GroPep reports double profits

Adelaide-based GroPep (ASX:GRO) has recorded pre-tax profit of AUD$3.1 million for the year ending 30 June 2005, an increase of more than 200 per cent over the $1 million reported last year.

"We are certainly pleased -- we had a fantastic year and are looking forward to another good year," said GroPep managing director Bob Finder.

The company posted a net profit after tax of $6.4 million, boosted by the initial recognition of tax assets of $3.4 million. Total revenue for the year was $16.7 million, 27 per cent above 2003/04, driven by revenue growth of 42 per cent to 12.4 million. GroPep's upgrade of its Thebarton manufacturing facility resulted in capital expenditure of $3.2 million.

"There was a lot of effort put into the development of the facility which will help us to meet demand for cell culture for at least the next five years," said Finder.

The company currently has cash reserves above $10 million.

"Going forward, we expect that cash to grow with positive operations," said Finder. "Because of our tax situation we may be able to give a modest dividend in the 2005/06 financial year.

"We are now in a new stage and we will evaluate how to expand GroPep even more." GroPep's earnings were boosted by its biological products division, which recorded a positive year with revenues up 49 per cent to $13 million. Earnings before interest and tax (EBIT) were $9.1 million, up 54 per cent on the previous year.

The cell culture division also played a major role, with revenue at $11.9 million, up 56 per cent on 2003/04, while EBIT was $8.5 million, up from $5.4 million last year.

"The cell culture business grew to its highest level ever and the deal between CSL and Sigma-Aldrich not only gives us cash payments but opens up the marketing aspect of the business," Finder said.

The company's biopharmaceutical development program was up from $2.2 million in 2003/04 to $3.2 million after allowing for R&D related revenues.

"We continue to make good progress in drug development and in 2006 hope to get our infertility drug into phase I trials," said Finder.