PRG.L Regulatory News (PRG)

10 Oct 2006 07:01

Premier Research Group10 October 2006 FOR IMMEDIATE RELEASE 10 OCTOBER 2006 PREMIER RESEARCH GROUP plc INTERIM RESULTS ANNOUNCEMENT For the six months ended 31 July 2006 "A further period of continued growth" 10 October 2006, London, UK - Premier Research Group plc (AIM: PRG) ("PremierResearch", "Company" or "Group"), the international pharmaceutical servicesgroup today announces its interim results for the six months ended 31 July 2006. HIGHLIGHTS • Financial Performance o Revenues £14.6m, an increase of 139% (H1 2005: £6.1m) o EBITDA £3.1m, up 97% (H1 2005: £1.6m) o Pre-tax profit (excluding exceptional costs) £1.9m, an increase of 68% (H1 2005: £1.2m) o Exceptional costs associated with acquisitions below budget • Acquisition of Scirex Corporation LLC: July 2006 o Consideration of £16.2m plus excess working capital of up to US$7m o Large well-established full service US CRO providing strategic footprint for access to doctors and patients in important US market o Funded by £7.5m placing of 5,172,415 new ordinary shares @ 145p per share and a new debt facility of £12.5m o Integration progressing as planned • Current trading o Currently working with 15 of the world's top 20 pharma and biotech companies o Strong trading with book-to-bill ratio still greater than 1 o Order book growing in core and acquired businesses o More than £100m of outstanding proposals with customers o Further acquisition opportunities undergoing evaluation Commenting on summary and outlook, Dr Simon Yaxley, CEO said: "With current trading buoyant we move into the second half of the year confidentof meeting the market's expectations. Our focus remains on both stimulating andaccelerating organic growth and seeking out earnings enhancing synergisticacquisitions. A key focus will also be on bringing further scale to the businessby moving larger and more lucrative contracts through our sales pipeline. " Enquiries: Premier Research Group plc Dr Simon Yaxley, Chief Executive Officer Tel: 01344 752375 Bernard Gallagher, Chief Financial Officer Tel: 01344 458309 www.premier-research.com Buchanan Communications Tel: 020 7466 5000 Lisa Baderoon Mobile: 07721 413496 Rebecca Skye Dietrich Evolution Securities Tim Worlledge/ Simon Leathers Tel: 020 7071 4300 CHIEF EXECUTIVE'S REVIEW Overview I am delighted to report on a further period of continued growth for PremierResearch in the six months ended 31 July 2006. We completed the half year byannouncing in early July the US acquisition of Scirex, our largest to date, andhighly strategic in further accessing the important US market. Results The results for the six months show the Company to be in excellent health andbenefiting from the integration of the three businesses acquired in the lastfinancial year. In summary, our financial performance during the period saw revenues growing by139% to £14.6m (H1 2005: £6.1m). The Group's EBITDA for the first 6 months was£3.1m (H1 2005: £1.6m), whilst profit before tax (excluding exceptional costs)in the period increased to £1.9m (H1 2005: £1.2m) reflecting the change in themix of the business resulting from acquisitions. Strong order intake maintainedthe H1 book-to-bill ratio at greater than one, indicating the consistent growthof the order book. This indicator of future sales visibility continues to be animportant marker as acquisitions, both historical and future, have differentlevels of visibility prior to being integrated into Premier Research. As a Company focused on maximising shareholder value by growth, supported by anaggressive acquisition strategy, the Board continues to reinvest all cashbalances back into the business and thus does not currently propose the paymentof any dividends at the half year. However, given the cash generative nature ofthe business upon the achievement of the Company's full year targets the Boardintends to recommend a modest dividend. Operational Review The half year has seen us further deliver on our goals, which are sustainablegrowth and winning and delivering higher value, multi-national projects. Withturnover increasing by 139% this illustrates the continued strong demand for ourservices from new and existing international customers with an increasedemphasis on larger value contracts. We now have over 150 customers, and haverecently signed three new preferred provider agreements allowing us greatercertainty of repeat business with those customers. It is also important to notethat we are currently working with 15 of the world's top 20 pharma and biotechcompanies Following the three acquisitions completed in the last financial year, thisfirst half saw Premier Research return to make its largest acquisition to date,Scirex Corporation LLC ("Scirex") in July. The total cost of the acquisitionwhich included an initial cash consideration of £19.2m plus rationalisationcosts of up to £2.2m was funded by securing a new £12.5m bank debt facility. Ashare placing of 5,172,413 new ordinary shares raising £7.5m was completedsimultaneously, with the proceeds being used to reduce debt. The successfulcompletion of the acquisition will be earnings enhancing to the Group in thisyear and will contribute greatly to our continued growth as it strengthens ourbusiness model and will enhance our service offering amongst our customer base. Scirex - acquired July 2006 Scirex is a full service CRO that specialises in providing outsourced clinicalservices to the global biotechnology and pharmaceutical industries. The companyis headquartered in Philadelphia, USA, and has ten offices located across theUS, London (UK) and Krakow (Poland). Scirex offers expertise, experience andtechnology necessary to develop drugs from Phase I to Phase IV and is working inthe same therapeutic areas as Premier Research, particular in central nervoussystem disorders. Importantly, Scirex will provide a strategic footprint forPremier Research to access doctors and patients within the important US market. For the year ending 31 December 2005 Scirex recorded sales of £27.9 million andan EBIT of £729,000 and brings a significant signed order book of in excess of£17m. Post Acquisition Integration The restructuring of Scirex was completed within one month of acquisition. Thisincluded the senior US management team being strengthened, the reduction of thenon core workforce and introductions by management to key Scirex customers. Ona further positive note the integration of Scirex into our US infrastructurecontinues on track and the exceptional costs associated with Scirex integrationare expected to be lower than our budgets by at least £200,000, demonstratingmanagement's prudent approach to acquisition integration. Importantly, this alsoendorses our view that the integration of large acquisitions in one keyterritory can be completed quickly and efficiently. I am delighted to confirmthat we have maintained our track record of not losing any customers from anacquired company or indeed through our core business. Importantly, since thecompletion of the acquisition, we have been awarded repeat business from anumber of legacy customers and we have continued to be successful in attractingnew customers to the enlarged Group, with the winning of several new significantcontracts on both sides of the Atlantic. Strengthened Management As with previous acquisitions, the operational management team was strengthenedto facilitate the integration of Scirex. The Group now has a robust structurecapable of handling the increasing operational requirements associated withPremier Research's projected growth and development in the global marketplace. Service Offering & Sales With the demand for our services going from strength to strength it wasextremely important that we enhanced our sales team to provide a balanced focusacross the US and International territories and to continue to drive organicgrowth. Our ongoing focus remains on three of the highest growth areas in drugdevelopment (oncology, central nervous system and anti-infectives) together withour underlying expertise in paediatrics, a specialised area with strongregulatory drivers. However, as Premier Research continues its expansion as aleading international pharmaceutical services player, new areas of developmentwithin cardiovascular and respiratory may be targeted. Our expertise across consultancy, clinical study delivery, data management andfinal medical reporting, continues to provide us with an extremely robustbusiness model and an infrastructure which boasts over 750 employees in 31countries. This together with a powerful reputation amongst our peer groupcontinues to provide the kudos to compete for higher value contracts; a trendwhich we are focused on maintaining, and indeed increasing, over time. Our diverse and highly credible customer base now comprises over 150 customers.With no contract accounting for more than 10% of revenues in any one year, thiscontinues to provide us with recurring business, endorsing the excellent servicedelivery we provide. Outsourcing Market The outsourcing market continues to be buoyant and the requirement foroutsourced clinical research services continues to grow with the improvedquality, reliability, safety, efficiency and controls associated withoutsourcing trials. All the indicators point to this continuing for the longerterm. Importantly, Premier Research's positioning within this growing marketwill allow the Company to exploit the significant opportunities which arise. Current Trading I am delighted to report that trading has continued to be strong moving into thesecond half of the year and the book-to-bill ratio remains greater than one. Thecontinued growth of our order book and the realisation of the operationalbenefits associated with the integration of last year's acquisitions togetherwith the year end contribution from our recent acquisition, Scirex, providemanagement with added confidence that the Company will continue to performstrongly. Summary & Outlook With current trading buoyant we move into the second half of the year confidentof meeting the market's expectations. Our focus remains on both stimulating andaccelerating organic growth and seeking out earnings enhancing synergisticacquisitions. A key focus will also be on bringing further scale to the businessby moving larger and more lucrative contracts through our sales pipeline. In closing, I would again like to reiterate my thanks to all our staff for theircommitment, to our new employees who join us from Scirex and to our shareholdersfor their continued support. Dr Simon Yaxley Chief Executive Officer10 October 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the six months ended 31 July 2006 - Unaudited Note Six months Six months Twelve months ended ended ended 31 July 31 July 31 January 2006 2005 2006 £000's £000's £000'sGroup turnover 3 14,573 6,067 16,453Administrative expenses 12,326 4,811 12,731Operating profit 2,247 1,256 3,722Exceptional items 5 (1,290) (255) (1,171) 957 1,001 2,551Interest payable and similar charges (303) (102) (454)Profit on ordinary activities before taxation 654 899 2,097 Tax on profit on ordinary activities (206) (155) (698)Retained profit for the period 448 744 1,399Earnings per share basic (pence) 4 0.84 1.80 3.12Earnings per share diluted (pence) 4 0.83 1.70 3.11 Statement of total recognized gains and lossesFor the six months ended 31 July 2006 - Unaudited Six months Six months Twelve months ended ended ended 31 July 31 July 31 January 2006 2005 2006 £000's £000's £000'sProfit for the period 448 744 1,399Exchange difference on translation of net assets of subsidiary undertakings 6 (100) (117)Total gains and losses for the period 454 644 1,282 CONSOLIDATED BALANCE SHEETAs at 31 July 2006 - Unaudited Note As at As at As at 31 July 31 July 31 January 2006 2005 2006 £000's £000's £000'sFixed assetsIntangible assets 42,269 19,525 25,594Tangible assets 2,194 955 1,268Investments 52 1,486 52 44,515 21,966 26,914Current assetsDebtors 6 18,942 5,180 6,825Cash at bank 7,029 1,489 1,391 25,971 6,669 8,216Creditors: Amounts falling due within one year 7 25,509 5,300 10,080Net current assets/(liabilities) 462 1,369 (1,864)Total assets less current liabilities 44,977 23,335 25,050Creditors: Amounts falling due after more than one year 8 14,961 7,975 8,864 Provisions 9 1,474 - 1,055 28,542 15,360 15,131Capital and reservesCalled-up equity share capital 10 601 482 482Deferred shares - 2,844 1,977Share premium account 10 27,754 12,939 12,939Other reserves (37) (37) (37)Profit and loss account 224 (868) (230)Shareholders' funds 28,542 15,360 15,131 CONSOLIDATED CASH FLOW STATEMENTFor the six months ended 31 July 2006 - Unaudited Six months Six months Twelve months ended ended ended 31 July 31 July 31 January 2006 2005 2006 £000's £000's £000'sNet cash inflow/(outflow) from operating activities (3,169) 458 2,184Returns on investments and servicing of financeInterest paid (298) (100) (447)Interest element of hire purchase (5) (2) (7)Net cash outflow from returns on investments and servicing of finance (303) (102) (454)Taxation (157) (69) (117)Capital expenditure and financial investmentPayments to acquire tangible fixed assets (79) (60) (131)Receipts from sale of fixed assets - 6 15Acquisition of investments - 1 -Net cash outflow from capital expenditure and financial investment (79) (53) (116)Acquisitions and disposalsAcquisition of shares in group undertakings (18,585) (9,314) (9,610)Deferred consideration on acquisitions (1,977) (276) (2,182)Net cash acquired with subsidiary 448 10 274Net cash outflow from acquisitions and disposals (20,114) (9,580) (11,518)Cash outflow before financing (23,822) (9,346) (10,021)FinancingIssue of equity share capital 119 82 82Share premium on issue of equity share capital 14,815 6,180 6,180Repayment of loans - (1,492) (3,073)New bank loans 17,673 6,870 6,830Repayment of bank loans (780) (76) (398)Capital element of hire purchase (20) (20) (117)Net cash inflow from financing 31,807 11,544 9,504Increase/(decrease) in cash 7,985 2,198 (517) RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIESFor the six months ended 31 July 2006 - Unaudited Six months Six months Twelve months ended ended ended 31 July 31 July 31 January 2006 2005 2006 £000's £000's £000'sOperating profit 2,247 1,256 3,722Amortisation 746 236 775Depreciation 161 89 164(Profit)/loss on disposal of fixed assets - (6) 59Increase in debtors (2,707) (962) (542)Increase/(decrease) in creditors (2,326) 100 (823)Reorganisation costs (1,290) (255) (1,171)Net cash inflow/(outflow) from operating activities (3,169) 458 2,184 Reconciliation of net cash flow to movement in net debtFor the six months ended 31 July 2006 - Unaudited Six months Six months Twelve months ended ended ended 31 July 31 July 31 January 2006 2005 2006 £000's £000's £000'sIncrease/(decrease) in cash in the period 7,985 2,198 (517)Cash outflow from loans - 1,492 3,073Cash inflow from bank loans (16,893) (6,794) (6,432)Cash outflow from lease financing 20 20 117Change in net debt resulting from cash flows (8,888) (3,084) (3,759)New finance leases (30) (96) (160)Debt acquired with acquisitions - (1,442) (2,798)Foreign exchange 183 (101) (117)Movement in net debt in the period (8,735) (4,723) (6,834)Opening net debt (9,978) (3,144) (3,144)Closing net debt (18,713) (7,867) (9,978) ANALYSIS OF CHANGES IN NET DEBTFor the six months ended 31 July 2006 - Unaudited At 1 February 2006 Cash flows Other Changes At 31 July 2006 £000's £000's £000's £000'sNet Cash:Cash at bank and in hand 1,391 5,532 106 7,029Overdrafts (2,633) 2,453 - (180) (1,242) 7,985 106 6,849Debt:Debt due within 1 year (1,760) (7,865) (945) (10,570)Debt due after 1 year (6,863) (9,028) 1,022 (14,869)Finance Lease (113) 20 (30) (123) (8,736) (16,873) 47 (25,562)Net debt (9,978) (8,888) 153 (18,713) Notes to the financial information 1. Basis of preparation The interim financial information has been prepared on the basis of theaccounting policies set out in the Group's statutory financial statements forthe year ended 31 January 2006. These interim financial statements do not constitute statutory financialstatements within the meaning of section 240 of the Companies Act 1985. Resultsfor the six month periods ended 31 July 2006 and 31 July 2005 have not beenaudited. The results for the year ended 31 January 2006 have been extracted fromthe statutory financial statements, upon which the auditors reported withoutqualification. 2. Acquisitions During the period the Group acquired Scirex LLC. The provisional goodwill onthis acquisition is being written off on a straight line basis over a period oftwenty years. 3. Geographical Analysis Six months Six months ended ended 31 July 2006 31 July 2005 £000's £000'sUK 2,886 20% 2,932 48%Europe 6,231 43% 711 12%USA 5,456 37% 2,424 40%Total 14,573 100% 6,067 100% 4. Earnings per share Earnings per share for the six month period ended 31 July 2006 is based on theprofit after taxation of £448,000 divided by the weighted average number ofshares during the period, 53,267,882 (basic) and 53,487,751 (dilutive) 1pordinary shares. A reconciliation of the basic and diluted number of shares used in the six monthperiod ended 31 July 2006 is: Weighted average number of shares 53,267,882Dilutive share options 219,869Diluted 53,487,751 5. Exceptional items The exceptional items represent restructuring costs arising as a result ofrationalisation and reorganisation following the acquisition in the period. 6. Debtors As at As at 31 July 2006 31 July 2005 £000's £000'sTrade 9,375 2,519Unbilled receivables 6,629 900Prepayments and other debtors 2,938 1,761 18,942 5,180 7. Creditors and amounts due within one year As at As at 31 July 2006 31 July 2005 £000's £000'sBank loans and overdrafts 10,750 1,113Trade creditors 5,124 1,560Corporation tax 1,079 168Other taxes 211 205Other creditors and accruals 8,314 1,987Acquisition loans - -Other loans - 225HP and leasing 31 42 25,509 5,300 8. Creditors and amounts due over one year As at As at 31 July 2006 31 July 2005 £000's £000'sHP and leasing 92 103Bank loans 14,869 7,872 14,961 7,975 9. Provisions An analysis of movements on the provision for the Group is as follows; As at As at 31 July 2006 31 July 2005 £000's £000's1 February 1,055 -Utilised in the period (643) -Created on acquisition 1,062 -31 July 1,474 - The Group provision is for restructuring costs on acquisitions. 10. Share capital and share premium account Called Up and Fully Paid 1p £000's Ordinary Shares1 February 2006 48,244,980 482Issued in the period 11,818,673 11931 July 2006 60,063,653 601 Share Premium £000's1 February 2006 12,939Arising on issues in the period 14,81531 July 2006 27,754 Included in share capital and reserves at 31 July 2005 was £2,844k being thefair value of the shares to be issued as deferred consideration on the Pharmdataacquisition. On 7 June 2006 2,201,816 shares were issued and allotted to thevendors of Pharmdata in full and final settlement of this deferredconsideration. 11. A copy of this statement is being sent to all shareholders and furthercopies are available from the Company's Registered Office at the address belowas well as on the Company's website: www.premier-research.com Premier Research Group plc, 30 Wellington Business Park, Dukes Ride, Crowthorne,Berkshire, RG45 6LS This information is provided by RNS The company news service from the London Stock Exchange