GroPep back in the black after $3.1m turnaround

Adelaide company GroPep (ASX:GRO) has posted a AUD$227,000 profit for the half year ending 31 December, 2003, representing a $3.1 million turnaround on the company's $2.9 million loss during the period.

The result included a 60 per cent growth in total revenues to $6.5 million, and a 67 per cent growth in revenues from product sales, said managing director Bob Finder. He said the company expected its full year revenue to be 15-20 per cent higher than last year.

Helping the company's cash position out is a $3.6 million payment for the sale of a Sydney site it bought with the aborted acquisition of Biotech Australia in 2002, and a milestone payment of $3.8 million from its malaria vaccine project, bringing total cash reserves to more than $10 million.

"We're certainly in a position where we're very secure from a cash point of view," CFO Tony Mitchell told Australian Biotechnology News.

The result brings it to three quarters in a row that the company has been cash flow positive. "We've got through all of the issues with Biotech Australia and we feel like the company is on a strong platform for the future," Mitchell said.

Finder noted that despite the rise in the Australian dollar compared to its US counterpart, sales to the cell culture market had increased by nearly 75 per cent, ahead of anticipated growth in part because of the timing of order fulfilment. Biomedical research product sales were also up 31 per cent over 2002 levels.

The company has taken steps to protect its US revenues from the rising Australian dollar, locking in hedging arrangements at a rate of US$0.63 until August this year and US$0.70 until August 2005. "We're quite comfortable, given what has happened in recent times," Mitchell said.