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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Bbi Hldgs | LSE:BBI | London | Ordinary Share | GB00B00M4S16 | ORD 2.5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 185.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:6152J BBI Holdings PLC 11 December 2007 11 December 2007 INTERIM RESULTS For the 6 months ended 30 September 2007 BBI Holdings Plc ("BBI" or "the Group"), the AIM listed developer and manufacturer of rapid result diagnostic tests and reagents for the diagnostic industry, announces interim results for the year ended 30 September 2007. BBI operates in three main areas: 1. Diagnostics - specialising in the development and manufacture of non-invasive lateral flow tests which can give a quick and effective diagnosis to patients at the bedside or in a doctor's surgery without recourse to costly and time-consuming laboratory analysis. 2. Healthcare - specialising in the sale and distribution of diabetes and healthcare related products 3. Enzymes - following the acquisiton of Theratase plc BBI is a world leader in natural enzyme manufacture which significantly expands BBI's reagent capacity across a broad range of auto analyser diagnostics. Financial Highlights: * Turnover up 115% to #9.55m (2006: #4.43m) * Gross profit up 85% to #5.17m (2006: #2.80m) * Operating profit up 43% to #1.14m (2006: #0.80m) * EBITA (after share based payments) up 76.5% to #1.64m (2006: #0.93m) * Basic EPS of 1.62p (2006: 2.33p) - influenced by shares issued for Theratase acquisition Other Highlights * Acquisition of Alchemy Laboratories Ltd in May 2006 * Acquisition of Theratase successfully completed to form BBI's Enzyme Division * Theratase and earlier acquisitions delivering significant increase in revenue * 510k clearances on two products developed and manufactured by BBI: Verax PGD and Focus HSV-2 assays * BBI's quality gold accredited globally as benchmark reference standard by NIST (The National Institute of Standards and Technology) * Launch of Hypobox - the integrated hypoglycaemia solution * Management strengthened with recruitment of two new divisional CEOs * New Cardiff premises due to team expansion David Evans, Chairman, said: "In my statement in the 2007 report and accounts, I explained that the impact of a number of opportunities would be experienced in the second half of the current year. We have made good progress towards achieving our goals for this year, and while our growth targets remain stretching and demanding we remain confident that they can be achieved. "Our acquisition strategy remains extremely important. A number of opportunities are being progressed, and I look forward to reporting on these in the near future." For further information: BBI Holdings plc Cenkos Securities plc Parkgreen Communications Ltd Julian Baines, CEO Ian Soanes / Adrian Hargrave Paul McManus Tel: 029 2074 7232 Tel: 020 7397 8900 Tel: 020 7479 7933 Mob. 07980 541 893 www.bbigold.com Email: paul.mcmanus@parkgreenmedia.com Background notes: About BBI Holdings PLC (LSE: BBI): BBI specialises in the development and manufacture of non-invasive lateral flow tests, or In Vitro Diagnostics (IVD). Such tests offer a rapid and cost effective diagnosis for the Point of Care (POC) market, as they are not laboratory based and can be used at the bedside/doctor's surgery. BBI derives income from four core areas within the research, development, and manufacture of IVDs: Gold Colloid/Conjugate Manufacture. BBI has achieved a global reputation for manufacturing superior quality gold reagents. These are bound to specific antibodies or antigens and incorporated into diagnostic tests, to provide a positive or negative visual signal. Gold is an excellent indicator for sensitivity-based tests. Contract Product Development. BBI has many years' experience in working with customers to develop rapid point of care tests. The first project entered into in 2001 was with Merck to develop five rapid tests to detect food-borne pathogens. Since then BBI has worked with many leading diagnostic companies including Phadia (formerly Pharmacia Diagnostics), Kimberley Clark, and Becton Dickinson. Rapid Test Manufacture. BBI can manufacture tests in the UK or the US. Rapid test manufacture involves placing conjugate onto a pad or strip and enclosing this within a preformed plastic package 'housing' designed to the customer's specifications. BBI expects this area to grow significantly over the coming years, as more and more contract development projects are transferred to manufacture and products launched in the market place. BBI Healthcare. In April 2004 BBI acquired Hypostop (now renamed GlucoGel in the UK). GlucoGel is an easy to use dextrose gel which is recommended by the National Institute for Clinical Excellence (NICE) to manage hypoglycaemia. In July 2006 BBI acquired a talking blood glucose meter reader for the visually impaired called SensoCard plus. The acquisition gives BBI exclusive distribution rights for SensoCard plus within the UK and shared rights for the US, Canada and India. Chairman's statement Introduction and overview I am pleased to report that the Group has continued to perform strongly in the first six months of 2007-08. Turnover for the period is up 115.4% over the equivalent period last year and while much of this growth comes from the acquisition of Theratase we have continued to see organic growth, with the group excluding Theratase having delivered revenue growth of 17.7% in the first six months. Profit growth has continued with operating profit up 42.9%. Strategy BBI's business is the development, manufacture and supply of diagnostic reagents, rapid tests, and products to assist the management of diabetes. The Group's aim is to grow and develop the business through: * Investing in new technology, both through forming strategic alliances with early- to mid-stage technology companies such as Quotient Diagnostics, Platform Diagnostics and GeneEx and through the internal development of intellectual property * Protecting and growing our core businesses * Making further acquisitions in related areas where we can add value by introducing our successful commercial strategy to them. Operating Review Diagnostics Division The division's business is the supply of colloidal gold, and the contract development and manufacture of lateral flow point of care tests. Diagnostics, under the leadership of Lyn Rees, represented 39% of total group turnover for the period, and has continued to show strong growth. The highlights for the division in the first six months include the achievement of two 510(k) clearances by our customers for products we designed and which we manufacture. The most important of these is for Verax's PGD test for bacterial contamination in blood platelets. Full scale manufacture of this test will commence in the second half of the year. The second 510(k) covers Focus's HSV-2 test which uses BBI's patented technology for the separation of HSV-2 (genital herpes) from the more common and less serious HSV-1 (cold sore) virus. Focus have product marketing rights for the USA and Europe: BBI retains the rights for the rest of the world, and is currently considering its options for commercialisation of the product in these markets. In addition the division has benefited from the contribution from the Simplify and SimpiRED products acquired in March 2007 from Agen. Production of these products is in the process of being transferred from Australia to the Group's facility in Dundee and will come fully on stream during the early part of 2008, leading to a margin improvement. During the period the Group has incurred #140,000 in relation to the product transfer which has been charged to the profit and loss account. Diagnostics has facilities in Cardiff, Dundee, Glasgow, and Madison in the USA. Life Sciences Division Dr Peter Corish has joined the Group to head our new Life Sciences division. The key goals of this division are to extend BBI's reputation and revenue in the life science research, molecular diagnostics, and nanoparticle markets, and to identify, evaluate and acquire next-generation Point of Care diagnostics in support of BBI's core business strategy. Life Sciences will be reported separately from 2008-09. Healthcare Division Healthcare distributes a range of products for use by diabetics from its base in Swansea, and represents 16% of turnover. The division's flagship product is GlucoGel, a dextrose gel used by diabetes patients when they experience hypoglycaemia. In addition the Healthcare division distributes GlucoTabs, a glucose tablet, and Sensocard Plus, a talking blood glucose meter designed for use by the visually impaired. The division has been successful in placing GlucoTabs with a wide range of wholesalers and retailers including Boots and Asda. Work to achieve 510(k) clearance for Sensocard Plus in the USA continues. Useful feedback has been received and clearance is now anticipated for the first half of calendar 2008. In November, Healthcare launched Hypobox, a solution designed for use on hospital wards or in the workplace for the treatment of hypoglycaemia. Hypobox contains both GlucoGel and GlucoTabs, as well as some third party products and information on treatment of an attack. This offering has been well received by our target audience. BBI is pleased that Mike Younghusband, formerly UK managing director of Axis-Shield, has recently joined the Group as the CEO of the Healthcare division. Enzyme Division On 15 May 2007, the Group completed the acquisition of Theratase plc for a total consideration of #24m in cash and shares. As part of this acquisition the convertible loan stock of #7.5m was converted into ordinary shares. Theratase now forms BBI's Enzyme division, and in the first half of 2007/08 represented 45% of Group turnover. The division has two operating businesses, Biozyme, based in Blaenavon in South Wales, and Seravac, which is located in Cape Town, South Africa. There is also a shared sales office in San Diego. The Enzyme Division has continued to have great success supplying glucose oxidase to manufacturers of blood glucose meters for use by diabetics. To maximise the Division's future potential, improved commercial resources have been made available and further capital resources will need to be expended for the Group to maintain and grow this division. Following the acquisition of Theratase, Colin Anderson and John Chesham, who continues to lead the division, have both joined the BBI board as executive directors. Financial Review International Financial Reporting Standards These are the first interim accounts produced by the Group in accordance with International Financial Reporting Standards (IFRS). Comparative financial information for 2006/07 has been adjusted in accordance with IFRS. A reconciliation of the differences between IFRS and UK GAAP is given in note 11 of this report. Turnover Turnover has increased by 115.4% over the same period last year to #9.55m (2006: #4.43m). Of the increase, #4.33m was contributed by Theratase which was acquired during the period. Continuing businesses grew by 17.7% to #5.22m, with Diagnostics growing by 21.6% and Healthcare by 9.0%. Gross Margin Gross profit has increased by 84.7% to #5.17m (2006: #2.80m). The gross margin percentage of 54% (2006: 63%) has been influenced both by the acquisition of Theratase and by additional production resources within Diagnostics in anticipation of second half growth. Other operating expenses Other operating expenses (excluding the amortisation of intangibles) have increased by 85.7% from #1.94m to #3.60m. At 30 September 2007 the Group employed 258 people, up from 119 at the equivalent point last year. Operating profit and earnings per share Operating profit, which is stated after amortisation of intangibles and a charge for share-based payments of #72,000 (2006: #70,000), has increased by 42.9% to #1.14m (2006: #0.80m). The Group believes that earnings before interest tax and amortisation (EBITA) is a more useful measure of underlying performance. EBITA, after taking out the effect of share based payments, is #1.64m (2006: #0.93m), an increase of 76.5%. Basic earnings per share of 1.62p per share (2006: 2.33p) have been influenced by the shares issued in the first half in connection with the acquisition of Theratase. Dividends BBI paid a dividend of 0.5p per ordinary share in existence prior to the acquisition of Theratase on 31 May 2007, at a total cost of #134,000. Balance Sheet Following the acquisition of Theratase and the acquisition of product technology from Agen, goodwill and other intangible assets have increased to #35.0m (2006: #8.9m). The increase in investments is largely the result of further investments in Platform Diagnostics made in line with the agreement with that company and Carclo Plc and the investment the Theratase Group has in Alloksys Life Sciences B.V. Inventories have significantly increased to #3.34m (2006: #0.49m) largely as a result of the Theratase acquisition, as have trade and other receivables (2007: #4.90m, 2006: #1.81m), and current trade and other creditors (2007: #3.53m, 2006: #0.72m). Total equity has increased by 206% to #35.87m (2006: #11.73m). Cash and Debt The acquisition of Theratase was partly funded by new debt from Barclays Bank plc. As a result, the Group has net debt at the end of September of #2.57m (2006: net cash of #0.85m). Outlook The acquisition of Theratase has accelerated the Group's transformation into a significant player in the world diagnostic reagents business. As a supplier of the key component into over 4.5 billion tests worldwide per annum, the Group can now count all the world's top diagnostics businesses amongst its customer base. In my statement in the 2007 report and accounts, I explained that the impact of a number of opportunities would be experienced in the second half of the current year. We have made good progress towards achieving our goals for this year, and while our growth targets remain stretching and demanding we remain confident that they can be achieved. Our acquisition strategy remains extremely important. A number of opportunities are being progressed, and I look forward to reporting on these in the near future. The future success of the Group is dependent on its ability to attract and retain staff of a high calibre. I would like to extend my and the Board's thanks to all of BBI's employees whose hard work and dedication has been vital to the Group's success so far. I would also like to thank our investors for their support in providing a base upon which the Group's future can be built. David Evans 11 December 2007 Condensed consolidated income statement Six months ended 30 September 2007 (unaudited) Note Six months Six months Year ended ended 30 ended 30 31 March as September September restated 2007 as restated (see note #'000 (see note 11) 2007 11)2006 #'000 #'000 Revenue 3 9,546 4,431 9,732 Cost of sales (4,378) (1,633) (3,428) Gross profit 5,168 2,798 6,304 Amortisation of intangible (424) (59) (163) assets Other administration expenses (3,602) (1,940) (4,003) Total administration expenses (4,026) (1,999) (4,166) Operating profit 1,142 799 2,138 Investment revenues 41 26 33 Finance costs (286) (48) (150) Profit before tax 897 777 2,021 Tax 4 (269) (182) (548) Profit for the period 628 595 1,473 Earnings per share Basic 6 1.62p 2.33p 5.63p Diluted 6 1.49p 1.79p 4.31p All activities derive from continuing operations. Condensed consolidated balance sheet As at 30 September 2007 (unaudited) 30 30 31 September September March 2007 2006 2007 #'000 #'000 #'000 Assets Non-current assets Goodwill 21,867 6,742 7,665 Other intangible assets 13,152 2,109 3,462 Property, plant and equipment 3,983 1,637 1,904 Investments 1,131 702 784 Deferred tax asset 269 75 51 40,402 11,265 13,866 Current assets Inventories 3,343 486 583 Trade and other receivables 4,896 1,806 2,800 Current asset investment - - 7,500 Cash and cash equivalents 3,063 2,092 1,490 11,302 4,384 12,373 Total assets 51,704 15,649 26,239 Equity Share capital 1,073 669 669 Share premium account 33,269 10,808 10,793 Own shares (274) - - Translation reserves (74) - - Retained earnings 1,873 250 1,209 Total equity 35,867 11,727 12,671 Liabilities Non-current liabilities Bank loans 4,454 825 1,670 Deferred tax liabilities 3,945 711 1,038 Long-term provisions 949 538 956 Total non current liabilities 9,348 2,074 3,664 Current liabilities Trade and other payables 3,533 719 980 Current tax liabilities 996 578 800 Bank overdrafts and loans 1,179 417 624 Convertible loan stock - - 7,500 Provisions 781 - - Dividends - 134 - Total current liabilities 6,489 1,848 9,904 Total liabilities 15,837 3,922 13,568 Total equity and liabilities 51,704 15,649 26,239 Condensed consolidated cash flow statement Six months ended 30 September 2007 (unaudited) 30 30 31 September September March 2007 2006 2007 #'000 #'000 #'000 Profit for the year 628 595 1,473 Adjustments for: Investment revenues (41) (26) (33) Finance costs 286 48 150 Income tax expense 269 182 548 Depreciation of property, plant and equipment 233 85 199 Amortisation of intangible assets 424 59 163 Foreign exchange gains - - (58) Share-based payment expense 72 70 152 Operating cash flows before movements in working 1,871 1,013 2,594 capital (Increase)/decrease in inventories (255) 65 (32) Increase in receivables (1,100) (45) (1,458) Increase/(decrease) in payables 147 (410) 276 Movements on provisions (120) - - Cash generated by operations 543 623 1,380 Income taxes paid (177) (127) (366) Interest paid (286) (48) (92) Net cash from operating activities 80 448 922 Condensed consolidated cash flow statement Six months ended 30 September 2007 (unaudited) 30 30 31 September September March 2007 2006 2007 #'000 #'000 #'000 Net cash from operating activities 80 448 922 Investing activities Interest received 41 26 33 Increase in trade investments (138) (410) (491) Proceeds from sale of shares in ESOP 86 - - trust Proceeds on disposal of property, plant 1 - - and equipment Purchases of property, plant and (472) (190) (477) equipment Purchases of intangible assets (72) - (25) Net cash acquired with subsidiary 2,028 2,087 2,087 Acquisition of subsidiary (9,607) (3,964) (5,571) Net cash used in investing activities (8,133) (2,451) (4,444) Financing activities Dividends paid (134) - (134) Repayments of borrowings (1,606) (29) (293) Repayments of obligations under finance Leases (32) (10) (14) New finance leases - 10 10 Proceeds on issue of shares 7,675 2,672 2,672 New bank loans raised 3,723 - 1,319 Net cash from financing activities 9,626 2,643 3,560 Net increase in cash and cash equivalents 1,573 640 38 Cash and cash equivalents at beginning of 1,490 1,452 1,452 period Cash and cash equivalents at end of 3,063 2,092 1,490 period Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less. Consolidated statement of recognised income and expense Six months ended 30 September 2007 (unaudited) Six months Six months Year ended 30 ended 30 ended 31 September September March 2007 2007 2006 #'000 #'000 #'000 Foreign exchange translation (74) - - differences Net expense recognised directly (74) - - in equity Profit for the period 628 595 1,473 Total recognised income for the year all 554 595 1,473 attributable to equity holders of the parent Condensed consolidated statement of changes in equity As at 30 September 2007 (unaudited) Share Share Own Foreign Retained Total Capital premium shares exchange earnings Equity #'000 account #'000 reserve #'000 #'000 #'000 #'000 Balance at 31 March 2006 as 560 6,985 - - (267) 7,278 previously reported IFRS adjustments - - - (15) (15) At 31 March 2006 (under IFRS 560 6,985 - - (282) 7,263 -unaudited) Profit for the period - - - - 595 595 New shares issued (net of 109 3,823 - - - 3,932 expenses) Equity-settled share-based - - - - 70 70 payments Dividends - - - - (133) (133) Balance at 30 September 2006 669 10,808 - - 250 11,727 Profit for the period - - - - 878 878 Expenses of share issue - (15) - - - (15) Equity-settled share-based - - - - 82 82 payments Dividends - - - - (1) (1) Balance at 31 March 2007 669 10,793 - - 1,209 12,671 Profit for the period - - - - 628 628 New shares issued (net of 404 22,476 - - - 22,880 expenses) ESOP - - (274) - 98 (176) Equity-settled share-based - - - - 72 72 payments Foreign exchange adjustments - - - (74) - (74) Dividends - - - - (134) (134) Balance at 30 September 2007 1,073 33,269 (274) (74) 1,873 35,867 NOTES TO THE INTERIM REPORT Six months ended 30 September 2007 1 BASIS OF PREPARATION AND ACCOUNTING The next annual financial statements for the group will be prepared in accordance with International Financial Reporting Standards as adopted for use in the EU ("IFRS"). Accordingly, the interim report has been prepared in accordance with the recognition and measurement criteria of IFRS. The financial information contained in these interim financial statements has been prepared on the basis of IFRS that the directors expect to be applicable as at 31 March 2008. The interim report has been drawn up using the accounting policies as set out in note 2. These are the group's first consolidated financial statements prepared in accordance with IFRS. Certain optional exemptions to the general principles are available under IFRS 1 and the significant first-time adoption choices made by the group are as follows: * The group has elected not to apply IFRS 3 retrospectively to business combinations that took place before 1 April 2006 (the transition date). As a result, in the IFRS opening balance sheet, goodwill arising from past business combinations of #4.67m remains as stated under UK Generally Accepted Accounting Principles ("UK GAAP"). * The cumulative adjustment to the foreign currency translation reserve was set to zero at 1 April 2006. Disclosures concerning the transition from UK GAAP to IFRS are presented in note 11. The financial information for the six month period ending 30 September 2007 and 2006 has not been audited by the group's auditors and does not constitute accounts within the meaning of s240 of the Companies Act 1985. The information for the year ended 31 March 2007 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. 2 ACCOUNTING POLICIES - CONSOLIDATED Basis of consolidation The consolidated financial information incorporates the financial information of the company and entities controlled by the company (its subsidiaries). Control is achieved where the company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits for its activities. The financial statements of subsidiaries are included in the group financial statements from the date the group obtained control until the group's control ceases. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies in line with those used by group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for resale in accordance with IFRS 5 "Non Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell. Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the group's interest in the net fair values of the acquiree's identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised in the income statement immediately. Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the group's interest in the fair value of identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised in the income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of the group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of any subsidiary the attributable amount of goodwill is included in the determination of profit or loss on disposal. Goodwill arising on business combinations before the date of transition to IFRS has been retained at the value that would arise applying the principles of UK GAAP. Revenue and revenue recognition Revenue represents amounts receivable for goods and services provided in the normal course of business, net of trade discounts, VAT and other sales-related taxes. Revenue is recognised on despatch of the related goods. For revenue in respect of research and development contracts, the revenue is recognised as it is earned under the terms of the contract. Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance lease are recognised as assets in the balance sheet at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a financial lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income. Rentals under operating leases are charged to the income statement on a straight-line basis over the lease term. Foreign currencies The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in pound sterling, which is the functional currency of the parent Company, and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currency) are recorded at rates of exchange prevailing on the date of the transactions. At each balance sheet date assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non monetary items are carried at their fair value and movements are included in profit or loss for the period except for differences arising on retranslation of no monetary items in respect of which gains and losses are recognised directly in equity. For such non monetary items, any exchange component of that gain or loss is recognised directly in equity. Foreign currencies (continued) For the purpose of presenting consolidated financial statements, the assets and liabilities of the group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rate at the date of transactions are used. Exchange rate differences arising, if any, are classified as equity and transferred to the group's translation reserve. Such translation differences are recognised as income or as expenses in the period to which the operation is disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Grants Grants in respect of capital expenditure are credited to a deferred income account and are released to the income statement over the expected useful lives of the relevant assets. Grants of a revenue nature are credited to income in the year to which they relate. Operating profit Operating profit is stated after charging provisions for impairment in investment in associates, but before investment income and finance costs. Retirement benefit costs The group operates defined contribution pension schemes. Contributions are charged to the profit and loss account as they become payable in accordance with the rules of the scheme. Taxation The tax expense represents the sum of the tax currently payable, and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates and interests in joint ventures, except where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the group intends to settle its current tax assets and liabilities on a net basis. Property, plant and equipment Property, plant and equipment are held at cost less accumulated depreciation and any recognised impairment loss. They are depreciated to their residual value using the straight-line method over their expected useful lives as follows: Freehold buildings - 2% - 4% straight-line Fixtures, fittings and equipment - 10% - 33% straight-line Motor vehicles - 25% straight-line Assets held under finance leases are depreciated over their useful lives as set out above. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sale proceeds and the carrying amount of the asset, and is recognised in the income statement. Development costs Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from the group's production development is recognised only if the following conditions are met: * an asset is created that can be identified; * it is probable that the asset created will generate future economic benefits; and * the development cost of the asset can be measured reliably. The cost of developing programmes not meeting the IAS 38 criteria are written off to the income statement. Separable intangibles When an acquisition is made, a review is undertaken to identify separately identifiable non-monetary assets that meet the definition under IAS 38 " Intangible assets". In respect of acquisitions made in the period since transition to IFRS, customer relationships, brand names, product rights and know-how were recognised as being separately identifiable. The fair value was determined on a basis that reflects the amounts the acquirer would have paid for the assets in arms length transactions between knowledgeable willing parties. Customer relationships are amortised over their estimated useful economic life of 15 to 20 years. Brand names, product rights and know-how are amortised over their estimated useful economic life of 10 years. Impairment of tangible and intangible assets excluding goodwill At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises direct material, labour costs and the appropriate share of production overheads. Net realisable value represents the estimated selling price less all estimated costs of completion. Financial instruments Financial assets and financial liabilities are recognised on the group's balance sheet when the group becomes a party to the contractual provision of the instrument. Trade receivables Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits held at call with banks. Trade payables Trade payables are initially measured at fair value, and are subsequently measured at an amortised cost using the effective interest rate method. Equity instruments Equity instruments issued by the company are recorded as proceeds received, net of direct issue costs. Provisions Provisions are recognised when the group has a present obligation as a result of a past event and it is probable that the group will be required to settle that obligation. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material. Share-based payment The group has applied the requirements of IFRS 2 to all grants of equity instruments after 7 November 2002 that were unvested at 1 April 2006. The group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group's estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is measured by use of the Black-Scholes model. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. Change in accounting policies In the current financial year the group will adopt International Financial Reporting Standard 7 "Financial instruments: Disclosures" IFRS 7 for the first time. AS IFRS 7 is a disclosure standard, there is no impact on the change in accounting policy on the half-yearly financial report. Full details of the change will be disclosed in our annual report for the year ended 31 March 2008. 3 SEGMENTAL ANALYSIS OF RESULTS For management purposes, the group is currently organised into three operating divisions - Diagnostics, Healthcare and Enzymes. These divisions are the basis on which the group reports its primary segment information. The Life Sciences Division is not currently reported separately internally. Principal activities are as follows Diagnostics - specialising in the development and manufacture of colloidal gold, and non-invasive lateral flow tests which can give a quick and effective diagnosis to patients at the bedside or in a doctor's surgery without recourse to costly and time-consuming laboratory analysis. Healthcare - specialising in the sale and distribution of diabetes and healthcare related products. Enzymes - following the acquisition of Theratase, BBI is a world leader in natural enzyme manufacture which significantly expands BBI's reagent capacity across a broad range of diagnostics. Segment information about these businesses is presented below. Six Six Year months months ended 31 ended 30 ended 30 March September September 2007 2007 2006 #'000 #'000 #'000 Revenue By business segment Diagnostics 3,727 3,065 6,979 Healthcare 1,489 1,366 2,753 Enzymes 4,330 - - Consolidated 9,546 4,431 9,732 By geographical destination United Kingdom 3,990 1,728 4,027 Other European countries 1,702 753 1,809 North America 2,313 1,551 3,254 Rest of the world 1,541 399 642 Consolidated 9,546 4,431 9,732 By geographical origin United Kingdom 6,996 4,409 9,458 North America 1,188 22 274 South Africa 1,362 - - Consolidated 9,546 4,431 9,732 4 TAX Income tax for the six month period is charged at 30.0% (six months ended 30 September 2006: 23.4%; year ended 31 March 2007: 27.1 %), representing the best estimate of the average annual effective income tax rate expected for the full year, applied to the pre-tax income of the six month period. 5 DIVIDENDS On 31 May 2007 the Company paid a dividend of 0.5p per ordinary share in existence prior to the acquisition of Theratase plc at a total cost of #134,000. 6 EARNINGS PER SHARE Earnings per ordinary share has been calculated by dividing the profit after taxation for the period by the average number of ordinary shares in issue during the period of 38,706,153 (30 September 2006: 25,551,881; 31 March 2007: 26,145,391). The weighted average number of ordinary shares in issue during the period excludes those held by employee benefit trusts which are deemed to be cancelled on the basis that the right to dividends has been waived. Diluted earnings per ordinary share has been calculated by dividing the profit after taxation for the period by the average number of ordinary shares in issue during the period after accounting for dilutive share options of 42,222,987 (30 September 2006: 33,306,258; 31 March 2007: 34,176,263). 7 BANK OVERDRAFTS AND LOANS During the period, the group obtained new short-term bank loans amounting to #3.723 million. The loans bear interest at market rates and are repayable within 5 years. The proceeds were used to partly fund the acquisition of Theratase and to refinance loans acquired with the business. Repayments of bank loans amounting to #1.606 million were made during the period. In addition the convertible loan of #7.5 million, included within current liabilities as at 31 March 2007 was converted into equity during the period. 8 SHARE CAPITAL Share capital as at 30 September 2007 amounted to #1.073 million. During the period, the group issued the following 2.5 pence ordinary shares: 10,596,104 shares in connection with the acquisition of Theratase; 5,208,333 shares in connection with the conversion of the convertible loan; and 372,965 shares following the exercise of share options. 9 ACQUISITION OF SUBSIDIARY On 15 May 2007 the group acquired 100 per cent of the issued share capital of Theratase plc ("Theratase") for cash and equity consideration of #24.1 million. Theratase is the parent company of a group of companies involved in the manufacture and supply of naturally derived enzymes. This transaction has been accounted for by the purchase method of accounting. Book value Fair value #'000 #'000 Net assets acquired: Intangible assets 1,934 11,707 Property, plant and equipment 1,841 1,841 Deferred tax asset 148 148 Investment 198 198 Inventories 2,505 2,505 Trade and other receivables 1,347 1,347 Cash and cash equivalents 2,028 2,028 Borrowings (1,254) (1,254) Trade and other payables (2,305) (2,305) Other creditors (819) (819) Deferred tax liabilities (8) (2,940) 5,615 12,456 Goodwill 12,356 Total consideration 24,812 Satisfied by: Cash 8,859 Equity 15,205 Expenses paid in cash 748 24,812 The goodwill arising on the acquisition of Theratase is attributable to the anticipated profitability of the distribution of the group's products in new markets and the anticipated future operating synergies from the combination. The Theratase group contributed #4.33 million to revenue and #0.54 million to the BBI group's profit before tax for the period between the date of acquisition and 30 September 2007. 10 REPORT AND FINANCIAL STATEMENTS 2007 The comparative figures for the financial year ended 31 March 2007 are extracted from the group's statutory financial statements for that financial year. Those financial statements have been reported on by the group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. Copies of the Annual Report for 2007 are available from the company's registered office by applying to the Company Secretary, BBI Holdings Plc, Golden Gate, Ty Glas Avenue, Llanishen, Cardiff, CF14 5DX. The interim results for the six months ended 30 September 2007 and 30 September 2006 have been reviewed but have not been audited. The financial information set out above does not constitute full financial statements as defined by section 240 of the Companies Act 1985. 11 UK GAAP TO IFRS RECONCILIATION As Employee As published benefits restated 31 March #'000 under 2006 IFRS 31 #'000 March 2006 #'000 Assets Non-current assets Goodwill 4,666 - 4,666 Other intangible assets - - - Property, plant and 1,472 - 1,472 equipment Investments 293 - 293 Deferred tax asset 7 - 7 6,438 - 6,438 Current assets Inventories 446 - 446 Trade and other 1,097 - 1,097 receivables Cash and cash 1,452 - 1,452 equivalents 2,995 - 2,995 Total assets 9,433 - 9,433 Equity Share capital 560 - 560 Share premium account 6,985 - 6,985 Foreign exchange - - - reserve Retained earnings (267) (15) (282) Total equity 7,278 (15) 7,263 Liabilities Non-current liabilities Bank loans 965 - 965 Deferred tax - - - liabilities Long-term provisions 75 - 75 Total non current 1,040 - 1,040 liabilities Current liabilities Trade and other 581 15 596 payables Current tax liabilities 232 - 232 Bank overdrafts and 302 - 302 loans Provisions - - - Total current 1,115 15 1,130 liabilities Total liabilities 2,155 15 2,130 Total equity and 9,433 15 9,448 liabilities Consolidated income statement for the six months ended 30 September 2006 As Employee Goodwill & Deferred As published benefits intangibles tax restated 30 #'000 #'000 #'000 under September IFRS 30 2006 September #'000 2006 #'000 Revenue 4,431 - - - 4,431 Cost of sales (1,633) - - - (1,633) Gross profit 2,798 - - - 2,798 Administration expenses (1,962) 22 - - (1,940) Amortisation of intangible (207) - 148 - (59) assets Operating profit 629 22 148 - 799 Investment revenues 26 - - - 26 Finance costs (48) - - - (48) Profit before tax 607 22 148 - 777 Tax (200) - - 18 (182) Profit for the period 407 22 148 18 595 Comparative consolidated balance sheet as at 30 September 2006 As Employee Goodwill & Deferred As published benefits intangibles tax restated 30 under September #'000 #'000 #'000 IFRS 30 2006 September 2006 #'000 #'000 Assets Non-current assets Goodwill 8,053 - (1,961) 650 6,742 Other intangible assets - - 2,109 - 2,109 Property, plant and 1,637 - - - 1,637 equipment Investments 702 - - - 702 Deferred tax asset 75 - - - 75 10,467 - 148 650 11,265 Current assets Inventories 486 - - - 486 Trade and other 1,806 - - - 1,806 receivables Cash and cash 2,092 - - - 2,092 equivalents 4,384 - - - 4,384 Total assets 14,851 - 148 650 15,649 Equity Share capital 669 - - - 669 Share premium account 10,808 - - - 10,808 Foreign exchange - - - - - reserve Retained earnings 77 7 148 18 250 Total equity 11,554 7 148 18 11,727 Liabilities Non-current liabilities Bank loans 825 - - - 825 Deferred tax 79 - - 632 711 liabilities Long-term provisions 538 - - - 538 Total non current 1,442 - - 632 2,074 liabilities Current liabilities Trade and other 726 (7) - - 719 payables Current tax liabilities 578 - - - 578 Bank overdrafts and 417 - - - 417 loans Dividends 134 - - - 134 Provisions - - - - - Total current 1,855 (7) - - 1,848 liabilities Total liabilities 3,297 (7) - 632 3,922 Total equity and 14,851 - 148 650 15,649 liabilities Consolidated income statement for the year ended 31 March 2007 As Employee Foreign Goodwill & IAS 38 Deferred As published benefits exchange intangibles start-up tax restated 31 March #'000 #'000 #'000 costs #'000 under 2007 #'000 IFRS 31 #'000 March 2007 #'000 Revenue 9,732 - - - - 9,732 Cost of sales (3,345) - - - (83) - (3,428) Gross profit 6,387 - - - (83) - 6,304 Administration (4,048) (13) 58 - - - (4,003) expenses Amortisation of (450) - - 287 - - (163) intangible assets Operating profit 1,889 (13) 58 287 (83) - 2,138 Investment revenues 33 - - - - - 33 Finance costs (92) - (58) - - - (150) Profit before tax 1,830 (13) - 287 (83) - 2,021 Tax (597) - - - - 49 (548) Profit for the 1,233 (13) - 287 (83) 49 1,473 period Comparative consolidated balance sheet as at 31 March 2007 As Employee Goodwill IAS 38 Deferred As published benefits and start-up tax restated 31 March #'000 intangibles costs #'000 under 2007 #'000 #'000 IFRS 31 #'000 March 2007 #'000 Assets Non-current assets Goodwill 9,753 - (3,175) - 1,087 7,665 Other intangible assets - - 3,462 - - 3,462 Property, plant and 1,904 - - - - 1,904 equipment Investments 784 - - - - 784 Deferred tax asset 51 - - - - 51 12,492 - 287 - 1,087 13,886 Current assets Inventories 583 - - - - 583 Trade and other 2,883 - - (83) - 2,800 receivables Current asset 7,500 - - - - 7,500 investment Cash and cash 1,490 - - - - 1,490 equivalents 12,456 - - (83) - 12,373 Total assets 24,948 - 287 (83) 1,087 26,239 Equity Share capital 669 - - - - 669 Share premium account 10,793 - - - - 10,793 Translation reserves - - - - - - Retained earnings 984 (28) 287 (83) 49 1,209 Total equity 12,446 (28) 287 (83) 49 12,671 Liabilities Non-current liabilities Bank loans 1,670 - - - - 1,670 Deferred tax - - - - 1,038 1,038 liabilities Long-term provisions 956 - - - - 956 Total non current 2,626 - - - 1,038 3,664 liabilities Current liabilities Trade and other 952 28 - - - 980 payables Current tax liabilities 800 - - - - 800 Bank overdrafts and 624 - - - - 624 loans Convertible loan stock 7,500 - - - - 7,500 Provisions - - - - - - Total current 9,876 28 - - - 9,904 liabilities Total liabilities 12,502 28 - - 1,038 13,568 Total equity and 24,948 - 287 (83) 1,087 26,239 liabilities Principal areas of impact Employee benefits In accordance with IAS 19: "Employee benefits" a holiday pay accrual has been recognised. Goodwill and intangibles In accordance with IFRS 3: "Business combinations", some amounts previously classified as goodwill have been reclassified as other intangible assets. Goodwill is no longer amortised. Other intangible assets are amortised over their expected useful lives. Start up costs In accordance with IAS 38: "Intangible assets" amounts previously capitalised as start up costs have been written off in the period they were incurred. Deferred tax A deferred tax liability has been recognised in respect of the intangible assets arising on business combinations. Reclassifications In addition to the above adjustments which impact on total equity, a number of reclassifications have been made to meet the presentational requirements under IFRS. These include: * the creation of a foreign exchange translation reserve for gains and losses arising after 1 April 2006; * the transfer of onerous lease accruals to provisions; and * the transfer of day-to-day foreign exchange gains and losses to financial income or expenses within the income statement. INDEPENDENT REVIEW REPORT TO BBI 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 2007 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated statement of recognised income and expense, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 11. 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 International Standard on Review Engagements (UK and Ireland) 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review 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 the AIM Rules of the London Stock Exchange. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the group intends to use in preparing its next annual financial statements. 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 (UK and Ireland) 2410, "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 inquiries, 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 2007 is not prepared, in all material respects, in accordance with the AIM Rules of the London Stock Exchange. Deloitte & Touche LLP Chartered Accountants and Registered Auditor Cardiff, United Kingdom 11 December 2007 This information is provided by RNS The company news service from the London Stock Exchange END IR UAVURBRRUARA
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