Interim Results

10th Dec 2008 15:26



 

IMMUNODIAGNOSTIC SYSTEMS HOLDINGS PLC

Unaudited Interim Results for the Six-Month Period to 30 September 2008

Immunodiagnostic Systems Holdings plc ("IDS" or the "Company" or the "Group"), a leading producer of diagnostic testing kits for the clinical and research markets, announces its interim results for the six month period to 30 September 2008.

IDS operates in the in-vitro diagnostics ("IVD") market. The Company designs, manufactures and sells immunoassay kits which are used to measure or detect particular substances within a sample, thus aiding the diagnosis or monitoring of a disease or providing information for research studies. In 2007 the immunoassay sector of the IVD market was estimated to be worth US$ 10bn.

Financial Highlights:

Revenue up 84% to £12.48m (2007: £6.77m);

Gross profit up 72% to £7.41m (2007: £4.32m);

EBITA up 39% to £2.14m (2007: £1.54m);

Pre-tax profit up 16% to £1.56m (2007: £1.34m);

Operational Highlights:

Sales of flagship Vitamin D product up 65% compared to same period last year;

Transfer of manufacturing from Nordic acquisition completed;

Good progress on IDS iSYS automated Vitamin D assay, launch expected in FQ4 '08;

As announced separately today, Placing to raise £3.12m to fund IDS iSYS instrument placements.

In his statement to shareholders, David Evans, Chairman said:

"We believe that IDS is extremely well positioned to sustain its position at the forefront of the specialist immunoassay market, with the forward potential to enter the still more lucrative automated market and gain significant market share."

"We look forward to describing the successful launch of the IDS iSYS and its warm reception in our next report to shareholders."

Contacts:

IDS	Oriel Securities Ltd	Parkgreen Communications Ltd
Roger Duggan, CEO	Andrew Edwards	Paul McManus
Paul Hailes, Finance Director
Tel: 0191 519 0660	Tel: 020 7710 7600	Tel: 020 7933 8787
		Mob: 07980 541 893
http://www.idsplc.com		[email protected]

  Chairman's and Chief Executive's Report

Introduction

This has been a period of steady consolidation, forward planning and investment in the future. The acquisitions of Nordic Bioscience Diagnostics (NBD) and Biocode Hycel (BCH) are behind us, but deriving maximum value from these new assets has been both challenging and instructive. Meanwhile, demand for IDS products has continued to grow, to the delight of all in the IDS Group, surrounded as we are by more sombre commercial environments.

Activities in the Period

The transfer of production of NBD products to our highly-efficient Boldon facility is complete, and the emergent IDS Nordic sales and marketing operation is growing in confidence and competence throughout the Scandinavian markets. Reduced costs and increased margins are our reward.

The BCH acquisition secured for us the fully-automated analyser known as the 3X3, and most of our physical and intellectual resources have been directed towards readying the instrument, now re-named the IDS iSYS, and associated reagents for launch. This is a tremendously exciting programme, bringing together the combined resources of the IDS teams in Boldon (UK), Pouilly (France) and Liège (Belgium) as mainstream players, with Alliance and academic partners in Italy,  France, Germany and the USA working independently but simultaneously on reagent development. Our flagship product, Vitamin D, will launch in Financial Year Q4 '08, and we have a number of laboratories eagerly awaiting delivery.

During the period the Group sought to divest its haematology division as it was seen as being non-core to the overall Group. With scarce capital resource it was clear that capital could not be allocated to this unit ahead of the IDS iSYS with a net consequence that we were not in a position to sustain any competitive advantage. We are in the final stages of divestment as notified to the market last month.

Market conditions for the expanded range of IDS specialised products remain buoyant, and have created a sustained rise in demand for our tests in essentially all markets. The increasing requirement for Vitamin D testing within the Healthcare industry generally is remarkable. Published figures for the marketing of Vitamin D in the USA indicates growth in sales of 90% by LabCorp, 80% by Quest Laboratories and 74% by Mayo Clinic1, and 57% in France2. Overall our Vitamin D sales rose by 65% compared to the same 6 month period in the previous year3. This buoyancy is reflected in the performance figures (below) for the IDS Group subsidiaries in the USA, Germany, France and Scandinavia. Our renewed direct sales initiative in Austria is also beginning to deliver, with several prestigious accounts won in the last six months.

We believe that IDS is extremely well positioned to sustain its position at the forefront of the specialist immunoassay market, with the forward potential to enter the still more lucrative automated market and gain significant market share.

Our planning for market entry is now advanced, with the necessary resources in place or scheduled for timely introduction. We look forward to describing the successful launch of the IDS iSYS and its warm reception in our next report to shareholders.

Financial

Turnover for the period increased from £6.77m to £12.48m an increase of 84% reflecting the significant contribution of BCH and NBD but also the continued growth of the core business.

Gross Profit increased from £4.32m to £7.41m an increase of 72%. Overall margin percentages declined from 63.8% to 59.3% reflecting the greater proportion of sales from the acquired products of BCH as an overall part of the mix. In addition there was a stock write-off of circa £300k relating to the transfer of production to Boldon of the products acquired from Nordic Bioscience Diagnostics.

Total group research and development expenditure for the period was £1.8m of which £1.6m related to product development and was capitalised (bringing total development spend to date on the IDS iSYS to £10.6m which is included in intangible assets in the Balance Sheet; of this, £4.7m has been incurred since the acquisition of BCH). Additional IP of £0.7m was created with the acquisition of a licence agreement from a pharmaceutical company to develop an automated product for sale on the IDS iSYS system.

Group debt at period end totalled £13m down £0.2m. The movement comprised of payments totalling £1.6m plus an additional loan of £1.4m for the IP licence mentioned above.

Overall profit from operations increased from £1.46m to £1.87m an increase of 28%.

Financing costs increased from £130k to £330k reflecting the increased level of gearing relating to the acquisition of NBD.

The charge to taxation increased from £398k to £528k leaving a profit attributable to ordinary shareholders of £1,029k (2007: £944k).

Overall EPS declined from 6.059p to 4.291p and on a fully diluted basis from 5.604p to 4.069p.

Placing

In a separate statement we today announced the raising of £3.12m before expenses (£2.95m net) through a Placing of 2,397,268 new ordinary shares at a price of 130 pence per share by Oriel Securities Limited. 

The net proceeds will be used to fund a change in method of placement of the IDS-iSYS to a reagent rental model, primarily as a result of a change in end user preference. This is expected to lead to a fast roll-out of instruments, secure long term revenues and increase profitability.

Further information on the use of funds can be found in the separate announcement.

Outlook

The second-half of our financial year has always been stronger than the first-half of the year and this current financial year is looking to continue the same trend. As mentioned above, we have seen strong growth in market demand for Vitamin D testing and within the last three months, IDS has gained a number of prestigious accounts, with manual  products, simply on the quality of product performance. Sales for the months of October and November total £4.61m.

A key part of the growth in the final quarter of this financial year will stem from the launch of the IDS iSYS instrument which will launch in Financial Year Q4 '08 with our flagship Vitamin D product being the first assay. That growth will be sustained in the next financial year by the rapid placement of instruments and it is envisaged that the majority of those instruments will now be sold on a reagent-rental basis with the consequential impact on working capital.

We are in the final stages of the divestment of the haematology division, a process which has been conducted against a backcloth of a challenging economic climate from which the IVD Industry is not immune. Whilst the divestment will not be immediately cash generative it will free management resource to concentrate on the launch and future sales of IDS iSYS.

The Group continues to look to strengthen its IP offering where appropriate in order that its ultimate menu offering on the IDS iSYS offers unparalleled competitive advantage. In particular, the Company is considering the opportunity to acquire a licence to a patent for a new product focussing on Chronic Kidney Disease.

The Board remains confident of the Group's prospects for the remainder of the year.

David Evans Roger Duggan

Chairman Chief Executive Officer

End notes:

1. all in USA Today, 13th July 2008

2. SFRI

3. from management accounts   Unaudited consolidated interim balance sheet

As at 30 September 2008

		6 Months ended 30 Sept 2008 £'000	6 Months ended 30 Sept 2007 £'000	Year ended  31 March 2008 £'000
Assets
Non-current assets
Property, plant and equipment		3,429	2,876	3,066
Goodwill		18,608	18,629	18,838
Other intangible assets		30,664	21,510	28,610
Investments		4	3	4
Deferred tax asset		-	-	-
		52,705	43,018	50,518
Current assets
Inventories		5,083	5,637	6,222
Trade and other receivables		4,952	4,244	4,763
Cash and cash equivalents		880	4,404	2,973
		10,915	14,285	13,958
Assets held for sale
Property, plant and equipment		363	-	-
Inventories		1,272	-	-
Trade receivables		348	-	-
		1,983	-	-
Total assets		65,603	57,303	64,476
Liabilities
Current liabilities
Short term portion of long term borrowings		4,925	1,836	3,370
Trade and other payables		5,052	5,086	5,427
Income tax liabilities		-	118	10
		9,977	7,040	8,807
Net current assets		2,558	7,245	5,151
Non-current liabilities
Long term borrowings		8,005	10,500	9,841
Provisions		5,445	6,177	5,128
Deferred tax liabilities		4,032	3,719	3,116
Deferred income		461	20	593
		17,943	20,416	18,678
Total liabilities		27,920	27,456	27,485
Net assets		37,683	29,847	36,991
Total equity
Called up share capital		480	479	479
Share premium account		25,573	25,432	25,544
Other reserves		5,902	770	5,909
Retained earnings		5,735	3,173	5,066
Treasury shares		(7)	(7)	(7)
Equity attributable to equity holders of the parent		37,683	29,847	36,991

  

Unaudited consolidated interim income statement

For the six month period to 30 September 2008 

		6 Months ended 30 Sept 2008 £'000	6 Months ended 30 Sept 2007 £'000	Year ended  31 March 2008 £'000
Revenue
Continuing		12,482	5,295	11,678
Acquisitions		-	1,472	6,982
		12,482	6,767	18,660
Cost of Sales		(5,072)	(2,445)	(7,229)
Gross Profit		7,410	4,322	11,431
Distribution costs		(2,656)	(1,117)	(3,328)
Administrative expenses		(2,888)	(1,742)	(3,822)
Profit from operations		1,866	1,463	4,281
Finance income		21	9	124
		1,887	1,472	4,405
Finance costs		(330)	(130)	(614)
Profit before tax		1,557	1,342	3,791
Income tax expense		(528)	(398)	(954)
Profit for the period attributable to equity holders of the parent		1,029	944	2,837
of which relating to discontinued operations		(105)	(27)	(5)
Earnings per share
- basic		4.291p	6.059p	14.346p
- diluted		4.069p	5.604p	13.489p

  Unaudited consolidated interim cash flow statement

For the six month period to 30 September 2008

		6 Months ended 30 Sept 2008 £'000	6 Months ended 30 Sept 2007 £'000	Year ended  31 March 2008 £'000
Profit from operations		1,866	1,463	4,281
Adjustments for:
Depreciation and amortisation		635	167	933
Share based payment expense		109	29	69
Release of deferred grants		(134)	(2)	(180)
Interest paid		(330)	(130)	(614)
Operating cash flows before movements in working capital		2,146	1,527	4,489
Movement in inventories		(99)	(165)	(5,307)
Movement in receivables		303	2,836	(2,718)
Movement in payables		(99)	(3,541)	3,768
Income taxes paid		(75)	(1,135)	(677)
Net cash from / (used by) operating activities		2,176	(478)	(445)
Investing activities
Acquisition of investments in subsidiaries (net of cash acquired)		(23)	(18,234)	(17,453)
Acquisition of investments in associates		-	-	(1)
Purchases of other intangible assets		(2,241)	(836)	(2,371)
Purchases of property, plant and equipment		(1,077)	(425)	(766)
Interest received		21	9	124
Net cash used by investing activities		(3,320)	(19,486)	(20,467)
Financing activities
Proceeds from issue of shares for cash		30	11,359	12,003
Proceeds of new borrowings		1,405	12,251	13,728
Repayments of borrowings		(1,693)		(602)
Dividends paid		(360)	(202)	(202)
Net cash from / (used by) financing activities		(618)	23,408	24,927
Effect of exchange rate differences		17	-	(2,002)
Net increase / (decrease) in cash and cash equivalents		(1,745)	3,444	2,013
Cash and cash equivalents at beginning of period		2,973	960	960
Cash and cash equivalents at end of period		1,228	4,404	2,973

  Unaudited consolidated statement of changes in equity

	Share capital £'000	Share premium account £'000	Other reserves £'000	Retained earnings £'000	Treasury shares £'000	Total £'000
At 1 April 2008	479	25,544	5,909	5,066	(7)	36,991
Profit for the period				1,029		1,029
Foreign exchange translation differences on foreign currency net investment in subsidiaries			(116)			(116)
Share based payments charged to equity reserves			109			109
Dividend Paid				(360)		(360)
Shares issued in the period (net of expenses)	1	29				30
At 30 September 2008	480	25,573	5,902	5,735	(7)	37,683

	Share capital £'000	Share premium account £'000	Other reserves £'000	Retained earnings £'000	Treasury shares £'000	Total £'000
At 1 April 2007	267	936	803	2,431	(7)	4,430
Profit for the period				944		944
Foreign exchange translation differences on foreign currency net investment in subsidiaries			(62)			(62)
Share based payments charged to equity reserves			29			29
Dividend Paid				(202)		(202)
Shares issued in the period (net of expenses)	212	24,496				24,708
At 30 September 2007	479	25,432	770	3,173	(7)	29,847

	Share capital £'000	Share premium account £'000	Other reserves £'000	Retained earnings £'000	Treasury shares £'000	Total £'000
At 1 April 2007	267	936	803	2,431	(7)	4,430
Profit for the year				2,837		2,837
Foreign exchange translation differences on foreign currency net investment in subsidiaries			5,037			5,037
Share based payments charged to equity reserves			69			69
Dividend Paid				(202)		(202)
Shares issued in the period (net of expenses)	212	24,608				24,820
At 31 March 2008	479	25,544	5,909	5,066	(7)	36,991

 

 

Notes to the Interim Financial Statements

For the period to 30 September 2008

1 Basis of preparation

This interim statement for the six month period to 30 September 2008 is unaudited and was approved by the Directors on 10 December 2008. The financial information contained in the interim report has been prepared in accordance with the accounting policies set out in the annual report and accounts for the year ended 31 March 2008.

The financial information contained in the interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the full preceding year is based on the statutory accounts for the year ended 31 March 2008. Those accounts, upon which the auditors, Baker Tilly UK Audit LLP, issued an unqualified audit opinion, have been delivered to the Registrar of Companies.

The financial information for the corresponding period of the preceding financial year is based on the interim financial statements for that period. During the preparation of the annual financial statements for the year ended 31 March 2008, the goodwill recognised on the acquisition of two subsidiaries during the period was revised in accordance with IFRS 3. The effect was to increase other intangible assets by £13,864k and to reduce goodwill by £9,584k. Deferred tax liabilities increase by £9,584. This adjustment is reflected in the figures presented as corresponding amounts for the period ended 30 September 2007. This adjustment has had no effect on reported profits.

As permitted, this interim report has been prepared in accordance with AIM Rule 18 and not in accordance with IAS 34 "Interim Financial Reporting" therefore it is not fully in compliance with IFRS.

2 Assets held for sale and discontinued operations

As at the balance sheet date, the Group was actively seeking a buyer for the haematology activities, which had been acquired as part of Biocode Hycel, as a stand-alone business. In accordance with IFRS 5, the assets to be sold as part of that business have been designated a disposal group and classified as assets held for sale. As the fair value of the assets was higher than their carrying amount at the time of reclassification, no revaluation was necessary for the purpose of these interim financial statements. The revenue, expenses and result of the discontinued activities were as follows:

	6 Months ended 30 Sept 2008	6 Months ended 30 Sept 2007	Year  ended  31 Mar 2008
	£'000	£'000	£'000
Revenue	1,635	1,884	266
Total expenses	(1,740)	(1,911)	(271)
Profit before tax	(105)	(27)	(5)
Income tax expense	-	-	-
Profit after tax	(105)	(27)	(5)

 

3 Revenue and segmental information

Revenue and profit before tax relate principally to the main activity of the manufacturing and distributing of medical  diagnostic products, and are attributable to the continuing operations of the Group.

Geographical analysis of turnover by origin:

	6 Months ended 30 Sept 2008	6 Months ended 30 Sept 2007	Year  ended  31 Mar 2008
	£'000	£'000	£'000
UK	3,546	3,012	6,932
Europe	6,604	2,646	8,866
USA	2,332	1,109	2,862
	12,482	6,767	18,660

Geographical analysis of profit before tax by origin:

	6 Months ended 30 Sept 2008	6 Months ended 30 Sept 2007	Year ended 31 Mar 2008
	£'000	£'000	£'000
UK	1,861	1,200	3,467
Europe	(399)	138	382
USA	404	125	432
Profit from operations	1,866	1,463	4,281
Finance Costs (net)	(309)	(121)	(490)
Profit before tax	1,557	1,342	3,791

Geographical analysis of net assets/(liabilities) by origin:

 

	30 Sept 2008	30 Sept 2007	31 Mar 2008
	£'000	£'000	£'000
UK	24,814	23,298	24,570
Europe	11,948	6,308	11,985
USA	714	241	437
	37,476	29,847	36,992

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 year.

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 two classes of dilutive potential ordinary shares: those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year and the contingently issuable shares under the Group's share option scheme. At 30 September 2008, 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 ended 30 Sept 2008	6 Months ended 30 Sept 2007	Year  ended  31 Mar 2008
	£	£	£
Profit after tax	1,029,264	943,898	2,836,692
	No.	No.	No.
Weighted average no of shares:
For basic earnings per share	23,987,972	15,579,053	19,773,787
Effect of dilutive potential ordinary shares:
-Share Options	1,307,537	1,264,571	1,256,494
For diluted earnings per share	25,295,509	16,843,624	21,030,281
Basic earnings per share	4.291p	6.059p	14.346p
Diluted earnings per share	4.069p	5.604p	13.489p

5 Taxation

Taxation for the 6 months ended 30 September 2008 is based on the effective rate of taxation which is estimated to apply to the year ended 31 March 2009.

6 Other reserves

The other reserves consist of the merger reserve, the foreign currency translation reserve and the reserve for shares to be issued under employee share option plans.

The merger reserve arises on consolidation of the results of Immunodiagnostic Holdings PLC and the consolidated results of Immunodiagnostic Systems Limited. The reserve represents the difference arising on consolidation between the nominal value of shares issued by Immunodiagnostic Holdings PLC in consideration for 100% of the share capital of Immunodiagnostic Systems Limited and the nominal value of the shares acquired, plus the share premium account relating to those shares.

ENDIR EBLFFVLBBFBX

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