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Article Excerpt
IAN GILHAM, CEO, AXIS-SHIELD: Okay. So, good morning and welcome to the preliminary results presentation for Axis-Shield for 2008. For those of you who don't know me, I'm Ian Gilham, I'm Group CEO. Joining me today is Nigel Keen, Chairman, and Ronny Hermansen, Group FD. I'll take you through the presentation, Ronny will do the financials, and I'll round up. And then we'll open the floor for questions, and I think we'll then open up for any questions from those joining us by conference call.
So, how did we do in 2008? Financial highlights. Reported revenues were up just short of 28% to GBP85.3m, 14.3% growth at constant currency. So we're very pleased with the revenue growth in absolute terms and both -- at constant currency. The key -- the major driver of the business was the Point-of-care division. Those of you who follow us will know that we've invested quite heavily, in previous years, in the Point-of-care business. And we're very pleased that that investment's now paying off, with 37.4% growth in our Point-of-care business. I'll talk to you more about that a little bit later.
Underlying profit before tax. Underlying -- you'll see the asterix there -- I think you've seen a lot of asterix this year. Underlying is really about how we judge how we're performing in the business, so we're taking out the one-offs and the exceptional items. And the underlying profit before tax grew 68% to GBP4.5m, and the underlying earnings per share was up 18.8% to 6.5p. So we're pleased with both the revenue and the profit development -- the true profit development of the Group.
R&D expenditure. We've said, last year, that we anticipated running the business, going forward, into delivering new products on a flat R&D spend. In real -- in constant exchange, it was flat. It was actually GBP8.3m, so we are keeping our R&D expenditure within the levels that we said that we would have.
Operating highlights are all covered, actually, in subsequent slides. But, just very briefly, we saw strong performance across the whole business, all three divisions. We were pleased with -- particularly pleased with Point-of-care. We targeted 4,000 Afinion placements, we achieved that. We were pleased with the manufacturing scale-up of Afinion and the move to the new facility in Oslo. And we were very pleased with the strengthened and extended distribution agreement with Abbott and PSS, in the US, until 2011.
As well as Afinion doing well, we saw good growth of NycoCard. And in our lab business, AxSYM xtra, did well. We -- after a couple of years of heavy losses in Homocysteine, we said, last year, we thought that business would stabilize, and indeed it did, in 2008, so we're pleased with that. The new markers, anti-CCP and Active-B12 did well for us, in Lab division. And we made good progress with both AxSYM and ARCHITECT development. And we said that we were interested in extending our Distribution business and we did that, very recently, with the acquisition of our German distribution rights. And, overall, we were very pleased that our new product development remained on track, across the board, throughout the year.
What business are we in? We're in the in-vitro diagnostics, global IVD business. It's a $37b business, growing at about 7% a year, and the parts we focus on are the higher growth parts of that business. We have three key parts to our business. We try to focus on the high growth parts of the business. We do that in three ways. We have our Point-of-care business, which is focused on testing moving from hospital laboratories into physicians' offices. We have the Laboratory business, where we focus on new markers and higher value, higher margin tests in the laboratory. And then we have Direct Distribution in the Nordic countries, in the UK, Switzerland and now Germany.
Market conditions. I think it's fair to say that the diagnostics market is relatively unaffected by the global financial crisis. Increasingly, spenders and the governments are looking for high value from their healthcare expenditure, and it's increasingly clear that diagnostics is becoming seen as an important investment to better use medicines and healthcare resources. So, although there are -- there's obviously some impact in some areas, overall we feel that we're in a market which is relatively unaffected by the global financial situation.
We've seen a trend towards maintaining, or in cases increasing, reimbursement levels for our tests. I'll talk a bit more about that, but that's a healthy and encouraging sign. And, as a Group, our positive cash position helps us, in terms of being able to sustain our business and growth through the current environmental conditions, financial conditions. So we feel that we're in a fairly strong market segment, given the current prevailing economic conditions.
A few words on Point-of-care. The Afinion roll-out continues to do well for us. We've got a graph here which shows, by quarter-- the blue bars are the Afinion instrument placements per quarter. And the red chart is actually -- actual cartridge revenues per quarter. So, you can see, we saw good growth across '07 and through '08.
We achieved our target of 4,000 Afinion instruments in the market by the end of the year. Revenues were up 150% to GBP8.6m, in terms of Afinion revenues for the year. We were pleased that we were able to successfully scale-up both instrument and cartridge production, and we moved to a new facility in Oslo, which brings several sites together in one consolidated site in Oslo. New test development remains on track. We're making good progress with the new tests for Afinion, and we certainly increased the patent protection on Afinion through the year. So it was a good year of progress for Afinion for us, and we were very pleased with the full year results.
The business model, as a reminder, is really about placing or selling instruments in high quality accounts in -- mainly in physicians' offices. And then the payback comes, really, from cartridge sales into those accounts, test cartridge sales, classical razor-blade model. Traditionally, we place the instruments in the US and the customer agrees to purchase a certain number of cartridges per month, or per year, from us.
In Europe, the model has been about selling instruments. Often the cost is sometimes is a little bit below cost, and then selling cartridges to the customer. One area we have seen some pressure, is that the global -- the financial uncertainty has led to some delay in purchasing decisions in Europe, about new instruments. So we have, in certain markets, we have started to also compliment instrument sales with some of the US model of instrument placements and cartridge pull through in Europe. So it's not a huge part of it, but we have seen that -- the market move in that direction. And we're very well positioned to be able to capitalize on that move in Europe.
The objective remains the same. A large population of instruments in high quality accounts, not diminishing the quality of the placement in order to get the instrument numbers, and then build the menu. And we remain on track for coagulation at...
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