Cyprotex Plc
LSE : CRX

Cyprotex Plc

August 17, 2005 02:29 ET

Cyprotex PLC: Interim Results for the Six Months to 30 June 2005

LONDON, UNITED KINGDOM--(CCNMatthews - Aug. 17, 2005) - Cyprotex PLC ("Cyprotex" or "the company")(LSE:CRX), the drug discovery technology and information company, today reports its interim results for the half year ended 30 June 2005.

HIGHLIGHTS

- Revenues increased by 58% to Pounds Sterling 1.40m (First half 2004: Pounds Sterling 0.89m)

- Gross profits were 66% higher at Pounds Sterling 1.22m (First half 2004: Pounds Sterling 0.73m)

- Gross margin rose to 87%, compared with 83% for the same period last year

- Cash resources at end of June 2005 were Pounds Sterling 1.34m

- Basic loss per share down to 0.33p (First half 2004: 0.62p)

- Significant milestone achieved during the first half 2005, with positive monthly trading cash flow generated for the first time

- Continued expansion of the customer-base and the signing of new, longer-term and collaborative contracts in each of the three continents where drug discovery is focused

Commenting on the results, Robert Morrisson Atwater, Chairman and Chief Executive Officer of Cyprotex PLC, said: "Cyprotex set itself some major goals at the beginning of 2005. Significant progress toward these had been made by the half-year stage. This bodes well for the full year."



For further information:

Cyprotex PLC

Robert Morrisson Atwater,
Chief Executive Officer Tel: +44 (0) 1625 505 100
ir@cyprotex.com www.cyprotex.com

Code Securities Limited

Chris Collins Tel: +44 (0) 20 7024 2000
cic@codesecurities.com www.codesecurities.com

Media enquiries:

Abchurch Communications Limited
Heather Salmond / Samantha Robbins Tel: +44 (0) 20 7398 7700
samantha.robbins@abchurch-group.com www.abchurch-group.com


CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S STATEMENT

Meeting Objectives

Cyprotex set itself some major goals at the beginning of 2005. Significant progress toward these had been made by the half-year stage. This bodes well for the full year.

Somewhat earlier than expected, Cyprotex achieved an important milestone. Enjoying the benefits of significant capacity expansion that was largely paid for during 2004, the Group is trading cash flow positive, on a single monthly basis.

Cyprotex continued to outpace the growth of its underlying market. Having added to its North American marketing team, a growing contribution from this continent, both in terms of customer numbers and contract size, is already evident. Cyprotex has also secured its first customer in the Japanese market, which it believes will secure its longer-term presence in the region. Continued expansion of its base of active customers proves both the market opportunity for, and the superiority of, the Group's sector-leading technologies.

Whilst further expansion of its product offering, state-of-the-art laboratory facilities and office reorganisation will be funded during the second half, Cyprotex's resources continued to be carefully guarded and opportunities for cost reduction continually monitored. Cyprotex remains comfortable with the benefit of a significant cash 'cushion'. Existing operations are considered to have sufficient resources to fund their own expansion going forward.

Cyprotex continues to focus on achieving each of the key objectives set out in the Group's 2004 Annual Report and Accounts. Necessary skills, resources and experience will be added at Board level to allow the Group to seize the opportunities its global market offers. Cyprotex will attempt to further capitalise on its significant past expenditure in predictive computational capabilities through academic franchise and industrial collaboration. Management will also focus on meeting the needs of its global customer base through both organic expansion of its product offering and 'bolt-on' acquisitions of related technology.

Financial Highlights of the 2005 half year

- Revenue for the half-year ended 30 June 2005 was Pounds Sterling 1,400,860, against Pounds Sterling 886,238 for the comparable period in 2004, representing a 58% increase year-on-year.

- Gross profits rose 66% to Pounds Sterling 1,216,604, up from Pounds Sterling 734,433 in the first half of 2004.

- Gross margins reached 87%, compared with 83%.

- The loss on ordinary activity after taxation for the half year was Pounds Sterling 419,163, down from a loss of Pounds Sterling 759,200, representing a reduction of 45% year-on-year.

- Cash resources were carefully guarded. Cash in hand at 30 June 2005 amounted to Pounds Sterling 1.34m, despite continued investment in new products and laboratory capabilities.

- A rapidly expanding customer base has ensured the Group does not have a high dependence on any single customer, the largest of which is likely to contribute less than 15% of total revenue in the year 2005.

Product Development and Laboratory Expansion

Cyprotex's Cloe Screen hERG channel inhibition assay, which was validated in the Group laboratories early in 2005, is now fully integrated into the automated high throughput system. Restructuring of its metabolite profiling and identification is now well advanced. Additional offerings of both in-vitro safety toxicology and new assay development will be commercialised during the second half.

Further laboratory expansion, within the existing Macclesfield site, is already at the planning stage. This is expected to commence during the first half of 2006. Having also completed the commissioning of a major new Quadropole Mass Spectrometer installation and its automated method development now advanced, Cyprotex is anticipating the capacity, turnaround and reliability requirements of its expanding customer base into 2007 and beyond.

Customer Development

Cyprotex continues to retain existing customers while expanding its global reach. Revenue generating contracts were secured from a wide range of customers, including international names such as Roche, Serono, Novo Nordisk, Johnson & Johnson, AstraZeneca and Sepracor.

Cyprotex continues to maintain a high profile at a large number of major pharmaceutical/biotechnology conferences during 2005, including the Drug Discovery Technology & Development World Congress in Boston, USA and the World Pharmaceutical Congress in Philadelphia, USA.

Robert Morrisson Atwater

Chairman and Chief Executive Officer

17 August 2005



GROUP PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2005

Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Continuing activities Note Sterling Sterling Sterling


TURNOVER 2 1,400,860 886,238 2,117,321

Cost of sales (184,256) (151,805) (432,441)
------------ ------------ ------------

GROSS PROFIT 1,216,604 734,433 1,684,880

Administrative expenses (1,711,899) (1,620,730) (3,255,104)
------------ ------------ ------------

OPERATING LOSS (495,295) (886,297) (1,570,224)

Interest receivable 34,037 56,121 107,697
Interest payable (26,369) (1,691) (1,762)
------------ ------------ ------------

LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (487,627) (831,867) (1,464,289)

Taxation 3 68,464 72,667 165,182
------------ ------------ ------------
LOSS FOR THE PERIOD (419,163) (759,200) (1,299,107)
------------ ------------ ------------
------------ ------------ ------------

Loss per ordinary share
- basic & diluted 4 (0.33)p (0.62)p (1.04)p



GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the six months ended 30 June 2005

Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

Loss for the financial period (419,163) (759,200) (1,299,107)
Exchange difference on the
re-translation of net assets
of subsidiary undertaking (26,251) 4,486 20,266
------------ ------------ ------------
Total recognised gains and
losses relating to the period (445,414) (754,714) (1,278,841)
------------ ------------ ------------
------------ ------------ ------------


GROUP BALANCE SHEET
As at 30 June 2005

Unaudited Unaudited Audited
At At At
30 June 30 June 31 December
2005 2004 2004
Note Pounds Pounds Pounds
Sterling Sterling Sterling

FIXED ASSETS
Tangible assets 1,690,827 819,747 915,124
------------ ------------ ------------

CURRENT ASSETS
Stocks 89,388 71,838 86,028
Debtors 562,254 675,048 770,863
Cash at bank and in hand 1,338,409 2,696,757 1,839,800
------------ ------------ ------------
1,990,051 3,443,643 2,696,691

CREDITORS: due within
one year (384,746) (690,533) (563,085)
------------ ------------ ------------
NET CURRENT ASSETS 1,605,305 2,753,110 2,133,606
------------ ------------ ------------
TOTAL ASSETS LESS
CURRENT LIABILITIES 3,296,132 3,572,857 3,048,730

CREDITORS: due after
more than one year (689,750) - -
------------ ------------ ------------
NET ASSETS 2,606,382 3,572,857 3,048,730
------------ ------------ ------------
------------ ------------ ------------

CAPITAL AND RESERVES
Called up share capital 127,620 127,312 127,312
Share premium account 9,619,479 9,616,721 9,616,721
Merger reserve 128,070 128,070 128,070
Profit and loss account (7,268,787) (6,299,246) (6,823,373)
------------ ------------ ------------
EQUITY SHAREHOLDERS'
FUNDS 7 2,606,382 3,572,857 3,048,730
------------ ------------ ------------
------------ ------------ ------------



GROUP CASH FLOW STATEMENT
For the six months ended 30 June 2005

Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Note Sterling Sterling Sterling

NET CASH OUTFLOW
FROM OPERATING
ACTIVITIES 5 (436,998) (924,972) (1,487,748)
------------ ------------ ------------

RETURNS ON INVESTMENT
AND SERVICING OF FINANCE
Interest received 34,037 56,121 107,697
Interest paid (26,369) (4) (75)
Interest element of
finance lease and hire
purchase contracts - (1,687) (1,687)
------------ ------------ ------------
7,668 54,430 105,935
------------ ------------ ------------

TAXATION
UK corporation tax
received 166,416 - 163,141
------------ ------------ ------------
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire
tangible fixed assets (941,793) (36,605) (545,432)
Receipts from sales of
tangible fixed assets - 16,702 16,702
------------ ------------ ------------
(941,793) (19,903) (528,730)
------------ ------------ ------------

NET CASH OUTFLOW BEFORE
FINANCING (1,204,707) (890,445) (1,747,402)
------------ ------------ ------------

MANAGEMENT OF LIQUID
RESOURCES 505,383 (2,536,265) (1,742,580)
------------ ------------ ------------

FINANCING
Issue of ordinary share
capital 3,066 3,104,332 3,104,332
Net movement in short
term borrowings 10,500 - -
Net movement in long
term borrowings 689,750 - -
Repayment of capital
lease and hire purchase
contracts - (8,360) (8,360)
------------ ------------ ------------
703,316 3,095,972 3,095,972
------------ ------------ ------------
INCREASE/(DECREASE)
IN CASH 6 3,992 (330,738) (394,010)
------------ ------------ ------------
------------ ------------ ------------



GROUP CASH FLOW STATEMENT (continued)
For the six months ended 30 June 2005

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

Increase/(decrease) in
cash during the period 3,992 (330,738) (394,010)

Cash (inflow)/outflow
(from)/to short term
deposits (505,383) 2,536,265 1,742,580

Cash inflow from increase
in short term loans (10,500) - -

Cash inflow from increase
in long term loans (689,750) - -

Repayment of capital
element of finance
lease and hire
purchase contracts - 8,360 8,360
----------- ------------ -----------
Movement in net funds
during the period (1,201,641) 2,213,887 1,356,930
------------ ------------ ------------
Opening net funds 1,839,800 482,870 482,870
------------ ------------ ------------
Closing net funds 638,159 2,696,757 1,839,800
------------ ------------ ------------
------------ ------------ ------------


NOTES TO THE UNAUDITED INTERIM REPORT

1. BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION

The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The figures for the year ending 31 December 2004 have been extracted from the statutory financial statements which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unqualified and did not contain a statement under section 237(2) or 237(3) of the Companies Act 1985. The accounts have been prepared in accordance with applicable accounting standards and under the historical cost accounting rules.

The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2004 Annual Report and Financial Statements. The financial information is prepared on a going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.

The interim financial information has been reviewed by the Company's auditors. A copy of the auditors' review report is attached to this interim report.

2. SEGMENTAL ANALYSIS

The Group operates in one principal area of activity, that of providing in-vitro and in-silico ADMET/PK (Absorption, Distribution, Metabolism, Excretion, Toxicity / Pharmacokinetic) information to the pharmaceutical industry. The turnover and operating result for the periods are derived from the Group's principal activity.

The geographical analysis of turnover by destination is as follows:



Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

United Kingdom 139,930 408,474 808,820
Rest of Europe 1,058,776 419,797 1,183,168
USA 202,154 57,967 125,333
------------ ------------ ------------
1,400,860 886,238 2,117,321
------------ ------------ ------------
------------ ------------ ------------


3. TAXATION

The tax credit represents a claim by the Group for repayable R&D tax credits.

4. LOSS PER SHARE

The loss per share is calculated by reference to the earnings attributable to ordinary shareholders divided by the weighted average of 127,387,951 ordinary shares for the 6 months to 30 June 2005, 123,343,826 ordinary shares for the 6 months to 30 June 2004, and 125,338,821 for the 12 months to 31 December 2004.



Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

Attributable loss
(Pounds Sterling) (419,163) (759,200) (1,299,107)
--------------------------------------

Average number of ordinary
shares in issue for basic
and diluted loss per share 127,387,951 123,343,826 125,338,821
--------------------------------------
Basic and diluted loss
per share (0.33)p (0.62)p (1.04)p
--------------------------------------
--------------------------------------


The loss for the period and the weighted average number of ordinary shares for calculating the diluted loss per share for the period to 30 June 2005, 30 June 2004 and 31 December 2004 are identical to those used for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of Financial Reporting Standard No. 14 'Earnings per share' (FRS 14).



5. RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING
ACTIVITIES

Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

Operating loss (495,295) (886,297) (1,570,224)
Depreciation of tangible
fixed assets 166,090 130,146 272,641
Loss on sale of tangible
fixed assets - 2,522 2,522
Increase in stocks and work
in progress (3,360) (4,072) (18,262)
Decrease/(increase) in
operating debtors and
prepayments 110,657 (194,544) (360,985)
(Decrease)/increase in
operating creditors and
accruals (188,839) 22,787 166,294
Exchange rate differences (26,251) 4,486 20,266
------------ ------------ ------------
(436,998) (924,972) (1,487,748)
------------ ------------ ------------
------------ ------------ ------------


6. ANALYSIS OF MOVEMENT IN NET FUNDS

Non At
At 1 January Cash flow cash 30 June
2005 movements 2005
Pounds Pounds Pounds Pounds
Sterling Sterling Sterling Sterling

Cash at bank and in hand 97,220 3,992 - 101,212
--------------------------------------------

Short term deposits 1,742,580 (505,383) - 1,237,197
Bank loans due within
one year - (10,500) - (10,500)
Bank loans due after
one year - (689,750) - (689,750)
--------------------------------------------
1,839,800 (1,201,641) - 638,159
--------------------------------------------
--------------------------------------------


In the Group balance sheet short term deposits are included within
cash at bank and in hand.


7. RECONCILIATION OF EQUITY SHAREHOLDERS' FUNDS

Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Pounds Pounds Pounds
Sterling Sterling Sterling

Loss for the financial period (419,163) (759,200) (1,299,107)

Issue of share capital 3,066 3,162,256 3,162,256
Share issue costs - (57,924) (57,924)
Exchange difference on
the re-translation of
net assets of subsidiary
undertaking (26,251) 4,486 20,266
------------ ------------ ------------
(Decrease)/ increase in
equity shareholders' funds (442,348) 2,349,618 1,825,491

Opening equity
shareholders' funds 3,048,730 1,223,239 1,223,239
------------ ------------ ------------
Closing equity
shareholders' funds 2,606,382 3,572,857 3,048,730
------------ ------------ ------------
------------ ------------ ------------


8. Copies will be available on request from the Company Secretary, Cyprotex PLC, 15 Beech Lane, Macclesfield, Cheshire, SK10 2DR.

9. The interim report was approved by the board of directors on 17 August 2005.

INDEPENDENT REVIEW REPORT TO CYPROTEX PLC

Introduction

We have been instructed by the company to review the financial information for the six months ended 30 June 2005 which comprises the group profit and loss account, group balance sheet, group cash flow statement, reconciliation of net cash flow to movement in net funds, group statement of total recognised gains and losses, and the related notes 1 to 9. We have read the other information contained in the interim report, which comprises only the Chairman and Chief Executive Officer's Statement, and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Our responsibilities do not extend to any other information. This report is made solely to the company's members, as a body, in accordance with guidance contained in APB Bulletin 1999/4 "Review of interim financial information". Our review work has been undertaken so that we might state to the company's members those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report and ensuring that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review having regard to the guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data, and based thereon, assessing whether the accounting policies and presentation have been consistently applied, unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2005.



Grant Thornton UK LLP
Chartered Accountants
Manchester
17 August 2005


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