Interim Results & Placing
Fulcrum Pharma PLC
16 May 2002
THERE WILL BE A PRESENTATION FOR PRESS AND ANALYSTS AT 10.30 AM TODAY AT
BUCHANAN COMMUNICATIONS, 107 CHEAPSIDE, LONDON, EC2V 6DN - PLEASE CONTACT NICOLA
HOW ON 020 7466 5000 IF YOU WILL BE ATTENDING.
For Immediate Release: 07.00, 16 May 2002
FULCRUM PHARMA PLC
Interim Results for the six months ended 28 February 2002
Placing of 28,260,870 New Ordinary Shares and 2,608,698 Sale Shares at 11.5 p
per share
Fulcrum Pharma PLC (LSE: FUL), the independent drug development company, today
announces a successful placing and announces its interim audited results for the
six months ended 28 February 2002 - in line with market expectations.
Highlights:
• Placing successfully raised £3.25 million (before expenses) -
underwritten by Seymour Pierce
• Further bank facility of £0.5 million under negotiation
• Net proceeds to be utilised in:
o expansion in the UK and Europe
o establishment of US office and restructuring of Japanese office
o new partnership / preferred supplier arrangements
o development of new specialist services.
• Over 60% of the client base has shown repeat or follow on business with
increasing duration of a significant number of contracts
• European expansion progressing well with approximately 60% of income
coming from Pharma and Biotech companies based in Europe during the 18 month
period ended 28th February 2002
• Growing reputation in Japan for oncology drug development
• Profit before tax increased to £422,000 (2001: £127,000)
• Earnings per share 0.46 p (adjusted diluted 0.3p)
• Maiden dividend of 0.2 p per share
Prof. Sir Charles George, Chairman of Fulcrum Pharma, commented:
'We have every reason to believe that profits will continue to rise based on
current contracts; the impressive level of repeat business and on the team's
continued hard work in winning new clients. This additional funding will
particularly aid Fulcrum with international business development activities and
I look forward to reporting more positive progress on this at the time of the
full year - as well as updating the market on developments from Fulcrum's new US
and Japanese offices.'
For Further Information, Please Contact :
Fulcrum Pharma PLC 0870 7107152
Jon Court, Chief Executive
Buchanan Communications 0207 466 5000
Nicola How / Louise Bolton
FULCRUM PHARMA PLC
Interim Results for the six months ended 28 February 2002
Placing of 28,260,870 New Ordinary Shares and 2,608,698 Sale Shares at 11.5 p
per share
Chairman's Statement
I am pleased to announce that Fulcrum proposes to raise £3.25 million (before
expenses) by means of a Placing of 28,260,870 New Ordinary Shares. In addition,
in order to satisfy market demand, certain of the Directors and founders of
Fulcrum Pharma Developments ('FPD') intend to sell, in aggregate, 2,608,698 Sale
Shares at the Placing Price to certain of Seymour Pierce's institutional
clients. The Placing has been fully underwritten by Seymour Pierce.
The Company is also announcing today its interim results for the six months
ended 28 February 2002 which are set out below.
Placing:
Background to and reasons for the Placing
The Ordinary Shares of Fulcrum were admitted to trading on AIM in March 2000
and, since then, the Company has seen significant and growing demand for its
services.
The Company is now planning a significant expansion programme to take full
advantage of the growing Pharma outsourcing market. This will enable Fulcrum to
build on its profitable and scalable business.
To fund this expansion plan, the Company proposes to raise £3.25 million (before
expenses) by way of the Placing. In addition, the Directors are negotiating the
terms of a bank facility of £0.5 million to fund the balance of the expected
working capital requirements of the proposed developments. The net proceeds of
the Placing and the bank facility will be utilised in four main areas:
• Scale up of the UK/Europe operation:
A scale up of the UK/Europe operation should enable Fulcrum to increase the
penetration of this sector of the market and maintain our level of business.
• Globalisation to meet the needs of our clients:
It is intended that a model of the UK operation will be established in the US.
This, together with an increase in the UK and Japan business development and
service capacity, will enable Fulcrum to offer its customers full global
services. Further, the Company's Japanese branch office will be restructured
into a KK to facilitate the planned growth.
• Partnership/Preferred Supplier Arrangements ('PSA'):
The Directors intend that initiatives will be used as a marketing tool for the
existing business and will be targeted to access portfolios of contracts from
single clients. In principle, under a PSA the Company would expect to make an
equity or other capital investment in the client company in return for preferred
supplier status to manage the development of a number of that client's products.
The Directors intend only to make such an investment in companies which the
Directors believe are already funded to meet the costs of developing the
relevant products pursuant to the PSA.
• Specialist Services:
The Company intends to establish a new specialist business unit to meet
unfulfilled demand in the global market. This unit should enable the Group to
increase billing capacity in the development process in the EU, US and Japan
Interim Results:
I am pleased to report that Fulcrum has made an unaudited profit before tax of
£422,000 at the halfway stage of the third financial year of the business (in
the first six months of the previous year profit before tax was £127,000). Basic
earnings per share are 0.46p and the adjusted diluted earnings per share (taking
into account the issue of the Deferred Consideration Shares) are 0.3p. Cash
balances have risen to £2.624 million including approximately £0.5 million of
customer payments in advance.
Dividend
As indicated in the Annual Report for the year ended 31 August 2001, the
Directors, reflecting the success of the Company to date and the support given
to them by Shareholders since the Company's admission to AIM in March 2000, are
declaring a dividend of 0.2p per Ordinary Share. This dividend, for which
neither the Deferred Consideration Shares nor the New Ordinary Shares will be
eligible, is expected to be paid on or about 28 June 2002 to Shareholders on the
register on 31 May 2002.
Current Trading
Over the six month period to February 2002, we have seen a further improvement
in gross profit and future earnings visibility. This has been due to:
• Increasing duration and quality of contracts:
Over 60% of the client base during the eighteen month period ended February 2002
has shown repeat or follow on business. Further earnings visibility has improved
due to the long duration (12 to 36 months) of a significant number of new and
ongoing contracts.
• Continued penetration of the European market:
Approximately 60% of the Company's income in the eighteen month period ended
February 2002 arose from contracts with European Pharma and Biotech companies.
• Further growth in Japan:
Fulcrum's reputation in Japan for oncology drug development continues to grow.
Fulcrum has been selected to manage a new programme to investigate the most
appropriate combination chemotherapy for the treatment of Non-Small-Cell Lung
Cancer in Japan. This study is being done in collaboration with the Tokyo
Collaborative Oncology Group (TCOG) and will include over 30 leading Japanese
clinical oncologists.
We expect that income will continue to grow based on contracts in place and our
continuing business development activities and I look forward to reporting a
positive outcome for the full year.
Details of the Placing
Seymour Pierce has agreed to use its reasonable endeavours to place the
28,260,870 New Ordinary Shares with institutional and other investors, failing
which to itself subscribe for the New Ordinary Shares.
In addition, in order to satisfy market demand, certain Directors intend to sell
an aggregate of 2,608,698 Sale Shares with institutional clients of Seymour
Pierce.
It is expected that Admission will become effective and dealings in the New
Ordinary Shares will commence on 11 June 2002.
Issue of Deferred Consideration Shares
Following advice from Seymour Pierce, the Company's Nominated Adviser, the
agreed changes to the share exchange agreement described in my statement in the
2001 Annual Report have now been completed.
The Directors are accordingly issuing the 31,666,667 Deferred Consideration
Shares to certain of the vendors of FPD. Full details of the Deferred
Consideration Shares are contained in the prospectus dated 8 March 2000 which
was prepared in connection with the Company's admission to AIM. In addition,
under the terms of the amended share exchange agreement, a further 434,783 new
Ordinary Shares will be issued to Simeon Galpert, a founder of FPD who no longer
has a continuing role in the Group.
The Deferred Consideration Shares are expected to be admitted to AIM, along with
the New Ordinary Shares, on 11 June 2002.
Your Directors consider that the Placing is in the best interests of the Company
and its Shareholders as a whole. Accordingly, the Directors unanimously
recommend Shareholders to vote in favour of the Resolutions to be proposed at
the EGM as they intend to do in respect of their own beneficial and
non-beneficial holdings, amounting in aggregate to 11,936,665 existing Ordinary
Shares, representing approximately 19.41 per cent of the Company's issued share
capital.
The Extraordinary General Meeting is being held at the offices of Buchanan
Communications, 107 Cheapside, London, EC1 at 11.00 am on 10 June 2002. Copies
of the circular sent to shareholders today are available from the offices of
Seymour Pierce, 29/30 Cornhill, London, EC3 from today until one month after
Admission.
Professor Sir Charles F George
Chairman
Consolidated Profit and Loss Account
for the period ended 28 February 2002
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2002 2001 2001
Notes Unaudited Unaudited Audited
£'000 £'000 £'000
Turnover 2,983 3,033 6,026
Cost of Sales 2,064 2,526 4,642
Exceptional item 2 - - 570
Gross profit 919 507 814
Selling expenses (127) (115) (201)
Administrative expenses (398) (281) (686)
Exceptional item 2 - - (380)
Operating profit/loss 394 111 (453)
Interest receivable and similar income 28 16 49
Profit/(Loss) on ordinary activities
before taxation 422 127 (404)
Tax on Profit/(Loss) on Ordinary Activities 3 (139) (39) (163)
Profit/(Loss) attributable to shareholders 283 88 (567)
Proposed dividend 4 (123) - -
Retained profit for the period 160 88 (567)
Earnings per share (pence)
Adjusted basic 5 - - 0.70p
Adjusted diluted 5 - - 0.42p
Basic 5 0.46p 0.18p (1.04p)
Diluted 5 0.30p 0.18p (1.04)
Adjusted earnings per share excludes the effect of the exceptional items.
All items included in the Profit and Loss accounts relate to continuing
operations. There were no recognised gains or losses other than the profit for
the period.
Consolidated Balance Sheet at 28 February 2002
28 February 28 February 31 August
2002 2001 2001
Unaudited Unaudited Audited
£'000 £'000 £'000
Fixed assets
Tangible assets 35 61 42
Current assets
Debtors 1,732 1,215 985
Cash at bank and in hand 2,624 1,726 1,980
4,356 2,941 2,965
Creditors:
amounts falling due within one year (1,796) (942) (572)
Net current assets 2,560 1,999 2,393
Total assets less current liabilities 2,595 2,060 2,435
Provision for liabilities and charges (10) - (10)
2,585 2,060 2,425
Capital and reserves
Called up share capital 615 592 615
Share premium 1,543 1,496 1,543
Merger reserve (133) (133) (133)
Profit and loss account 560 105 400
Equity shareholders' fund: 2,585 2,060 2,425
Consolidated Statement of Cash Flows
for the period ended 28 February 2002
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2002 2001 2001
Notes Unaudited Unaudited Audited
£'000 £'000 £'000
Net cash inflow/(outflow) from
operating activities 5a 629 (143) 15
Returns on investments and servicing of
Finance
Interest received 28 16 49
Taxation paid - - (7)
Capital expenditure and financial investment
Purchase of tangible fixed assets (13) (63) (63)
Net cash outflow before management of
liquid resources and financing 644 (190) (6)
Financing
Issue of ordinary share capital - 1,250 1,320
Share issue costs - (50) (50)
644 1,200 1,270
Increase in cash 2,624 1,010 1,264
Reconciliation of net cash flow to
movement in net funds
Increase in Cash 644 1,010 1,264
Net funds at start of period 1,980 716 716
Net funds at end of period 2,624 1,726 1,980
Notes
1. Financial information
The interim results for the six months ended 28 February 2002 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 period ended 31 August 2001. The comparative information
contained in the report for the year ended 31 August 2001 does not constitute
the statutory accounts for the financial period. Those accounts have been
reported on by the Company's Auditors, Ernst and Young, 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. Exceptional item
As set out in the paragraph below the Company recorded an exceptional charge of
£950,000 (£570,000 cost of sales; £380,000 administrative expenses) in the
profit and loss account to reflect the difference between the fair value of the
shares at the date of the agreement and the amount of consideration, if any,
that the employee shareholders may be required to pay for the additional shares.
As disclosed in the listing document dated 8 March 2000, produced by the Company
in connection with its admission to the Alternative Investment Market ('AIM')
and in the Company's annual accounts for the year ended 31 August 2000, certain
employee shareholders, including directors of the Company were entitled under a
share exchange agreement dated 7 March 2000 to be allotted up to a maximum of
56,666,666 additional 1p ordinary shares in the Company by reference to the
consolidated profits before tax of the Group for the twelve months ended 31
August 2001. Based on the profit before tax and exceptional items of £546,000,
the Company will issue 31,666,667 additional ordinary shares for no cash
consideration.
3. Tax on profit on ordinary activities
Six months Six months Year ended
to to to
28 February 28 February 31 August
2002 2001 2001
£'000 £'000 £'000
UK Corporation tax at 33%: 163 26 153
Deferred taxation - - 10
163 26 163
4. Dividends
An interim dividend of 0.2p per ordinary share (2001: nil) is proposed.
5. Earnings per share
Six months Six months Year
ended ended ended
28 February 28 February 31 August
2002 2001 2001
£'000 £'000 £'000
Weighted average number of ordinary
shares in issue 61,500,000 49,636,280 24,423,559
Diluted weighted average number of ordinary
shares in issue 95,035,334 58,404,167 29,308,123
6. Notes to the statement of cash flow
a) Reconciliation of the operating profit to net cash outflow from
operating activities.
Six months Six months Year ended
to to to
28 February 28 February 31 August
2002 2001 2001
£'000 £'000 £'000
Operating profit/loss 394 111 (453)
Depreciation 20 16 34
Non cash exceptional item - - 950
Increase in debtors (747) (324) (93)
Increase in creditors 962 54 (423)
Net Cash inflow/ (outflow) from
operating activities 629 (143) 15
b) Analysis of net funds
Six months Six months Year ended
to to to
28 February 28 February 31 August
2002 2001 2001
£'000 £'000 £'000
Cash at bank and in hand 2,624 1,726 1,980
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