4 Feb 2020 07:00
Horizon Discovery Group plc
Pre-Close Trading Update
·; Full year 2019 Group unaudited revenues from continuing operations expected to increase by approximately 8% to approximately £58.3 million
·; Full year 2019 Group unaudited reported revenues expected to increase by approximately 7% to approximately £62.9 million
Cambridge, UK, 4 February 2020: Horizon Discovery Group plc (LSE: HZD) ("Horizon" "the Group" or "the Company"), a global leader in the application of gene editing and gene modulation technologies, today provides an unaudited pre-close trading update for the year ended 31 December 2019. The Company expects to report its audited Full Year 2019 results on 30 March 2020.
Horizon expects to report full year 2019 revenues from continuing operations1 of approximately £58.3 million (FY 2018: £54.1 million), approximately £56.7 million on a constant currency basis, representing growth of approximately 8% compared to the prior year and approximately 5% on a constant currency basis.
Reported revenues for full year 2019 (including continuing and discontinued operations1) are expected to be approximately £62.9 million (FY 2018: £58.7 million), approximately £61.2 million on a constant currency basis, representing growth of approximately 7% compared to the prior year, and approximately 4% on a constant currency basis.
Revenue growth during the year has been driven by a strong performance in the Research Reagents and Screening Business Units. BioProduction continued to perform well and generated a strong second half performance but, as expected, ended the year broadly flat year-on-year, reflecting the business unit's exceptionally strong prior-year comparator performance. As previously reported, the Diagnostics Business Unit had a challenging first half of the year, reporting revenues 28.6% down on prior year. The Group took prompt action to rectify the situation and under new leadership this business unit had a stronger second half. In December 2019, the Company completed its divestment of its non-core In Vivo business unit to Envigo RMS LLC. Revenues generated in the period in the financial year that the Company owned In Vivo are excluded from the Company's continuing operations set out in the table below.
Expected revenues and growth rates by Business Unit (unaudited)
Business Unit | Revenue £m | Growth % | ||
FY19 | FY18 | Reported | Constant Currency | |
Research Reagents | 33.2 | 30.2 | 9.8 | 6.7 |
Screening | 11.4 | 8.9 | 27.7 | 24.7 |
BioProduction | 8.6 | 8.7 | -1.7 | -3.7 |
Diagnostics | 5.1 | 6.3 | -18.8 | -21.5 |
Total continuing operations | 58.3 | 54.1 | 7.6 | 4.7 |
In Vivo | 4.6 | 4.6 | 0.2 | -2.3 |
Total continuing and discontinuing operations | 62.9 | 58.7 | 7.0 | 4.2 |
Adjusted EBITDA2 on continuing operations is expected to be £3.9 million (FY18 £2.1 million). Total Adjusted EBITDA2 on continuing and discontinued operations is expected to be £1.5 million (FY18 £0.7 million).
Gross margin from continuing operations1 is expected to be approximately 70.0% (FY 2018: 69.7%) with a reduction in margin contribution from Diagnostics offset by Screening and Research Reagents.
The Group cash balance of £18.8 million at year end 2019 (HY 2019: £24.8 million) was in-line with expectations and reflected continued investment in the business with a focus on continued growth and increasing market share.
Outlook
Horizon has made good progress across the Group in 2019. All four Business Units performed well in the second half and this trend has continued at the start of 2020. The Group continues to follow its Investing for Growth strategy with continued investments in IT, Screening and R&D to support its new Base Editing platform. Management believe this will help to accelerate Horizon's transformation into a high-growth, pure-play tools and services company, and expects revenue growth in FY20 to be in-line with expectations, and for the increased investments to reduce FY20 EBITDA to a marginal loss for the year.
Terry Pizzie, Chief Executive Officer of Horizon Discovery, commented:
"We have reported a solid full year 2019 performance based on the unaudited results against the backdrop of a busy second half that has seen a number of notable developments that will help to accelerate our transformation into a high-growth, pure-play tools and services company.
"These include the divestment of our non-core In Vivo business unit, and a new strategic collaboration with Mammoth Biosciences, which will see us jointly develop new CRISPR tools to develop a next-generation, technologically disruptive suite of CHO cell lines that have been optimised to solve challenges in biologic drug development. Just after year-end, following a year of reviewing the technology, we exercised our option to exclusively license a novel Base Editing platform from Rutgers, The State University of New Jersey (US), for use in therapeutic, diagnostic and service applications.
"We are committed to continued focused investment in commercially-led, scientific innovation to stay at the forefront of emerging technologies. By extending our capabilities through in-licensing technologies, partnerships, and collaborations, such as these, we seek to more closely align our tools and services offering to the needs of our pharmaceutical, biotech and academic partners."
Notes
1 In December 2019, the Company completed its divestment of its non-core In-Vivo business. In the period in the 2019 financial year that the Company owned the In-Vivo business, revenues of £4.6 million were generated. These are excluded from the Company's continuing operations FY2019 results reported above. To guide investors, this trading update and the Full Year results will each report the Group's performance on the basis of both continuing operations and discontinuing operations.
2 EBITDA is a non-GAAP financial measure that we define as net loss adjusted for investment income, finance costs, taxation, depreciation and amortization, and exceptional items. For discontinued operations, it is also adjusted for impairments, onerous provision and loss on disposal.
Ends
For further information from Horizon Discovery Group plc, please contact:
Horizon Discovery Group plc
Terry Pizzie, Chief Executive Officer
Jayesh Pankhania, Chief Financial Officer
Jon Davies, Head of Investor Relations
Tel: +44 (0) 1223 655 580
Numis Securities Limited (Broker and NOMAD)
Freddie Barnfield / Duncan Monteith
Tel: +44 (0) 207 260 1000
Consilium Strategic Communications (Financial Media and Investor Relations)
Mary-Jane Elliott / Matthew Neal / Melissa Gardiner
Tel: +44 (0) 20 3709 5700
Email: horizon@consilium-comms.com
Westwicke, an ICR Company (US Investor Relations)
Stephanie Carrington
Tel. +1 646-277-1282
Email: horizondiscovery@icrinc.com
About Horizon Discovery Group plc www.horizondiscovery.com
Horizon Discovery Group plc (LSE: HZD) ("Horizon") drives the application of gene editing and gene modulation within the global life science market - supporting scientists on the path from research to therapy.
Built upon more than a decade of experience in the engineering of cell lines, Horizon offers an unmatched portfolio of tools and services to help scientists gain a greater understanding of gene function, identify genetic drivers behind human disease, deliver biotherapeutics, cellular and gene therapies for precision medicine as well as develop and validate diagnostic workflows.
Horizon's solutions enable almost any gene to be altered, or its function modulated, in human and other mammalian cell lines.
The Group's customers include many of the world's foremost academic institutes, global pharmaceutical and biotechnology companies as well as clinical diagnostic laboratories. Insight into the challenges faced by these organizations enables Horizon to focus efforts on development of innovative solutions that not only differentiate the Group's offering, but also fuel development of the next wave of precision medicines.
Horizon is headquartered in Cambridge, UK with offices in USA and Japan. The Group is listed on the London Stock Exchange's AIM market under the ticker HZD.