GroPep says turn-around is on track despite loss

Despite slightly lower than expected revenues for the half-year ending December 31, Adelaide company GroPep was on track for full recovery, said CFO Tony Mitchell today.

The company has posted a net loss of $AUD1.2 million, slightly lower than the same period last year, but excluding the overhead and closure expenses associated with the Roseville site acquired through the Biotech Australia purchase early in 2002.

"It was essentially what was expected. The revenues were slightly below plan, but we're expecting that for the full year results we should be there," Mitchell said.

While the total revenue was down 4.3 per cent to $AUD4.1 million, compared to 2001, revenues from the company's cell culture and reagents division increased by 3.7 and 1.3 per cent respectively. Revenue from research agreements was also down compared to 2001.

The company reported in January that debts incurred through the acquisition of Biotech Australia had been eliminated and the sale of the Roseville plant completed.

In addition, GroPep had reduced its R&D expenditure by 40 per cent, as promised in June last year. "We're down to a small number of focused projects," Mitchell said.

The company expects to break even for the remainder of the financial year, although a loss is expected over the full year's results. But the 2003-2004 financial year should be cash-flow positive, said Mitchell.

Managing director Bob Finder said that the turnaround of the company, announced in June last year after the company posted a dramatic loss, was on track.

"We said we would close and sell the Roseville plant, reduce R&D expenses, focus on our profitable cell culture business and optimise our pharmaceutical drug development business to create a more capital-efficient focused company. We have delivered on these commitments," he said.