In line with guidance, the Group is expected to report FY16 revenues of at least £24.0 million, representing growth of no less than 19% (FY15: £20.2 million), with gross margin increasing to the mid-50% range (FY15: 49%) driven by product sales volumes ahead of expectations and at reduced cost of goods sold.
The Group expects to report a full year loss after taxation in line with expectations (FY15: £10.5 million loss), having substantially completed the measures necessary to reduce the cost base by over £5.0 million in FY17 as part of the Group’s stated path to profit strategy. The Group has a robust working capital position with cash headroom of £11.0 million, represented by year end cash of £6.0 million and an undrawn debt facility of £5.0 million, supported by a strong short-term accounts receivable profile following a record final quarter sales performance.
Products
The Products business continues to perform very solidly, with reported revenue growth expected of at least 44% (FY15: £7.8 million) at a significantly increased gross margin of approximately 70% (FY15: 57%), driven by increased sales of molecular diagnostic reference standards, cell line catalogue and biomanufacturing cell lines, with strong momentum expected to continue in 2017.
Services
The Group expects to report Services revenue growth of no less than 4% (FY15: £12.2 million). Genetic screening, custom cell line development and discovery research services delivered a combined increase in revenue of at least 30% over FY15, offset by the previously announced temporary reduction in molecular screening service capacity resulting from the consolidation of Boston, USA operations into the Cambridge, UK site. Full molecular screening service capacity has now been restored moving into 2017.
The Group has created a world-leading Centre of Excellence for gene-editing, cell biology and high-throughput screening in its expanded Cambridge, UK headquarters. This streamlined operation is expected to provide run rate cost savings of approximately £3.0 million towards the overall reduction in cost base in 2017.
Research Biotech
Progress continues in the Research Biotech division where the Group remains eligible to receive future R&D milestones of up to £208 million plus future product royalties, and equity upside through its Avvinity Therapeutics joint venture. The focus of the Group’s efforts in immuno-oncology and cell and gene therapy positions the Group at the cutting edge of global academic, biotech and pharma R&D efforts.
Outlook
Based on a strong order book with forward visibility already on more than 50% of expected FY2017 consensus revenue, the Group is confident it will deliver FY17 revenues in the range of £30-£35 million and reconfirms its strategy to deliver positive EBITDA in FY17.
Dr. Darrin M. Disley, Chief Executive Officer of Horizon Discovery Group, commented: “Horizon is building a global life science business that exploits a world-leading position in gene editing to deliver the picks and shovels that support the new gold rush taking place in healthcare around the development of genetically-targeted medicines and cell and gene therapies. The Group is realising the benefits of this strategy through continued strong revenue growth, having invested for scale through 2016, and having implemented measures to transition to profitability thereafter. Early revenue indicators for 2017 already look encouraging thanks to a very robust sales order book. This, combined with having the products and services, global commercial resources and sales channels, and business systems needed to drive long term success all in place, reinforces our confidence in becoming a sustainably profitable company as we continue to deliver strong revenue growth.”
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For further information from Horizon Discovery Group plc, please contact:
Horizon Discovery Group plc
Darrin Disley, Chief Executive Officer
Richard Vellacott, Chief Financial Officer
Chris Claxton, VP Investor Relations
Tel: +44 (0) 1223 655 580
Zyme Communications (Trade and Regional Media)
Katie Odgaard
Tel: +44 (0)7787 502 947
Email: katie.odgaard@zymecommunications.com
Consilium Strategic Communications (Financial Media and Investor Relations)
Mary-Jane Elliott / Susan Stuart / Matthew Neal / Melissa Gardiner
Tel: +44 (0) 20 3709 5701
Email: horizon@consilium-comms.com
Numis Securities Limited (Joint Broker and NOMAD)
Michael Meade / Freddie Barnfield
Tel: +44 (0) 207 260 1000
RBC Capital Markets (Joint Broker)
Paul Tomasic / Marcus Jackson
Tel: +44 (0) 20 7653 4000
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