The number of customers now using Horizon Discovery 's (HZD) products or services rose by a third year-on-year to 1,600 at the end of the reported period, helping the gene technology company record significantly elevated revenues. The group remains on track to deliver cash profits by the end of 2017, despite this period's loss of £4.3m. And yet, investors sent the share price down 7 per cent in morning trading.
The reason may lie in management's decision to reduce costs by moving the Boston molecular screening services into the UK site. Without this tactical decision, moving into profit by next year "would have been a challenge", according to chief financial officer Richard Vellacott. But in the short term this has come at a cost to the top line. The services business reported flat revenue in the first six months of the year and full-year expectations have been tapered, with total group revenue now forecast to be in the range of £24m to £26m.
Broker Numis brought down its revenue forecasts, but has taken into account the outperformance of the products business. An extra £700,000 of revenue is expected for the full year now that Horizon's cells are being used as referencing standards in the most exciting areas of personalised medicine. A forecast loss before tax of £11.3m gives a loss per share of 10.6p for the year to December 2016, compared with losses of £10.5m and 11.2p in 2015.
HORIZON DISCOVERY (HZD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 152p | MARKET VALUE: | £144m | |
| TOUCH: | 148-155p | 12-MONTH HIGH / LOW: | 186p | 127p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 84.4p* | NET CASH: | £13m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 8.6 | -6.83 | -7.9 | nil |
| 2016 | 10.2 | -6.44 | -6.4 | nil |
| % change | +19 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £49.2, or 52p a share | ||||
