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