Cyprotex : March 25, 2014 - Final Results for Year ended 31 December 2013

Cyprotex PLC ("Cyprotex" or the "Company" or the "Group")

Final results for the year ended 31 December 2013

Strong performance and investment for future growth

Cyprotex PLC (AIM: CRX), the preclinical ADME-Tox services company, today reports its final results for the year ended 31 December 2013.

Financial Highlights

• Strong revenue growth up 17.3% to £9.77 million (2012: £8.33 million)

• Operating profits up 88% at £0.61 million (2012: £0.33 million)

• Underlying EBITDA^, an indicator of cash generation, up 59% at £1.54 million (2012: £0.97 million)

• £6.88 million (net) raised by Company in total in September 2013

£4 million by way of an issue of unsecured convertible loan notes; and

£3 million of unsecured redeemable loan notes

• Loss after tax of £0.8 million (2012 Profit after tax: £0.2 million) due to exceptional non-cash finance charge relating to the issue of loan notes in the year of £1.6 million (2012: £nil)

• Loss per share at 0.36 pence (2012: earnings per share 0.09 pence)

^ excluding share-based payment charge and impairment of intangibles

Operational Highlights

• Strong performance across all divisions of the business

136 new customers generating £1.76 million of revenues

Further de-risking of the business through a broadening customer base with our largest customer contributing less than 10% of revenues for the first time and top 5 customers accounting for 30.5%

• Increased investment in people and equipment

Investment of £1.6 million in state of art liquid handling and analytical equipment

Expansion of UK facility into Biohub at Alderley Park

Increase in headcount to over 100 employees

• Alliances, collaborations and new contracts performing well

US Environmental Protection Agency contract worth up to $10m over five years for ToxCast project

Distribution agreement with Intralink to expand Cyprotex brand in the important Japanese market

Evolution of Pfizer collaboration which now involves support work for specific projects

Federated approach provides customers with a broad range of products and services

• Launch of eCiphrCardio and eCiphrNeuro, new proprietary services for the prediction of cardiotoxicity and neurotoxicity respectively

Changes to the Board structure

Ian Johnson joins as Chairman as Steve Harris becomes a Non-Executive Director

Christopher Mills joins as Non-Executive Director following Chris Clothier departure

Post Period Events

• Acquisition of CeeTox Inc., a US specialist in in vitro toxicology screening for the personal care, cosmetics and industrial chemicals sectors Ian Johnson, Chairman of Cyprotex PLC, said:

"2013 has been an excellent year in terms of operational performance and internal expansion which coupled with the recent acquisition is enabling us to build further value in our business. We have a clear vision to continue such growth strategies into 2014 and beyond, considerably aided by a successful fundraising of almost £7 million. Cyprotex was awarded the prestigious BioNow award for the best service business in the life science sector - an acknowledgment of the esteem and value our customers place in us. Our aim is to continue to build scale by delivering customer service of the highest standards and through the development of new and innovative products and services to satisfy the needs of our widening client base."

For further information:

Cyprotex PLC Tel: [phone]
Dr Anthony Baxter, Chief Executive Officer
John Dootson, Chief Financial Officer
Mark Warburton, Chief Operating Officer and Legal Counsel
[e-mail]
www.cyprotex.com

N+1 Singer (Nomad and broker to Cyprotex)
Tel: [phone]
Shaun Dobson
[e-mail]
Jenny Wyllie
[e-mail]
www.nplus1singer.com

FTI Consulting
Simon Conway
Mo Noonan
Tel: [phone]
[e-mail]
www.fticonsulting.com

Notes to Editors:

Cyprotex PLC

Cyprotex is listed on the AIM market of the London Stock Exchange (CRX). It has sites in Macclesfield, near Manchester in the UK, Watertown, MA and Kalamazoo in MI in the US. The Company was established in 1999 and works with more than 800 partners within the pharmaceutical and biotech industry, cosmetics and personal care industry and the chemical industry. Cyprotex acquired Apredica and the assets of Cellumen Inc. in August 2010 and the combined business provides support for a wide range of experimental and computational ADME-Tox and PK services, extending from early drug discovery through to IND submission. The acquisition of the assets and business of CeeTox in January 2014 has enabled Cyprotex to expand its range of services to target the personal care, cosmetics and chemical industries. The Company's core capabilities include high quality in vitro ADME screening services, mechanistic toxicology and high content toxicology screening services, including our proprietary CellCiphr® toxicity prediction technology, predictive modelling using PBPK and QSAR techniques, including Cloe® PK for in vivo PK prediction, and a range of skin, ocular and endocrine disruption services. For more information, see www.cyprotex.com

Chairman and Chief Executive Officer's Report

A strong performance from all sectors of the business has resulted in record turnover and EBITDA. Significant investment from new shareholders enables implementation of a rapid growth strategy.

Cyprotex continued to deliver excellent growth in 2013, a record year for both turnover and EBITDA. All parts of our business performed well as we focused our efforts in selling our most popular assays in both ADME and toxicity services. During the year, we added two new toxicity assays, eCiphrCardio and eCiphrNeuro, for the effective prediction of cardiotoxicity and neurotoxicity respectively, which have seen rapid uptake from our client base.

Geographically, US customer revenues were 40.7% (2012: 39.9%) and in Europe customer revenues were 57.6% (2012: 56.6%), with our Macclesfield site delivering an increase of 19.4% in sales reflecting the continuing dominance of European customers to our revenue base. Whilst we saw a small improvement in US sales, we have made a deliberate attempt to redress this balance towards the world's largest market for ADME-Tox through internal investments and acquisitions in the US.

We believe that the Asia Pacific region will become increasingly important to our revenues over the next few years and to this end we have commenced a sales drive in Japan with a specialist consultancy company. We expect to see rest of world revenues increase in the coming years as a result of this initiative.

As the business has grown we have expanded our main Macclesfield HQ site and this site is now almost at capacity. To take account of our strategy for future growth, we have commenced an expansion programme in the UK by initially leasing two laboratories and associated administration space in the new BioHub facility at the former AstraZeneca headquarters site in nearby Alderley Park, Cheshire, with the likelihood of further expansion in 2014. We have also continued to expand our Watertown, MA, US site in terms of people and equipment. A new replica of our Macclesfield high throughput ADME screening laboratory has been created which will come into operational effect in early 2014 to provide larger strategic ADME screening contracts for US based customers more reluctant to outsource overseas to the UK facility.

Our Board composition has changed this year with Mr Ian Johnson joining the Board as Chairman following Mr Steve Harris stepping down. We are delighted that Steve has remained with the Company as a Non-Executive Director and we are very grateful for his five year tenure as Chairman where he oversaw a significant transition bringing the business into growth and profitability.

We are also pleased to announce that funds managed by Harwood Capital LLP ('Harwood') have taken a significant holding in the Company and have replaced IPGL Ltd, Dr Katya Tsaioun and Mr Doug Bates as the largest investors in Cyprotex. As a result, we welcome Mr Christopher Mills to the Board as a Non-Executive Director. Mr Chris Clothier stepped down as a Non-Executive director of the Company in 2013 following our successful fundraising and we thank Chris for his services to the Company.

The acquisition of 29.0% of the issued share capital by funds managed by Harwood and additional significant purchases by other institutional investors has changed the investment profile of the business considerably. Furthermore, a fund raising exercise in August 2013 led by Harwood and one of its managed funds, Trident Private Equity Fund III LP, of £4.0 million via Convertible Loan Notes and £3.0 million via Redeemable Loan Notes has significantly strengthened the Company's cash position. We have subsequently developed an investment strategy to expedite growth in Cyprotex involving a combination of focused internal service development together with acquisitions of businesses or assets which complement the current service offerings.

In line with this strategy we were pleased to announce the purchase of the trade and assets of CeeTox, Inc ('CeeTox') on 1 January 2014. CeeTox is a specialist in vitro toxicological screening business with an in silico prediction capability. Technically and strategically, CeeTox complements Cyprotex's existing offering, not only by providing Cyprotex customers with new products and services, but through entry to the Personal Care, Cosmetics and Industrial Chemicals space, new territories for the Company. Many of the CeeTox assays are run under GLP (Good Laboratory Practice) guidelines, which is an area we have been keen to enter. Also like Cyprotex, CeeTox has previously announced a significant contract with the US Environmental Protection Agency which has the potential to significantly grow revenues. CeeTox is a world leader in the provision of Endocrine Disruptor Screening Panels which is also a highly valuable capability we wanted to acquire. This acquisition provides excellent sales synergies and opportunities for cross selling. The location of CeeTox in Kalamazoo, MI, USA expands our footprint in the key US territory and affords closer access to the Midwest pharma and biotech hubs.

Operational Performance

The excellent operational performance in 2013 was a reflection of an increase in revenues in the major customer territories. Our two operational sites grew their revenues with an outstanding performance by the Macclesfield site. The increased focus on diversifying our screening offerings, especially in toxicology, has seen a reduced dependence on our traditional customer base of pharma and biotech. There has been a concomitant increase in non-pharma based business, mainly in Personal Care, Cosmetics, Agrochemical and Industrial Chemical industries contributing £1.15 million in 2013 (£0.59 million for 2012). This deliberate diversification of industry base is a response to the highly fragmented nature of the ADME-Tox CRO ('Contract Research Organisation') business segment to ensure further growth and revenue security. Similarly, we have seen our dependence on our largest single customer drop from 11.3% to below 10% for the first time, which is further evidence of our continuing efforts to reduce reliance and de-risk our revenues.

The total number of customers serviced during 2013 was 325 compared to 317 in 2012 with 136 new customers in the period. Revenues per customer for new clients significantly increased to an average of £13,000 compared to around £10,000 for 2012 which is indicative of improving quality of revenues per customer.

Expansion of our Macclesfield and Watertown sites, moving into Alderley Park and the acquisition of Kalamazoo facilities (CeeTox) has meant that our headcount has increased to over 100 for the first time in the Company's history. We recognise that key to our business is continuing to grow our revenues whilst keeping costs and overheads under control and we are proud to have continued profitable trading since 2008.

We have continued our investment in capital expenditure on both the UK and US sites. Notable purchases have been two further Waters Xevo® triple quadrupole mass spectrometers, two further Agilent Infinity UHPLC instruments, two further Tecan Freedom EVO® 200 liquid handling robots to further bolster capability in high throughput ADME assays and an AB Sciex QTRAP® to enhance our analytical platform at the Macclesfield site. We have, in replicating our high throughput ADME screening platform in Watertown, purchased, installed and validated two AB Sciex QTRAP® mass spectrometers, two Tecan Freedom EVO® 200 liquid handling robots and two Agilent Infinity UHPLC instruments. To enhance our radiochemical detection capability we have purchased a PerkinElmer MicroBeta® scintillation counter for our laboratories in the Alderley Park, BioHub facility. These investments totalled £1.6 million signifying a commitment to be at the leading edge of technical capability in the ADME-Tox services industry.

With our internal and external growth plans for 2014 and beyond already well defined and partly executed, we expect a similar spend on capital expenditure for 2014 and we will focus spending on where we can see a fast and high quality revenue return for these investments.

We have continued our collaboration with Pfizer during 2013 and this has evolved from being a proof of principle agreement to performing dedicated support work for specific projects. We have also continued developing our dedicated 'Federated' approach to certain service offerings with Sygnature Discovery Limited (medicinal chemistry, integrated drug discovery services), Sirius Analytical Limited (high throughput physical chemistry), InSphero AG (3D microtissues), SOLVO Biotechnologiai ZRT(transporter assays) and Sigma-Aldrich, Inc (transporter assays).

Financial Performance

Group revenues grew by 17.3% in 2013 (2012: 5.3%) to £9.77 million (2012: £8.33 million) - a record turnover for the business. Given we are a highly operationally geared business this revenue translated to a record underlying EBITDA figures of £1.54 million (2012: £0.97million) and operating profit of £0.613 million (2012: £0.326 million). This is the sixth consecutive year of operational profitability.

Following the strong operational performance and the fundraising via £4 million of Convertible Loan Notes and £3 million of Redeemable Loan Notes, the balance sheet continues to be strong with net assets of £6.3 million (2012: £7.0 million) including cash of £7.1 million (2012: £0.9 million).

Whilst delivering two important new assays, R&D spend in 2013 was lowered to £0.331 million (2012: £0.443 million). As mentioned above, due to investment in our UK and US sites, we have spent over £1.6 million on essential CAPEX purchases (2012: £1.0 million). When non-cash items are deducted, the underlying EBITDA recorded for the year was £1.54 million (2012: £0.97 million). This remains a key indicator of the Group's continuing ability to generate cash from its core operations. We have incurred additional cost to rent and run the additional laboratory facilities in the Alderley Park BioHub of £0.03 million per annum.

Immediately after the trading period we announced the purchase of the trade and assets of CeeTox, Inc. The initial purchase price of £0.61 million was funded by our own resources. There will be a further commission payment of 5% on certain sales of assays achieved in the next two years (to a maximum of £3.1 million) to the former owners of CeeTox Inc., North American Science Associate, Inc. We have agreed a rental payment of approximately £0.1 million per annum for the Kalamazoo facility and expect to continue trading on this site for at least a further 12 months before moving operations to our Watertown facility.

Outlook and Summary

2013 has been an excellent year in terms of operational performance and internal expansion which coupled with the recent acquisition is enabling us to build further value in our business. We have a clear vision to continue such growth strategies into 2014 and beyond, considerably aided by a successful fundraising of almost £7 million. Our aim is to deliver customer service of the highest standards through the development of new and innovative services to satisfy the needs of our widening client base.

Ian Johnson                                             Dr Anthony D Baxter

Non-Executive Chairman                            Chief Executive Officer

25 March 2014

Consolidated income statement year to 31 December 2013

Notes to the final results year to 31 December 2013