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Source BioScience - Interim Management Statement


11/19/2013 9:31:56 AM

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19 November 2013 -- Source BioScience plc (LSE: SBS), the international laboratory services and products business, today publishes its Interim Management Statement for the year to date.

Unless otherwise stated, the financial information referenced below refers to the period ended 30 September 2013, and the corresponding period last year, this being the latest practicable date to which financial information has been prepared. The performance of the acquired Vindon Healthcare plc (‘Vindon’) business is not included within the financial information presented below as the transaction only concluded at the end of the period under review. An overview of the integration progress is provided.

Business performance and outlook

Source BioScience has sustained the consistent growth previously reported during 2013 and revenue during the third quarter was more than 20% ahead of the same period last year.

This performance has been underpinned by continued progression of the Group’s laboratory services activities, especially Healthcare Diagnostics and LifeSciences DNA sequencing, coupled with the growth in the blood group serology reagents business which was acquired in April.
The Group is trading in line with management expectations, continuing to build on a strong operational performance year to date, and the Board remains confident of the outlook for the full year. Healthcare

Our laboratory services activities have performed strongly in the period and Diagnostics revenue increased by 40% in Q3 compared with the same period last year. A significant component of the Diagnostics growth resulted from the launch of our Sexually Transmitted Infection (‘STI’) testing service and the subsequent winning of the Kent and Medway Councils’ chlamydia screening tender. This contract commenced in August for the delivery of over 40,000 tests per annum and is worth more than £1.0 million over three years. Our expertise in gene-based testing and significant experience of supporting the UK Cervical Cancer Screening Programme was instrumental in the award of this tender under the National Chlamydia Screening Programme and, to date, the work is progressing well.

The Cytology business has operated steadily as expected and in April, the Group’s Healthcare products portfolio was further enhanced with the acquisition of Inverclyde Biologicals. This equipped the Group with manufacturing expertise for blood group serology reagents and high quality diagnostic kits, which are complementary with the existing Source BioScience portfolio. The Group has benefitted from the portfolio expansion and geographic coverage that the acquisition of Inverclyde Biologicals (‘Inverclyde’) has generated; the cross-selling opportunities are being crystallised and the run rate for serology products revenue is significantly ahead of where it was pre-acquisition.

LifeSciences

Our ambition is to become Europe’s leading commercial provider of DNA sequencing and our Overnight Service is instrumental in achieving this. Our market share in the UK continues to increase and DNA sequencing volumes during Q3 were 70% greater than the same period last year and up 47% on a year to date basis. This momentum is being sustained by the introduction of new services and the expansion of our laboratory network.

During the year we have launched the Overnight Service from our facilities in Bellshill, Scotland and we will shortly be launching the Overnight Service from our recently acquired premises in Rochdale. The new laboratory facility in Rochdale will enable customers in Manchester, Liverpool and Leeds to access our super-fast DNA sequencing service.

As reported previously, a major element of the long term growth strategy is the own branding of products under reSource™ and expansion of the Group’s product portfolio, supported by the GenomeCube® search engine and e-commerce platform. These initiatives are progressing to plan and will ultimately enable the globalisation of the products business, providing our distributors, and customers, fast and ready access to the enhanced product portfolio. Update on the integration of Vindon

In August 2013 Source BioScience announced the £12.2 million acquisition of Vindon which was declared unconditional in all respects in the second half of September. The integration of the acquired business is progressing to plan and, as at today, the first tranche of operational and commercial initiatives are close to conclusion.

Consolidation of the Group’s Irish facilities onto a single site will be completed by the year end and consolidation of the warehousing and logistics infrastructure into Rochdale will also be concluded at the same time. The operational efficiencies to be gained from these changes will benefit the Group immediately.

As highlighted above, we will shortly be launching our Overnight Service for DNA sequencing for customers in Manchester, Liverpool and Leeds from our facilities in Rochdale. This is the first step in the second tranche of initiatives, bringing more of the Group’s enlarged portfolio of products and services within reach of a wider customer base.

We are currently finalising the business plan to migrate our DNA sequencing service and LifeSciences products portfolio to the USA, centred around our existing facilities in Los Angeles and Atlanta. We expect to be in a position to announce our plans in 2014, by the time of our full year results.

Conclusion

Source BioScience has continued to deliver the rate of growth previously reported and we expect the momentum we have seen year to date from the underlying business to continue through the remainder of the year.

The acquisitions of Vindon and Inverclyde bring significant opportunities to the Group, both from additional products and services and the extension of the Group’s reach geographically. We now have access to new markets and customers, and we have a platform for international growth across mainland Europe, in addition to the East and West coasts of the USA.

We expect all of these factors to contribute to the further progress of the Group in 2014 and beyond.

About Source BioScience:

Source BioScience plc (LSE: SBS) is an international laboratory services and products business serving the healthcare and life science research markets. The Healthcare operations provide screening and reference laboratory diagnostic testing for cancer and other diseases in addition to complementary products for serology, diagnostics and sample storage. The LifeSciences division provides gene-based laboratory research support from conceptualisation to implementation, calling upon a wide range of innovative technology platforms and an online catalogue of biomolecular tools including cDNA clones and antibodies. The PharmaBiotech division provides support for drug discovery, from biomarker discovery and clinical trial services through to stability storage and sample archiving under environmentally controlled conditions. A superior quality management system, including GLP, GCP and CPA accreditations, make the services very attractive for applications in regulatory studies or in a clinical and diagnostic setting. Source BioScience has its headquarters in Nottingham, UK. For more information, see www.sourcebioscience.com. Disclaimer

The Interim Management Statement may contain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements. Any forward-looking statements made by or on behalf of Source BioScience speak only as at the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared. Source BioScience does not undertake to update forward-looking statements to reflect any changes in the Group’s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Issued for and on behalf of Source BioScience by College Hill.

For more information please contact: SourceBioScience@collegehill.com

Source BioScience plc

Dr Nick Ash

Chief Executive Officer

T: +44 (0)115 973 9010

www.sourcebioscience.com

College Hill (PR Agency to Source BioScience)

Melanie Toyne-Sewell/Donia Al Saffar

T: +44 (0)207 457 2020

E: sourcebioscience@collegehill.com

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