Revenue for the year ended 31 December 2008 is expected to increase by around 14% to approximately £26.2 million (2007: £22.9 million) driven by good growth in clinical instruments, cell biology and the recurring revenue streams of consumables and services. The Company’s genomics-based instruments revenues are expected to be broadly similar to 2007. Revenue in the year was positively impacted by around £0.8 million by the strengthening US dollar against Sterling.
We continued to see further improvement in the underlying gross margin in the year, reflecting an improved product mix and operational efficiencies. Genetix also continues to invest significantly in those areas of the business which we believe will help to drive future revenue growth.
The Group continues to be strongly cash generative and is expected to finish the year with cash of £15.2 million (2007: £12.6 million) and no borrowings.
The Group continues to manage its foreign exchange risk by utilising forward currency contracts. At 31 December 2008, the Group was committed to US$7 million of forward contracts at average rates of US$1.783 all maturing in 2009. IAS 39 requires that these contracts be valued at fair value at the Balance Sheet date with the gains or losses arising recognised immediately in the income statement. As at 31 December 2008, the unrealised loss arising from these fair value changes was £876,000. (31 December 2007: £34,000 loss) and accordingly a charge equating to this amount will be recorded in the income statement for 2008.
The Group reports and measures its underlying profitability and earnings per share excluding the unrealised fair value adjustments on forward currency contracts and adjustments to acquired intangibles and goodwill.
Underlying pre-tax profits and earnings per share for the year ended 31 December 2008 are expected to be in line with market expectations.
Charles de Rohan, Chief Executive of Genetix, commented:
“We made further good progress in 2008 despite the wider economic conditions and volatile exchange rate markets. Our strategy of investing in the business to drive top line growth and underlying profitability and earnings per share is bearing fruit and positions us well to deliver sustained shareholder value.
“The Group is profitable, financially strong and benefits from a number of defensive qualities. We continue to tightly manage our cost base in line with the current economic trading environment. With world class products and deep customer relationships, the business is well placed and able to meet the opportunities and challenges for the coming year”
