Industrial Research Delivers Improved Result

MEDIA RELEASE FROM INDUSTRIAL RESEARCH

6 April 2006

Industrial Research Delivers Improved Financial Result

Crown-owned technology company, Industrial Research Limited, has reported a much improved financial result for the six months ended 31 December 2005.

The company recorded earnings before interest, tax and restructuring costs of $1,328,000 for the half year, a turnaround on the EBIT deficit of $224,000 for the corresponding period last year. The improved result was based on revenues of $32.6 million, an increase of $2 million over the same period last year.

Chair Liz Coutts attributed Industrial Research’s progress to a carefully managed programme of activity over the past two years whereby cost reductions were balanced against maintaining strategic science capability and enhancing revenue streams. The programme culminated, late last year, with the company consolidating its science capability in Wellington and downsizing its Auckland and Christchurch operations.

Licensing Agreements

Performance was boosted by initial returns from a licensing agreement inked with international biotechnology company, BioCryst and international pharmaceutical giant, Roche, for a drug to prevent the rejection of transplanted organs and treat autoimmune diseases.

“Industrial Research has been working with the Albert Einstein College of Medicine in New York on this project for several years,” Ms Coutts said. “That this project has now come to fruition is a credit to the scientific capability of our staff, our relationships with international partners and the structures that are in place to commercialise our discoveries.”

Post-period Industrial Research announced another multi-million dollar agreement with BioCryst, this time for its breakthrough leukaemia therapeutic, Fodosine.

Sale of Properties

The Company has commenced a formal process to sell its Auckland property and a vacant site in Lower Hutt. The properties are listed on Industrial Research’s books at $2.3 million, however their current market value is approximately $14.5 million. The proceeds of the sales will be applied to reduce debt and reinvested in upgrading equipment to maintain science capability. The sale process is currently awaiting a clearance under the Treaty of Waitangi.

Funding Review

The Board looks forward to the outcome of current government policy work on public science funding mechanisms and is optimistic that it will contribute towards creating a more stable funding environment.

As input to that work the Board of Industrial Research requested that the Ministry of Research, Science and Technology commission an independent assessment of the relative strengths of its scientific capability and the strategic importance of its science platforms to New Zealand.

The report, which is being released today, confirms the world-class scientific capabilities of Industrial Research staff and identifies the competitive strengths, strategic importance, commercial potential and economic impact of its various science platforms.

“This company maintains a huge reservoir of scientific knowledge and capability which directly benefits many New Zealand industries,” Ms Coutts said. “Its expertise is vested in science platforms that range from high temperature superconductors and carbohydrate chemistry to industrial measurement, imaging and detection. These are balanced by investments made in developing platforms in emerging areas such as nanotechnology and photonics. And our applied platforms, in fields such as assistive devices and materials performance, provide essential services to major industry sectors.

“It is vitally important to New Zealand that the company has the resources to sustain this ongoing investment in world-class science that directly creates so much value for the economy and provides essential science services to critical industries.”

ENDS

Note – A PDF of the half-year report is available from the ‘finances and reporting’ section of our website - www.irl.cri.nz

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