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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Immunodiagnostic Systems Holdings Plc | LSE:IDH | London | Ordinary Share | GB00B01YZ052 | ORD 2P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 378.00 | 0.00 | 00:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMIDH
RNS Number : 1593Q
Immunodiagnostic Systems Hldgs PLC
25 November 2016
25 November 2016
Immunodiagnostic Systems Holdings PLC
Interim Results for the six month period ended 30 September 2016
Immunodiagnostic Systems Holdings plc ("IDS", "the Group" or "the Company"), a specialist producer of manual and automated diagnostic testing kits and instruments for the clinical market, today announces its unaudited interim results for the six month period ended 30 September 2016 ("H1 2017").
Financial Summary
-- Revenue was GBP19.5m in H1 2017 (H1 2016: GBP19.4m), an increase of 1%. On a like for like basis (i.e. eliminating changes in scope and at constant exchange rates* ("CER")) this represents a revenue decrease of 9%.
-- Revenues in our Automated CLIA business were GBP9.9m (H1 2016: GBP9.2m), an increase of 8%. At CER this represents a decline of 2%.
-- At CER automated 25-OH Vitamin D revenues declined by 25%, similar to the rate of decline experienced on H1 2016. This was in line with our expectations and is mainly due to our main laboratory customers transferring this assay to workhorse analysers.
-- This decline was offset by growth of 16% at CER in our speciality assay business, i.e. CLIA products excluding 25-OH Vitamin D. This growth rate is higher than we had forecasted and is significantly ahead of the 3% growth seen in these products during FY2016.
-- Revenues in our Manual business were GBP6.2m, a decline of 2%. At CER this represents a revenue decrease of 11%. This can be broken down into a decrease of 40% in manual 25-OH Vitamin D revenue, while the remainder of the business remained stable.
-- Revenues in our Licensing and Technology business were GBP2.0m, a decline of 28%. At CER this represents a revenue decrease of 35%. The reduction is due to the expected loss of royalty business from a major customer.
-- Adjusted EBITDA was broadly flat at GBP4.2m (H1 2016: GBP4.3m), before exceptional costs of GBP1.3m (H1 2016: GBPnil).
-- PBT was GBP0.5m (H1 2016: GBP0.8m). -- Basic EPS increased to 5.0p (H1 2016: 4.0p). -- Net cash flow from operations was GBP3.7m (H1 2016: GBP3.1m). -- Closing cash and cash equivalents increased to GBP28.7m (31 March 2016: GBP26.6m).
*CER has been calculated by applying the prior period foreign exchange rates to the current period results.
Operational Summary
-- 17-OH Progesterone automated assay released, followed by our Total Testosterone assay in mid-October. These are the first products in our IDS-iSYS fertility panel.
-- Total assay menu increased to 17 assays (March 16: 15) in Europe and 10 (March 16: 9) in the USA.
-- Improvement in instrument placement performance versus the same period in the prior year. Total gross instrument placements in direct sales territories increased to 15 (H1 2016: 9). Net direct placements were 5 versus 10 net direct returns in H1 2016.
-- Completion of the restructuring of the IDS operations in France leading to a reduction in headcount of over 20 employees. Transfer of automated assay manufacturing to Liege on track for completion by year end.
-- Other cost efficiency initiatives are running according to plan, and we are targeting a full year cost saving of GBP3.5m (at CER) versus FY2016.
Patricio Lacalle, CEO of IDS, commented:
"As expected we have continued to suffer significant declines in our 25-OH Vitamin D assay sales as well as our royalty income. This was offset by encouraging growth in our Speciality automated business and the favourable foreign exchange impact of the weaker Pound. We are continuing to implement the four pillars of our strategy as previously communicated and have embedded these within each of our three business units. The development of our assay pipeline is taking longer than expected, though we are pleased to have introduced two new fertility assays since the end of FY2016. We will continue to focus our efforts on improving our sales processes and capabilities, as well as strengthening our product pipeline through internal development and external partnerships."
For further information:
Immunodiagnostic Systems Holdings Tel : +44 (0)191 PLC 519 0660 Patricio Lacalle, CEO Paul Martin, Finance Director Peel Hunt LLP Tel : +44 (0)20 7418 8900 James Steel /Oliver Jackson
The information contained within this announcement may constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.
Chief Executive's Statement
On a like for like basis (i.e. at constant scope and CER) revenue declined by 9% in H1 2017.
Sales of our 25-OH Vitamin D product, across both our manual and automated businesses, declined by 30% at CER. Additionally, as previously anticipated, royalty income has declined by 35% at CER. This is as a result of a major customer transitioning their 25-OH Vitamin D assay away from IDS technology.
On a more positive note, sales in our other speciality automated assays grew by 16% at CER, which is an acceleration compared to the growth rate of 3% achieved in FY 2016.
An overview of the performance of our three business units is set out below:
Automated Business
1. Revenue Performance H1 2017 H1 2016 FY 2016 Change Change GBP000 GBP000 GBP000 % % at CER ------------------ -------- -------- -------- ------- ---------- 25-OH Vitamin D 3,239 3,898 7,232 (17%) (25%) ------------------ -------- -------- -------- ------- ---------- Other Speciality 6,231 4,841 10,076 29% 16% ------------------ -------- -------- -------- ------- ---------- Instrument Sales 441 418 983 5% (5%) ------------------ -------- -------- -------- ------- ---------- Total 9,911 9,157 18,291 8% (2%) ------------------ -------- -------- -------- ------- ----------
At CER, automated 25-OH Vitamin D revenue declined 25% compared to H1 2016. This is similar to the rate of decline experienced in FY 2016, and was in line with our revenue plan. This decrease is mainly a result of our main laboratory customers continuing to transfer this assay to workhorse analysers after termination of their contractual obligations with the Group.
At CER Other Speciality income (which relates mainly to our Endocrinology Excellence menu) increased by 16% at CER. Whilst most segments showed double digit growth, the areas which contributed most were Calcium Metabolism, Bone Metabolism and Growth.
Instrument sales, which include sales of spare parts and services, remained consistent compared with the same period last year.
2. Placements / iSYS Sales H1 2017 H1 2016 FY 2016 Direct - Gross Placements 15 9 31 Direct - Gross Returns (10) (19) (43) Direct - Net Placements / (Returns) 5 (10) (12) ------------------------- -------- -------- -------- Distributor Sales 2 3 8 ------------------------- -------- -------- --------
Direct instruments are those sold or placed with reagent rental IDS end-user customers in the Group's core markets of the USA and Europe (excluding distributor territories of Spain and Italy).
Gross instrument placements improved mainly due to improved sales performance in the USA and France. These regions generated a combined 4 net placements in H1 2017, compared to 13 net returns in H1 2016.
Average revenue per direct instrument ("ARPI") was GBP52,000 per annum (calculated on a rolling 12-month basis) (H1 2016: GBP50,000, FY 2016: GBP48,000), the increase being mainly due to the impact of the weaker Pound which leads to USD and Euro denominated iSYS revenue being worth more when converted into Pounds Sterling.
3. Sales Process
The CRM system, which was introduced during H1 FY2016, is now fully embedded in all our major sales regions. We are focusing on 3 areas: target qualification, opportunity management and call preparation. Over the last 15 months each sales person has qualified a large number of targets in their respective sales territory. The resulting opportunities are being followed up together with the field sales manager. We have further focused on increasing the quality of calls by improving our planning cycle. As a result we reduced travel time, increased customer facing time and provided a more focused approach, driving customer benefits.
The system is now providing the key data to drive a quantitative, performance based measurement of the sales team achievements. It is also allowing us to generate deeper insight into our customer requirements, thereby allowing us to more accurately target customers who have a requirement for IDS's niche speciality assay offering.
In addition to the detailed insight of our customers' operations, we can much better focus on supporting sales representative performance. We are confident that in the end the benefits and the dynamics we gain in turning opportunities into results will speak for itself.
4. Assay Development
In H1 2017 we released one new automated assay, 17-OH Progesterone, followed by our Total Testosterone assay in mid-October. These are the first products in our IDS-iSYS fertility panel. This brings the total assay menu to 17 assays in Europe and 10 in the USA.
We are seeing an improvement in the speed in which we are able to launch assays. We are optimistic we will launch another one to two assays this financial year - in recent history we have not launched more than two in a full financial year. However we are still a long way short of our target of releasing six to eight assays per year.
The consolidation of the majority of our automated assay development and production into Liege, as announced in January 2016, will be completed as scheduled by December 2016.
During the period we created the new role of Operations Director, which has been filled by internal appointment.
This will allow our Technical Director, who previously also held responsibility for operations, to focus on assay development. Additionally we have recruited a second assay R&D manager, to be based in our Liege facility. We believe these personnel changes will enhance our development capacity and capabilities.
Manual Business
H1 2017 H1 2016 FY 2016 Change Change GBP000 GBP000 GBP000 % % at CER ------------------ -------- -------- -------- ------- ---------- 25-OH Vitamin D 1,130 1,698 2,867 (33%) (40%) ------------------ -------- -------- -------- ------- ---------- Other Speciality 3,569 3,243 6,933 10% 2% ------------------ -------- -------- -------- ------- ---------- Diametra 1,533 1,417 2,876 8% (6%) ------------------ -------- -------- -------- ------- ---------- Total 6,232 6,358 12,676 (2%) (11%) ------------------ -------- -------- -------- ------- ---------- 1. Revenue Performance
At CER, manual 25-OH Vitamin D declined by 40%, which was in line with our expectations. This decline is mainly due to customers continuing to migrate testing to automated analysers. At CER, revenue in the remainder of our manual business remained broadly steady.
2. Sales Organisation
The main business opportunity for IDS's manual ELISA assays lies in two key areas:
-- Research only usage in developed areas of the world. This segment typically purchases low volumes of assays and is best serviced through a telesales channel.
-- Clinical use in the areas of the world which have less developed medical facilities and have not yet migrated testing to automated analysers. These regions are covered by our distribution network, which is now being managed by our newly recruited international distribution manager. I believe that the increased resources in this area give IDS a good opportunity to generate additional revenues in our manual business.
We are continuing to recruit for the position of business unit manager to head up our manual assay business to spearhead the turnaround of this business.
Licensing and Technology Business
H1 2017 H1 2016 FY 2016 Change Change % % at CER ------------ -------- -------- -------- ------- ---------- Royalty Income 1,977 2,733 5,121 (28%) (35%) ------------ -------- -------- -------- ------- ---------- Technology Income 1,342 1,105 2,217 21% 9% ------------ -------- -------- -------- ------- ---------- Total 3,319 3,838 7,338 (14%) (23%) ------------ -------- -------- -------- ------- ---------- 1. Revenue Performance
At CER royalty income has decreased by 35% due to the expected reduction in revenue from one major customer. We expect this rate of decline to continue into the second half of the year.
Technology income relates to revenue generated by selling the iSYS analyser and related ancillaries to partners on an OEM basis. A total of 15 instruments were sold to partners during H1 2017 (H1 2016: 8, FY 2016: 27).
2. Strategic Partnership Agreements
During the period IDS have reached agreement to provide the IDS-iSYS analyser equipment to two new customers on an OEM basis. These customers will develop and commercialise proprietary assays on the analyser, and IDS will generate revenue through sales of analysers and ancillary equipment to these customers.
Cost Management
Towards the end of FY 2016 we started to take a closer look at our cost base, and this exercise has continued into FY 2017. With sales and profit dropping, we needed to look at the service provided and the organisational structures and capacities within IDS to ensure these are appropriate to drive our return to growth.
1. Capacity
The IDS organisation was built to support the growth it had shown in 2010-2013, when revenue peaked at over GBP53m. We have reduced most of the overcapacity by natural attrition, with a small number of redundancies where required. We installed a hiring freeze for all but critical roles which will help drive revenue growth and increase assay development performance.
2. Simplifying services
As announced in January 2016, we chose to focus production and R&D work for automated assays around our production site in Liege, Belgium. Additionally we decided to consolidate all R&D functions for our instruments into our site in Bourgogne and hence reduced the staff in Paris. Furthermore we are setting up a shared service centre based in Frankfurt for direct sales in continental Europe, with a potential to reduce staff by over 30% in this area. In our technical and field service organisation we decided to remove one management layer and adjusted the structure accordingly.
3. Functional Organisation
The results achieved through a review of our sales processes have underlined the advantages of functional expertise shared globally. Hence we will continue to move towards a functional organisation, and away from an organisation built around territories.
As a result of these activities we have booked an exceptional restructuring cost, relating mainly to redundancy costs, of GBP1.3m during the period.
We will continue to investigate means to make the business more operationally efficient. While there is still significant work to do, we believe we are well on our way to restructuring the business to enable us to both serve customers better and accelerate the development of our assay pipeline.
Financial review
Group revenues were GBP19.5m, an increase of 1% compared to the revenues of GBP19.4m recorded in H1 2016. At CER revenues fell by 9%. Adjusted EBITDA (before exceptional restructuring costs of GBP1.3m related to our cost initiatives) was GBP4.2m, in line with the same period last year.
A. SUMMARY OF INCOME STATEMENT H1 2017 H1 2016 FY 2016 GBP000 GBP000 GBP000 ------------------------------- -------- --------- --------- Revenue 19,462 19,354 38,305 ------------------------------- -------- --------- --------- Gross profit 11,673 12,114 22,465 Gross margin 60.0% 62.6% 58.6% Sales and marketing (4,365) (4,392) (9,233) Research and development (902) (1,878) (3,354) General and administrative (4,247) (4,981) (9,412) ------------------------------- -------- --------- --------- Total operating costs (9,514) (11,251) (21,999) Exceptional items (1,276) - (37,266) ------------------------------- -------- --------- --------- Statutory EBIT 883 863 (36,800) Add back Depreciation and amortisation 2,063 3,439 6,983 Exceptional items 1,276 - 37,266 ------------------------------- -------- --------- --------- Adjusted EBITDA 4,222 4,302 7,449 ------------------------------- -------- --------- ---------
Foreign Exchange
During the period, IDS revenues have benefitted by around GBP1.9m (or 9%) as a result of the weaker Pound. In the period 34% (H1 2016: 42%) of the Group's revenues were denominated in US Dollars and 55% (H1 2016: 48%) were in Euros. These revenues are now worth more when converted into Pounds Sterling as a result of the weaker Pound.
Conversely IDS also has a significant cost based denominated in Euros and US Dollars, thus these costs have increased compared to H1 2016 when converted back into Pounds Sterling.
The approximate net improvement in the H1 2017 EBIT as a result of movements in exchange rates is GBP0.5m.
The average exchange rates used to translate Euros and US Dollars to Pounds Sterling are as follows:
Average exchange rates H1 H1 2016 FY 2016 2017 ------------------------ ------ -------- ----------------------- Sterling : US Dollar 1.39 1.54 1.51 Sterling : Euro 1.24 1.40 1.37 ------------------------ ------ -------- -----------------------
Gross Profit
Gross profit was GBP11.7m (H1 2016: GBP12.1m) implying a gross margin percentage of 60.0% (H1 2016: 62.6%). The decline in gross margin is mainly due to the impact of product mix and lower royalty income, offset by lower amortisation costs.
Operating costs
The Group's total operating costs (before exceptional items) comprise:
H1 2017 H1 2016 FY 2016 Gross Costs Net Gross Costs Net Gross Costs Net capitalised capitalised capitalised GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 ---------------- --------- ------------ -------- --------- ------------ --------- --------- ------------ --------- Sales & marketing (4,365) - (4,365) (4,392) - (4,392) (9,233) - (9,233) Research & development (2,040) 1,138 (902) (3,361) 1,483 (1,878) (6,320) 2,966 (3,354) General & administrative (4,439) 192 (4,247) (5,115) 134 (4,981) (9,717) 305 (9,412) ---------------- --------- ------------ -------- --------- ------------ --------- --------- ------------ --------- Operating costs (10,844) 1,330 (9,514) (12,868) 1,617 (11,251) (25,270) 3,271 (21,999) ---------------- --------- ------------ -------- --------- ------------ --------- --------- ------------ ---------
Total spend on operating costs has declined by 16%, or GBP2.1m, to GBP10.8m (H1 2016: GBP12.9m, FY 2016: GBP25.3m), with GBP1.0m of the decrease attributable to the reduction in depreciation and amortisation as a result of the exceptional impairment charge booked at 31 March 2016. At CER total operating costs for H1 2017 would be GBP10.0m, a decline of 22%.
Cost reclassification - depreciation and amortisation
To ensure that the Group's financial performance can be more easily benchmarked with its peer group, the depreciation costs previously shown on the face of the income statement have been included within operating costs. This does not impact the profit or net assets of the group for either H1 2016 or Full Year 2016. A table detailing the impact of this reclassification is set out in note 1.
Exceptional items
During the period the Group has initiated a number of restructuring projects designed to rationalise the cost base of the business. These projects are focussed on making the organisation more efficient, while retaining the skills and competencies we need to return the business to profitable growth.
At CER we are targeting an improvement in our fixed cost base of GBP3.5m versus FY 2016.
The project to consolidate our automated assay operations into Liege is progressing well and will be completed on schedule in December 2016. Additionally at the time of writing we have substantially completed the restructure of our operations in France, where we have streamlined the iSYS manufacturing and commercial support functions so that we have a more efficient operational structure which is appropriate for the anticipated future business requirements.
Below is a summary of the exceptional items during the current and previous financial period:
H1 2017 H1 FY GBP000 2016 2016 GBP000 GBP000 ---------------------------------------------- -------- --------- Restructuring costs (1,276) - (362) Repayable grant release - - 1,323 Impairment of goodwill, intangible assets and tangible fixed assets - - (38,227) ------------------------------------- -------- -------- --------- Total exceptional items (1,276) - (37,266) ------------------------------------- -------- -------- ---------
In H1 2017, exceptional items relate to redundancy expenses driven by our cost reduction initiatives.
In the year-ended 31 March 2016, the Group commenced the consolidation of automated product development and production into our Liege site, resulting in redundancy costs and an onerous lease provision in our Boldon location. We released a historical repayable grant amounting to GBP1.3m, upon obtaining written confirmation from the grantor that no further amount would be repayable. Additionally as a result of the annual impairment review performed at the end of FY2016 as required by IAS36, an asset impairment charge of GBP38.2m was recognised. More details on this charge can be found in notes 14 and 15 of the Annual Report and Accounts 2016.
Finance expense/income
Net finance expense was GBP0.4m (H1 2016: GBPnil, FY 2016 GBP0.2m) and relates mainly to foreign exchange gains and losses on intercompany funding and cash balances.
Taxation
The Group's effective tax rate for the current period is based on an estimate of the rate for the full financial year and is -35% (H1 2016: -42%). Before exceptional items, prior year adjustments and the effect of rate changes on deferred tax balances, the effective rate is -51% (H1 2016:-42%). The effective tax rate is reduced by 71% as a result of research and development tax relief claimed on eligible expenditure and patent box relief.
Earnings per share
Adjusted earnings per share is calculated using profit after tax adjusted to exclude the after tax effect of exceptional items. Basic earnings per share are 5.0p (H1 2016: 4.0p). Adjusted basic earnings per share are 9.3p (H1 2016: 4.0p).
Headcount
Headcount has reduced to 294 people on a full time employment basis (30 September 2015: 328, 31 March 2016: 315) as a result of projects we have implemented to improve our business efficiency.
B. SUMMARY OF BALANCE SHEET
The Group's net assets at 30 September 2016 are GBP55.5m (30 September 2015: GBP81.6m). The main reason for the reduction is the asset impairment charge of GBP38.2m recognised during the second half of FY 2016. This is also the main reason non-current assets have reduced from GBP56.2m to GBP19.6m.
C. SUMMARY OF CASH FLOW STATEMENT
IDS generated net cash flows from operations of GBP3.7m (H1 2016: GBP3.1m). Net cash used in investing activities was of GBP1.5m (H1 2016:GBP2.5m), which resulted in free cash flow of GBP2.1m (H1 2016: GBP0.5m).
Net cash used in financing activities was GBP0.4m (H1 2016: GBP0.9m), the decrease being mainly due to the lower dividend paid.
The majority of the cash outflow relating to the exceptional restructuring costs of GBP1.3m recognised during H1 2017 will occur during the second half of FY 2017.
As at 30 September 2016, the Group had increased cash and cash equivalents to GBP28.7m (30 September 2015: GBP23.5m; 31 March 2016: GBP26.6m). Thus despite the headwinds caused by the decline in 25-OH Vitamin D revenues it is encouraging that our cash balance has continued to grow, which allows IDS flexibility to pursue potential options within the corporate development/ partnership pillar of our strategy.
D. OUTLOOK
The medium-term trading conditions for the Group remain challenging. We expect to see continued declines in our 25-OH Vitamin D and Royalty Income revenue streams during H2, however will strive to offset these losses by continuing to grow in our Other Speciality assay and Technology businesses.
Management will focus its efforts on improving our sales processes and capabilities, as well as strengthening our product pipeline through internal development and external partnerships. The next intermediate goal is to stabilize the revenue line on a like for like basis, as well as continuing efforts to make the organisation more efficient into FY 2018.
Unaudited consolidated interim income statement
For the six month period to 30 September 2016
6 Months 6 Months Year ended ended ended 31 March 30 Sept 30 Sept 2016 2016 2015 Note GBP000 GBP000 GBP000 Revenue 2 19,462 19,354 38,305 Cost of Sales (7,789) (7,240) (15,840) Gross Profit 11,673 12,114 22,465 Sales and marketing (4,365) (4,392) (9,233) Research and development (902) (1,878) (3,354) General and administrative (4,247) (4,981) (9,412) ----- --------- --------- ----------- Operating costs pre-exceptional items (9,514) (11,251) (21,999) Restructuring costs (1,276) - (362) Repayable grant release - - 1,323 Impairment of goodwill and other intangibles - - (38,227) Total exceptional items 3 (1,276) - (37,266) ----------------------------------- ----- --------- --------- ----------- Operating Costs (10,790) (11,251) (59,265) Profit/ (loss) from operations 883 863 (36,800) Finance income 96 104 169 Finance costs (481) (140) (392) Profit/(loss) before tax 498 827 (37,023) Income tax credit 5 985 350 4,853 Profit/(loss) for the period attributable to owners of the parent 1,483 1,177 (32,170)
===== ========= ========= =========== Earnings per share From continuing operations Adjusted basic 4 9.3p 4.0p 4.7p Adjusted diluted 4 9.3p 4.0p 4.7p Basic 4 5.0p 4.0p (109.7p) Diluted 4 5.0p 4.0p (109.7p)
Unaudited interim statement of other comprehensive income
For the six month period to 30 September 2016
6 Months 6 Months Year ended ended ended 31 March 30 Sept 30 Sept 2015 2016 2015 GBP000 GBP000 GBP000 Profit/ (loss) for the period 1,483 1,177 (32,170) Other comprehensive income to be reclassified to profit or loss in subsequent periods: Currency translation differences 2,522 467 3,741 Other comprehensive income to be reclassified to profit or loss in subsequent periods, before and after tax 2,522 467 3,741 Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Remeasurement of defined benefit plan 113 36 102 --------- --------- --------- Other comprehensive income not to be reclassified to profit or loss in subsequent periods, before tax 113 36 102 Tax relating to other comprehensive income to be reclassified to profit or loss in subsequent periods - (12) (34) --------- --------- --------- Other comprehensive income, net of tax 2,635 491 3,809 --------- --------- --------- Total comprehensive income/(expense) for the period attributable to owners of the parent 4,118 1,668 (28,361) ========= ========= =========
Unaudited consolidated interim balance sheet
As at 30 September 2016
30 September 30 September 31 March 2016 2015 2016 Note GBP000 GBP000 GBP000 Assets Non-current assets Property, plant and equipment 9,416 10,011 9,629 Goodwill - 15,549 - Other intangible assets 9,786 30,282 9,211 Deferred tax assets 33 86 26 Other non-current assets 323 276 294 19,558 56,204 19,160 Current assets Inventories 8,035 7,760 7,509 Trade and other receivables 7,784 7,215 6,956 Income tax receivable 3,093 2,534 2,161 Cash and cash equivalents 28,700 23,486 26,554 47,612 40,995 43,180 ----- ------------- ------------- --------- Total assets 67,170 97,199 62,340 ----- ------------- ------------- --------- Liabilities Current liabilities Short-term portion of long-term borrowings 98 82 89 Trade and other payables 6,378 5,289 6,287 Income tax payable 48 804 3 Provisions 6 1,204 83 54 Deferred income 79 137 119 7,807 6,395 6,552 ----- ------------- ------------- --------- Net current assets 39,805 34,600 36,628 ----- ------------- ------------- --------- Non-current liabilities Long-term portion of long-term borrowings 1,290 1,194 1,220 Repayable grants - 1,375 - Provisions 6 1,310 1,108 1,419 Deferred tax liabilities 1,400 5,507 1,551 4,000 9,184 4,190 Total liabilities 11,807 15,579 10,742 ----- ------------- ------------- --------- Net assets 55,363 81,620 51,598 ===== ============= ============= ========= Total equity Called up share capital 7 588 588 588 Share premium account 7 32,263 32,263 32,263 Other reserves 4,982 (814) 2,460 Retained earnings 17,530 49,583 16,287 Equity attributable to owners of the parent 55,363 81,620 51,598 ===== ============= ============= =========
Unaudited consolidated interim cash flow statement
For the six month period to 30 September 2016
6 Months 6 Months Year ended ended ended 31 March 30 Sept 30 Sept 2016 2016 2015 GBP000 GBP000 GBP000 Profit/(loss) before tax 498 827 (37,023) Adjustments for: Depreciation of property, plant and equipment 1,156 1,190 2,418 Amortisation of intangible assets 907 2,249 4,565 Impairment of goodwill - - 16,496 Impairment of intangible assets - - 21,504 Impairment of property, plant and equipment - - 227 Loss/(profit) on disposal of property, plant and equipment 26 (30) 157 Share based payment expense - 15 21 Release of repayable grant - - (1,323) Finance income (96) (104) (169) Finance costs 481 140 392 Other exceptional items 1,276 - 362 Operating cash flows before movements in working capital 4,248 4,287 7,627 Decrease/(increase) in inventories 272 (922) (350) (Increase)/decrease in receivables (332) 203 724 (Decrease)/increase in payables and provisions (510) (423) 100 Cash generated by operations 3,678 3,145 8,101 Cash outflow related to exceptional costs (113) - (8) Income taxes received/(paid) 103 (21) 95 Net cash from operating activities 3,668 3,124 8,188 --------- --------- --------- Investing activities Purchases of other intangible assets (1,321) (1,743) (3,388) Purchases of property, plant and equipment (392) (959) (1,795) Disposals of property, plant and equipment 158 84 188 Interest received 96 104 169 Net cash used by investing activities (1,459) (2,514) (4,826) --------- --------- --------- Financing activities Proceeds from issue of shares for cash - 410 410 Repayments of borrowings (49) (324) (410) Interest paid (34) (140) (109) Dividends paid (353) (876) (876) Net cash used by financing activities (436) (930) (985) --------- --------- --------- Net increase/(decrease) in cash and cash equivalents 1,773 (320) 2,377 Effect of exchange rate differences 373 76 447 Cash and cash equivalents at beginning of period 26,554 23,730 23,730 --------- --------- --------- Cash and cash equivalents at end of period 28,700 23,486 26,554 ========= ========= =========
Unaudited consolidated statement of changes in equity
Share Share Other Retained Total capital premium reserves earnings account GBP000 GBP000 GBP000 GBP000 GBP000 At 1 April 2016 588 32,263 2,460 16,287 51,598 Profit for the period - - - 1,483 1,483 Other comprehensive income Foreign exchange translation differences on foreign currency net investment in subsidiaries - - 2,522 - 2,522 Remeasurement of defined benefit plan - - - 113 113 Tax effect on remeasurement of defined benefit plan - - - - - -------- -------- --------- --------- --------- Total comprehensive income - - 2,522 1,596 4,118 Transactions with owners Share based payments - - - - - Tax recognised on share based payments charged to equity reserves - - - - - Dividend Paid - - - (353) (353) Shares issued in the period (net of expenses) - - - - - At 30 September 2016 588 32,263 4,982 17,530 55,363 ======== ======== ========= ========= ========= At 1 April 2015 584 31,857 (1,281) 49,248 80,408 Profit for the period - - - 1,177 1,177 Other comprehensive income Foreign exchange translation differences on foreign currency net investment in subsidiaries - - 467 - 467 Remeasurement of defined benefit plan - - - 36 36 Tax effect on remeasurement of defined benefit plan - - - (12) (12) -------- -------- --------- --------- --------- Total comprehensive income - - 467 1,201 1,668 Transactions with owners Share based payments - - - 15 15 Tax recognised on share based payments - - - (5) (5) Dividend Paid - - - (876) (876) Shares issued in the period (net of expenses) 4 406 - - 410 At 30 September 2015 588 32,263 (814) 49,583 81,620 ======== ======== ========= ========= ========= At 1 April 2015 584 31,857 (1,281) 49,248 80,408 Loss for the period - - - (32,170) (32,170) Other comprehensive income Foreign exchange translation differences on foreign currency net investment in subsidiaries - - 3,741 - 3,741 Remeasurement of defined benefit plan - - - 102 102 Tax effect on remeasurement of defined plan - - - (34) (34) -------- -------- --------- --------- --------- Total comprehensive income/(loss) - - 3,741 (32,102) (28,361) Transactions with owners Share based payments - - - 21 21 Tax recognised on share based payments - - - (4) (4) Dividend Paid - - - (876) (876) Shares issued in the year (net of expenses) 4 406 - - 410 At 31 March 2016 588 32,263 2,460 16,287 51,598 ======== ======== ========= ========= =========
Notes to the Interim Financial Statements
For the six month period to 30 September 2016
1 Basis of preparation
The condensed financial statements for the six months ended 30 September 2016 have been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2016. The condensed financial information has been prepared using the same accounting policies and methods of computation used to prepare the Group's Annual Report for the year ended 31 March 2016 that are described on pages 46 to 54 of that report which can be found on the Group's website at www.idsplc.com. The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union.
There are no new standards or interpretations mandatory for the first time for the financial year ending 31 March 2016 that have a material effect on the half year results. The financial information for the six months ended 30 September 2016 and the comparative financial information for the six months ended 30 September 2015 has not been audited, but has been reviewed by the auditors. The comparative financial information for the year ended 31 March 2016 has been extracted from the 2016 Annual Report & Accounts. The financial information contained in this interim report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006 and does not reflect all of the information contained in the Group's Annual Report and financial statements. The annual financial statements for the year ended 31 March 2016, which were approved by the Board of Directors on 21 June 2016, received an unqualified audit report, did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 and have been filed with the Registrar of Companies.
Change in accounting policy relating to presentation only: the depreciation and amortisation previously shown on the face of the income statement has now been allocated among the cost categories to which it relates. This change does not impact the group profit or net assets. The changes made are highlighted in the table below:
Before Reclassification Reclassifications After Reclassification GBP000 H1 H1 H1 H1 H1 H1 2017 2016 2017 2016 2017 2016 Revenue 19,462 19,354 19,462 19,354 Cost of Sales (7,789) (7,240) (7,789) (7,240) ------------- ----------- -------- ---------- ------------ ----------- Gross Profit 11,673 12,114 11,673 12,114 Sales and marketing (4,297) (4,330) (68) (62) (4,365) (4,392) Research and development (795) (740) (107) (1,138) (902) (1,878) General and administrative expenses (3,766) (4,521) (481) (460) (4,247) (4,981) ------------- ----------- -------- ---------- ------------ ----------- Operating costs pre-exceptional items (8,858) (9,591) (656) (1,660) (9,514) (11,251) Exceptional items (1,276) - (1,276) - ------------- ----------- -------- ---------- ------------ ----------- Operating Costs (10,134) (9,591) (656) (1,660) (10,790) (11,251) Depreciation and amortisation (656) (1,660) 656 1,660 - - ------------- ----------- -------- ---------- ------------ ----------- Profit from operations 883 863 - - 883 863 ------------- ----------- -------- ---------- ------------ -----------
2 Revenue and segmental information
An analysis of the Group's revenue is as follows:
H1 2017 H1 FY 2016 2016 GBP000 GBP000 GBP000 ------------------------------ -------- ------- ------- 25-OH vitamin D 3,239 3,898 7,232 Other specialty 6,231 4,841 10,076 Instrument sales 441 418 983 ------------------------------ -------- ------- ------- Total automated 9,911 9,157 18,291 ------------------------------ -------- ------- ------- Automated revenue comprises: Operating lease rental 2,297 2,326 4,591 Reagent revenue 7,614 6,831 13,700 ------------------------------ -------- ------- ------- 25-OH vitamin D 1,130 1,698 2,867 Other specialty 3,569 3,243 6,933 Diametra 1,533 1,417 2,876 ------------------------------ -------- ------- ------- Total manual 6,232 6,358 12,676 ------------------------------ -------- ------- ------- Licensing and Technology 3,319 3,838 7,338 ------------------------------ -------- ------- ------- 19,462 19,354 38,305 ------------------------------ -------- ------- -------
Operating lease rental relates to contracts implicit in agreements for the placing of IDS-iSYS instruments with customers and the related sale of reagents.
Revenue categories were revised during the year ending 31 March 2016 to reflect the way revenue is monitored in the business. This has resulted in some revenue in the H1 2016 results previously categorised as Automated, Instrument and Manual being reclassified as Licensing and Technology. Revenue previously disclosed as Other Income is now fully categorised as Licensing and Technology.
The main activity of the Group is the development, manufacture and distribution of medical diagnostic products. As described on page 54 of the 2016 Annual Report & Accounts, the Group has determined that it has one operating segment as defined under IFRS 8, being the whole of the Group. As a result of this, no detailed segmental information is provided.
3 Exceptional items
The Group incurred a number of exceptional items during the current and previous financial periods:
H1 2017 H1 FY GBP000 2016 2016 GBP000 GBP000 ---------------------------------------------- -------- --------- Restructuring costs (1,276) - (362) Repayable grant release - - 1,323 Impairment of goodwill, intangible assets and tangible fixed assets - - (38,227) ------------------------------------- -------- -------- --------- Total exceptional items (1,276) - (37,266) ------------------------------------- -------- -------- ---------
In H1 2017, exceptional items relate to redundancy expenses driven by our cost reduction initiatives.
In the year-ended 31 March 2016, the Group consolidated automated product development and production into our Liege site, resulting in redundancy costs and an onerous lease provision in our Boldon location. We released a historical repayable grant amounting to GBP1.3m, upon obtaining written confirmation from the grantor that no further amount would be repayable. Additionally as a result of the annual impairment review performed at the end of FY2016 as required by IAS36, an asset impairment charge of GBP38.2m was recognised. More details on this charge can be found in notes 14 and 15 of the Annual Report and Accounts 2016.
4 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares relating to contingently issuable shares under the Group's share option scheme. At 30 September 2016, the performance criteria for the vesting of the awards under the option scheme had been met and consequently the shares in question are included in the diluted EPS calculation.
The calculations of earnings per share are based on the following profits and numbers of shares.
6 Months 6 Months Year ended ended ended 31 March 30 Sept 30 Sept 2016 2016 2015 GBP000 GBP000 GBP000 Profit/(loss) on ordinary activities after tax 1,483 1,177 (32,170) =========== =========== =========== No. No. No. Weighted average no of shares: For basic earnings per share 29,415,175 29,248,508 29,331,842 Effect of dilutive potential ordinary shares: -Share Options - 9,483 5,334 For diluted earnings per share 29,415,175 29,257,991 29,337,176 =========== =========== =========== Basic earnings per share 5.0p 4.0p (109.7p) Diluted earnings per share 5.0p 4.0p (109.7p) 6 Months 6 Months Year ended ended ended 31 March 30 Sept 30 Sept 2016 2015 2015 GBP000 GBP000 GBP000 Profit/(loss) on ordinary activities after tax as reported 1,483 1,177 (32,170) Exceptional items 1,258 - 33,555 Profit on ordinary activities after tax as adjusted 2,741 1,177 1,385 ========= ========= ========= Adjusted basic earnings per share 9.3p 4.0p 4.7p Adjusted diluted earnings per share 9.3p 4.0p 4.7p
5 Taxation
The estimated tax rate for the year on profit before exceptional items of -35% (H1 2016: -42%) has been applied to the profit before exceptional items for the six months to 30 September 2016. This has been added to the tax charge on exceptional and other items relating solely to the first half year to determine the total tax charge for the six months ending 30 September 2016.
In the Budget on 16 March 2016, the Chancellor announced planned reductions in the UK Corporation tax rate to 17% by 2020. These changes were substantively enacted on 6 September 2016. This will reduce the Group's future tax charge accordingly and so has been reflected in the calculation of deferred tax.
The Group recognises certain provisions and accruals in respect of tax which involve a degree of estimation and uncertainty where the tax treatment cannot be fully determined until a resolution has been reached by the relevant tax authority. This approach resulted in providing GBP695,000 at 30 September 2016 (GBP1,305,000 at 31 March 2016). The conclusion of audits by tax authorities in the six month period ending 30 September 2016 resulted in the release of GBP708,000 of this provision.
6 Provisions
Onerous Retirement/Leavers Warranty Dilapidation Lease Restructuring Provision Provision Provision Provision Provision Total GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 At 1 April 2016 644 54 541 234 - 1,473 Foreign exchange movement 64 5 - - - 69 Arising during the year - - - - 1,104 1,104 Reassessment in period (91) - - (41) - (132) At 30 September 2016 617 59 541 193 1,104 2,514 ====================== =========== ============== ========== =============== ======== At 1 April 2015 635 82 500 - - 1,217 Foreign exchange movement 9 1 - - - 10 Reassessment in period (36) - - - - (36) At 30 September 2015 608 83 500 - - 1,191 ====================== =========== ============== ========== =============== ======== At 1 April 2015 635 82 500 - - 1,217
Foreign exchange movement 47 4 - - - 51 Arising during the year - - - 234 - 234 Unwinding of discount - - 41 - - 41 Reassessment in year (38) (32) - - - (70) At 31 March 2016 644 54 541 234 - 1,473 ====================== =========== ============== ========== =============== ======== At 30 September 2016 Included in current liabilities 41 59 - - 1,104 1,204 non-current liabilities 576 - 541 193 - 1,310 617 59 541 193 1,104 2,514 ====================== =========== ============== ========== =============== ======== At 30 September 2015 Included in current liabilities - 83 - - - 83 non-current liabilities 608 - 500 - - 1,108 608 83 500 - - 1,191 ====================== =========== ============== ========== =============== ======== At 31 March 2016 Included in current liabilities - 54 - - - 54 non-current liabilities 644 - 541 234 - 1,419 644 54 541 234 - 1,473 ====================== =========== ============== ========== =============== ========
The retirement/ leavers provision relates to statutory requirements in France and Italy to pay amounts to retiring/ leaving employees under certain circumstances. There is no general assumption that employees will leave within the next 12 months, except for those impacted by the French restructure, and as such the provision relating to those included in the French restructure is classified as current, while the remainder is included within non-current liabilities.
The warranty provision relates to warranties given for the first year of operation of IDS-iSYS systems. This is reassessed each year. It is expected that these costs will be incurred in line with normal warranty terms of one year from the placements of the instrument.
The dilapidations provision relates to leased buildings in Boldon, UK and at its earliest will be required to be settled in July 2020, at the first break point in a 15-year lease signed in February 2015. The discounted expected future cash flows to restore the buildings amounted to GBP541,000 at the balance sheet date.
The onerous lease provision relates to the unused proportion of the leased buildings in Boldon following the decision taken in the year ending 31 March 2016 to move automated immunoassay related activities to the Liege site. The discounted expected future lease payments to be paid up to July 2020 amounted to GBP193,000 at the balance sheet date.
The restructuring provision relates to expected redundancy and related costs arising as a result of our cost reduction projects and is expected to be settled during the next twelve months.
7 Share Capital
6 Months 6 Months Year ended ended ended 31 March 30 Sept 2016 30 Sept 2015 2016 GBP000 GBP000 GBP000 Equity Shares Authorised: 75,000,000 Ordinary Shares of GBP0.02 each at 30 Sept 2016, 31 March 2016 and 30 September 2015 1,500 1,500 1,500 ======================== ======================== ================= Share Capital Allotted, called up and fully paid: 29,415,175 in issue at 1 April 2016 (1 April 2015: 29,215,175) 588 584 584 Issued on the exercise of share options - 4 4 29,415,175 in issue at 30 Sept 2016 (30 Sep 2015: 29,415,175, 31 Mar 2016: 29,415,175) 588 588 588 ======================== ======================== ================= Share Premium Balance brought forward 32,263 31,857 31,857 Premium on shares issued during the year - 406 406 32,263 32,263 32,263 ======================== ======================== =================
8 Financial assets and financial liabilities
The carrying value of the financial assets and liabilities are not materially different from their fair value.
9 Interim results
These results were approved by the Board of Directors on Thursday 24 November 2016. Copies of this interim report will be available to the public from the Group's registered office and www.idsplc.com.
Independent review report to Immunodiagnostic Systems Holdings PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2016 which comprises the Consolidated Interim Income Statement, Consolidated Interim Statement of Comprehensive Income, Consolidated Interim Balance Sheet, Consolidated Interim Cash Flow Statement, Consolidated Statement of Changes in Equity and the related notes 1 to 9. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half yearly financial report in accordance with International Accounting Standards 34, "Interim Financial Reporting", as adopted by the European Union.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland), 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report for the six months ended 30 September 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union.
Ernst & Young LLP
Newcastle upon Tyne
24 November 2016
This information is provided by RNS
The company news service from the London Stock Exchange
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November 25, 2016 03:00 ET (08:00 GMT)
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