Interim Results
Fulcrum Pharma PLC
18 May 2005
For immediate release 18 May 2005
Fulcrum Pharma plc
('Fulcrum' or 'the Group')
Interim Results for the six months to 28 February 2005
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
unaudited results for the six months ended 28 February 2005.
Highlights
• Loss before tax and exceptionals of £350,000
• Performance improved compared with the half year ended 31 August 2004
(H2 2004: loss before tax and exceptionals of £766,000)
• Group fee income was flat compared with the same period last year
• US subsidiary profitable with 30% growth in fees compared with same
period last year
• Europe has signed a long term agreement with Syngenta Biopharma
• Cross sales from Japan continue to grow
• Strategy to improve performance taking effect
• Net cash remains strong at £1.6 million at 28 February 2005 and £1.8
million at 30 April 2005
Commenting on the results, Chairman Prof. Sir Charles George said: 'I am pleased
to report that our strategy to improve performance is beginning to deliver
results, underlined by the progress shown over the second half of last year. The
growth in US sales was particularly encouraging as were the level of cross sales
from Japan into Europe and the US. Operational efficiencies and careful cost
control give us confidence that we can return the Group to profitability.'
For further information, please contact:
Fulcrum Pharma PLC Tel: 0870 710 7152
Jon Court, Chief Executive
Buchanan Communications Tel: 0207 466 5000
Mary-Jane Johnson
FULCRUM PHARMA PLC
Interim Results for the six months ended 28 February 2005
REPORT OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
INTRODUCTION
We are pleased to announce the interim results to 28 February 2005. Fulcrum has
been implementing its strategy for recovery following the disappointing
performance in the second half of last year. We are pleased to report that our
strategy to improve performance is beginning to take effect.
The Group has focussed on sales growth, particularly in the US where the Group
plans to expand the US subsidiary to deliver more than 50% of Group sales.
Cross sales from Japan, that is sales to Japanese companies delivered by the US
and European subsidiaries, continue to grow compared with the same period last
year. However, Group fee sales overall were flat as pricing pressures in Europe,
related to the weak US dollar and the funding environment, continue and sales
growth in Japan was lower than expected. The sales strategy has been to secure
long term relationships with clients through risk sharing and partnerships.
Progress has been made in improving operational efficiency and reducing the cost
base in Europe. Careful management of costs in all operating regions has
improved the ratio of overheads to fees and improved the Group performance over
the second half of last year.
We believe that the Group continues to position itself to deliver our vision of
building a global, scalable, outsourcing business that is both profitable and
sustainable.
FINANCIAL REVIEW
The results for the six months ended 28 February 2005 show a loss before tax and
exceptional items of £350,000 (first half 2004: loss of £96,000; full year 2004:
loss of £862,000). The loss includes exchange losses of £32,000 (2004:
£117,000). The basic loss per share of 0.29p compares with a 0.30p basic loss
per share in H1 2004.
Dividend
The Directors do not propose an interim dividend (2004:0.2p per share).
OPERATIONAL REVIEW
Commercial strategy
Sales and marketing
The reorganisation of Sales and Marketing on a regional basis is having a
positive impact on sales and has resulted in a strengthening of the pipeline in
Europe where there has been an increase in the number of new clients. We are
executing a targeted campaign to increase client awareness in the emerging
pharma and biotech communities. This campaign includes sponsorship of, and
presentations at, major biotechnology and partnering conferences in the US,
Europe and Japan.
Establishing long term business relationships
A core of long term partnerships has been established in Europe, which is
expected to contribute two thirds of European sales in the current financial
year. We are delighted that a long term agreement has been signed with Syngenta
Biopharma. Fulcrum is providing drug development expertise and embedding
critical tools and processes from Fulcrum's 'Document Driven Drug Development'
platform into the client organisation. In addition, Fulcrum's partnership with
Addex Pharmaceuticals continues to support the delivery of Addex's portfolio of
novel positive and negative allosteric modulators for CNS diseases. Addex and
Fulcrum delivered a joint presentation on the value created by the relationship
at Biobusiness 2005 in Geneva. The Group plans to develop further long term
business relationships to bring long term contracts and upside through risk
sharing.
Cross sales with Japan
Our investment in business development in Japan continues to improve cross sales
from Japan into Europe and the US. Cross sales represent 13% and 17% of sales in
Europe and the US respectively. Our Japanese clients include large pharma and
emerging biotechs such as NanoCarriers Co., Ltd. These companies utilise our
skillsets and resources in the European and US subsidiaries. We have also
achieved cross sales into Japan from emerging European companies seeking the
opportunity to create value in the Japanese market.
Regional performance
Europe
The sales pipeline and order book have strengthened following the reorganisation
of Sales & Marketing in September 2004. The business development team has
successfully won new clients and delivered several core contracts which are
resourced from our European office. The team has also delivered cross sales to
the US office including a contract with Lorantis Ltd to perform work in the US.
We have also taken steps to reduce the cost base to enable a return to
profitability. In this financial year, cost savings of circa £250,000 are
anticipated, with the majority of these savings occurring in the second half of
the year. Of this, £220,000 represents permanent annual savings, the majority of
which relates to the reorganisation and the remainder to the relocation of the
UK office.
US
The US subsidiary has continued to grow through its domestic customer base, from
cross sales from Japan and from the provision of resources to the European
subsidiary. The latter has allowed efficient use of global resources. Overall
US fee sales have grown by 30% compared with the same period last year. This
sales growth together with good cost control has resulted in a profit in the
first half year. It is planned to increase investment in the US when the group
returns to overall profitability, so that our goal of the US subsidiary
delivering greater than 50% of Group fee sales can be realised.
Japan
Japan had a slow start to the year due to an expected major contract not
converting, resulting in a loss in the first half year. Since then the
management team has effected a recovery and at the start of the second half has
secured two large domestic contracts and several cross sale contracts from
Europe. As a result, the prospects for the second half year are encouraging.
PROSPECTS
We remain focussed on returning the Group to profitability through sales growth,
cost control and operational efficiency across the three operating regions. In
Europe an exceptional profit of £250,000 will occur in the second half of the
financial year in respect of a lease settlement agreement with the current
landlord, which has prompted the relocation of the UK office.
We intend to continue to invest in our US subsidiary, increase cross sales
between the regions and develop further risk-sharing opportunities and
relationships with our clients.
Consolidated Profit & Loss Account
for the period ended 28 February 2005
Six months Six months Year
ended ended ended
28 February 29 February 31 August
2005 2004 2004
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Turnover 2 6,330 5,490 11,085
Cost of sales (5,090) (3,726) (8,434)
Gross profit 1,240 1,764 2,651
Selling expenses (381) (385) (810)
Administrative expenses (1,229) (1,500) (2,752)
Exceptional administrative expenses 3 - (312) (348)
Total administrative expenses (1,229) (1,812) (3,100)
Operating loss (370) (433) (1,259)
Interest receivable and similar income 27 29 58
Interest payable and similar charges (7) (4) (9)
Loss on ordinary activities before taxation (350) (408) (1,210)
Tax on loss on ordinary activities 4 - 43 88
Loss attributable to shareholders (350) (365) (1,122)
Proposed dividend 5 - (244) (244)
Retained loss for the period (350) (609) (1,366)
Loss per share (pence)
Basic 6 (0.29)p (0.30)p (0.93)p
Adjusted basic 6 (0.29)p (0.04)p (0.69)p
Adjusted loss per share excludes 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 28 February 2005
Six months Six months Year
ended ended ended
28 February 29 February 31 August
2005 2004 2004
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss on ordinary activities after taxation (350) (365) (1,122)
Exchange adjustments offset in reserves (22) (95) (82)
Total recognised gains and losses since last annual (372) (460) (1,204)
report
Consolidated Balance Sheet
as at 28 February 2005
28 February 29 February 31 August
2005 2004 2004
Unaudited Unaudited Audited
£'000 £'000 £'000
Fixed assets
Tangible assets 526 590 584
Investments 85 96 85
611 686 669
Current assets
Debtors 3,536 3,278 3,351
Short term investments 1,298 1,355 1,423
Cash at bank and in hand 678 743 1,045
5,512 5,376 5,819
Creditors: amounts falling due within one year (3,012) (1,788) (2,831)
Net current assets 2,500 3,588 2,988
Total assets less current liabilities 3,111 4,274 3,657
Creditors: amounts falling due after more than one year (52) (63) (226)
3,059 4,211 3,431
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 (2,076) (924) (1,704)
Equity shareholders' funds 3,059 4,211 3,431
Consolidated Cash Flow Statement
Six months Six months Year
ended ended ended
28 February 29 February 31 August
2005 2004 2004
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Net cash outflow from operating activities 7 (533) (1,291) (843)
Returns on investments and servicing of finance
Interest received 27 29 58
Interest paid (7) (4) (9)
Net cash inflow from returns on investments and 20 25 49
servicing of finance
Taxation
Corporation tax (1) (10) 176
Capital expenditure and financial investment
Purchase of tangible fixed assets (43) (156) (293)
Purchase of shares by ESOP - (43) -
Equity dividends paid to shareholders 5 - - (244)
Net cash outflow before management of liquid resources (557) (1,475) (1,283)
and financing
Management of liquid resources
Decrease in short term investments 125 1,470 1,402
Financing
New finance leases - - 58
Bank loan received 98 - 152
Capital element of finance lease payments (19) (11) (32)
Bank loan repayments (14) (12) (23)
65 (23) 155
(Decrease)/increase in cash 7 (367) (28) 274
Reconciliation of net cash flow to movement in net
funds
Six months Six months Year
ended ended ended
28 February 29 February 31 August
2005 2004 2004
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
(Decrease)/increase in cash 7 (367) (28) 274
(Increase)/decrease in bank loans (84) 12 (129)
Decrease in short term investments 7 (125) (1,470) (1,402)
Decrease/(increase) in finance leases 19 11 (26)
Change in net funds from cash flows (557) (1,475) (1,283)
Net funds at start of period 7 2,179 3,462 3,462
Net funds at end of period 7 1,622 1,987 2,179
1. Financial information
The interim results for the six months ended 28 February 2005 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 2004. The comparative information
contained in the report for the year ended 31 August 2004 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. Turnover
Geographical analysis by region
Six months to Six months to Year ended
28 February 29 February 31 August
2005 2004 2004
£'000 £'000 £'000
Europe 1,458 1,564 3,414
US 747 573 1,305
Japan 667 782 1,192
Total fee income 2,872 2,919 5,911
Passthrough costs 3,458 2,571 5,174
6,330 5,490 11,085
3. Exceptional items
Six months to Six months to Year ended
28 February 29 February 31 August
2005 2004 2004
£'000 £'000 £'000
Loss on ordinary activities before tax (350) (408) (1,210)
Exceptional administrative expenses - 312 348
Loss on ordinary activities before taxation and (350) (96) (862)
exceptional items
The Group has reported a loss before tax and exceptional items of £350,000. The
Company recorded an exceptional charge of £nil in the current period (H1 2004:
£312,000). The exceptional charges in 2004 represented the cost of the Group's
venture Fulcrum Ventures Ltd.
4. Tax on loss on ordinary activities
Six months to Six months to Year ended
28 February 29 February 31 August
2005 2004 2004
£'000 £'000 £'000
Current taxation
UK corporation tax at 30% - - (63)
Adjustment in respect of prior period - - 18
- - (45)
Deferred taxation
Origination and reversal of timing differences - (43) (43)
- (43) (88)
The tax charge for the period differs from the standard rate of corporation tax
in the UK of 30% (2004: 30%). The differences are explained below:
Six months to Six months to Year ended
28 February 29 February 31 August
2005 2004 2004
£'000 £'000 £'000
Loss on ordinary activities before tax (350) (408) (1,210)
Loss on ordinary activities before tax multiplied (105) (122) (363)
by the standard rate of corporation tax in the UK
of 30% (2004: 30%)
Effects of:
Capital allowances in excess of depreciation (2) (16) 17
Expenses not deductible for tax purposes 4 4 22
Tax losses for the period not relieved 129 134 377
Adjustment in respect of prior period - - 18
Research and development tax credits (26) - (116)
Current tax credit for period - - (45)
5. Dividends
The directors do not propose to pay an interim dividend (H1 2004: 0.2p per
share).
6. Loss per share
Six months Six months Year
ended ended ended
28 February 29 February 31 August
2005 2004 2004
£'000 £'000 £'000
Loss on ordinary activities after taxation for basic loss (350) (365) (1,122)
per share
Exceptional costs - 312 348
Loss on ordinary activities after taxation for adjusted loss (350) (53) (774)
per share
Weighted average number of ordinary shares for earnings per 120,901,541 121,401,451 121,151,541
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
28 February 29 February 31 August
2005 2004 2004
£'000 £'000 £'000
Operating loss (370) (433) (1,259)
Depreciation 93 107 238
Shares in ESOT written down - - 59
Exchange loss (14) (96) (82)
(Increase)/decrease in debtors (184) (354) (549)
(Decrease)/increase in creditors (58) (515) 750
Net cash outflow from operating activities (533) (1,291) (843)
(b) Analysis of net funds
As at As at
1 September 29 February
2004 Cash flow 2005
£'000 £'000 £'000
Cash at bank and in hand 1,045 (367) 678
Bank loan (196) (84) (280)
Short term investment 1,423 (125) 1,298
Finance leases (93) 19 (74)
2,179 (557) 1,622
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
- 14 minutes ago Biotech Growth Trust (The)
- 41 minutes ago Aptamer Group
- 48 minutes ago Pacific Assets Trust
- 51 minutes ago M&G
- 1 hour ago Oxford Instruments