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11 September 2000
Interim results for the six months ended 30 June 2000
Axis-Shield plc ("Axis-Shield") announces its interim results for the six months ended 30 June 2000.
Significant period of corporate activity to create a broadly-based diagnostics group
Integration of acquisitions successfully completed
First class list of partners assembled for cardiovascular markers:
agreement signed with Bayer for homocysteine and AFT
- distribution agreement announced today with Diagnostic Products Corporation for homocysteine
Increasing awareness of markers as disease management tools
Homocysteine unit sales doubled and sales increased by 65%
Point-of-care acquisitions open new direct sales channels
Well placed for future growth
Commenting on the results, Svein Lien, Chief Executive of Axis-Shield, said:
"During the past six months, we have successfully restructured the Group into four divisions to focus more fully on our key target markets. Our Laboratory Division continues to perform well as the awareness of in-vitro diagnostic markers in total disease management increases amongst pharmaceutical companies. The PoC division has been successfully integrated and we are extremely pleased with its profitable contribution to the Group over the past six months. We continue to invest in R&D to commercialise further diagnostics for both these divisions and will also continue to assess acquisition opportunities to enhance our business."
Svein Lien, Chief Executive Officer Today: +44 (0) 20 7831 3113
Paul Garvey, Finance Director Thereafter: +44 (0) 1382 422000
David Yates / Sophie Pender-Cudlip Tel: +44 (0) 20 7831 3113
A presentation for analysts will take place today at 11am at the offices of Financial Dynamics, Holborn Gate, 26 Southampton Buildings, WC2. Please call Alison Bowsher on 020 7831 3113 for further details.
Further details on Axis-Shield can be found on the Company’s web site: www.axis-shield.com
In February 2000, the acquisition of the Nycomed diagnostics business was successfully completed. The results of the business, now known as Axis-Shield PoC (PoC Division), have been included for five months and have already made a positive profit contribution to the Group during the period. This acquisition has provided a catalyst for restructuring our business into four operating divisions, thereby increasing focus on the different markets we serve.
Laboratory Division principally provides novel diagnostic test kits to our OEM partners throughout the world and markets our own brand products through our distributor network.
PoC Division principally manufactures and markets the NycoCard® range of point-of-care tests.
Medinor Division distributes Group and third-party products in the Nordic region.
R&D Division continues to seek out and develop novel and patentable products which can be marketed through the other divisions. The Division is also responsible for the continuing development required to maintain our existing products in their leadership positions. We continue to focus on the identification of new markers and methods for more effective detection of major critical conditions such as cardiovascular disease. As these novel markers become more accepted through the commercial efforts of the Laboratory Division, we will seek to develop rapid and easy-to-use versions for commercialisation by PoC.
Turnover for the six months increased to £17.2 million from £5.3 million, reflecting a five month contribution of £6 million from the newly acquired Nycomed diagnostics business and the full six month contribution from Medinor of £7.2 million. Since the Medinor Division is now distributing the PoC Division’s products in the Nordic region, some of the acquired turnover from the Nycomed diagnostics business is now included in the Medinor Division figure. In the Laboratory Division, we report good growth from homocysteine where we have seen a near doubling of our unit sales over the same period last year. The growth in homocysteine sales underlines the rationale for last year’s merger of Axis and Shield. We remain confident of the future growth prospects for homocysteine.
The gross margin increased to 47.3% (gross profit: £8.1 million) from 28.1% in 1999 (gross profit: £1.5 million). The increase reflects the combination of higher margins gained through direct selling in the Nordic region of our PoC products, combined with growth in the revenue stream from homocysteine. The acquisition of the PoC Division has also brought a higher margin business to the Group.
Net ordinary operating expenses for the period were £9.4 million compared with £4.0 million during the same period last year. A significant amount of this increase relates to the operating costs of the new businesses acquired since June 1999. However, the Group also continues to invest in the key areas of research and development and sales and marketing. Exceptional costs of £1.1 million were incurred through the acquisition of the PoC Division from Nycomed, including a £594,000 charge against the Profit & Loss account for share options issued at a discount to market price, as approved at the AGM. A provision of £196,000 was made against our investment in A/C Diagnostics LLC and £1.4 million of goodwill was written off, of which £513,000 related to research & development expenditure previously capitalised in the PoC Division balance sheet.
The Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) improved to a loss of £1.9 million in the first half of 2000 from a loss of £6.7 million for the first six months of 1999. This year’s figure includes a non-cash charge of £594,000, related to the issue of share options referred to above. If the EBITDA figure were to be adjusted for this