Source BioScience - Interim Management Statement
Published: May 19, 2014
May 19, 2014 -- 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 31 March 2014 and the corresponding period last year.
Business performance and highlights
Source BioScience has benefitted from the transformational acquisitions made in 2013 of Inverclyde and Vindon. Revenue during the first quarter was more than 55% ahead of the same period last year, including the contribution from the acquisitions in addition to organic growth in the underlying business.
The performance of the underlying performance primarily reflects the continued progression of the Group’s laboratory services activities, especially Healthcare Diagnostics and LifeSciences DNA sequencing. This is now coupled with the acquired serology products and stability and bio storage activities.
Highlights in the period include:
• Commercial launch of the enhanced Source BioScience portfolio in the USA including Overnight Service™ for DNA sequencing in Los Angeles and product distribution from Atlanta
• Competitive tenders won for Cambridgeshire County Council, Worcestershire County Council and other commissioning groups for chlamydia screening. Chlamydia screening contracts are now worth in excess of £2.0 million over three years
• Renewal of an existing liquid based cytology supply agreement for cervical cancer screening with a current NHS customer; worth in excess of £1.1 million over the initial five year term
• Achieved renewal as a preferred provider of DNA sequencing services to the Research Councils UK. Contract renewed for a further two years, which is worth in excess of £1.0 million over the period
• Opening of new DNA sequencing facility in Tramore, Ireland
The Group had £3.8 million of cash at the end of April 2014 (31 December 2013: £4.2 million) and net debt of £5.2 million (31 December 2013: £5.0 million) reflecting the financing arrangements put in place to part fund the acquisitions in 2013 and capital expenditure in the period.
Healthcare and Diagnostics
Healthcare and Diagnostics revenue increased by more than 20% compared with the same period last year. The laboratory services activities performed strongly in the period and Clinical Diagnostics revenue increased by over 30% compared with the first quarter of 2013. A significant component of the Clinical Diagnostics growth resulted from the Sexually Transmitted Infection (‘STI’) testing service launched to local authorities during 2013 since when the Group has secured a number of STI screening and integrated sexual health tenders. Contract wins to date are worth in excess of £2.0 million over the next three years. A number of these contracts are already underway and operating at the expected run rate, whilst other contracts will come on stream later in the current financial year.
The Healthcare and Diagnostics product portfolio, including cytology and serology products, has operated as expected during the period and revenue is up more than 15% compared with the same period last year, driven by the growth of the serology products business.
Source BioScience’s ambition is to become the leading commercial provider of DNA sequencing in Europe and the USA and the Overnight Service™ is instrumental in achieving this.
The Group’s market share in the UK continues to increase. DNA sequencing volumes during Q1 2014 were significantly greater than the same period last year which translated into 25% greater revenue than in the comparative period. This momentum is being sustained by the introduction of new services and the expansion of the laboratory network. During 2014 additional sequencing facilities were opened overseas in Tramore, Ireland and Los Angeles, California enabling access to new geographic markets and bringing the enhanced service to new and existing customers in those locations.
As reported previously, a major element of the long term growth strategy for this division is the own branding of the Group’s products under the reSource™ brand and the expansion of the product portfolio, supported by the GenomeCube® search engine and e-commerce platform. These initiatives are progressing to plan. The Directors believe that the reSource™ brand will ultimately enable the globalisation of the products business, providing the Group’s distributors and customers fast and ready access to the enhanced product portfolio.
In April, the Group’s clone and serology product portfolio was launched in the USA from the Atlanta facility, enabling customers to access these products within a timeframe and at a price that cannot be matched by distributing from the UK.
Stability and Bio Storage
Following the acquisition of Vindon late in 2013, the performance of the Stability and Bio Storage division has been in line with expectations during the first quarter of 2014. The ability to bring the latest tissue and gene-based analysis services and technologies to stability and cryo-storage customers enables the Group to perform downstream analyses at single site, accredited facilities. New opportunities with biopharma customers have already been crystallised, resulting from the combination of the Group’s stability storage and laboratory services expertise.
A number of projects have already commenced and are contributing to revenue. As a result, divisional revenue for Q1 2014 is more than 15% ahead of Q4 2013, the first three months immediately following the acquisition of the stability storage business.
As highlighted above, the established stability storage facilities in Atlanta and Los Angeles have provided the foundation from which to roll out the Group’s DNA sequencing service and product portfolio as well as providing local biopharma customers with the enhanced storage and analysis service.
Although still early in the year, the Group is trading in line with management expectations and continues to build on the strong operational performance delivered during the second half of 2013.
The acquisitions made during 2013 have opened significant opportunities to the Group, both from additional products and services and the extension of the Group’s geographic reach. Source BioScience now has access to new markets and customers, and an established platform for international growth across mainland Europe, in addition to the East and West coasts of the USA.
The Board remains confident of the outlook for the full year and anticipates that each of these factors will continue to contribute to the further progress of the Group during the remainder of 2014 and beyond.
About Source BioScience
Source BioScience is a trusted provider of state-of-the-art products and services to the healthcare and clinical, life and applied scientific and biopharma industries. It is an international business with centres in four countries and customers in over 90 countries. The Group offers a complementary portfolio of products and services that share common technologies, lab processes, infrastructure and expertise. These include clinical diagnostics, genomics, proteomics, drug discovery and development research as well as controlled environment storage and testing services for a diverse range of markets. These products and services are provided to a large and diverse customer base including the top 50 pharmaceutical companies, leading universities and research institutes worldwide, the UK NHS and other healthcare providers. The Group is listed on the Premium Main Market of the London Stock Exchange (LSE: SBS). For more information see www.sourcebioscience.com
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 Instinctif Partners.
For more information please contact:
Source BioScience plc
Dr Nick Ash
Chief Executive Officer
Tel: +44 (0)115 973 9010
Instinctif Partners (PR Agency to Source BioScience)
Melanie Toyne-Sewell/Jen Lewis
Tel: +44 (0)20 7457 2020
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