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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Bionostics | LSE:BIO | London | Ordinary Share | GB0008381823 | ORD 25P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 29.75 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:2652J Bionostics PLC 06 December 2007 Embargoed until 07.00 6 December 2007 BIONOSTICS PLC ("Bionostics" or the "Group", formerly Ferraris Group Plc) Preliminary results for the year to 31 August 2007 Bionostics Plc, the international medical diagnostics group, today announces preliminary results for the year to 31 August 2007. HIGHLIGHTS *The Board of Directors have announced that they have reached agreement on the terms of a recommended cash offer by NAV Bidco Limited for the entire issued and to be issued ordinary share capital of Bionostics Plc subject to approval by the shareholders and the subsequent sanction of the Court. *New business in the diabetes sector during the second half of the year led to the two highest revenue months in the history of In Vitro Diagnostics ("IVD"). *IVD grew revenues for the year by 6%, excluding currency fluctuations. *IVD's Xsera Rapid HIV-1/2 Antibody Controls were selected by the San Francisco Department of Public Health for exclusive use in an eighteen month study. *Oxford Cryosystems ("OC") grew revenues for the year by 8% on the strength of their recently launched non-liquid nitrogen system, the Cobra, and renewed interest in the older helium-based cooling systems. *OC identified a key partner in China to help gain a sales and service presence in this untapped market. *Group revenues, as reported in sterling, declined to #13.9m (2006: #14.1m) as a result of the 9% decline in the dollar. *Significant savings achieved with the closure of the head office and reduction in the size of the Board of Directors. *Group operating profit from continuing operations before goodwill impairment and exceptional expenses improved to #2.4m (2006: #2.2m) (see Consolidated Income Statement). *Total profit after tax improved to #0.7m (2006: #27.8m loss). *Progress has been made during the second half of the year to reduce debt - debt has been reduced to #11.2m (2006: #11.4m) and has continued to reduce. Dr. Paul Haycock, Chairman, commented: 'The restructured group is well positioned for the new financial year. We have started the year strongly and above last year's turnover run-rates. IVD has renewed contracts with major customers and new business is anticipated with major pharmaceutical players. OC is developing new products that will be important to the continued growth of that business.' 'Central costs are expected to reduce further, but will continue to reflect the cost of compliance and regulation that is required of a publicly listed company. Cash flow is expected to remain strong and is an important component to our debt reduction efforts and continued strengthening of our balance sheet.' Enquiries: Bionostics PLC Paul Haycock, Chairman 020 7067 0700 Kelly Winn, Finance Director Weber Shandwick Financial 020 7067 0700 Nick Oborne/Charlie Hooper Notes to Editors Bionostics Plc, formerly named Ferraris Group Plc, is a global medical diagnostic business committed to providing a broad range of products and services in the liquid control and cryosystem sectors. Bionostics comprises two divisions: In Vitro Diagnostics is a leading provider of liquid control solutions used to confirm the accurate performance of medical diagnostic blood testing devices. Oxford Cryosystems is the world's leading developer of low temperature devices for X-ray crystallography, a pivotal technique in markets including drug discovery, biotechnology and materials science. Embargoed until 07.00 6 December 2007 BIONOSTICS PLC ("Bionostics" or the "Group", formerly Ferraris Group Plc) Preliminary results for the year to 31 August 2007 Chairman's Statement Introduction Fiscal year 2007 was a time of significant change for Bionostics plc. The disposal of the Respiratory Group was finalised in November of 2006, followed in January of 2007 by the closing of the Birmingham head office, the release of all head office staff, and the transitioning of the remaining head office functions to the In Vitro Diagnostics (IVD) headquarters in Devens, MA, USA. In February, concurrent with my assuming the Chairman's role, the Group was renamed Bionostics plc and the Board of Directors was reduced in size by two members. Both the closing of the head office and the reduction in the size of the Board of Directors contributed to substantial cost reduction and a structure which I believe better reflects the reduced complexity of the ongoing business. Now comprising IVD and Oxford Cryosystems (OC), Bionostics plc has shown steady revenue growth , as measured in local currency, throughout the year, allowing us to reduce debt levels, as promised in February 2007. Consequently, Bionostics plc is a financially stronger organization, in terms of net assets, and a commercially healthier organization. Results In local currencies, revenue from organic growth in the continuing operations increased 6% over last year, before the impact of the weaker dollar. After accounting for the decline in the dollar, revenue is down a little over 1% to #13.9m from #14.1m last year. Initial savings in central costs more than offset the slight reduction in margins, improving operating profit from continuing operations before goodwill impairment and exceptional costs to #2.4m from #2.2m last year (see Consolidated Income Statement). Total profit after tax improved to #0.7m (2006: #27.8m loss). Further details and commentary on the operating results and cash flow is given in the Review of Operations and the Financial Review. Dividend The Directors do not recommend a final dividend and did not make an interim dividend. The Directors consider that expected cash flows are best used to further reduce debt and invest modestly in the ongoing business. Operational Highlights IVD finished the year exceptionally strong realising nearly 60% of revenues and nearly 70% of profits in the second half of the year. After a slow start by two of the largest diabetes diagnostics manufacturers, IVD reduced headcount and restructured to better align the business to meet customer needs. New IVD business was initiated in the second half of the year which contributed to record levels of both revenues and profits. The anticipated decline in the blood gas sector did not materialise and new business in the diabetes sector was exceptionally strong in the final three quarters. Steady growth in the recently introduced control solutions for HIV-1 and HIV-2 has increased our visibility in this market. And, at the time of record product recalls by toy manufacturers due to excessively high levels of lead in painted toys imported from China, IVD has recently begun to distribute products for blood lead testing and has also launched a control solution for use with the lead testing device. OC benefited from renewed interest in its helium based system this year. Development continues on three new cryocooler systems to cover a variety of x-ray analysis techniques. The order book continues to look strong moving into the new financial year. Board & Management Consistent with the plan to reduce the complexity of the group, several changes were implemented during the year. Michael Thomas, Group Chief Executive, has completed his first year leading the group. At the AGM in January 2007, I assumed the role of Chairman and reduced the size of the Board as previously described. Simon Dighton, the Group Finance Director, resigned in April 2007, concluding the head office closure plan. The Directors consider that while maintaining corporate governance requirements, the reduced size of the Board more closely aligns with the less complex group following the disposal of the Cardiac Division and Respiratory Division. Employees Our employees have faced a year of significant changes. They have adjusted to the Board and Management changes, the restructuring and redirection of the businesses, and they remain focused on the operations of the business. I thank them for their hard work and continued support. Outlook The restructured group is well positioned for the new financial year. We have started the year strongly and above last year's turnover run-rates. IVD has renewed contracts with major customers and new business is anticipated with major pharmaceutical players. OC is developing new products that will be important to the continued growth of that business. Central costs are expected to reduce further, but will continue to reflect the cost of compliance and regulation that is required of a publicly listed company. Net cash flow is expected to be positive and is an important component to the continuing reduction of the Group's debt, and therefore, the continuing strengthening of our balance sheet. Recommended Cash Offer As detailed in Note 1, the Directors have announced that they have reached agreement on the terms of a recommended cash offer by NAV Bidco Limited ("NAV Bidco") for the entire issued and to be issued ordinary share capital of Bionostics Plc subject to approval by the shareholders and sanction by the court. The recommended cash offer of 30 pence per share is to be implemented by means of a scheme of arrangement pursuant to section 425 of the Companies Act 1985 (involving a reduction of capital under section 135 of the Companies Act 1985). The scheme of arrangement requires the approval of the Shareholders at a meeting convened by the Court and the subsequent sanction of the Court. Additionally, since the current banking facilities require repayment upon a change of ownership, replacement banking facilities have been agreed subject to execution of financing documents customary for this type of transaction and will become effective after Shareholder approval and completion of the scheme of arrangement which is expected on 31 January, 2007. In the event that the scheme of arrangement is not approved by shareholders and is not sanctioned by the court, the Group's existing banking facilities are due to expire on 30 June 2008. The directors recognise that these uncertainties may cast doubt on the Group's ability to continue as a going concern. The directors expect that the current banking negotiations will conclude such that replacement banking facilities will be in place prior to the expiry of the current facilities. As a consequence of this significant uncertainty, together with any events that may arise up to the date that the accounts are to be signed, at the date of issuing this statement the auditors have indicated to the directors that their audit report is likely to be unqualified but modified to include an emphasis of matter paragraph on this uncertainty which may cast significant doubt on the group's ability to continue as a going concern. Paul Haycock Non-executive Chairman Review of Operations In-Vitro Diagnostic Controls President: Michael Thomas 2007 2006 % change --------------------------------------------------------------- Revenue: ($'000) 22,605 21,365 5.8% (#'000) 11,510 11,892 -3.2% --------------------------------------------------------------- exchange rate $/# 1.964 1.797 9.3% Revenues in local currency grew year over year by approximately 6%. This helped to mitigate a greater than 9% weakening of the dollar from FY'06 to FY '07, netting a 3% revenue decline. Following a very slow start by two of the IVD division's largest customers, new business in the diabetes sector grew rapidly throughout the balance of the year, producing record sales and profits, including the two highest revenue months in the history of the IVD division. With full year revenue from these new contracts, prospects in the new financial year appear strong. Business in the blood gas sector remained strong despite an anticipated decline. The combination of general price increases and increased demand for some of IVD 's boutique products has resulted in overall higher margins for these blood gas products. Additionally, IVD launched several new control products, under the RNA Medical brand name, in diagnostic areas such as lead concentration, haemoglobin, and haemoglobin A1c. Further, IVD gained market recognition as a result of the selection by the San Francisco Department of Public Health of Xsera Rapid HIV-1/ 2 Antibody Controls for exclusive use in an eighteen month study. New business gains, both in the Western United States and internationally, are anticipated to result from additional resources directed to these locations. Oxford Cryosystems President: Richard Glazer 2007 2006 #'000 #'000 % change ----------------------------------------------------------------- Revenue: 2,348 2,178 7.8% ----------------------------------------------------------------- OC revenue increased by nearly 8% to #2.3m. Key factors driving the revenue growth included the solid demand for the recently launched non-liquid nitrogen system, the Cobra, and renewed interest in the older helium-based cooling systems. Also this year, OC identified a key partner in China that can help gain a sales and service presence in this untapped market. Further, a sales and service manager was added to increase the focus on the market in the USA. Development continues on several new systems which will provide access to a larger market. These changes should ensure strong continued growth for the OC division in the new financial year. Risks and Uncertainties Some of the unique characteristics of the business also carry certain risks. The group has established procedures for identifying, monitoring, and mitigating these risks. The main areas of risk identified by the Directors are as follows: Regulatory The in vitro diagnostic controls business is closely regulated by the FDA in the USA. The main risks are: * Failing to comply with FDA regulations; * Changes to the regulations eliminating the requirement for certain products; * Failure to satisfy the FDA on new product submissions causing product launches to be delayed or cancelled. Customer Base The In Vitro Diagnostic controls business is dominated by a handful of large pharmaceutical customers. The loss of any one of these dominant customers is likely to have a significant short term adverse effect on the business. The Company has contracts with most of these large customers which contain provisions for an orderly withdrawal to occur over a period of time thus mitigating the impact of a withdrawal. General Market Conditions The IVD business is anticipating a gradual decline in blood gas controls as new analyzers are introduced that do not use glass ampoule quality control testing. The business will be required to mitigate this decline by developing products in new sectors such as lead care, infectious disease, and related services. The opportunities in these areas are promising but failure to successfully expand the product range may adversely affect future trading. OC provides products to support crystallography which is a specialized market. Its ability to expand is dependent on adapting its products to serve related areas. Interest Rates The Group finances its operations through bank loans, overdrafts and hire purchase facilities principally at variable rates at negotiated margins using pooling of the Group's requirements to achieve this. Foreign Currency The Group's main exposure to exchange rate fluctuations arises on the translation of overseas net assets and profits into sterling for reporting purposes. The Group has investments principally in the US dollar associated with its overseas based businesses. Wherever practical, translation exposures arising on consolidation of the Group's overseas net assets are minimized by matching assets with borrowings in dollars. In managing this exposure, the Group's objectives are to maintain a low cost of capital and to retain some potential for currency appreciation while partially hedging against currency depreciation. To this end the Group has arranged its facilities in US dollars as its principal future earnings are expected to be in US dollars. Summary The group has procedures in place to identify risks and mitigate them to the extent possible. Despite efforts to address these risks, they cannot be eliminated entirely. Michael Thomas Group Chief Executive Financial Review Introduction The continuing group comprises IVD and OC. Discontinued activities are the results of the Respiratory Division until its disposal on 10 November 2006. The results of the continuing group together with all central costs are shown in the consolidated income statement. Continuing Operations Both IVD and OC experienced steady organic growth this year. As measured in local currencies, revenues at IVD increased by 6% and revenues at OC increased by 8%. Since IVD contributes nearly 83% of the Group revenues and is transacted in US $ the impact of the 9% decline in the dollar was significant. As a result of the adverse impact of currency translation, the Group revenues declined a little more than 1% to #13.9m (2006: #14.1m). However, due to the reduction of operating expenses, operating profit from continuing operations before goodwill impairment and exceptional expenses improved to #2.4m (2006: #2.2m). Total profit for the period increased to #0.7m from a loss last year of #27.8m. Selling and Distribution costs were at largely the same levels as last year. Research and Development expenses declined slightly to #0.6m (2006: #0.7m) as the result of lower supply costs and a delay in hiring research staff. General and administrative expenses before exceptional costs reduced to #3.0m (2006: #3.4m). This improvement was primarily the result of reductions in central costs. Head office costs were reduced to #1.0m (2006: #1.7m), however, the savings were partially offset by increases in general and administrative costs at IVD. The Group benefited from a tax credit of #0.1m (2006: #0.3m) as the result of the utilisation of deferred tax assets that arose in prior periods. Goodwill and exceptional items Goodwill is tested annually for impairment and adjustments to the carrying value of goodwill are made if deemed necessary. There were no impairment charges to goodwill. Exceptional costs of #0.7m included redundancies as the result of the closure of the head office and the reduction, by two non-executive directors, of the Board of Directors. Discontinued operations Discontinued operations represents the operating result of the Respiratory Division for ten weeks until its disposal on 10 November 2006. While the FY2006 charges for asset impairment and goodwill impairment of #26.3m were included in the total loss from discontinued operations of #29.2m, the FY2007 charge for discontinued operations was only #0.3m and resulted from Respiratory Division operating losses. Earnings per Share Earnings per share on continuing operations before goodwill impairment and exceptional costs increased to 3.2p (2006: 2.7p). After accounting for exceptional costs and the losses incurred from the disposed divisions the total earnings per share was 1.4p (2006: 55.6p loss). Dividend As it is the intention of the group to use cash flows to further reduce debt levels, no final dividend is proposed (2006: #nil). Since there was no interim dividend, the full year dividend is therefore #nil (2006: #nil). Balance Sheet and Shareholders' Funds Net assets increased to #8.7m (2006: #7.4m) primarily as a result of the growth in continuing operations following the disposal of the Cardiac Division and Respiratory Division. All costs associated with the disposals have now been paid resulting in a reduction in current trade and other payables to #1.8m (2006: #4.9m). Inventories rose only slightly to #1.3m (2006: #1.2m) even as business levels increased during the last half of the year. Trade receivables increased to #2.2m (2006: #1.9m) primarily as a result of the strong trading at the end of the year. Fixed asset expenditure for the continuing group was #0.1m (2006: #0.6m). Major expenditures included investment in software to run the manufacturing processes at IVD and several pieces of production equipment. Banking and Treasury Debt at 31 August 2007 was #11.2m (2006: #11.4m). Debt rose to #11.5m by 28 February 2007 primarily as the result of the payment of the expected and agreed clawback and working capital adjustment of #2.5m relating to the Cardiac disposal. Profitability has improved during the last half of the financial year and progress has been made to reduce debt levels. Debt has already been reduced by #0.3m since 28 February 2007 to #11.2m at 31 August 2007 and continued steady reduction is anticipated. The group's borrowings are denominated in US $ to act as a natural hedge against exchange rate movements now that more than 80% of the group's trading is transacted in US $. Gearing at 31 August 2007 measured 114% (2006:119%) - see note 5. During the year, gearing had increased significantly as payments were made relating to disposal costs and the payment of exceptional costs related to the closure of the head office and reduction of the size of the Board of Directors. During the second half of the year gearing improved substantially as a result of cash flow from increased trading and profitability. The interest cover covenants and cash flow covenants have also improved over this period. Covenants are anticipated to improve significantly during the new financial year as cash flow steadily improves. The Group's existing banking facilities are due to expire on 30 June 2008. The directors recognise that expiration of these banking facilities, if not refinanced, raises a material uncertainty that may cast doubt on the Group's ability to continue as a going concern. The directors have reached agreement on the terms of a recommended cash offer by NAV Bidco for the entire issued and to be issued share capital of Bionostics Plc subject to approval by the shareholders and sanction by the court. As a consequence of the uncertainty over the approval of the scheme and the refinancing of the banking facilities the auditors have indicated to the directors that their audit report is likely to be unqualified but modified as reflected in the Chairman's statement. BIONOSTICS PLC (formerly Ferraris Group Plc) CONSOLIDATED INCOME STATEMENT (UNAUDITED) For the year ended 31 August, 2007 Year to 31 August, 2007 Year to 31 August, 2006 Before Before Goodwill & Goodwill & Goodwill & Goodwill & exceptional exceptional exceptional exceptional items items* Total items items Total Notes #'000 #'000 #'000 #'000 #'000 #'000 Continuing operations Revenue 2 13,858 - 13,858 14,070 - 14,070 Cost of sales (6,684) - (6,684) (6,571) - (6,571) --------------------------------------------------------------------------------------------------------- Gross Profit 7,174 - 7,174 7,499 - 7,499 Selling and distribution expenses (1,175) - (1,175) (1,226) - (1,226) Research and development expenses (585) - (585) (701) - (701) General and administrative expenses (3,014) (724) (3,738) (3,379) - (3,379) --------------------------------------------------------------------------------------------------------- Operating profit/(loss) 2 2,400 (724) 1,676 2,193 2,193 Financial income 18 - 18 107 - 107 Financial expense (903) - (903) (1,278) - (1,278) --------------------------------------------------------------------------------------------------------- Profit/(loss) before tax 1,515 (724) 791 1,022 - 1,022 Tax 98 106 204 328 - 328 --------------------------------------------------------------------------------------------------------- Profit/(loss) for the period from continuing operations 1,613 (618) 995 1,350 - 1,350 Discontinued operations Loss for the period from discontinued operations 2 (297) - (297) (2,878) (26,280) (29,158) --------------------------------------------------------------------------------------------------------- Profit/(loss) for the period 1,316 (618) 698 (1,528) (26,280) (27,808) --------------------------------------------------------------------------------------------------------- Earnings per share 3 Pence Pence Pence Pence From continuing operations: - Basic 3.2 2.0 2.7 2.7 - Diluted 3.2 2.0 2.7 2.7 From continuing and discontinued operations: - Basic 2.6 1.4 (3.1) (55.6) - Diluted 2.6 1.4 (3.1) (55.5) * Goodwill and exceptional items in 2007 were #724,000 before the effect of tax and discontinued operations. This was attributable to the closure costs of an administrative office and the reduction of the Board of Directors. There were no goodwill impairment charges in 2007. In 2006, goodwill and exceptional items relating to discontinued operations were #26,280,000 comprising #21,517,000 impairment of goodwill and #4,763,000 impairment of assets. BIONOSTICS PLC (formerly Ferraris Group Plc) CONSOLIDATED BALANCE SHEET (UNAUDITED) As at 31 August, 2007 2007 2006 Notes #'000 #'000 Non-current assets Goodwill 16,880 16,880 Other intangible assets 118 137 Property, plant and equipment 846 1,180 Other investments - 3 Trade and other receivables 92 92 Deferred tax asset 42 350 ------------------------------------------------------------------------------ 17,978 18,642 ------------------------------------------------------------------------------ Current assets Inventories 1,254 1,206 Trade and other receivables 2,169 1,936 Cash and cash equivalents 791 1,803 ------------------------------------------------------------------------------ 4,214 4,945 ------------------------------------------------------------------------------ Assets held for sale - 3,998 ------------------------------------------------------------------------------ Total assets 2 22,192 27,585 Current liabilities Trade and other payables (1,838) (4,893) Current tax liabilities (105) (98) Bank overdrafts and loans (11,218) (434) Hire purchase and lease liabilities (13) (79) Provisions - (263) Liabilities directly associated with assets held for resale - (3,006) ------------------------------------------------------------------------------ (13,174) (8,773) ------------------------------------------------------------------------------ Non-current liabilities Bank loans - (10,888) Hire purchase and lease liabilities - (13) Trade and other payables (351) (478) ------------------------------------------------------------------------------ (351) (11,379) ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Total liabilities 2 (13,525) (20,152) ------------------------------------------------------------------------------ Net assets 8,667 7,433 ============================================================================== Equity Share capital 4 12,602 12,602 Share premium account 4 454 454 Merger reserve 4 4,603 11,075 ESOP reserve 4 (457) (642) Translation reserve 4 508 50 Retained earnings 4 (9,043) (16,106) ------------------------------------------------------------------------------ Total equity 4 8,667 7,433 ============================================================================== BIONOSTICS PLC (formerly Ferraris Group Plc) CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) For the year ended 31 August, 2007 2007 2006 Notes #'000 #'000 Net cash from operating activities Cash generated by operations 5 437 2,439 Tax received 184 107 --------------------------------------------------------------------------------------- Net cash from operating activities 621 2,546 --------------------------------------------------------------------------------------- Investing activities Interest received 18 19 Disposal of subsidiary 2,050 12,800 Proceeds on disposal of investments 3 43 Proceeds on disposal of property, plant and equipment 4 31 Purchase of property, plant and equipment (133) (553) Purchase of other intangibles (2) (21) Deferred consideration and costs relating to the disposal of subsidiaries (4,278) (657) --------------------------------------------------------------------------------------- Net cash (used in)/from investing activities (2,338) 11,662 --------------------------------------------------------------------------------------- Financing activities Dividends paid - (1,798) Interest paid (838) (1,454) Repayment of borrowings (1,955) (5,706) Repayment of hire purchase loans and leases (79) (2,533) New bank loans raised 1,201 5,562 Issue of shares - 88 Increase/(decrease) in bank overdraft 1,201 (6,275) --------------------------------------------------------------------------------------- Net cash used in financing activities (470) (12,116) --------------------------------------------------------------------------------------- Net (decrease)/increase in cash and cash equivalents (2,187) 2,092 Cash and cash equivalents at the beginning of period 1,803 820 Cash associated with assets held for sale 1,000 - Effect of foreign exchange rate changes on loan balances (552) (109) Effect of foreign exchange rate changes all other 727 - --------------------------------------------------------------------------------------- Cash and cash equivalents at the end of period 791 2,803 --------------------------------------------------------------------------------------- BIONOSTICS PLC (formerly Ferraris Group Plc) CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSE (UNAUDITED) For the year ended 31 August, 2007 2007 2006 #'000 #'000 Currency translation gains/(losses) 458 35 -------------------------------------------------------------------------------------- Net income/(expense) recognised directly in equity 458 35 Profit/(loss) for the period 698 (27,808) -------------------------------------------------------------------------------------- Total recognised income/(expense) for the period 1,156 (27,773) -------------------------------------------------------------------------------------- Attributable to: Equity holders of the parent 1,156 (27,773) Minority interest - - -------------------------------------------------------------------------------------- 1,156 (27,773) -------------------------------------------------------------------------------------- BIONOSTICS PLC 1. Notes to the preliminary results The unaudited results for the full year ended 31 August 2007 have been prepared in accordance with International Accounting Standards and International Financial Reporting Standards (collectively 'IFRS') as adopted by the European Union at 31 August 2007 and the financial information contained herein is presented on a consistent basis with the IFRS accounting policies of Bionostics Plc. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRSs), this announcement does not itself contain sufficient information to comply with IFRSs nor does it constitute statutory accounts of the Group within the meaning of Section 240 of the Companies Act 1985. The audit of the statutory accounts for the year ended 31 August 2007 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting. Statutory accounts for the year ended 31 August 2006, which were prepared under accounting practices generally accepted in the UK, have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under Section 237 (2) or (3) of the Companies Act 1985. Basis of preparation - going concern ------------------------------------ These preliminary financial results are prepared on a going concern basis. The Board has prepared projected cash flow information for the period ending 12 months from the date of approval of these preliminary financial results. In preparing the projected cash flow information, the directors recognise that there are material uncertainties that may cast significant doubt on the Group's ability to continue as a going concern. These uncertainties are as follows: * the Group's existing banking facilities are due to expire on 30 June 2008 and the effective date of the new facilities is contingent upon the successful approval of the scheme of arrangement by shareholders and subsequent sanction by the court; * the existing facilities contain covenants which require repayment of the facility upon a change in ownership of the Company; and * the directors have announced that they have reached agreement on the terms of a recommended cash offer by NAV Bidco for the entire issued and to be issued ordinary share capital of Bionostics Plc. The projected cash flow information includes certain key assumptions made by the directors including: * satisfactory continuation of the level of trading, profitability and cash flows in line with Directors' expectations; * continuation of the ability of the Group to operate within the existing banking facilities and comply with the associated covenants until the replacement facility is unconditional and approved; * upon the effective date of the approved scheme of arrangement, the proposed replacement loan facility comprising a $24m five-year term loan and a $5m revolver will be funded as part of the change in ownership and refinancing of the Group as outlined above; * in the event that the scheme of arrangement is not approved by shareholders and is not sanctioned by the court, the Directors believe that the current negotiations to replace these facilities will conclude such that the long term financing needs of the Group are met; * shareholder approval of the recommended offer for the purchase of the Company's shares; and * any change in ownership over the forecast period does not materially alter the projections. The Directors have announced that they have reached agreement on the terms of a recommended cash offer by NAV Bidco for the entire issued and to be issued ordinary share capital of Bionostics Plc. The recommended offer of 30 pence per share is to be implemented by means of a scheme of arrangement pursuant to section 425 of the Companies Act 1985 (involving a reduction of capital under section 135 of the Companies Act 1985). The Scheme requires the approval of the Shareholders at a meeting convened by the Court and the subsequent sanction of the Court. Additionally, since the current banking facilities require repayment upon a change of ownership, replacement banking facilities have been agreed subject to execution of financing documents customary for this type of transaction and will become effective upon the effective date of the scheme. Having taken into account the uncertainties outlined above and the negotiations currently underway, the directors consider that the cash flow projections have been compiled on a reasonable basis and that it is appropriate that the financial information should be prepared on a going concern basis. The financial information does not contain any adjustments that would be required in the event that the going concern basis be deemed inappropriate as a result of the inability to achieve a satisfactory outcome to the uncertainties mentioned above. Such adjustments would include providing for any further liabilities that may arise and writing down the carrying value of assets, including goodwill, to their recoverable amounts. 2) Business and geographical segments Business segments The group is organised into two operating segments, IVD Controls and Cryosystems. Management sold the Cardiac and Respiratory segments on 31 July, 2006 and 10 November, 2006 respectively and therefore, in accordance with IFRS 5, these segments have been classified as discontinued. The net assets of the Cardiac and Respiratory segments have been shown as "assets held for resale". Year to 31st August 2007 ------------------------ IVD Total Eliminate Controls Cryosystems Respiratory Group Discontinued Total #'000 #'000 #'000 #'000 #'000 #'000 Revenue External sales 11,510 2,348 3,356 17,214 (3,356) 13,858 Inter-segment sales - - 325 325 (325) - --------------------------------------------------------------------- Total revenue 11,510 2,348 3,681 17,539 (3,681) 13,858 --------------------------------------------------------------------- Segment result 2,893 514 (297) 3,110 297 3,407 Unallocated corporate expenses (1,007) ------- Operating profit before exceptional items 2,400 Exceptional items * (724) ------- Operating profit after exceptional items 1,676 Finance costs (885) ------- Profit before tax 791 Tax 204 ------- Profit for the period from continuing operations 995 Loss for the period from discontinued operations (297) ------- Profit after tax and discontinued operations 698 ------- Segment assets 20,280 1,676 - 21,956 - 21,956 Unallocated corporate assets 236 - 236 ------------------------------- 22,192 - 22,192 ------------------------------- Segment liabilities (1,028) (323) - (1,351) - (1,351) Unallocated corporate liabilities (12,174) - (12,174) ------------------------------- (13,525) - (13,525) ------------------------------- Other segment items: Capital expenditure 116 17 - 133 - 133 Unallocated corporate capital expenditure - - - ------------------------------- 133 - 133 ------------------------------- Depreciation and amortisation (371) (17) (93) (481) 93 (388) Unallocated corporate depreciation and amortisation (5) - (5) ------------------------------- (486) 93 (393) ------------------------------- * exceptional items related to the closure of the head office in the UK and the reduction in the size of the Board of Directors. 2) Business and geographical segments (continued) Year to 31st August 2006 -------------------------- IVD Total Eliminate Controls Cryosystems Cardiac Respiratory Group Discontinued Total #'000 #'000 #'000 #'000 #'000 #'000 #'000 Revenue External sales 11,892 2,178 17,001 17,982 49,053 (34,983) 14,070 Inter-segment sales - - 200 1,618 1,818 (1,818) - ------------------------------------------------------------------------------- Total revenue 11,892 2,178 17,201 19,600 50,871 (36,801) 14,070 ------------------------------------------------------------------------------- Segment result 3,379 483 (510) (873) 2,479 1,383 3,862 Unallocated corporate expenses (1,669) ------ Operating profit before goodwill & exceptional 2,193 Finance costs (1,171) ------ Profit before tax 1,022 Tax 328 ------ Profit for the period from continuing operations 1,350 Loss for the period from discontinued operations (29,158) ------ Loss after tax and discontinued operations (27,808) ------ Segment assets 20,438 1,566 - 3,998 26,002 - 26,002 Unallocated corporate assets 1,583 - 1,583 ------------------------------- 27,585 - 27,585 ------------------------------- Segment liabilities (2,031) (262) - (3,006) (5,299) - (5,299) Unallocated corporate liabilities (14,853) - (14,853) ------------------------------- (20,152) - (20,152) ------------------------------- Other segment items: Capital expenditure 341 13 879 257 1,490 - 1,490 Unallocated corporate capital expenditure 2 - 2 ------------------------------- 1,492 - 1,492 ------------------------------- Depreciation and amortisation (408) (17) (686) (612) (1,723) - (1,723) Unallocated corporate depreciation and amortisation (90) - (90) ------------------------------- (1,813) - (1,813) ------------------------------- 2) Business and geographical segments (continued) Geographical segments The Group's operations are located in the UK and North America. The UK is the home country of the parent. The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods/services, along with the carrying amount of segment assets and capital expenditure, analysed by the geographical area in which the assets are located: Revenue: Continuing Discontinued Total 2007 2006 2007 2006 2007 2006 #'000 #'000 #'000 #'000 #'000 #'000 United Kingdom 531 552 337 7,532 868 8,084 Europe 1,665 1,364 690 9,809 2,355 11,173 North America 9,297 9,922 2,134 15,783 11,431 25,705 Rest of World 2,365 2,232 195 1,859 2,560 4,091 --------------------------------------------------- 13,858 14,070 3,356 34,983 17,214 49,053 --------------------------------------------------- Assets and capital expenditure: Segment assets Capital Expenditure 2007 2006 2007 2006 #'000 #'000 #'000 #'000 United Kingdom (10,656) (11,474) 17 918 Europe - 224 - 90 North America 19,323 18,683 116 484 ---------------------------------- 8,667 7,433 133 1,492 ---------------------------------- 3) Earnings per share The calculation of the basic and diluted earnings/(loss) per share is based on the following data: From continuing and discontinued operations Year to Year to 31st 31st August August 2007 2006 #'000 #'000 Earnings/(loss): Earnings/(loss) for the purposes of basic & diluted earnings/(loss) per share being net profit/(loss) attributable to equity shareholders of the parent 698 (27,808) Add back goodwill impairment & exceptional items 618 26,280 --------------------------------------------------------------------------------------- Earnings/(loss) per share before goodwill impairment & exceptional items 1,316 (1,528) --------------------------------------------------------------------------------------- no. of no. of shares shares Number of shares: Weighted average number of ordinary shares for the purposes of basic earnings/(loss) per share 50,138,068 49,983,334 Effect of dilutive potential ordinary shares - share options and awards 155,744 90,504 ----------------------------------------------------------------------------------------- Weighted average number of ordinary shares for the purposes of diluted earnings/(loss) per share 50,293,812 50,073,838 ----------------------------------------------------------------------------------------- EPS: p p Basic - before goodwill impairment and exceptional items 2.6 (3.1) - after goodwill impairment and exceptional items 1.4 (55.6) Diluted - before goodwill impairment and exceptional items 2.6 (3.1) - after goodwill impairment and exceptional items 1.4 (55.5) From continuing operations Year to Year to 31st 31st August August 2007 2006 #'000 #'000 Earnings/(loss) attributable to equity holders of the parent 698 (27,808) Adjustment to exclude profit/(loss) for the period from discontinued operations 297 29,158 ----------------------------------------------------------------------------------------- Earnings from continuing operations for the purpose of basic & diluted earnings per share 995 1,350 Add back goodwill impairment & exceptional items 618 - ----------------------------------------------------------------------------------------- Earnings from continuing operations for the purpose of basic & diluted earnings per share before goodwill 1,613 1,350 ----------------------------------------------------------------------------------------- The denominators used are the same as those detailed above for both basic and diluted earnings per share from continuing and discontinued operations. Year to Year to 31st 31st August August 2007 2006 p p Basic - before goodwill impairment and exceptional items 3.2 2.7 - after goodwill impairment and exceptional items 2.0 2.7 Diluted - before goodwill impairment and exceptional items 3.2 2.7 - after goodwill impairment and exceptional items 2.0 2.7 From discontinued operations Year to Year to 31st 31st August August 2007 2006 p p Basic (0.6) (58.3) Diluted (0.6) (58.2) 4) Movements in equity Group: Contingent Cumulative Share Share Share Merger ESOP Translation Retained Minority Capital Capital Premium Reserve Reserve Reserve Earnings Interest Total #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 ------------------------------------------------------------------------------------------- Balance at 1 September, 2005 12,574 - 394 11,075 (642) 15 13,500 - 36,916 ------------------------------------------------------------------------------------------- Currency translation adjustments - - - - - 35 - - 35 Loss for the period - - - - - - (27,808) - (27,808) Dividend - - - - - - (1,798) - (1,798) Issue of share capital 28 - 60 - - - - - 88 ------------------------------------------------------------------------------------------- Balance at 31 August 2006 12,602 - 454 11,075 (642) 50 (16,106) - 7,433 ------------------------------------------------------------------------------------------- Currency translation adjustments - - - - - 458 - - 458 Income for the period - - - - - - 698 - 698 Reserves movement - - - (6,472) - - 6,472 - - Issue of shares from ESOP Reserve - - - - 185 - (185) - - Share option charge - - - - - - 78 - 78 ------------------------------------------------------------------------------------------- Balance at 31 August 2007 12,602 - 454 4,603 (457) 508 (9,043) - 8,667 ------------------------------------------------------------------------------------------- 5) Notes to the cash flow statement 2007 2006 #'000 #'000 Operating profit before discontinued, exceptional items & goodwill 2,400 2,193 Adjustment for: Exceptional items & goodwill on continuing operations (724) - ------------------------------------------------------------------------- 1,676 2,193 Discontinued operating loss before exceptional items & goodwill (297) (1,382) Exceptional items & goodwill on discontinued operations - (26,280) ------------------------------------------------------------------------- 1,379 (25,469) Adjustments for: Depreciation/impairment of property, plant and equipment 379 1,813 Amortisation of intangible assets 14 14 Impairment of goodwill and net assets - 26,280 Loss/(profit) on disposal of property, plant and equipment 28 (193) Share option charge 78 - ------------------------------------------------------------------------- Operating cash flows before movements in working capital 1,878 2,445 Increase in inventories (59) (510) (Increase)/decrease in receivables (321) 1,405 Decrease in payables (686) (901) Change in working capital from discontinued operations (375) - ------------------------------------------------------------------------- Net Cash (used in)/generated by operations (437) 2,439 ------------------------------------------------------------------------- Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank. Gearing Measurement 2007 2006 #'000 #'000 Bank overdrafts and loans < 1year (11,217) (434) Bank loans > one year - (10,888) Hire purchase and lease liabilities < 1 year (13) (79) Hire purchase and lease liabilities > 1 year - (13) ------------------------------------------------------------------------- Total Debt (11,230) (11,414) Cash 791 1,803 ------------------------------------------------------------------------- Total Net Debt (10,439) (9,611) Net Assets 8,667 7,433 Adjustment to add back ESOP Reserve 457 642 ------------------------------------------------------------------------- Adjusted Net Assets for Calculation of Gearing 9,124 8,075 Gearing 114% 119% This information is provided by RNS The company news service from the London Stock Exchange END FR ZGMGZKKZGNZM
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