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Tue, March 10, 2009 Trinity Biotech: Trinity Biotech Announces Quarter 4 Results
DUBLIN, IRELAND--(Marketwire - March 10, 2009) - Trinity Biotech plc (
Quarter 4 2008 Results
Revenues for quarter 4, 2008 amounted to US$34.0m compared to US$35.7m for quarter 4, 2007, a decrease of 4.8%. This included a decrease 5.1% in our Point of Care revenues and 4.7% in our Clinical Laboratory revenues. Compared to revenues of US$35.6m in quarter 3, 2008, revenues in quarter 4 have also fallen by approximately 4.4%. However, this fall is entirely attributable to currency movements. On a constant currency basis quarter 3 revenues would have also been US$34.0m and thus have remained constant quarter on quarter. The following table shows a comparison between quarter 3 and quarter 4 by key product area as adjusted for currency movements.
Quarter 3 Quarter 3 Quarter 4 2008 2008 2008 % Actual Adjusted* Actual Increase/ US$000 US$000 US$000 (decrease)* ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Clinical Laboratory 30,388 28,840 27,579 (4.4%) ---------- ---------- ---------- ---------- Point of Care 5,194 5,133 6,429 25.2% ---------- ---------- ---------- ---------- Total 35,582 33,973 34,008 0.1% ---------- ---------- ---------- ---------- * quarter 3 2008 revenues have been recalculated using quarter 4, 2008 exchange rates
The fall in Clinical Laboratory revenues of 4.4% in real terms is largely due to seasonal factors such as lower sales of Lyme Disease products which tend to peak in quarters 2 and 3 each year. This decrease was offset by an increase of 25.2% in Point of Care revenues. This growth occurred in both of our key HIV markets of Africa and the USA.
Gross profit for the quarter amounted to US$14.8m, representing a gross margin of approximately 44%. This is broadly in line with gross margin levels recorded in the previous three quarters. As a significant number of other companies record instrument servicing costs in selling, general and administrative expenses rather than in cost of sales as Trinity does, we have provided additional information to enable more meaningful comparison of gross margins to be made. Gross profit for the quarter before instrument servicing costs amounted to US$16.4m representing a gross margin before instrument servicing of 48%.
Research and development expenditure of US$1.9m was incurred during the quarter. This equates to approximately 5% of revenues and thus coincides with the Company's long term level of expenditure on such activities. Selling, general and administrative expenses of US$11.2m represents a 16% decrease from US$13.3m in quarter 4, 2007. This reduction is attributable to continued cost control and the impact of the stronger US dollar in quarter 4 2008.
Operating profit before restructuring expenses and impairment for the quarter amounted to US$2.2m and was consistent with the same period in 2007. Profit before tax and restructuring expense and impairment was US$1.8m for quarter 4 compared to US$1.5m for the same period in 2007, an increase of 16%. When compared to quarter 3, profit before tax on a similar basis showed an increase of 13% this quarter. EBITDA & share option expense and restructuring charges and impairment for the quarter was US$4.4m. This compares to US$4.5m in quarter 4, 2007. The Company recorded a net loss for the quarter of US$81.7m. However, excluding restructuring expenses and impairment, this resulted in a profit after tax of US$1.5m which equates to an EPS for the quarter of 7.1 US cents per ADR.
Restructuring expenses and impairment
During the quarter the Company recorded once off restructuring charges and asset impairments totalling US$87.9m. This amount consisted of the following:
-- An impairment charge of US$85.8m. In accordance with the provisions of accounting standards, companies are required to carry out annual impairment reviews of the asset valuations contained on their balance sheet. This applies in the case of both US GAAP and International Financial Reporting Standards (IFRS). In determining whether a potential asset impairment exists, companies are required to consider a range of internal and external factors. One such factor is the relationship between the company's market valuation and the book value of its net assets. This issue is receiving considerable attention at present given the extent to which the market values of most companies have been impacted by current economic conditions and sentiment. Accordingly, the SEC has provided guidance as to how it expects companies to deal with differences between market values and book valuations. At 31 December 2008, Trinity Biotech was trading at a significant discount to the book value of its net assets. In such circumstances given the accounting standard requirements and in particular the recent pronouncements by the SEC, the Company felt it was prudent to recognize an impairment provision of approximately US$85.8 million. By its nature this adjustment has no cash implications for the Company. The impairment was taken against the following categories of assets: US$m ------- Goodwill and other intangibles 71.7 ------- Property, plant and equipment 13.1 ------- Other assets 1.0 ------- Total 85.8 ------- -- A restructuring charge of US$2.1m. This is made up of US$1.5m in relation to the departure of the Company's former Chief Executive in October 2008. A further US$0.6m has been charged in relation to costs associated with the implementation of headcount reductions as part of a cost cutting programme announced in December 2008.
Full year 2008 Results
Revenues for the year by key product area were as follows:
% 2007 2008 Increase/ US$000 US$000 (decrease) ---------- ---------- ---------- ---------- ---------- ---------- Clinical Laboratory 119,113 121,143 1.7% ---------- ---------- ---------- Point of Care 24,504 18,996 (22.5%) ---------- ---------- ---------- Total 143,617 140,139 (2.4%) ---------- ---------- ----------
Overall revenues fell by 2.4% in 2008. This was attributable to lower Point of Care revenues. During 2008 revenues from HIV products grew in the USA but this was more than offset by lower HIV sales in Africa. The latter was due to particularly strong sales in 2007 with the result that the return to more normal sales levels resulted in a decline in overall Point of Care revenues.
Sales of Clinical Laboratory products grew by nearly 2% in the period. Within this category the Company has a number of growth segments notably Lyme and Diabetes related products.
Revenues for the year by geographic location were as follows :
% 2007 2008 Increase/ US$000 US$000 (decrease) ---------- ---------- ---------- ---------- ---------- ---------- Americas 68,481 69,915 2.1% ---------- ---------- ---------- Europe 43,630 43,481 (0.3%) ---------- ---------- ---------- Asia / Africa 31,506 26,743 (15.1%) ---------- ---------- ---------- Total 143,617 140,139 (2.4%) ---------- ---------- ----------
Gross profit for the year amounted to US$62.5m, representing a gross margin of approximately 45% which compares to a gross margin before once off charges of 47% for the same period in 2007. The lower gross margin reflects the impact of lower sales of Uni-Gold HIV products, as these products typically command higher margins. Gross margins were also adversely impacted by the weaker US dollar during 2008 compared to 2007. Gross profit for the year before instrument servicing costs amounted to US$69.0 representing a gross margin before instrument servicing of 49%.
Research and development expenditure increased from US$6.8m in 2007 to US$7.5m in 2008, reflecting the increased level of activity in 2008. This equates to approximately 5% of revenues. However, when capitalized development costs are taken into account the total expenditure on R&D amounts to approximately 11.4% of revenues reflecting the Company's commitment to developing new products and updating its product range.
In 2008, selling, general and administrative expenses decreased from US$49.7m to US$46.9m, a decrease of almost 6%. This was attributable to continued cost control and includes the benefits of the restructuring programme announced in late 2007. This reduction was also achieved notwithstanding the impact of the weaker dollar throughout 2008.
Operating profit for the year before restructuring expenses and impairment was US$8.3m compared to US$10.6m in 2007. The loss after tax for the year before once off items was US$77.8m. However, excluding the impact of once off charges in 2008 profit after tax would be US$5.4m giving an EPS of 26 US cents per ADR.
EBITDA and share options expense and excluding restructuring charges amounted to US$17.3m for the financial year ended 31 December 2008.
Activities during the quarter
Quarter 4 represented a pivotal quarter for Trinity Biotech from a number of perspectives:
-- In December, the Company's new haemostasis analyzer, Destiny Max, was launched in markets outside the USA. Destiny Max represents the largest development project ever undertaken by the Company. Its launch represents a major success for the Company and will be a key platform for future growth. Notwithstanding that the launch came close to the end of the quarter, the Company was proud to announce it had achieved the first sales of instruments in Japan, Italy and Ireland in 2008. -- The submission to the FDA for approval of Destiny Max was filed in December. The Company expects to launch Destiny Max in the USA in towards the end of quarter 2, 2009. -- Significant progress was made with respect to our A1c point of care device, Tri-stat, enabling the Company to announce the commencement of CLIA trials yesterday. -- The Company announced a US$6m cost cutting programme which included a c.10% reduction in the Company's work force. The level of savings achieved from this programme will drive the future profitability of the Company. -- Clint Severson was appointed as a non-executive member of the Board and was joined soon after year end by James Merselis. Given their extensive industry experience these two additions bring further depth and expertise to the Board.
Comments
Commenting on the results, Kevin Tansley, Chief Financial Officer, said, "Trinity recorded a quarter 4 profit before tax and restructuring charges and impairment of US$1.8m which is a 16% increase over the equivalent period in 2007. As well as maintaining our revenue levels, we have been successful in managing our cost base as we continue our drive for further operating efficiencies. This, combined with tight working capital management, has seen our cash balances grow from US$3.5m to US$5.2m in the space of one quarter.
"In our results today we also announced once off charges of US$87.9m, the vast majority of which relate to non-cash impairment charges triggered by a comparison of our market value versus the book value of our net assets as required under IFRS accounting standards."
Ronan O'Caoimh, CEO, commented, "From a revenue perspective we are happy with our performance this quarter. Notwithstanding the difficult economic climate, we have been successful in maintaining our revenue levels when the impact of currency movements is removed. Our Point of Care sales demonstrated very strong growth, reaffirming the leading market position that our HIV products have in the key markets of Africa and the USA.
"We were also delighted with the launch of our new Destiny Max instrument this quarter. This is the most significant product launch ever undertaken by the Company and opens up huge market potential for us. The instrument has received a very enthusiastic response from customers and this has already been converted into sales in markets as diverse as Japan, China, the United Kingdom, Italy and Ireland.
"We also announced US$6m of cost saving measures in December which combined with a more favourable currency environment positions us very well for 2009."
Forward-looking statements in this release are made pursuant to the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development commercialisation and technological difficulties, and other risks detailed in the Company's periodic reports filed with the Securities and Exchange Commission.
Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and blood coagulation disorders, and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information please see the Company's website: [ www.trinitybiotech.com ].
Three Months Three Months Ended Ended Year Ended Year Ended December 31, December 31, December 31, December 31, (US$000's except share 2008 2007 2008 2007 data) (unaudited) (unaudited) (unaudited) (audited) Revenues 34,008 35,725 140,139 143,617 Cost of sales (excluding service costs) (17,609) (16,649) (71,093) (69,128) Cost of sales - restructuring expenses - (12,725) - (12,725) Cost of sales - share based payments (1) (18) (51) (71) ----------- ----------- ----------- ----------- Gross profit (excluding service costs) 16,398 6,333 68,995 61,693 Gross profit % (excluding service costs) 48% 18% 49% 43% ----------- ----------- ----------- ----------- Cost of sales - instrument servicing costs (1,573) (1,774) (6,501) (6,444) Gross profit 14,825 4,559 62,494 55,249 Gross profit % 44% 13% 45% 38% Gross profit before restructuring expenses & inventory write off 14,825 17,284 62,494 67,974 Other operating income 622 157 1,173 413 Research & development expenses (1,862) (1,667) (7,544) (6,761) Selling, general and administrative expenses (11,183) (13,272) (46,885) (49,719) Restructuring expenses & impairment (87,882) (27,222) (87,882) (27,222) Indirect share based payments (203) (226) (931) (1,332) ----------- ----------- ----------- ----------- Operating loss (85,683) (37,671) (79,575) (29,372) Operating profit before restructuring expenses, impairment & inventory write off 2,199 2,276 8,307 10,575 Financial income 12 57 65 457 Financial expenses (455) (821) (2,160) (3,148) ----------- ----------- ----------- ----------- Net financing costs (443) (764) (2,095) (2,691) ----------- ----------- ----------- ----------- Loss before tax (86,126) (38,435) (81,670) (32,063) Profit before tax, restructuring expenses, impairment & inventory write off 1,756 1,512 6,212 7,884 Income tax credit / (expense) 4,469 (2,494) 3,892 (3,309) ----------- ----------- ----------- ----------- Loss for the period (81,657) (40,929) (77,778) (35,372) ----------- ----------- ----------- ----------- Loss per ADR (US cents) (391.6) (215.0) (382.2) (186.1) Diluted loss per ADR (US cents) (391.6) (215.0) (382.2) (186.1) Weighted average no. of ADRs used in computing earnings per ADR 20,854,395 19,037,989 20,348,519 19,009,145 The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting). Trinity Biotech plc Consolidated Balance Sheets December 31, December 31, 2008 2007 US$ '000 US$ '000 (unaudited) (audited) ASSETS Non-current assets Property, plant and equipment 11,836 26,409 Goodwill and intangible assets 38,544 104,928 Deferred tax assets 3,051 3,937 Other assets 877 896 ------------- ------------- Total non-current assets 54,308 136,170 ------------- ------------- Current assets Inventories 42,317 44,420 Trade and other receivables 27,418 25,683 Income tax receivable 282 782 Derivative Financial Instruments - 224 Cash and cash equivalents 5,184 8,700 ------------- ------------- Total current assets 75,201 79,809 ------------- ------------- ------------- ------------- TOTAL ASSETS 129,509 215,979 ============= ============= EQUITY AND LIABILITIES Equity attributable to the equity holders of the parent Share capital 1,070 991 Share premium 159,864 153,961 Retained earnings (99,493) (22,908) Translation reserve (9) 797 Other reserves 4,473 4,004 ------------- ------------- Total equity 65,905 136,845 ------------- ------------- Current liabilities Interest-bearing loans and borrowings 12,656 15,821 Income tax payable 5 86 Trade and other payables 22,969 24,779 Derivative Financial Instruments 27 - Other financial liabilities - 2,725 Provisions 50 100 ------------- ------------- Total current liabilities 35,707 43,511 ------------- ------------- Non-current liabilities Interest-bearing loans and borrowings 23,465 26,312 Other payables 59 74 Deferred tax liabilities 4,373 9,237 ------------- ------------- Total non-current liabilities 27,897 35,623 ------------- ------------- ------------- ------------- TOTAL LIABILITIES 63,604 79,134 ------------- ------------- ------------- ------------- TOTAL EQUITY AND LIABILITIES 129,509 215,979 ============= ============= The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting).
