'A year of two halves' for BioProgress as 2H '05 costs slashed; sees maiden profits in '06
Specialty pharma BioProgress plc's (BPRG) losses widened to £8.7m in the year to end December 2005 from £7.1m in 2004, but the company said it has turned the corner into operating profitability with most of the losses incurred in the first half of the year.
"2005 was a year of two halves," CEO Richard Trevillion (pictured) said when releasing annual results today. "It commenced with spiralling costs, worsening trading conditions, partnership difficulties and operational confusion.
"However, as a result of rapid action taken during the second half of the year by the new management team, we have entered 2006 a very different company. All key partnerships are progressing rapidly to full commercialisation and the company is also launching its own products with its own platforms.
"The Company's first quarter 2006 trading has demonstrated the effectiveness of the strategy implemented in the second half of the year. BioProgress is well positioned to end the year for the first time in its history trading profitably at an EBITDA level."
BioProgress is now a fully integrated specialty pharma and healthcare company. (See our recent story on its restructuring, including post 2005 developments). It has applied to the London Stock Exchange to be re-classified from 'Specialty Chemicals' to 'Pharmaceuticals' within the Healthcare industry. It expects the change will be announced in the summer.
Turnover was £4.4m in 2005, an increase of 77% over 2004. Most of this came from BioTec Films Inc which was acquired by the group in March 2004. Adjusting 2004, to account for 9 months of revenue reported post acquisition, turnover increased by 32% in 2005.
Gross margin increased to 40% from 32% as the firm focussed on new clients with a reduced cost base.
Admin costs cut
Administrative expenses grew by 34% to £11.26m. First half costs of £7.3m were cut to £3.9m in the second half reflecting the cost reduction programme and the corporate restructuring in which headcount was reduced significantly. Cash on hand at the end of the year was £6.5m, down from £14.4m in 2004.
Mr Trevillion said in a statement the group is "enjoying strong organic growth in all business areas and the outlook for the remainder of this year is [extremely] (sic) positive."
The stock market seems less sure. The share price has been in mild decline since the start of this year after doubling in November after the news of the Dexo acquisition. Today it slipped 4.5%, or 2.25p, to reach 47.75p, having been 10p higher at the start of the New Year. BioProgress is valued at £64m.
Through the restructuring the company retained its intellectual property licensing activities centred on patented encapsulation systems that use water soluble and biodegradable films. Mr Trevillion said this technology will enable the group to rapidly differentiate its recently acquired product lines through the newly formed Dexo group and to formulate its own unique oral dosage medicines. Its investment in an international sales and marketing infrastructure will enable it to distribute the product range globally.
An example is the recent launch of the Ronflux anti-snoring range of products and caffeine strips, he said. This range is one of Dexo's products, reformulated in an enhanced oral dosage form. BioProgress used its formulation and production teams in the US and UK, and sales and marketing capability within the Dexo subsidiaries.
The creation and launch of the products in such a short time since the acquisition of Dexo in January 2006, "sends a very powerful message to the market," he said.
12th April 2006
