the Group can look forward
positively to the full year.
Consolidated Profit and Loss Account
for the period ended 29 February 2004
Notes Six months Six months Year
ended ended ended
29 February 28 February 31 August
2004 2003 2003
Unaudited Unaudited Audited
£'000 £'000 £'000
Turnover 5,490 2,498 7,809
Cost of sales (3,726) (2,213) (5,554)
Gross Profit 1,764 285 2,255
Selling expenses (385) (228) (513)
Administrative expenses (1,500) (823) (2,424)
Exceptional administrative expenses 3 (312) - (383)
Total administrative expenses (1,812) (823) (2,807)
Operating loss (433) (766) (1,065)
Interest receivable & similar income 29 63 120
Interest payable & similar charges (4) (2)
Loss on ordinary activities before (408) (703) (947)
taxation
Tax on loss on ordinary activities 4 43 168 195
Loss attributable to shareholders (365) (535) (752)
Proposed dividend 5 (244) (244) (244)
Retained loss for the period (609) (779) (996)
Earnings per share (pence)
Basic 6 (0.30p) (0.44p) (0.62p)
Adjusted basic 6 (0.04p) (0.44p) (0.30p)
Adjusted earnings per share exclude the effect of the exceptional items.
All items included in the Profit and Loss accounts relate to continuing
operations.
Statement of Total Group Recognised Gains and Losses
for the period ended 29 February 2004
Loss on ordinary activities after (365) (535) (752)
taxation
Exchange adjustments offset in reserves (95) - 5
Total recognised gains and losses since (460) (535) (747)
last annual report
Consolidated Balance Sheet
As at 29 February 2004
29 February 28 February 31 August
2004 2003 2003
Unaudited Unaudited Audited
£'000 £'000 £'000
Fixed assets
Tangible assets 590 405 541
Investments 96 53 53
686 458 594
Current assets
Debtors 3,278 1,766 2,930
Short term investments 1,355 3,781 2,825
Cash at bank and in hand 743 948 771
5,376 6,495 6,526
Creditors: amounts falling due within one year (1,788) (1,810) (2,075)
Net current assets 3,588 4,685 4,451
Total assets less current liabilities 4,274 5,143 5,045
Creditors: amounts falling due after more than one (63) (86)
year
Provision for liabilities and charges - (15) (43)
4,211 5,128 4,916
Capital and reserves
Called up share capital 1,219 1,219 1,219
Share premium 4,370 4,370 4,370
Merger reserve (454) (454) (454)
Profit and loss account (924) (7) (219)
Equity shareholders' funds 4,211 5,128 4,916
Jon Court
Geoffrey Smith
Directors
May 2004
Consolidated Cash Flow Statement
for the period ended 29 February 2004
Notes Six months Six months Period
ended ended ended
29 February 28 February 31 August
2004 2003 2003
Unaudited Unaudited Audited
£'000 £'000 £'000
Net cash outflow from operating activities 7 (1,291) (24) (691)
Returns on investments and servicing of finance
Interest received 29 63 120
Interest paid (4) (2)
Net cash inflow from returns on investments and 25 118
services of financing
Taxation -
Corporation tax (10) - (209)
Capital expenditure and financial investment
Purchase of tangible fixed assets (156) (412) (614)
Purchase of shares by ESOP (43)
Equity dividends paid to shareholders 5 - - (244)
Net cash outflow before management of liquid (1,475) (373) (1,640)
resources and financing
Management of liquid resources
Decrease in short term investments 1,470 739 1,695
Financing
New finance leases - - 75
Bank loan received - - 75
Capital element of finance lease payments (11) (8)
Bank loan repayments (12) (8)
(23) - 134
(Decrease)/increase in cash 7 (28) 366 189
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash 7 (28) 366 189
Decrease/(increase) in bank loans 12 (67)
Cash flow from decrease in short term 7 (1,470) (739) (1,695)
investments
Decrease/(increase) in finance leases 11 (67)
Change in net funds from cash flows (1,475) (373) (1,640)
Net funds at start of period 7 3,462 5,102 5,102
Net funds at end of period 7 1,987 4,729 3,462
For the period ended 29 February 2004
1. FINANCIAL INFORMATION
The interim results for the six months ended 29 February 2004 are unaudited and
do not constitute statutory accounts within the meaning of section 240 of the
Companies Act 1985. They have been drawn up using accounting policies and
principles consistent with those applied in the preparation of the audited
accounts for the year ended 31 August 2003. The comparative information
contained in the report for the year ended 31 August 2003 does not constitute
the statutory accounts for the financial period. Those accounts have been
reported on by the Company's Auditors, PricewaterhouseCoopers, and delivered to
the Registrar of Companies. The report of the Auditors was unqualified and did
not contain a statement under section 237(2) or (3) of the Companies Act.
2. COMPARITIVES
In the Interim results for the six months to 28 February 2003, non-recurring
costs of £547,000 associated with the establishment of the US subsidiary and the
Niphix subsidiary in Japan were treated as exceptional. In the accounts for the
year ended 31 August 2003, the directors decided that these costs were
additional administrative expenses. The comparatives for the six months to 28
February 2003 have accordingly been amended.
3. EXCEPTIONAL ITEMS
The Group has reported a loss before tax and exceptional items
of £96,000. The Company has recorded an exceptional charge of £312,000 in the
current period (31.08.03 : £383,000). The exceptional charges represent the cost
of the company's new venture JRiCo Ventures Ltd.
4. TAX ON LOSS ON ORDINARY ACTIVITIES
Six months to Six months to 28 Year ended
29 February February 31 August
2004 2003 2003
£'000 £'000 £'000
Current taxation
UK Corporation tax at 30% - (178) (190)
Adjustment in respect of prior period - - (43)
(178) (233)
Deferred taxation
Origination and reversal of timing differences (43) 10 38
(43) (168) (195)
The tax charge for the year differs from the standard rate of corporation tax in
the UK of 30% (2003: 30%). The differences are explained below:-
Six months to Six months to Year ended
29 February 28 February 31 August
2004 2003 2003
£'000 £'000 £'000
Loss on ordinary activities before tax (408) (703) (947)
Loss on ordinary activities before tax and (122) (211) (284)
exceptional items multiplied by the standard rate
of corporation tax in the UK of 30% (2003:30%))
Effects of:
Capital allowances in excess of depreciation (16) - (65)
Expenses not deductible for tax purposes 4 6 -
Tax losses for the period not relieved 134 27 155
Adjustment in respect of prior period - - (43)
Adjustment in respect of foreign tax rates - - 4
Current tax credit for period - (178) (233)
5. DIVIDENDS
An interim dividend of 0.2p per ordinary share (2003 0.2p) will be paid on 25
June 2004 to shareholders on the register at 28 May 2004.
6. EARNINGS PER SHARE
Six months Six months Year
ended ended ended
29 February 28 February 31 August
2004 2003 2003
Loss on ordinary activities after taxation for (365) (535) (752)
basic earnings per share
Exceptional costs 312 - 383
Loss on ordinary activities after taxation for (53) (535) (369)
adjusted earnings per share
Weighted average number of ordinary shares for 121,401,451 121,401,451 121,401,451
earnings per share
The weighted average number of shares is calculated excluding those held by the
Employee Share Ownership Plan, which are treated as cancelled.
7. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
(a) Reconciliation of the operating profit to net cash outflow
from operating activities.
Six months to Six months to Year to
29 February 28 February 31 August
2004 2003 2003
£'000 £'000 £'000
Operating loss (433) (766) (1,065)
Depreciation 107 31 97
Exchange (loss)/gain (96) - 4
(Increase)/decrease in debtors (354) 216 (740)
(Decrease)/increase in creditors (515) 495 1,013
Net cash outflow from operating activities (1,291) (24) (691)
(b) Analysis of net funds
As at Cashflow As at
1 September 29 February
2003 2004
£'000 £'000 £'000
Cash at bank and in hand 771 (28) 743
Bank loan (67) 12 (55)
Short term investment 2,825 (1,470) 1,355
Finance lease (67) 11 (56)
3,462 (1,475) 1,987
8. COPIES OF UNAUDITED INTERIM REPORT
Copies of this report are being sent to shareholders and are
also available at the registered office of Fulcrum Pharma plc, Kodak House,
Station Road, Hemel Hempstead, Hertfordshire HP1 1JY.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 20 minutes ago Oxford Instruments
- 1 hour ago CMC Markets
- 1 hour ago Hongkong Land Holding Ltd. (Sing.Reg)
- 4 hours ago Futura Medical
- 4 hours ago Conygar Investment Company