UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 205494
------------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 1-10173
------------------------
HUNTINGDON LIFE SCIENCES GROUP plc
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ENGLAND AND WALES
(JURISDICTION OF INCORPORATION OR ORGANIZATION)
WOOLLEY ROAD, ALCONBURY, HUNTINGDON, PE17 5HS, CAMBRIDGESHIRE, ENGLAND
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or Section 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No __
At September 30, 1999, 291,010,294 Ordinary Shares of 5 pence each were
outstanding.
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Page
Item 1 Financial Statements 3
Condensed Consolidated Balance Sheets at September 30, 1999 3
and December 31, 1998
Condensed Consolidated Statements of Income for the three and 4
nine months ended September 30, 1999
Condensed Consolidated Statement of Changes in Shareholders' 4
Equity
Condensed Consolidated Statements of Cash Flows for the nine 5
months ended September 30, 1999
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
PART II OTHER INFORMATION
Item 1 Legal Proceedings 13
Item 2 Changes in Securities 13
Item 3 Defaults upon Senior Securities 13
Item 4 Submission of Matters to a Vote of Security Holders 13
Item 5 Other Information 13
Item 6 Exhibits and reports on Form 8-K 13
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
<TABLE>
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS September 30, December 31,
1999 1998
(pound)'000 (pound)'000
<S> <C> <C>
Current Assets:
Cash and cash equivalents 4,630 14,080
Accounts receivable net of allowance for uncollectable
of(pound)69,000 (1998: (pound)111,000) 8,301 7,791
Amounts recoverable on contracts 5,002 4,060
Inventories 1,065 1,137
Prepaid expenses and other 1,067 1,441
Deferred income taxes 820 873
----------------- ---------------
Total current assets 20,885 29,382
----------------- ---------------
Property, Plant and Equipment:
Cost 122,401 132,552
Less accumulated depreciation and amortisation 52,940 57,136
----------------- ---------------
69,461 75,416
----------------- ---------------
Investments 154 154
Unamortised costs of raising long term debt 719 882
Deferred income taxes 5,278 4,303
----------------- ---------------
Total Assets 96,497 110,137
----------------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade payables, accrued expenses and accrued payroll and benefits 11,324 11,826
Short term debt 22,469 4,116
Fees invoiced in advance 7,371 8,340
----------------- ---------------
Total current liabilities 41,164 24,282
----------------- ---------------
Long term debt 30,451 54,688
----------------- ---------------
Other long term liabilities 538 2,571
----------------- ---------------
Deferred income taxes 13,765 15,285
----------------- ---------------
Shareholders' Equity: 5p Ordinary Shares
Authorised-at September 30, 1999 400,000,000 (1998, 400,000,000)
Issued and outstanding-at September 30, 1999 291,010,294 (1998, 14,550 14,550
291,010,294)
Share premium 25,100 25,100
Retained earnings (29,071) (26,339)
----------------- ---------------
Total Shareholders' Equity 10,579 13,311
----------------- ---------------
Total Liabilities and Shareholders' Equity 96,497 110,137
----------------- ---------------
</TABLE>
<PAGE>
<TABLE>
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
(pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Revenues 15,035 13,063 42,701 39,542
Cost of sales (13,115) (13,943) (38,441) (42,228)
----------------- ---------------- ---------------- --------------
Gross profit/(loss) 1,920 (880) 4,260 (2,686)
Selling and administrative expenses (2,099) (2,308) (6,793) (6,877)
Other operating income 522 0 522 0
----------------- ---------------- ---------------- --------------
Operating profit/(loss) 343 (3,188) (2,011) (9,563)
Interest income 62 156 300 341
Interest expense (1,070) (1,751) (3,256) (4,605)
Other income/(loss) 833 433 (235) 739
----------------- ---------------- ---------------- --------------
Profit/(loss) before income taxes 168 (4,350) (5,202) (13,088)
Income taxes 713 1,972 2,470 5,318
----------------- ---------------- ---------------- --------------
Net profit/(loss) 881 (2,378) (2,732) (7,770)
----------------- ---------------- ---------------- --------------
Earnings/(Loss) per share (pence)
- -basic and diluted 0.3 (1.4) (0.9) (5.9)
Earnings/(Loss) per ADR (dollars)
- -basic and diluted 0.02 (0.12) (0.08) (0.48)
'000 '000 '000 '000
Weighted average shares outstanding
- - basic 291,010 166,524 291,010 131,577
- - diluted 293,721 166,524 291,010 131,577
</TABLE>
<TABLE>
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
<CAPTION>
Ordinary Share Retained
Shares Premium Earnings Total
(pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C>
Balance, December 31, 1998 14,550 25,100 (26,339) 13,311
Net loss for period - - (2,732) (2,732)
----------------- ------------------ -------------- ---------------
Balance, September 30, 1999 14,550 25,100 (29,071) 10,579
----------------- ------------------ -------------- ---------------
</TABLE>
<PAGE>
<TABLE>
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine months ended September 30,
1999 1998
(pound)'000 (pound)'000
<S> <C> <C>
Cash flows from operating activities:
Net loss (2,732) (7,770)
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortisation 5,737 4,859
Amortisation of loan costs 163 98
Profit on sale of property, plant and equipment (1,772) -
Exchange losses 209 387
Deferred income taxes (2,442) (4,344)
Changes in operating assets and liabilities
(Increase)/decrease in accounts receivable and prepaid expenses (1,078) 2,061
Decrease/(increase) in inventories 72 (13)
(Decrease)/increase in accounts payable and accrued expenses, salaries and
wages and income taxes (707) 1,492
Decrease in fees invoiced in advance (969) (1,634)
Decrease in other liabilities (2,033) (790)
------------- -------------
Net cash used by operating activities (5,552) (5,654)
------------- -------------
Investing activities:
Purchase of property, plant and equipment (2,151) (2,829)
Proceeds from sale of property, plant and equipment 4,214 5
------------- -------------
Net cash generated/(used) by investing activities 2,063 (2,824)
------------- -------------
Financing activities:
Issue of share capital - 20,134
Loans received - 24,500
Repayment of loans (5,214) (19,750)
Repayment of short term borrowings (747) -
------------- -------------
Net cash (used)/generated by financing activities (5,961) 24,884
------------- -------------
(Decrease)/increase in cash and cash equivalents (9,450) 16,406
Cash and cash equivalents at beginning of period 14,080 443
------------- -------------
Cash and cash equivalents at end of period 4,630 16,849
------------- -------------
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements reflect all
adjustments of a normal recurring nature, which are, in the opinion of
management, necessary for a fair statement of the results of operations for the
interim periods presented. The consolidated financial statements have been
compiled without audit and are subject to such year-end adjustments as may be
considered appropriate and should be read in conjunction with the historical
consolidated financial statements of Huntingdon Life Sciences plc. and
subsidiaries (Huntingdon) for the years ended December 31, 1998, 1997 and 1996
included in the Annual Report on Form 20-F for the fiscal year ended December
31, 1998. Operating results for the three month and nine month periods ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
These financial statements have been prepared in accordance with US GAAP and
under the same accounting principles as the financial statements included in the
Annual Report on Form 20-F. As a result adjustments have been made to the
financial statements reported under UK GAAP for deferred taxation, pension costs
and holiday pay.
2. LOSS PER SHARE/ADR
Loss per ADR is calculated using an exchange rate of $1.61 =(pound)1.00
(1998 $1.64 =(pound)1.00). Each ADR represents five Ordinary Shares.
The conversion of the Convertible Capital Bonds would be antidilutive and has
been excluded from the diluted earnings per share calculation. Some share
options are considered dilutive for the three months ended September 30, 1999
and therefore have been included in the calculation.
3. DEBT
Bank debt is due for repayment on August 31, 2000 and hence is now included
under current liabilities.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
1. OVERVIEW
Huntingdon is a leading Contract Research Organisation offering world-wide
pre-clinical and non-clinical testing for biological safety and efficacy
assessment which is necessary for the development of pharmaceuticals and
chemicals. Huntingdon serves the rapidly evolving requirements to perform safety
evaluations on new pharmaceutical compounds and chemical compounds contained
within the products that man uses, eats, and is otherwise exposed to. In
addition it tests the effect of such compounds on the environment and also
performs work on assessing the safety and efficacy of veterinary products.
2. RESULTS OF OPERATIONS
Three months ended September 30, 1998 compared with three months ended
September 30, 1999
Revenues for the three months ended September 30, 1999 were (pound)15.0 million
an increase of 15% on revenues of (pound)13.1 million for the three months ended
September 30, 1998. The impact of increases in order volume following the
refinancing in September 1998 started to feed through to revenues in the second
quarter and this has continued in the third quarter.
Cost of sales fell by 6.0% to (pound)13.1 million for the three months ended
September 30, 1999 from (pound)13.9 million for the corresponding period in 1998
despite the increase in revenues. Huntingdon's operating capacity was reduced
throughout 1998 through natural attrition and the closure of the Wilmslow
Research Centre. In addition a cost reduction programme was announced by new
management in December 1998. This was designed to align operations with current
sales levels and is on course to produce targeted savings of (pound)6 million
per year.
Selling and administration expenses fell by 9.1% to (pound)2.1 million for the
three months ended September 30, 1999 from (pound)2.3 million in the
corresponding period in 1998. The decrease was due to reclassification of
certain expenditure as cost of sales.
Other operating income for the three months ended September 30, 1999 comprised a
profit of (pound)1.8 million on the sale of the Wilmslow Research Centre offset
by a loss of (pound)1.2 million to write off assets that are not Year 2000
compliant.
Net interest expense fell by 36.8% to (pound)1.0 million for the three months
ended June 30, 1999 from (pound)1.6 million for the corresponding period in
1998. Interest expense for the three months ended September 30, 1998 included
(pound)0.5 million relating to the renewal of borrowing facilities. The
remainder of the reduction in expense was due to a combination of lower net debt
and lower interest rates.
The unrealised gain on exchange of (pound)0.8 million arose on net liabilities
denominated in US dollars (primarily the Convertible Capital Bonds of
$50 million) with the strengthening of sterling against the dollar. In the
third quarter of 1998 sterling also strengthened against the dollar resulting
in a (pound)0.4 million gain on exchange.
Taxation relief for the three months ended September 30, 1999 was (pound)0.7
million as the exchange gain is not taxable and the profit on the sale of the
Wilmslow Research Centre has been offset by capital losses brought forward from
prior years.
The overall net profit for the three months ended September 30, 1999 was
(pound)0.9 million compared to a loss of (pound)2.4 million in the corresponding
period in 1998. Earnings per share was 0.3 pence, compared to a loss per share
of 1.4 pence last year on shares in issue of 291,010,294 (1998, 166,524,365).
Nine months ended September 30, 1998 compared with nine months ended September
30, 1999.
Revenues for the nine months ended September 30, 1999 were (pound)42.7 million
an increase of 8.0% on revenues of (pound)39.5 million for the nine months ended
September 30, 1998. The impact of increases in order volume following the
refinancing in September 1998 started to feed through to revenues in the second
quarter and this has continued in the third quarter.
Cost of sales for the nine months ended September 30, 1999 were (pound)38.4
million a reduction of 9.0% on cost of sales of (pound)42.2 million for the nine
months ended September 30, 1998. Huntingdon's operating capacity was reduced
throughout 1998 through natural attrition and the closure of the Wilmslow
Research Centre. In addition a cost reduction programme was announced by new
management in December 1998. This was designed to align operations with current
sales levels and is on course to produce targeted savings of (pound)6 million
per year.
Selling and administration expenses for the nine months ended September 30, 1999
were (pound)6.8 million, a decrease of 1.2% on selling and administration
expenses of (pound)6.9 million for the nine months ended September 30, 1998. The
decrease was due to reclassification of certain expenditure as cost of sales in
the third quarter.
Other operating income for the nine months ended 30 September, 1999 comprised a
profit of (pound)1.8 million on the sale of the Wilmslow Research Centre offset
by a loss of (pound)1.2 million to write off assets that are not Year 2000
compliant.
Net interest expense fell by 31% to (pound)3.0 million for the nine months ended
September 30, 1999 from (pound)4.3 million for the corresponding period in 1998.
Interest expense for the nine months ended September 30, 1998 included costs of
(pound)1.0 million relating to the review and renewal of borrowing facilities.
The remainder of the reduction in expense was due to a combination of lower net
debt and lower interest rates.
The unrealised loss on exchange of (pound)0.2 million arose on net liabilities
denominated in US dollars (primarily the Convertible Capital Bonds of $50
million) with the weakening of sterling against the dollar. In the first
nine months of 1998 sterling strengthened against the dollar resulting in a
(pound)0.7 million gain on exchange.
Taxation relief on losses for the nine months ended September 30, 1999 was
(pound)2.5 million representing relief at 47% compared to 41% for the
corresponding period in 1998.
A reconciliation between the UK Corporation tax rate and the effective rate of
income tax relief on losses before income taxes for the nine months ended
September 30, 1999 is shown below:-
%
UK statutory rate 30
Exchange loss not taxable (3)
Profits relieved by capital losses 12
Effect of reduction in UK tax rate on deferred tax 8
Effective tax rate 47
The overall net loss for the nine months ended September 30, 1999 was (pound)2.7
million compared to (pound)7.8 million in the corresponding period in 1998. Loss
per share was 0.9 pence down from 5.9 pence last year on shares in issue of
291,010,294 (1998 131,577,057).
3. LIQUIDITY & CAPITAL RESOURCES
During the nine months ended September 30, 1999 funds absorbed were (pound)9.5
million, which includes the impact of exchange rate movements and repayment of
short term borrowings of (pound)0.8 million, reducing cash in hand and on short
term deposit from (pound)14.1 million at December 31, 1998 to (pound)4.6 million
at September 30, 1999. The funds were utilised as follows:-
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31 June 30 Sept 30 Sept 30
(pound)m (pound)m (pound)m (pound)m
<S> <C> <C> <C> <C>
Operating loss (1) (1.5) (0.8) (0.2) (2.5)
Depreciation 1.5 1.5 1.5 4.5
Cost reduction programme (1.5) (0.6) (0.2) (2.3)
Working capital movements (0.8) - (0.9) (1.7)
Interest (1.5) (0.3) (1.7) (3.5)
Proceeds from sale of Wilmslow
- - 4.2 4.2
Capital expenditure (1.0) (0.6) (0.6) (2.2)
Loan repayments (1.3) (0.5) (4.2) (6.0)
--------------- ----------------- ------------- ---------------
(6.1) (1.3) (2.1) (9.5)
--------------- ----------------- ------------- ---------------
<FN>
(1) Before other operating income of (pound)0.5 million
</FN>
</TABLE>
During 1998 poor trading results put a heavy strain on cash resources, utilising
Huntingdon's available facilities. Given the medium to long term element of many
of Huntingdon's activities and the reluctance of clients to place new work until
Huntingdon's finances were stabilised, Huntingdon required a substantial
injection of finance to both initially restore confidence and then to fund
operations during the period until Huntingdon returned to profitability.
On September 2, 1998 a Group of new investors subscribed (pound)15 million for
120 million ordinary shares whilst existing shareholders and institutional
investors took up a further 57 million shares, contributing (pound)7.1 million.
After expenses of (pound)1.7 million, the issue of shares raised (pound)20.4
million. On the same date Huntingdon's bankers agreed to confirm and fix
Huntingdon's facilities at (pound)24.5 million until August 31, 2000 and this
was fully drawn down.
On September 1, 1999 the sale of the Wilmslow Research Centre was completed.
Part of the proceeds from this site ((pound)1.9 million) were used to repay bank
debt and the facility was reduced accordingly. Interest is payable in quarterly
breaks at "LIBOR" plus 1.75% per annum in respect of drawings up to
(pound)19,500,000 and LIBOR plus 2% in respect of drawings over
(pound)19,500,000. The interest rate payable at September 30, 1999 is 6.98% on
(pound)19,500,000 and 7.23% on (pound)3,086,000. As this facility is confirmed
to August 31, 2000 the bank debt is now shown in current liabilities.
The remainder of Huntingdon's long term finance is provided by Convertible
Capital Bonds repayable in 2006. These Bonds, totalling $50 million, were issued
in 1991 and remained outstanding as at September 30, 1999. They carry interest
at 7.5%, payable at six-monthly breaks in March and September. The conversion
rate, which is based upon a fixed rate of exchange of (pound)1.00=US $1.6825
is 242.3 pence per Ordinary Share and is subject to adjustment in certain
circumstances.
The balance of the consideration payable for the purchase of the Wilmslow
Research Centre (acquired in 1997) which remained outstanding as at June 30,
1999 ((pound)2.3 million) was repaid on September 1, 1999 following the sale of
the site.
4. EXCHANGE RATE FLUCTUATIONS AND EXCHANGE CONTROLS
In the nine months to September 30, 1999 following the weakening of sterling
against the US dollar, net liabilities denominated in US dollars (primarily the
Convertible Capital Bonds of $50 million) have increased in value on
consolidation to sterling. This does not affect the cash flow of Huntingdon
but has increased the reported loss before tax, accounting largely for the
unrealised loss on exchange of (pound)0.2 million reported in these results.
This compares with an exchange gain in the nine months to September 30, 1998 of
(pound)0.7 million.
Interest on the Convertible Capital Bonds is payable half-yearly (in March
and September) in US dollars and the impact of fluctuations in the exchange
rate between sterling and US dollars is offset by US dollar denominated revenues
receivable by Huntingdon. Although reported results have been affected by
conversion into sterling of the Bonds on consolidation and there may be an
impact in the future, Management has decided not to hedge against this
exposure. Such a hedge might impact upon Huntingdon's cash flow compared
with movements on the Bonds which do not affect cash flow in the medium term.
Huntingdon operates on a world-wide basis and generally invoices its clients in
the currency of the country in which it operates. Thus, for the most part
exposure to exchange rate fluctuations is limited as sales are denominated in
the same currency as costs. Trading exposures to currency fluctuations do occur
as a result of certain sales contracts, performed in the UK for US clients,
which are denominated in US dollars and contribute approximately 14% of total
revenues. Huntingdon has not experienced difficulty in transferring funds to and
receiving funds remitted from those countries outside the US or UK in which it
operates and Management expects this situation to continue.
Whilst the UK has not at this time entered the European Monetary Union,
Huntingdon has ascertained that its financial systems are capable of dealing
with Euro denominated transactions. In addition these systems ensure that
Huntingdon, if ever required to do so, will be able to report in Euro's.
5. YEAR 2000
Many computer systems in use today were designed and developed using two digits
rather than four to specify the year, or otherwise fail to deal with specific
date related problems arising in the Year 2000. This could cause many computer
applications to fail completely or to create erroneous results unless corrective
measures are taken. Huntingdon utilises software and related computer
technologies essential to its operations that will be affected by this Year 2000
issue and it has been implementing a strategy since 1996 to replace its computer
infrastructure, software applications and equipment to ensure that all critical
services and controls will operate efficiently on and after January 1, 2000.
State of readiness
The strategy is broken down into a number of key phases. These are as follows:
o Confirmatory audit of all software, electronic and electrical equipment.
o Questionnaires sent to all known suppliers of software, electronic and
electrical equipment for information on status of Year 2000 compliance
supported by supplier audits where appropriate.
o Assessment of all software, electronic and electrical equipment to identify
those critical to the business
o Testing of items identified as critical to the business for Year 2000
compliance, where practical.
o Corrective actions to ensure items are Year 2000 compliant, including
contingency plans where appropriate.
Huntingdon has completed the testing of items identified as critical to the
business and has implemented corrective actions, including contingency
programmes. Although some work is still underway on the decommissioning of old
operational systems the programme is substantially complete and any remaining
work will be completed in advance of the end of the year.
However, there can be no assurance that the Year 2000 problem, even after giving
effect to the implementation of these measures and applicable contingency plans,
will not occur and such an occurrence could have a material adverse impact on
Huntingdon's business, financial condition, results of operations and cash
flows.
Risk of Year 2000 problems
Huntingdon has identified the following major potential risks resulting from
Year 2000 problems. All would result in disruption to existing and future
studies and have an adverse impact on the health and well being of animals. The
subsequent impact on business and cash flow could have a material adverse effect
on Huntingdon's financial condition.
o The loss of power and utility services
o The inability to obtain timely and sufficient laboratory supplies and
animal feed
o The failure or malfunction of computer hardware, software and
technology embedded in scientific and other equipment.
In addition major disruption to customers' business due to Year 2000 problems
could have a major impact on Huntingdon's cash flows and financial condition.
Costs
With the Year 2000 programme nearing completion a thorough review of assets was
undertaken during the three months to September 30, 1999 to identify those
assets that will not be used after December 31, 1999 as they are not Year 2000
compliant. As a result assets with a book value of (pound)1.2m have been written
off during the quarter and this has increased the estimate of the amounts that
have been, or will be, expensed as incurred over the three year period to
December 31, 2000 to between (pound)2.1 million and (pound)2.3 million. The
amounts that have been, or will be, capitalised will be primarily incurred in
the two years to December 31, 1999 and are estimated at (pound)2.1 million.
-----------
Certain statements in this section and elsewhere in this Quarterly Report on
Form 10-Q (as well as information included in oral statements or other written
statements made or to be made by Huntingdon) constitute "forward-looking
statements" pursuant to the safe-harbor provisions of the United States Private
Litigation Reform Act of 1995. Such forward-looking statements include the
discussions of the business strategies of Huntingdon and expectations concerning
future operations, margins, profitability, liquidity and capital resources.
Although Huntingdon believes that such forward-looking statements are
reasonable, it can give no assurance that any forward-looking statements will
prove to be correct. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual results,
performance or achievements of Huntingdon to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. These risks, uncertainties and other factors are
more fully described in the Huntingdon's Form 20-F as filed with the SEC.
<PAGE>
HUNTINGDON LIFE SCIENCES GROUP PLC
OTHER INFORMATION
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
On September 1, 1999 the Company completed the sale of
Wilmslow Research Centre, England ("WRC") to J.S.Bloor
(Tamworth) Ltd for the cash sum of (pound)4.25 million (net
book value (pound)2.45 million). The net sale proceeds were
used to repay loans.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
99.1 Press release dated October 27, 1999 announcing third
quarter earnings.
(b) Reports on Form 8-K
1. The Company filed a report on Form 8-K/A on
September 7, 1999, amending its Form8-K
filed on July 14, 1999, announcing the
resignation of Arthur Andersen as auditors
and the engagement of Deloitte & Touche.
2. The Company filed a report on Form 8-K on
September 9, 1999, announcing a change of
broker, the resignation of the Deputy
Chairman and the appointment of new
directors.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorised.
HUNTINGDON LIFE SCIENCES GROUP plc
(Registrant)
By: /s/ Julian T. Griffiths
Name: Julian T Griffiths
Title: Finance Director
Date: November 11, 1999
PRESS RELEASE Huntingdon Life Sciences Group plc
("Huntingdon") (NYSE/SEAQ:HTD)
Woolley Road, Alconbury, Huntingdon
Cambs PE17 5HS, England
For Further Information:
Richard A. Michaelson
Phone: UK: +44 (0) 1480 892194
US: (201) 525-1819
e-mail: [email protected]
IMMEDIATE RELEASE
October 27, 1999
HUNTINGDON ANNOUNCES THIRD QUARTER RESULTS
Huntingdon, England, October 27, 1999 - Huntingdon Life Sciences Group plc ("the
Company") (NYSE:HTD) announced today that net sales for the quarter ended
September 30, 1999 were (pound)15.0 million ($24.0 million) an increase of 15%
from the prior year sales of (pound)13.1 million ($21.4 million). The Company
reported an operating loss for the quarter of (pound)0.5 million ($0.8 million)
compared to an operating loss of (pound)3.0 million ($4.9 million) in the same
quarter last year, exclusive of an exceptional non-cash charge of (pound)1.2
million ($2.0 million) in the current year to write off assets that are not Year
2000 compliant. Net losses after taxation and interest for the quarter were
(pound)0.1 million ($0.2 million), including both the charge noted above and an
exceptional profit of (pound)1.8 million ($2.8 million) on the sale of the
Company's Wilmslow site; this compares to a loss of (pound)4.2 million ($6.9
million) in the same quarter last year. Net loss per ordinary share was 0.04
pence, compared to 2.5 pence in the same quarter last year. Net loss per ADR was
0.3 cents compared with 21 cents in the same quarter last year. Excluding those
one-time events, net loss would have been (pound)0.6 million ($1.0 million), or
0.2 pence per ordinary share (2 cents loss per ADR).
Net sales for the nine months ended September 30, 1999 were (pound)42.7 million
($68.7million) compared to (pound)39.5 million ($64.8 million) in the same
period last year. The Company reported an operating loss for the nine months of
(pound)3.8 million ($6.1 million) compared to (pound)9.1 million ($14.9 million)
in the same period last year. Net losses after taxation and interest for the
nine months were (pound)5.2 million ($8.3 million) compared to (pound)12.1
million ($19.8 million) in the same period last year. Net loss per ordinary
share was 1.8 pence, compared to 9.2 pence in the same period last year. Net
loss per ADR was 14 cents, compared with 75 cents loss in the same period last
year.
Andrew Baker, Huntingdon's Executive Chairman said: "We continue to be pleased
with the positive trend in both sales and operating results. Stripping out
exceptional items the operating loss for the quarter was reduced to (pound)0.5
million, down from (pound)0.8 million last quarter and (pound)3.0 million for
the same period last year. Cash flow from operating activities was positive
again this quarter and the completion of the sale of the Wilmslow site allowed
us to reduce borrowings by (pound)4.2 million."
Brian Cass, Huntingdon's Managing Director added: "Our new organisation
continues to make progress in re-establishing our reputation and relationships
with clients. The results of these efforts are being seen in growing sales and
an increasing order book. Orders in the third quarter were 18% ahead of the same
period last year, maintaining the momentum of the first half of the year. Year
to date orders are now 20% ahead of last year. These increases in orders are
flowing through to sales; year to date sales of (pound)42.7m are 8% up on last
year, while the third quarter was 15% ahead of the same period last year."
Huntingdon Life Sciences Group plc is one of the world's leading CROs providing
product development services to the pharmaceutical, agrochemical and
biotechnology industries. Huntingdon brings leading technology and capability to
support its clients in non-clinical safety testing of new compounds in early
stage development and assessment. Huntingdon operates research facilities in the
United Kingdom (Huntingdon and Eye, England) and the United States (The
Princeton Research Centre, New Jersey).
This announcement contains statements that may be forward-looking as defined by
the USA's Private Litigation Reform Act of 1995. These statements are based
largely on Huntingdon's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond Huntingdon's control, as more fully
described in Huntingdon's Form 20-F as filed with the US Securities and Exchange
Commission.
* * * TABLES TO FOLLOW * * *
<PAGE>
HUNTINGDON LIFE SCIENCES GROUP plc
("HUNTINGDON")
(NYSE/SEAQ - HTD)
<TABLE>
SUMMARY OF UNAUDITED CONSOLIDATED PROFIT & LOSS ACCOUNTS
<CAPTION>
3 Months ended September 30 -(pound)000's 1999 1998
- ---------------------------
<S> <C> <C>
Revenues 15,035 13,063
Cost of sales (13,415) (13,930)
------------- --------------
Gross profit/(loss) 1,620 (867)
Selling and administration (2,099) (2,152)
Exceptional loss (1,250) -
------------- --------------
Operating loss (1,729) (3,019)
Exceptional items 1,772 -
------------- --------------
Profit/(Loss) on ordinary activities before interest 43 (3,019)
Interest payable and similar charges (1,008) (1,595)
Unrealised gains on exchange 833 433
------------- --------------
Loss on ordinary activities before taxation (132) (4,181)
Taxation 28 -
------------- --------------
Loss after taxation (104) (4,181)
------------- --------------
Loss per share (pence) - basic (0.04) (2.5)
- diluted (0.04) (2.7)
------------- --------------
------------- --------------
Loss per ADR (cents) - basic (0.3) (20.6)
- diluted (0.3) (22.1)
------------- --------------
</TABLE>
<PAGE>
<TABLE>
SUMMARY OF UNAUDITED CONSOLIDATED PROFIT & LOSS ACCOUNTS (CONTD.)
<CAPTION>
9 Months ended September 30 -(pound)000's 1999 1998
- ---------------------------
<S> <C> <C>
Revenues 42,701 39,542
Cost of sales (38,441) (42,226)
------------- --------------
Gross profit/(loss) 4,260 (2,684)
Selling and administration (6,793) (6,372)
Exceptional loss (1,250) -
------------- --------------
Operating loss (3,783) (9,056)
Exceptional items 1,772 -
------------- --------------
Loss on ordinary activities before interest (2,011) (9,056)
Interest payable and similar charges (2,956) (4,264)
Unrealised (loss)/gain on exchange (235) 739
------------- --------------
Loss on ordinary activities before taxation (5,202) (12,581)
Taxation 28 500
------------- --------------
Loss after taxation (5,174) (12,081)
------------- --------------
Loss per share (pence) - basic (1.8) (9.2)
- diluted (1.9) (9.6)
------------- --------------
Loss per ADR (cents) - basic (14.3) (75.3)
- diluted (15.1) (77.0)
------------- --------------
</TABLE>
<PAGE>
<TABLE>
SUMMARY OF UNAUDITED CONSOLIDATED BALANCE SHEETS
<CAPTION>
As at September 30-(pound)000's 1999 1998
- ------------------
<S> <C> <C>
Fixed assets 69,615 97,077
----------- -----------
Stock and Debtors 15,435 14,304
Cash at bank and in hand 4,630 16,849
----------- -----------
Current assets 20,065 31,153
Creditors and Taxation (17,901) (19,823)
----------- -----------
Net current assets 2,164 11,330
----------- -----------
Total assets less current liabilities 71,779 108,407
Convertible Capital Bonds (29,732) (28,614)
Long term loans (22,469) (26,300)
Provisions for liabilities and charges (539) (146)
----------- -----------
Capital and reserves 19,039 53,347
----------- -----------
</TABLE>
<TABLE>
SUMMARY OF UNAUDITED CONSOLIDATED CASH FLOWS
<CAPTION>
3 Months ended September 30 -(pound)000's 1999 1998
- ----------------------------
<S> <C> <C>
Operating loss (1,729) (3,019)
Depreciation 1,517 1,568
Movement in provisions 1,051 569
Movement in other working capital (652) 365
----------- -----------
Net cash inflow/(outflow) from operating activities 187 (517)
Net interest paid (1,669) (2,166)
Tax received - 249
Sale of fixed assets 4,214 -
Purchase of fixed assets (585) (858)
----------- -----------
Net cash inflow/(outflow) before financing 2,147 (3,292)
Financing:
Issue of share capital - 20,134
Loans received - 24,500
Repayments of amounts borrowed (4,214) (19,750)
----------- -----------
Net cash (outflow)/inflow from financing (4,214) 24,884
----------- -----------
(Decrease)/increase in cash and cash equivalents (2,067) 21,592
----------- -----------
</TABLE>
<PAGE>
<TABLE>
SUMMARY OF UNAUDITED CONSOLIDATED CASH FLOWS
<CAPTION>
9 Months ended September 30 -(pound)000's 1999 1998
- ---------------------------
<S> <C> <C>
Operating loss (3,783) (9,056)
Depreciation 4,487 4,859
Movement in provisions (1,032) (867)
Travers Morgan receipt 249 2,172
Movement in other working capital (2,015) 1,275
----------- -----------
Net cash outflow from operating activities (2,094) (1,617)
Net interest paid (3,486) (4,862)
Tax received 28 974
Sale of fixed assets 4,214 -
Purchase of fixed assets (2,151) (2,824)
----------- -----------
Net cash outflow before financing (3,489) (8,329)
Financing:
Issue of share capital - 20,134
Loans received - 24,500
Repayments of amounts borrowed (5,214) (19,750)
----------- -----------
Net cash (outflow)/inflow from financing (5,214) 24,884
----------- -----------
(Decrease)/increase in cash and cash equivalents (8,703) 16,555
----------- -----------
<FN>
Notes:
(1) These results have been prepared in accordance with UK GAAP but do not
constitute Statutory Accounts as defined by the UK Companies Act 1985 and
have not been audited.
(2) Loss per share is based on an average of 291,010,294 (1998, 131,577,057)
Ordinary Shares outstanding during the 9 month period ended September 30,
1999 and on an average of 291,010,294 (1998, 166,524,365) Ordinary Shares
outstanding during the 3 month period ended September 30, 1999.
(3) Diluted loss per share is based on an average of 277,996,096 (1998,
126,258,217) Ordinary Shares outstanding during the 9 month period ended
September 30, 1999 and on an average of 278,013,386 (1998, 152,111,560)
Ordinary Shares outstanding during the 3 month period ended September 30,
1999.
(4) Loss per ADR is calculated using an exchange rate of $1.61 =(pound)1.00
(1998, $1.64 =(pound)1.00). Each ADR represents five Ordinary Shares.
(5) For the purposes of consolidation an average exchange rate of $1.61 =
(pound)1.00 has been used in the 9 month period ended September 30, 1999
(1998, $1.64 = (pound)1.00) and $1.60= (pound)1.00 (1998, $1.65 =
(pound)1.00) in the 3 month period ended September 30, 1999.
(6) A printed copy of this quarterly report is available on request from the
Registered Office at Woolley Road, Alconbury, Huntingdon, Cambs PE17 5HS
</FN>
</TABLE>
