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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 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMIDH
RNS Number : 5109X
Immunodiagnostic Systems Hldgs PLC
24 November 2017
24 November 2017
Immunodiagnostic Systems Holdings PLC
Unaudited Interim Results for the six month period ended 30 September 2017
Summary of Group Results
Hot Features
Premium
LFL* Change
%
GBPm H1 H1 H1 H1 2018 H1 2017
2018 2017 2016 v v
H1 2017 H1 2016
Group Revenue 18.7 19.5 19.4 (11%) (9%)
Automated Business
Revenue 11.6 9.9 9.2 8% (2%)
Manual Business Revenues 6.0 6.2 6.4 (10%) (11%)
Licensing & Technology
Business Revenue 1.0 3.3 3.8 (71%) (23%)
Adjusted** EBITDA 3.4 4.2 4.3
Profit from Operations 1.1 0.9 0.9
Closing Cash and Cash
Equivalents 29.7 28.7 23.5
----------------------------- ------ ------ ------ --------- ----------
* Like for like 'LFL' numbers have been restated to remove the impact of foreign exchange movements in the year by restating the H1 2017 and H1 2016 performance using the exchange rates during H1 2018.
** Before exceptional credit of GBP0.1m (H1 2017: cost of GBP1.3m; FY 2017: cost of GBP1.4m) - see reconciliation in the Financial Review section.
Key Business Developments H1 2018
In H1 2018 the rate of improvement in the Group's financial performance slowed versus recent H1 periods. In particular LFL Group revenue was down by 11% versus a decrease of 9% last year. The main driver for this decrease was the previously announced loss of the main customer in the Licensing and Technology business. On the positive side, Automated business revenue resumed growth at a rate of 8% LFL.
Adjusted EBITDA, our core metric for underlying profitability, dropped from GBP4.2m to GBP3.4m because the lost business was royalty income, and hence 100% gross margin.
The Operational KPIs show a slightly more positive picture:
a) Gross and net placement of new instruments in direct sales territories resumed their ascent, albeit at a relatively slow rate. Sales of instruments to our distributors has started to show growth;
b) The average number of assays on our instruments in direct sales territories increased by 0.5 to 4.3 year on year. We launched one new assay in the period which will contribute to driving the average number of assays up further;
c) In terms of overall efficiency, revenues per full time employee ("FTE") stagnated at GBP130,000 on an annualised basis.
As you will see in the Report of the CEO, most of these metrics have improved year on year, but not sequentially from H2 2017.
Operational KPIs
H1 2018 H1 H1
2017 2016
Gross Instrument Placements
- Direct Territories 18 15 9
Net Instrument Placements
- Direct Territories 9 5 (10)
Instrument Sales - Distribution
Territories 17 2 3
Average Assays Per Instrument 4.3 3.9 3.5
New Assay Launches 1 1 0
Annualised revenue per employee
GBP000's 130 129 115
--------------------------------- -------- ------ ------
During October 2017, our CEO Regis Duval, informed the Board that he wished to step down for personal reasons. As a result he left the Group effective from 31 October 2017, with the CEO position being taken over by Jaap Stuut. Jaap has been with the Group since 2013, and was previously responsible for the global marketing and corporate development of the Company, as well as having the direct sales responsibility for the USA and Brazil.
Jaap Stuut, CEO of IDS, commented:
"Having worked at IDS for four years, I was pleased to be asked by the Board to take over as Group CEO. My focus in the coming months will be on the sales organisation in both our Automated and Manual businesses. I will strive to improve the quality and training of the sales team, as well as the tools available to enable them to successfully engage with both existing and new customers.
The first half results show that underlying revenues in the IDS business, excluding the Licensing and Technology segment, remain stable, however I am confident that we can improve on this performance moving forward, and I look forward to returning the business to growth."
Notes :
Immunodiagnostic Systems Holdings plc ("IDS", "the Group" or "the Company"), is a specialist in-vitro diagnostic solution provider to the clinical laboratory market and producer of manual and automated diagnostic testing kits and instruments for the clinical market.
For further information:
Immunodiagnostic Systems Holdings Tel : +44 (0)191
PLC 519 0660
Jaap Stuut, 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.
Report of the CEO/Operational Report
Overview
On a like for like basis ("LFL") revenue declined by 11% in H1 2018 versus H1 2017. The majority of this decline was driven by the loss of antibody royalty income from a major customer, as announced in the previous year. Laboratory business revenue (i.e. the Automated business plus the Manual business) grew by 1% versus the same period in the previous year on a like for like basis. Below is a discussion of the main developments and actions undertaken in our business units.
1. Automated Business
1.1 Revenue Performance
We were able to grow the segment by 8% on a LFL basis in H1 2018. Details of the movements within this business unit are shown below:
LFL Change %
--------------------------------------------- ------------------
H1 2018 H1 2017 H1 2016 H1 18 v H1 17
GBP000 GBP000 GBP000 H1 17 v
H1 16
--------------- -------- -------- -------- -------- --------
25-OH Vitamin
D 3,317 3,239 3,898 (3%) (25%)
--------------- -------- -------- -------- -------- --------
Speciality
Assays 7,408 6,231 4,841 10% 16%
--------------- -------- -------- -------- -------- --------
Instrument
Sales &
Service 879 441 418 66% (5%)
--------------- -------- -------- -------- -------- --------
Total 11,604 9,911 9,157 8% (2%)
--------------- -------- -------- -------- -------- --------
1.2 Sales Process
During the first half, our sales team in the USA has been increased from four people to six. We are confident that we have not only enlarged our team, but also improved the capabilities significantly. However, due to the extended sales process involved in placing an instrument, we do not expect to reap the benefits until the next financial year.
During the second half of the year, attention will turn to the sales team in Western Europe which now falls under my direct responsibility.
In addition to improving the efficacy and number of employees in the sales team, we are continuing to refine our sales process. As noted in our FY 2017 Annual Report, our CRM system is now fully embedded within our sales team and processes, and used by the team on a daily basis. Now the emphasis will be on improving our lead selection/qualification process to ensure we focus on opportunities where the customer is likely to find an IDS analyser and our niche assay portfolio a good complement to their existing workhorse analysers. Alternatively we will look for opportunities where we can be the workhorse - for example this could be the case in a Physician's Office Laboratory ("POL").
In addition to working with our direct sales representatives, we have recently started to develop sales traction in a number of countries via our distributor network. We have re-deployed senior resources within the organisation to focus on this area, and have recruited a number of new employees to strengthen the team managing our distributors. In H1 2018 the number of instrument placements with our distributors increased to 17 from 2 in H1 2017. The distribution channel is anticipated to be a key driver of growth going forwards.
1.3 Assay Development
In H1 2018 we released one new automated assay with a CE mark, IDS-iSYS Free Testosterone. This brings our fertility panel to three assays (the other two assays being 17 OH Progesterone and Total Testosterone).
In total we now have an assay menu of 20 assays in Europe and 10 in the USA. We continue to have four assays available for sale in China. We have a target to launch a further three assays during the second half of 2018, bringing the total launches for the financial year to four new assays with CE-mark.
During the period we have recruited a new R&D Director, who has taken responsibility for all assay R&D activities. Changes have been made to re-organise the R&D team. A layer of management has been redeployed, so now all project team leaders report directly to the R&D director, with the aim of making the team more agile and project focussed.
1.4 Assays per Instrument
Average assays being run on each instrument stands at 4.3, versus 3.9 at H1 2017. However this metric has remained static versus the position at 31 March 2017, and during H2 we will focus on returning this metric to growth. Maximising the number of assays running on each instrument is important both to short term revenue growth, and to improving the "stickiness" of the instrument within the laboratory.
1.5 Instrument Placements
An analysis of instrument placements and sales over the previous five half-year periods is set out below:
H1 H2 H1 H2 H1
2018 2017 2017 2016 2016
Direct Gross
Placements 18 25 15 22 9
Direct Returns (9) (14) (10) (24) (19)
Direct Net
Placements 9 11 5 (2) (10)
Sales to Distributors 17 10 2 5 3
------------------------ ------ ------ ------ ------ ------
Direct instruments are those instruments which are sold or placed with reagent rental IDS end-user customers in the Group's core markets of the USA, Europe (excluding distributor territories of Spain and Italy) and Brazil.
Gross direct instrument placements improved to 18 in this half, from 15 in H1 2017. An improvement in the number of placements in Europe was offset by lower placements in the USA. Coupled with lower returns, all regions increased their installed base of analysers during the period.
Sales of instruments within our distribution network have improved significantly to 17 (H1 FY17: 2), reflecting our increased emphasis on this sales channel.
When looking at the two and a half years of placement history shown in the table above, the "big picture" emerging is that there is some improvement, albeit at a slow pace. At the current rate of growth we will take too long to return to the circa 100 gross new placements per annum the Group achieved four to five years ago. Secondly, the level of placements is below those achieved by our competitors when considered in relation to the size of our direct sales force: they equate to less than three gross new placements per annum. Thus the conclusion of the Board is that the company needs the CEO to focus his energy on improving sales team performance to best in class levels whilst also delivering the enhancements to the overall product offering to make us the "go to" provider of diagnostic equipment and assays in our chosen niche areas.
Average revenue per direct instrument ("ARPI") was GBP56,000 per annum (calculated on a rolling 12-month basis) (H1 2017: GBP52,000). The increase versus H1 2017 was mainly due to the impact of the weaker Pound Sterling which led to USD and Euro denominated iSYS revenue being worth more when converted into Pounds Sterling.
1.6 IDS-i10 analyser
The IDS-i10 analyser (formerly iSYS2) was presented to the market at the AACC conference in San Diego in September 2017. This device has a number of advantages when compared to the iSYS including a smaller footprint, the ability to connect to a laboratory track and a higher throughput. Importantly, it is more eco-friendly. The feedback we received was positive, with the enhancements appearing to meet customer wishes.
We are currently finalising the validation of the assays on the machine, and expect to make the first commercial sales of the IDS-i10 into the US market during the first half of calendar year 2018.
2. Manual Business
2.1 Revenue Performance
On a LFL basis, revenues in this business unit declined by 10% compared to the same period last year. Details of the movements within this business unit are shown below. We have not been able to compensate the migration of 25-OH Vitamin D to automated analysers with growth in our other assays. On the positive side the team at Diametra, the ELISA manufacturer IDS acquired in FY2015, did an outstanding job, returning to growth for the first time since acquisition.
LFL Change %
------------------------------------------------ ------------------
H1 2018 H1 2017 H1 2016 H1 18 v H1 17
GBP000 GBP000 GBP000 H1 17 v
H1 16
------------------ -------- -------- -------- -------- --------
25-OH Vitamin
D 660 1,130 1,698 (45%) (40%)
------------------ -------- -------- -------- -------- --------
Other Speciality
- IDS 3,419 3,569 3,243 (11%) 2%
------------------ -------- -------- -------- -------- --------
Diametra 1,932 1,533 1,417 18% (6%)
------------------ -------- -------- -------- -------- --------
Total 6,011 6,232 6,358 (10%) (11%)
------------------ -------- -------- -------- -------- --------
2.2 Sales Organisation
The Business Unit Director for our Manual business joined in November 2017, and during the second half of this financial year he will focus on filling out the remaining roles in the Manual business unit's organisational structure, as well as developing the strategic direction of the business in terms of key geographical markets and product lines.
Emphasis will be on recruiting a team capable of expanding and managing the existing IDS internal sales organisation as well as the distributor network. The distributor network for Automated business tends to be different to that of Manual business, and we have therefore decided to give each business unit direct responsibility for its distributor network, rather than have a central group. We are confident that there is significant room for improvement once we have the team in place, as this area has not received the required attention for many years.
3. Licensing & Technology Business
3.1 Revenue Performance
On a LFL basis, revenues in this business unit declined by 71% compared to the same period last year. Details of the movements within this business unit are show below:
LFL Change %
----------------------------------------------- -----------------
H1 2018 H1 2017 H1 2016 H1 18 H1 17
GBP000 GBP000 GBP000 v v
H1 17 H1 16
----------------- -------- -------- -------- ------- --------
Biologicals
/ Antibody 69 1,977 2,733 (97%) (35%)
----------------- -------- -------- -------- ------- --------
Instrumentation
& Ancillaries 973 1,342 1,105 (33%) 9%
----------------- -------- -------- -------- ------- --------
Total 1,042 3,319 3,881 (71%) (23%)
----------------- -------- -------- -------- ------- --------
On a LFL basis, Biologicals/Antibody royalty income has decreased by 97% due to the loss of business from our major customer. Revenue during H1 2018 was only GBP69k, meaning that moving forward the overall group growth rate cannot be suppressed by further declines in this income stream.
Instrumentation and ancillary technology income relates to revenue generated by selling our IDS instruments and related consumables to partners on an OEM basis. A total of four instruments were sold to partners during H1 2018 (H1 2017: 15).
This reduction has arisen as during 2017 significant income was generated selling instruments to the new strategic partners, who are using these machines for R&D purposes. There has now been a dip in revenues while these partners complete their development work, and revenue will then increase once these partners are able to bring their products to market and hence will require instruments for operational purposes.
3.2 Main Actions Taken During the Reporting Period
Responsibility for our biological antibody portfolio has been given to the new head of our Manual business unit. We will be actively looking to commercialise this antibody portfolio, while remaining cognisant of the risk of creating additional competition for IDS's range of automated and manual assays.
During the period we have worked closely with the partners to whom we have sold our instrument technology to assist them in developing their product portfolios. This is a multi-year process, but once a partner's development cycle is complete we would expect to see growing revenues in this business unit as sales of analysers and ancillaries will increase upon commercialisation of our partners' products. During the period we advanced negotiations with a number of partners to allow IDS to sell their products on IDS's base of instruments.
4 Human Resources
4.1 Functional Organisation
As announced in the 2017 Annual Report, we commenced a process of transitioning our organisational structure from a geographical model to a functional one. This process was substantially completed during the first half of the year. During the coming months we aim to leverage this new structure to share best practices across sites, enhance decision making ability and eliminate duplication of resources. This efficiency will offset the additional resource being added to our sales and distributor management teams.
4.2 Engagement Survey
During February 2017, the Group performed a survey to measure and understand the levels of employee engagement in the business. The results of the survey clearly showed that we had work to do to increase the level of engagement to a level that would be expected in a successful business. As a management team, we understand the critical importance in having an engaged and motivated workforce to help complete the turnaround of IDS. Putting it simply, I want IDS to be an organisation where our existing team enjoy coming to work, and an environment that new recruits want to come to work in.
During the first half of FY 2018, a number of workshops and seminars were held with a large number of staff. As a result of these, action plans were developed to address specific issues raised in the survey.
In September 2017 the engagement survey was re-performed, and I am pleased to say the results had improved significantly since February 2017. However, we still have a long way to go to reach the levels of engagement we believe are required to make us a world class business. We will perform another survey in February 2018, and I will update you on the results of this in the 2018 Annual Report.
4.3 IDS Mission, Values and Behaviours
During the half we created a cross-functional team to review the mission and core values of IDS, and the behaviours we believe should underpin these values. This project is substantially complete, and we will introduce these behaviours and values to the business during the second half of FY 2018. They will be incorporated into our people processes, becoming the foundation by which we conduct our daily business, and will govern the type of people we recruit in the future.
Financial review
Group revenues were GBP18.7m, a decrease of 4% compared to the revenues of GBP19.5m recorded in H1 2017. LFL revenues fell by 11%. Revenues in our laboratory business, excluding the Technology Business, grew by 1% on a LFL basis (H1 2017: decline of 6%) as growth in our Automated business offset decline in our Manual business.
Adjusted EBITDA (before exceptional items) was GBP3.4m, a reduction of GBP0.8m compared to H1 2017, with the loss of antibody royalty income in the Licensing and Technology business adversely impacting EBITDA by GBP1.9m.
A. SUMMARY OF INCOME STATEMENT
Restated Restated
H1 2017 FY 2017
H1 2018 (Note (Note
1) 1)
GBP000 GBP000 GBP000
------------------------------- --------- --------- ---------
Revenue 18,657 19,462 40,035
------------------------------- --------- --------- ---------
Gross profit 9,193 10,158 19,927
Gross margin 49.3% 52.2% 49.8%
Sales and marketing (4,561) (4,681) (9,488)
Research and development (920) (856) (2,230)
General and administrative (2,728) (2,462) (5,154)
------------------------------- --------- --------- ---------
Total operating costs (8,209) (7,999) (16,872)
Exceptional items 146 (1,276) (1,404)
------------------------------- --------- --------- ---------
Profit from operations 1,130 883 1,651
Add back
Depreciation and amortisation 2,424 2,063 4,658
Exceptional items (146) 1,276 1,404
------------------------------- --------- --------- ---------
Adjusted EBITDA 3,408 4,222 7,713
------------------------------- --------- --------- ---------
Cost reclassification - operational overheads, premises costs and depreciation
A number of reclassifications have been carried out in H1 2018, to reallocate certain costs to the Income Statement line which better reflects the nature of the cost, thus ensuring that the Group's financial performance can be more easily benchmarked with its peer group. Firstly, fixed operational and production overheads, which were previously shown on the face of the income statement within general and administrative expenses have been moved to cost of sales.
In addition, premises costs and depreciation for land and buildings which were originally included within General & Administrative have now been adjusted to either fall in cost of sales or sales and marketing dependent on the business carried out at each territory. This does not impact the net assets or profit from operations of the Group for any of the periods reported. A table detailing the impact of this reclassification is set out in note 1.
Foreign Exchange
During the period, IDS revenues have benefitted by around GBP1.5m (or 8%) as a result of the devaluation of the Pound Sterling. In the period, 66% (H1 2017: 55%) of the Group's revenues were in Euros, and 23% (H1 2017: 34%) were denominated in US Dollars. 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 base denominated in Euros and US Dollars, thus these costs have increased compared to H1 2017 when converted back into Pounds Sterling. The approximate net improvement in H1 2018 adjusted EBITDA as a result of the 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 2017 FY 2017
2018
------------------------ ------ -------- -----------------------
Sterling : US Dollar 1.29 1.39 1.32
Sterling : Euro 1.14 1.24 1.20
------------------------ ------ -------- -----------------------
Gross Profit
Gross profit was GBP9.2m (H1 2017: GBP10.2m) implying a gross margin of 49.3% (H1 2017: 52.2%). The decline in gross margin is due to the erosion of antibody royalty income, on which the Group recorded a 100% gross margin. Stripping out royalty income, gross margins improved by around 12%, mainly as a result of a favourable product mix and cost reduction initiatives.
Operating costs
The Group's total operating costs (before exceptional items) comprise:
H1 2018 H1 2017
restated
(Note
GBP000 1)
GBP000
------------------------- ------- ---------
Sales & marketing (4,561) (4,681)
Research & development (920) (856)
General & administrative (2,728) (2,462)
Operating costs
(pre-exceptional) (8,209) (7,999)
------------------------- ------- ---------
Total spend on operating costs has increased by GBP0.2m, to GBP8.2m (H1 2017: GBP8.0m). LFL operating costs (on a constant scope and FX rate) decreased by GBP0.5m.
Sales and marketing costs reduced by GBP0.1m, driven by efficiency savings in the technical and field services teams. R&D costs remained constant however lower spending on instrument R&D was offset by higher spending on assay R&D. G&A expenses increased by GBP0.3m, mainly due to higher spend on recruitment costs related to key hires within the sales and R&D teams.
The Group continues to explore different avenues to drive efficiencies into our cost base. During H1 2018 we commenced the process to vacate our offices in Milan and Paris, and combine the functions performed in these offices into our Spello and Pouilly plants respectively. This process will be completed during the second half of FY 2018.
Exceptional items
During the year ended 31 March 2017 the Group initiated a number of restructuring projects designed to rationalise the cost base of the business. These projects were focussed on making the organisation more efficient, while retaining the skills and competencies we need to return the business to profitable growth.
Below is a summary of the exceptional items during the current and previous financial period:
H1 2018 H1 FY
GBP000 2017 2017
GBP000 GBP000
------------------------------------------ -------- --------
Restructuring costs 146 (1,276) (1,631)
Impairment of goodwill, intangible
assets and tangible fixed assets - - 227
------------------------------------- ---- -------- --------
Total exceptional items 146 (1,276) (1,404)
------------------------------------- ---- -------- --------
In FY 2017, restructuring costs relate mainly to redundancy costs of GBP1.3m (recorded during H1 2017) and onerous lease costs of GBP0.3m (recorded during H2), offset by an impairment reversal of GBP0.2m as a result of the impairment review carried out at 31 March 2017.
In H1 2018, an exceptional credit of GBP0.1m was recorded, relating to the reversal of a portion of the onerous lease provision booked in H2 FY 2017.
Finance income/expense
Net finance income was GBP0.1m (H1 2017: expense GBP0.4m, FY 2017: expense GBP0.5m) 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 -14% (H1 2017: -198%) giving a tax credit of GBP174k (H1 2017: credit of GBP985k). Before exceptional items, prior year adjustments and the effect of rate changes on deferred tax balances, the effective rate is -21% (H1 2017: -51%). The effective tax rate is reduced by 35% 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 4.9p (H1 2017: 5.0p). Adjusted basic earnings per share are 4.5p (H1 2017: 9.3p). A reconciliation of these amounts is given in note 4.
Headcount
Compared to the 31 March 2017 headcount (on an FTE basis and including contractors) of 284 people, headcount has increased by 3 (30 September 2016: 302). The key drivers of the increase related to an increase in sales headcount in the USA, and the in-sourcing of software development for the IDS analysers. A summary of IDS headcount by function is given below:
Headcount (FTE basis) H1 2018 31 Mar H1 H1
17 2017 2016
Operations 127 127 137 148
Sales and Marketing 81 80 86 93
thereof field sales
force 22 20 21 18
Research and Development 43 41 44 54
General and administrative 36 36 35 41
Total 287 284 302 336
---------------------------- -------- ------- ------ ------
Annualised revenue per employee for the six months period ending 30 September 2017 stagnated at GBP130,000 per FTE (H1 2017: GBP129,000).
B. SUMMARY OF BALANCE SHEET
The Group's net assets at 30 September 2017 are GBP57.2m (30 September 2016: GBP55.4m).
C. SUMMARY OF CASH FLOW STATEMENT
IDS generated net cash flows from operations of GBP1.3m (H1 2017: GBP3.7m). During the period the Group increased inventory levels by GBP1.1m, mainly as a result of increased holding of iSYS analysers and a build-up in materials related to the i10 analyser.
Net cash used in investing activities was GBP1.8m (H1 2017: GBP1.5m), resulting in free cash outflow of GBP0.5m (H1 2017: inflow of GBP2.2m).
Net cash used in financing activities was GBP1.4m (H1 2017: GBP0.4m), the increase being mainly due to the higher dividend paid.
Free cash flow to equity, comprising dividends, share buybacks and capital repayments of debt amounted to GBP1.2m (H1 2017: GBP0.4m).
As at 30 September 2017, the Group's cash and cash equivalents reduced to GBP29.7m compared to 31 March 2017 (30 September 2016: GBP28.7m; 31 March 2017: GBP31.5m), largely due to the payment of dividend relating to FY 2017 and the build-up in stocks of analysers.
D. OUTLOOK
Moving into the second half of financial year 2018 we anticipate that the various business units will continue on similar trajectories to those seen during H1 2018. However as noted in the 2017 Annual Report, it will be difficult to exceed FY 2017 comparable revenue numbers.
The work Jaap is undertaking within the sales organisation will bear fruit in the medium term, however due to the lengthy sales cycle for an analyser we do not expect to see an improvement in trajectory from these actions during this financial year.
We remain confident that the strategy we are pursuing, which remains unchanged with our new CEO, will deliver the return to growth that is desired by all the employees and shareholders of the Group.
Unaudited consolidated interim income statement
For the six month period to 30 September 2017
Restated Restated
6 Months 6 Months Year ended
ended ended 31 March
30 Sept 30 Sept 2017
2017 2016
(Note (Note
1) 1)
Note GBP000 GBP000 GBP000
Revenue 2 18,657 19,462 40,035
Cost of sales (9,464) (9,304) (20,108)
Gross profit 9,193 10,158 19,927
Sales and marketing (4,561) (4,681) (9,488)
Research and development (920) (856) (2,230)
General and administrative (2,728) (2,462) (5,154)
----- --------- --------- -----------
Operating costs pre-exceptional
items (8,209) (7,999) (16,872)
Restructuring costs 146 (1,276) (1,631)
Impairment of goodwill
and other intangibles - - 227
Total exceptional items 3 146 (1,276) (1,404)
---------------------------------- ----- --------- --------- -----------
Operating costs (8,063) (9,275) (18,276)
Profit from operations 1,130 883 1,651
Finance income 258 96 169
Finance costs (134) (481) (629)
Profit before tax 1,254 498 1,191
Income tax credit 5 174 985 1,818
Profit for the period
attributable to owners
of the parent 1,428 1,483 3,009
===== ========= ========= ===========
Earnings per share
From continuing operations
Adjusted basic 4 4.5p 9.3p 14.8p
Adjusted diluted 4 4.5p 9.3p 14.8p
Basic 4 4.9p 5.0p 10.2p
Diluted 4 4.8p 5.0p 10.2p
Unaudited interim statement of other comprehensive income
For the six month period to 30 September 2017
6 Months 6 Months Year
ended
ended ended 31 March
30 Sept 30 Sept 2016
2017 2016
GBP000 GBP000 GBP000
Profit for the period 1,428 1,483 3,009
Other comprehensive income
to be reclassified to profit
or loss in subsequent periods:
Currency translation differences 228 2,522 2,558
Other comprehensive income
to be reclassified to profit
or loss in subsequent periods,
before and after tax 228 2,522 2,558
Other comprehensive income
not to be reclassified to
profit or loss in subsequent
periods:
Remeasurement of defined
benefit plan 13 113 (82)
--------- --------- ---------
Other comprehensive income
not to be reclassified to
profit or loss in subsequent
periods, before tax 13 113 (82)
Tax relating to other comprehensive - - -
income to be reclassified
to profit or loss in subsequent
periods
--------- --------- ---------
Other comprehensive income,
net of tax 241 2,635 2,476
--------- --------- ---------
Total comprehensive income
for the period
attributable to owners
of the parent 1,669 4,118 5,485
========= ========= =========
Unaudited consolidated interim balance sheet
As at 30 September 2017
30 September 30 September 31 March
2017 2016 2017
Note GBP000 GBP000 GBP000
Assets
Non-current assets
Property, plant and
equipment 7,877 9,416 8,505
Other intangible assets 10,777 9,786 10,450
Deferred tax assets 524 33 503
Other non-current assets 340 323 333
19,518 19,558 19,791
Current assets
Inventories 8,736 8,035 7,572
Trade and other receivables 7,239 7,784 7,648
Income tax receivable 2,518 3,093 2,229
Cash and cash equivalents 29,652 28,700 31,495
48,145 47,612 48,944
----- ------------- ------------- ---------
Total assets 67,663 67,170 68,735
----- ------------- ------------- ---------
Liabilities
Current liabilities
Short-term portion of
long-term borrowings 80 98 77
Trade and other payables 6,590 6,378 7,484
Income tax payable 192 48 53
Provisions 6 395 1,204 424
Deferred income 154 79 181
7,411 7,807 8,219
----- ------------- ------------- ---------
Net current assets 40,734 39,805 40,725
----- ------------- ------------- ---------
Non-current liabilities
Long-term portion of
long-term borrowings 1,245 1,290 1,252
Provisions 6 1,176 1,310 1,611
Deferred tax liabilities 611 1,400 921
3,032 4,000 3,784
Total liabilities 10,443 11,807 12,003
----- ------------- ------------- ---------
Net assets 57,220 55,363 56,732
===== ============= ============= =========
Total equity
Called up share capital 7 588 588 588
Share premium account 7 32,263 32,263 32,263
Other reserves 5,246 4,982 5,018
Retained earnings 19,123 17,530 18,863
Equity attributable
to owners of the parent 57,220 55,363 56,732
===== ============= ============= =========
Unaudited consolidated interim cash flow statement
For the six month period to 30 September 2017
6 Months 6 Months Year
ended
ended ended 31 March
30 Sept 30 Sept 2017
2017 2016
GBP000 GBP000 GBP000
Profit before tax 1,254 498 1,191
Adjustments for:
Depreciation of property,
plant and equipment 1,452 1,156 2,723
Amortisation of intangible
assets 972 907 1,935
Impairment of property,
plant and equipment - - (227)
Loss on disposal of property,
plant and equipment 7 26 89
Share based payment expense 8 - 2
Finance income (162) (96) (169)
Finance costs 38 481 630
Other exceptional items (146) 1,276 1,631
Operating cash flows before
movements in working capital 3,423 4,248 7,805
(Increase)/decrease in inventories (1,063) 272 519
Decrease/(increase) in receivables 457 (332) (197)
(Decrease)/increase in payables
and provisions (1,006) (510) 721
Cash generated by operations 1,811 3,678 8,848
Cash outflow related to
exceptional costs (299) (113) (1,208)
Income taxes (paid)/received (163) 103 796
Net cash from operating
activities 1,349 3,668 8,436
--------- --------- ---------
Investing activities
Purchases of other intangible
assets (1,204) (1,321) (3,039)
Purchases of property, plant
and equipment (894) (392) (1,471)
Disposals of property, plant
and equipment 123 158 712
Interest received 162 96 169
Net cash used by investing
activities (1,813) (1,459) (3,629)
--------- --------- ---------
Financing activities
Purchase of own shares (12) - -
Repayments of borrowings (46) (49) (96)
Interest paid (134) (34) (88)
Dividends paid (1,177) (353) (353)
Net cash used by financing
activities (1,369) (436) (537)
--------- --------- ---------
Net (decrease)/increase
in cash and cash equivalents (1,833) 1,773 4,270
Effect of exchange rate
differences (10) 373 671
Cash and cash equivalents
at beginning of period 31,495 26,554 26,554
--------- --------- ---------
Cash and cash equivalents
at end of period 29,652 28,700 31,495
========= ========= =========
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 2017 588 32,263 5,018 18,863 56,732
Profit for the
period - - - 1,428 1,428
Other comprehensive
income
Foreign exchange
translation differences
on foreign currency
net investment
in subsidiaries - - 228 - 228
Remeasurement
of defined benefit
plan - - - 13 13
Total comprehensive
income - - 228 1,441 1,669
Transactions
with owners
Share based payments - - - 8 8
Dividend Paid - - - (1,177) (1,177)
Purchase of own
shares - (12) (12)
At 30 September
2017 588 32,263 5,246 19,123 57,220
======== ======== ========= ========= ========
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
Total comprehensive
income - - 2,522 1,596 4,118
Transactions
with owners
Share based payments - - - - -
Dividend Paid - - - (353) (353)
At 30 September
2016 588 32,263 4,982 17,530 55,363
======== ======== ========= ========= ========
At 1 April 2016 588 32,263 2,460 16,287 51,598
Profit for the
period - - - 3,009 3,009
Other comprehensive
income
Foreign exchange
translation differences
on foreign currency
net investment
in subsidiaries - - 2,558 - 2,558
Remeasurement
of defined benefit
plan - - - (82) (82)
Total comprehensive
income - - 2,558 2,927 5,485
Transactions
with owners
Share based payments - - - 2 2
Dividend Paid - - - (353) (353)
At 31 March 2017 588 32,263 5,018 18,863 56,732
======== ======== ========= ========= ========
Notes to the Interim Financial Statements
For the six month period to 30 September 2017
1 Basis of preparation
The unaudited condensed financial statements for the six months ended 30 September 2017 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 2017. The unaudited 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 2017 that are described on pages 48 to 56 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 2017 that have a material effect on the half year results. The financial information for the six months ended 30 September 2017 is not reviewed by Ernst & Young LLP and accordingly no opinion has been given. The comparative financial information for the year ended 31 March 2017 has been extracted from the 2017 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 2017, which were approved by the Board of Directors on 20 June 2017, 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: Operational overheads such as indirect salaries and consumables relating to production, premises costs and land and buildings depreciation previously shown below the gross profit line within operating costs have now been allocated to cost of sales or other operating cost categories better reflecting the nature of those costs. This reallocation also brings the Group's results in line with its peers. This change does not impact the Group profit. The changes made are highlighted in the table below:
H1 2018 Before Operational Premises After
Reclassification Overheads Reclassification Reclassification
Reclassification
GBP000 GBP000 GBP000 GBP000
Revenue 18,657 18,657
Cost of sales (8,008) (1,150) (306) (9,464)
------------------ ------------------ ------------------ ------------------
Gross profit 10,649 (1,150) (306) 9,193
Sales and marketing (4,279) (282) (4,561)
Research and development (966) 46 (920)
General and administrative (4,420) 1,150 542 (2,728)
------------------ ------------------ ------------------ ------------------
Operating costs
pre-exceptional
items (9,665) 1,150 306 (8,209)
Exceptional items 146 146
------------------ ------------------ ------------------ ------------------
Operating costs (9,519) 1,150 306 (8,063)
Profit from operations 1,130 - - 1,130
------------------ ------------------ ------------------ ------------------
H1 2017 Before Operational Premises After
Reclassification Overheads Reclassification Reclassification
Reclassification
GBP000 GBP000 GBP000 GBP000
Revenue 19,462 19,462
Cost of sales (7,789) (1,080) (435) (9,304)
------------------ ------------------ ------------------ ------------------
Gross profit 11,673 (1,080) (435) 10,158
Sales and marketing (4,365) (316) (4,681)
Research and development (902) 46 (856)
General and administrative (4,247) 1,080 705 (2,462)
------------------ ------------------ ------------------ ------------------
Operating costs
pre-exceptional
items (9,514) 1,080 435 (7,999)
Exceptional items (1,276) (1,276)
------------------ ------------------ ------------------ ------------------
Operating costs (10,790) 1,080 435 (9,275)
Profit from operations 883 - - 883
------------------ ------------------ ------------------ ------------------
FY 2017 Before Operational Premises After
Reclassification Overheads Reclassification Reclassification
Reclassification
GBP000 GBP000 GBP000 GBP000
Revenue 40,035 40,035
Cost of sales (17,056) (2,225) (827) (20,108)
------------------ ------------------ ------------------ ------------------
Gross profit 22,979 (2,225) (827) 19,927
Sales and marketing (8,824) (664) (9,488)
Research and development (2,313) 83 (2,230)
General and administrative (8,787) 2,225 1,408 (5,154)
------------------ ------------------ ------------------ ------------------
Operating costs
pre-exceptional
items (19,924) 2,225 827 (16,872)
Exceptional items (1,404) (1,404)
------------------ ------------------ ------------------ ------------------
Operating costs (21,328) 2,225 827 (18,276)
Profit from operations 1,651 - - 1,651
------------------ ------------------ ------------------ ------------------
2 Revenue and segmental information
An analysis of the Group's revenue is as follows:
H1 2018 H1 2017 FY 2017
GBP000 GBP000 GBP000
------------------------------- -------- -------- --------
25-OH vitamin D 3,317 3,239 6,773
Other specialty 7,408 6,231 13,257
Instrument sales 879 441 1,343
------------------------------- -------- -------- --------
Total automated 11,604 9,911 21,373
------------------------------- -------- -------- --------
Automated revenue comprises:
Operating lease rental 2,446 2,297 4,660
Reagent revenue 9,158 7,614 16,713
------------------------------- -------- -------- --------
25-OH vitamin D 660 1,130 2,063
Other specialty 3,419 3,569 7,367
Diametra 1,932 1,533 3,351
------------------------------- -------- -------- --------
Total manual 6,011 6,232 12,781
Biologicals / Antibody 69 1,977 2,767
Instrumentation & Ancillaries 973 1,342 3,114
------------------------------- -------- -------- --------
Licensing and Technology 1,042 3,319 5,881
18,657 19,462 40,035
------------------------------- -------- -------- --------
Operating lease rental relates to contracts implicit in agreements for the placing of IDS-iSYS instruments with customers and the related sale of reagents.
The Group applies IFRS 8 Operating Segments. IFRS 8 provides segmental information for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Group considers that the role of chief operating decision-maker is performed by the Board of Directors.
Following a significant restructuring of the Group that began in 2013/14 the business was directed and monitored on a functional basis.
Analysis of revenue is prepared and monitored on a geographical basis due to the organisation of the sales teams as well as by product type. However, earnings on a geographical basis are not considered the most appropriate measure of performance given the differing nature of operations across the different territories.
No further detailed segmental information is provided in this note, as there is only one operating segment. While the key decision makers review revenue based on the segments shown in Note 2, as a result of the structure of the business and the financial systems in place, operating profit cannot be determined for these revenue segments. Therefore the key decision makers only review the operating profit performance of the business as a whole.
All earnings, balance sheet and cash flow information received and reviewed by the Board of Directors is prepared at a Group level.
The Group determined that it had one operating segment as defined under IFRS 8, being the whole of the Group.
3 Exceptional items
The Group incurred a number of exceptional items during the current and previous financial periods:
H1 2018 H1 FY
GBP000 2017 2017
GBP000 GBP000
------------------------------------------ -------- --------
Restructuring income / (costs) 146 (1,276) (1,631)
Impairment of goodwill, intangible
assets and tangible fixed assets - - 227
------------------------------------- ---- -------- --------
Total exceptional items 146 (1,276) (1,404)
------------------------------------- ---- -------- --------
In H1 2018, an exceptional credit of GBP0.1m was recorded, relating to the reversal of a portion of the onerous lease provision booked in H2 FY 2017.
In H1 2017, exceptional items relate to redundancy expenses driven by our cost reduction initiatives.
In the year ended 31 March 2017, the restructuring costs related mainly to redundancy costs of GBP1.2m and onerous lease costs of GBP0.4m, offset by an impairment reversal of GBP0.2m as a result of the impairment review carried out at 31 March 2017.
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 2017, 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 2017
2017 2016
GBP000 GBP000 GBP000
Profit on ordinary
activities after tax 1,428 1,483 3,009
=========== =========== ===========
No. No. No.
Weighted average no
of shares:
For basic earnings
per share 29,413,891 29,415,175 29,415,175
Effect of dilutive
potential ordinary
shares:
-Share Options 61,853 - 247
For diluted earnings
per share 29,475,744 29,415,175 29,415,422
=========== =========== ===========
Basic earnings per
share 4.9p 5.0p 10.2p
Diluted earnings per
share 4.8p 5.0p 10.2p
6 Months 6 Months Year
ended
ended ended 31 March
30 Sept 30 Sept 2017
2017 2016
GBP000 GBP000 GBP000
Profit on ordinary activities
after tax as reported 1,428 1,483 3,009
Exceptional items after
tax (111) 1,258 1,353
Profit on ordinary activities
after tax as adjusted 1,317 2,741 4,362
========= ========= =========
Adjusted basic earnings
per share 4.5p 9.3p 14.8p
Adjusted diluted earnings
per share 4.5p 9.3p 14.8p
5 Taxation
The estimated tax rate for the year on profit before exceptional items of -21% (H1 2017: -35%) has been applied to the profit before exceptional items for the six months to 30 September 2017. 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 2017.
The Group's tax rate is substantially impacted by the claims for R&D relief in certain territories, leading to an overall negative effective rate.
6 Provisions
Onerous
Retirement/Leavers Warranty Dilapidation Lease Restructuring
Provision Provision Provision Provision Provision Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April 2017 681 42 541 513 258 2,035
Foreign exchange movement 21 1 - 5 8 35
Utilised during the period - - (62) (151) (161) (374)
Release in the period (11) (37) - (77) - (125)
At 30 September 2017 691 6 479 290 105 1,571
=================== =========== ============== ========== =============== ========
At 1 April 2016 644 54 541 234 - 1,473
Foreign exchange movement 64 5 - - - 69
Arising during the period - - - - 1,104 1,104
Utilised during the period - - - (41) - (41)
Release in the period (91) - - - - (91)
At 30 September 2016 617 59 541 193 1,104 2,514
=================== =========== ============== ========== =============== ========
At 1 April 2016 644 54 541 234 - 1,473
Foreign exchange movement 57 5 - - - 62
Arising during the year - - - 165 258 423
Unwinding of discount - - - 7 - 7
Reassessment in the year (20) (17) - 107 - 70
At 31 March 2017 681 42 541 513 258 2,035
=================== =========== ============== ========== =============== ========
At 30 September 2017
Included in current liabilities - - - 290 105 395
non-current
liabilities 691 6 479 - - 1,176
691 6 479 290 105 1,571
=================== =========== ============== ========== =============== ========
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 31 March 2017
Included in current liabilities - 42 - 124 258 424
non-current
liabilities 681 - 541 389 - 1,611
681 42 541 513 258 2,035
=================== =========== ============== ========== =============== ========
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.
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 two leased buildings in Boldon, UK. At its earliest, one building will be required to be settled in July 2020, at the first break point in a 15-year lease signed in February 2015. Due to the advanced stage of negotiations with a replacement tenant for the surplus building, management feel there is a high degree of certainty over the dilapidation obligation required to be settled in this financial year. The discounted expected future cash flows to restore the buildings amounted to GBP479,000 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 GBP184,000 at the balance sheet date, a reduction from the year ending 31 March 2017 expected future lease payments, as management are currently finalising the exit of the lease.
The remainder of this onerous lease provision relates to the unused proportion of the leased sales office in Paris following the restructure in IDS France in the year ending 31 March 2017. The expected future lease payments to be paid up to 31 July 2018 amounted to GBP106,000 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 2017 30 Sept 2016 2017
GBP000 GBP000 GBP000
Equity Shares
Authorised:
75,000,000 Ordinary Shares of GBP0.02 each at
30 Sept 2017, 31 March 2017 and 30 September
2016 1,500 1,500 1,500
======================== ======================== =================
Share Capital
Allotted, called up and fully paid:
29,411,297 (30 September 2016: 29,415,175, 31
March 2017: 29,415,175) Ordinary shares of 2p
each (excluding own shares held) 588 588 588
Own shares held of 2p each 3,878 (30 Sep 2016:
nil, 31 March 2017: nil) - - -
588 588 588
======================== ======================== =================
Share Premium
Balance brought forward and carried forward 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 Friday 24 November 2017. Copies of this unaudited interim report will be available to the public from the Group's registered office and www.idsplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLBDBSDDBGRS
(END) Dow Jones Newswires
November 24, 2017 11:30 ET (16:30 GMT)
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