IDH.L Regulatory News (IDH)

5 Jul 2006 07:00

Immunodiagnostic Systems Hldgs PLC05 July 2006 IMMUNODIAGNOSTIC SYSTEMS HOLDINGS PLC PRELIMINARY RESULTS For the year ended 31 March 2006 Immunodiagnostic Systems Holdings plc ("IDS" or the "Company"), a leadingproducer of diagnostic testing kits for the clinical and research markets,announces preliminary results for the year ended 31 March 2006, a year ofprogress commercially, scientifically and financially. IDS operates in the in-vitro diagnostics ("IVD") market. The Company designs,manufactures and sells immunoassay kits which are used to measure or detectparticular substances within a sample, thus aiding the diagnosis or monitoringof a disease or providing information for research studies. In 2002 theimmunoassay sector of the IVD market was estimated to be worth US$ 3.9bn. Financial Highlights • Turnover up 49.7% to £8.13m (2005: £5.44m)• Gross Profit up 54.9% to £5.25m (2005: £3.39m)• R&D spend up to £811,000 from £697,000• EBITDA of £1.53m (2005: £512,000)• Pre-tax profit of £1.17m (2005: £270,000)• Net cash of £885,000• Maiden Dividend of 1p Operational Highlights • Direct distribution networks now established in UK, US, Germany and France• First full year contribution of SBA acquired in March 2005• Accelerated new product development in UK and Finland - the product pipeline "has never been fuller"• 46% growth in the UK market, IDS's most mature market• Transfer of the manufacture of SBA products to Boldon to increase product profitability• Further automation introduced at the Boldon Manufacturing facility• Queen's Award for Enterprise: International Trade 2006• Marketing and Sales agreement with Japan based Medical & Biological Laboratories Co Ltd Regarding Outlook, David Evans, Chairman, said: "The Board is expecting further growth to be achieved in the forthcoming yearthrough further direct distribution and in June the Board agreed to pilot anapproach into Austria building on our existing logistical capabilities and basein Germany. Further expansion will depend upon the outcome of this approach. "The Group exists in a competitive environment and a changing technologicallandscape and it will continue to defend its existing positions with improvedversions of its existing products as well as seeking collaborations to place itsflagship products on automated instruments. "The Group continues to evaluate acquisition opportunities where the target canoffer significant strategic advantage in expansion of our portfolio or access tomarkets that we are unable to serve or in niche products /technology where thestrength of the IP offers long term and secure cash-flow growth. "The Group's trading since the year end has been in line with managementexpectations and I hope to update you further on this progression throughout theyear." Contacts:IDS Parkgreen Communications LtdDavid Evans, Roger Duggan, Paul McManusChairman Managing Director Tel: 020 7493 3716Tel: 07740 084 452 Mob: 07775 845 511 Mob: 07980 541 893http://www.ids-direct.com About the Company • IDS, based in Boldon, Tyne & Wear, is a world leader in the area ofdiagnostic tests for the clinical and research markets, currently focusing onimmunoassays used in the area of bone disease (e.g. Vitamin D and bone formation/loss markers). • Immunoassays measure or detect biomarkers whose presence orconcentration are indicative of a disease state. By exploiting proteomics andrecombinant antibody, IDS will deliver accelerated identification anddevelopment of new disease-related biomarkers. IDS is one of the first companiesto adopt this approach in the IVD market. • The Group's innovative work in the development of a vitamin Dimmunoassay enabled it to win a Queen's Award for Technological Achievement in1999 and in 2006 IDS won the Queen's Award for Enterprise: International Trade. • The Company manufactures its own tests and distributes these, alongwith other manufacturers' tests, directly in the UK, Germany (one of Europe'slargest markets), France and the US, and through third party distributors inother territories. In June 2004 IDS Inc was established; in December 2004 theGerman subsidiary IDS GmbH; and in October 2005 IDS Eurl in France. • The Company has a profitable core business and has grown consistentlyin turnover since a management buy-out ("MBO") in 1996. • IDS floated on AIM in December 2004 raising £1.12m net funds withshares placed at 51p. CHAIRMAN'S STATEMENT I have pleasure in reporting Immunodiagnostic Systems plc's annual results forthe year to 31 March 2006. The year has been one of progress commercially, scientifically and financially. Commercial Progress In the year the Group has expanded its direct distribution activity with theestablishment of its subsidiary in France in October and this has also seen thefirst full year of trading with its German subsidiary. Together with our directpresence in the UK and the USA, this offers not only significant margin leverageon the Group's own products, but also a conduit to market for other companieswho can, in partnership with IDS, benefit from our skills and presence in thesekey markets. As well as the strengths of our direct distribution we have an establishednetwork of distributors and significant effort has gone into the management ofthese. This effort has been rewarded by the increased level of sales from thenetwork in the period. The year just passed was the first full year of the SBA products withmanufacturing being transferred to Boldon in early 2006. These products havebroadened the Group's portfolio and in particular we have seen significantgrowth in the USA through the use of the diagnostic in major pharmaceuticalclinical trials. The ultimate key to growth in these products is theiracceptance in the clinical as well as the research markets. Scientific Progress As well as continued investment into the Group's key products to ensure theymaintain their competitive advantage the Group has continued to invest inembryonic opportunities where it may gain an early advantage. The Group has been successful in retaining its Finnish base of expertiseresulting from the acquisition of SBA, helped hugely by the support of theFinnish government which has a more pro-active approach to investment in thisarea compared to our domestic counterparts. In January of this year we wereawarded a Tekes grant amounting to a subsidy of 35% of qualifying expenditure.The Group continues to invest in partnership with others in the adaptation ofour tests onto dedicated instrument platforms. Ultimately the Group will requireits own instrumentation albeit based on a standard platform to be able tomaintain its competitive advantage. There has been little progress to report in the year on the Group's spin-outcompanies of PalindromX, Pyrronostics and Perinatal Diagnostics but it isanticipated that progress will be made this coming year and will be reported onin due course. The key management challenge over the next year is to increase the level ofproductivity from R&D whilst at the same time seek out and invest in new longterm opportunities which are aligned with our core objective of growth inshareholder and stakeholder value. Financial Progress Turnover Turnover increased by 49.7% to £8,133,000 (2005 £5,435,000) with the Groupbenefiting from growth in all the key markets, also reflecting significantgrowth in the USA, a full year's contribution from Germany and a partialcontribution from France as well as growth in our domestic and export markets Gross Margin Our gross margin increased to 64.52% (gross profit £5,247,000) from 62.41% in2005 (gross profit £3,392,000). This increase reflects the change in the productmix within our business with sales of IDS manufactured product up by 71% andsales in distribution of third party products up by 11% compared to last year. Operating Costs and Profits Total Overheads increased during the year to £3,993,000 ( 2005:£3,066,000) anincrease of 30.2% reflecting the increase in distribution costs in the periodemanating from the establishment of the subsidiaries in Europe as well asincreased overall activity. Within that increase of £927,000 a sum of £114,000 is attributable to increasedResearch and Development spend as spending increased to £811,000 (2005:£697,000). The charge for depreciation and amortisation of intangibles, including goodwillwas £291,000 compared to £226,000 in 2005. EBITDA The Group reports an increase in earnings before interest, tax, depreciation andamortisation (EBITDA) from £512,000 in 2005 to £1,533,000. Interest Net Interest payable for the year was £69,000 (2005:£16,000) reflecting in themain the loan interest in relation to the SBA acquisition. Profit before Tax The profit before tax for the year was £1,174,000 (2005: £270,000) Taxation The charge to taxation was £257,000 (2005: £58,000) giving rise to a profitafter taxation of £917,000 (2005: profit £212,000). Dividend The board is recommending payment of a dividend for the year of 1p per share. Profit after Tax The Group's Profit after Tax for the year was £917,000 (2005: £212,000). Board and Management During the year the Group appointed Dr Phillip Lee as Chief Scientific Officerwith Dr Lee relocating to Boldon from Los Angeles. Unfortunately for bothparties this appointment did not work out and it was in May by mutual consentthat Dr Lee left the Company on contractually agreed terms. The Board is actively seeking a replacement to Dr Lee and a firm of recruitmentagents have been appointed to assist the process. Outlook The Board is expecting further growth to be achieved in the forthcoming yearthrough further direct distribution and in June the Board agreed to pilot anapproach into Austria building on our existing logistical capabilities and basein Germany. Further expansion will depend upon the outcome of this approach. The Group exists in a competitive environment and a changing technologicallandscape and it will continue to defend its existing positions with improvedversions of its existing products as well as seeking collaborations to place itsflagship products on automated instruments. The Group continues to evaluate acquisition opportunities where the target canoffer significant strategic advantage in expansion of our portfolio or access tomarkets that we are unable to serve or in niche products /technology where thestrength of the IP offers long term and secure cash-flow growth. The Group's trading since the year end has been in line with managementexpectations and I hope to update you further on progress throughout the year. David EvansNon-Executive Chairman5th July 2006 MANAGING DIRECTOR'S REVIEW The Financial Year to 31st March 2006 has been one of both consolidation andunprecedented growth at IDS, a very busy but exciting and satisfying year! The three-pronged strategy we set out upon just three years ago has stood us ingood stead, and is delivering the performance we deemed then to be appropriatefor a SME achieving flotation on AIM and seeking to reward the trust ofinvestors. In brief, these are • Driving geographic market growth, increasing direct sales and those achieved through our distributor network• Accelerating new product development, and• Growth by acquisition, of products and/or companies. Growth has been delivered by all sales operations of IDS, from IDS Limited(Boldon, UK), IDS Inc (Fountain Hills, Phoenix, AZ), IDS GmbH (Frankfurt) and bythe enhanced activity of our Distributors throughout the world. Our subsidiaries in the USA and Germany have each put in a solid year'sperformance, focussing on marketing and sales activities tailored to thedifferent but specific needs of these territories. The USA saw growth of 259%(from ca $1.1m to $2.8m) and Germany grew 963% (from ca €170k to €1,600k). Theappointment of an experienced Sales Manager in the USA brings us furtherstrength and depth in the field of In Vitro Diagnostics (IVD), and a particularexpertise in the automation of our products for the larger laboratories. Thisbodes well for performance in the current financial year, and adds significantlyto the marketability of our products. With the establishment of IDS Eurl in October 2005, we extended further ourability to sell direct into the major global markets, providing for maximummargin on sales to the benefit of 'the bottom line'. Whilst still in its infancy, IDS Eurl has made an impressive start, with FY05/06sales of ca €350,000. The addition in May to the Paris office of an experiencedNational Sales Manager from Nichols Institute Diagnostics, until recently amajor competitor adds many years of knowledge of the French bone & skeletal IVDmarket. We anticipate sustained growth going forward. Our award-winning Vitamin D immunoassays remain at the heart of our salessuccess, but there is a growing contribution from complementary products issuingfrom our own pipeline, and those that came with the acquisition of SBA Sciences,Finland, in March 2005. We maintain our technological advantage in Vitamin D measurement, conferred inpart by the IDS Immunocapsule out-performing competing methods in efficiency andsimplicity of use, and in part by the quality and full range of Vitamin Dproducts offered. These products meet the needs of large and small laboratoriesalike. Key to the dramatic growth in the UK, our most mature market (up 46% from ca£2.4m to £3.5m), has been our approach to automation for high throughputlaboratories. This has been achieved by adapting our products to run reliablyon 'open-system' automated microtitre ELISA platforms which are now widelyavailable. The timing of the introduction of such automation was critical ingaining market share, coinciding with the withdrawal of Nichols InstituteDiagnostics (NID) from the global market following a strategic decision byparent company Quest International to cease NID operations. We will berolling-out this automation initiative throughout the IDS Group, and also guideand support our Distributors in their efforts to secure the larger, automatedaccounts. The standing of IDS Vitamin D technology within the IVD industry is widelyrecognised, with the result being we are in discussion with, or have agreedlicensing terms with, a number of the 'Top Ten' global IVD companies. IDStechnology will therefore appear on the fully-automated instruments of suchcompanies in forthcoming years, with a concomitant royalty stream receivable byIDS. New Product Development goes on apace at IDS Boldon, and at SBA Sciences inOulu, Finland. We have made the strategic decision to maintain SBA as anadditional Research & Development centre, sitting as it does close to theFinnish universities of Oulu and Turku. Historically, Finnish scientists havebeen at the forefront of discovery in the biology and chemistry of cartilage,bone and connective tissues, and the diseases associated with these tissues, andwe will now work closely with such scientists as we go forward in biomarkerdiscovery and exploitation. Such is the quality of the research underway atSBA, that the company has been awarded a TEKES (the Finnish Funding Agency forTechnology and Innovation) grant in support of its R&D activities. The result is that the IDS 'pipeline' has never been fuller, and we look forwardto launching new products on a more regular basis. Much of this preparation hasbeen the result of the positive input of our Chief Scientific Officer, Dr PhilLee. Unfortunately, Dr Lee, a medical physician of US-origin, has left thecompany after a relatively short tenure to pursue an alternative career path,and we are consequently in the process of seeking a replacement senior scientistto take up the numerous technical and technological challenges ahead. I have nodoubt that we will maintain our creative momentum, with the delivery to marketof innovative products to feed the voracious sales appetite we have created. Following our acquisition of SBA Sciences in February 2005, FY 2005/6 saw thetransfer of the manufacture of the SBA 'TRAP' range of kits from Finland(RatTrap(R) & MouseTRAP(R)) and Germany (human BoneTRAP(R)) to our Boldonfacility, which will significantly increase the profitability of thesehigh-demand products. In Boldon we also addressed the logistical aspects of successful growth, withthe installation and commissioning of further 'state of the art' automation inthe form of a high-throughput microtitre plate processor and a secondcustom-built immunocapsule filler/capper. We have been very happy with ourability to meet the increased demand arising from our 49% growth, and willcontinue to upgrade our core tech, assay development and manufacturingfacilities to maintain quality. We were delighted to receive notification of the receipt of the Queen's Awardfor Enterprise: International Trade 2006, our second such award since 1999.This is particularly gratifying in that it provides an excellent opportunity torecognise publicly, and to celebrate enthusiastically, the contributions ofevery member of staff throughout the Company and its subsidiaries, to theachievement of this accolade - truly a team effort, sustained as it has beenover many years. We have recently concluded a Marketing and Sales agreement with Medical &Biological Laboratories Co Ltd of Nagoya, Japan (MBL), which will see the earlyintroduction into the Japanese market of IDS research-orientated products and,in the fullness of time, the launch of the more heavily-regulated diagnostic IVDproducts. We are fortunate to have found a marketing partner of the calibre ofMBL, and must thank our long-standing Japanese business development partner,Summit Pharmaceuticals International Corporation of Tokyo, for their excellentwork on our behalf. This has been an excellent year for all IDS stakeholders, with more ambitiousexpectations still to be met. Whilst consolidating our strong organic growthand first acquisition, we have been busy qualifying more potentialopportunities. Our progress is such that we believe that we will add further tothe achievements of the Company, with 'the plethora of opportunities' I spoke oflast year seemingly undiminished. Roger DugganManaging Director5th July 2006 FINANCIAL REVIEW Financial Highlights Following our successful flotation of the company on the Alternative InvestmentMarket (AIM) in December 2004 we have used the additional cash generated tosignificantly accelerate the growth of the company. Turnover Turnover increased by 49.7% to £8,133,000 (2005 £5,435,000). Direct sales intothe USA, Germany, France and the revitalisation of our domestic marketcontributed greatly to this year's growth. Gross Margin Our gross margin increased to 64.52% (gross profit £5,247,000) from 62.41% in2005 (gross profit £3,392,000). This increase reflects the change in the productmix within our business with sales of IDS manufactured product up by 71% andsales in distribution of third party products up by 11% compared to last year. Operating Costs and Profits We continue to invest in R&D and our spend in 2006 increased in line withexpectations, to £811,000 from £697,000 - an increase of 16.4%. We expect thislevel of R&D expenditure to increase slightly throughout 2007 as we look tobring additional new products to market. Distribution and Administrative expenses increased by £927,000 to £3,993,000compared to £3,066,000 in 2005. This increase was expected due to the creationof our French subsidiary and the growth of both our USA and German basedsubsidiaries. The charge for depreciation and amortisation of intangibles, including goodwillwas £291,000 compared to £226,000 in 2005. EBITDA The group reports an increase in earnings before interest, tax, depreciation andamortisation (EBITDA) from £512,000 in 2005 to £1,533,000. Turnover by Product Area Year ending 31st March: 2006 2005 Change £'000 £'000 % Vitamin D 4,059 2,756 47.28Octeia 535 351 52.42SBA - Trap 846 59 1,333.90Gamma B 228 228 0.00Other 318 104 205.77Total of IDS Products 5,986 3,498 71.13 Distribution of third party sales 2,147 1,937 10.84 Total Turnover 8,133 5,435 49.64 Cash Flow The company's continued improvement at generating cash has once again providedresource to help grow the business: Net cash flow from operating activities was 1,216,000Net of investments and servicing finance (69,000)Taxation (128,000)Capital expenditure etc. (291,000)Financing (287,000) This has led to an increase in cash of £441,000 and a net cash position of£885,000 as at 31st March 2006. Dividend Policy and Dividend The board is proposing an annual dividend for the year of 1p (2005: Nil). Thispayment is covered 7 times. Subject to the approval of shareholders in theAnnual General Meeting, the dividend per share will be paid on 25th September2006 to shareholders on the register at the close of business on 25th August2006. The shares will be become ex-dividend on 23rd August 2006. Balance Sheet The Group's fixed assets at 31st March 2006 were £1,842,000 (2005: £1,684,000),which consisted of tangible assets of £746,000, intangible assets of £1,094,000and investments of £2,000. The intangible assets principally relate to thepatents and goodwill acquired on acquisitions. Stocks have increased to £805,000 (2005: £763,000) and debtors have increased to£1,563,000 (2005: £1,271,000) while current creditors have increased to£1,645,000 (2005: £1,508,000). Creditors due after one year have decreased to£441,000 (2005: £582,000). Paul HailesFinance Director5th July 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 March 2006 2006 2005 £ £TURNOVERContinuing operations 7,892,066 5,434,645Acquisitions in year 240,615 - ---------------------- ---------------------- 8,132,681 5,434,645 Cost of sales (2,885,293) (2,043,024) ---------------------- ----------------------Gross profit 5,247,388 3,391,621 Distribution costs (1,392,698) (867,972)Administrative expenses (2,600,095) (2,197,651) OPERATING PROFITContinuing operations 1,244,120 325,998Acquisitions in year 10,475 - ---------------------- ---------------------- 1,254,595 325,998Exceptional item - diminution in value of goodwill in - (23,351)associateShare of operating loss in associates (11,657) (16,297) ---------------------- ----------------------Total operating profit 1,242,938 286,350 Interest receivable 14,806 7,440Share of interest receivable in associates 181 280 ---------------------- ---------------------- 1,257,925 294,070 Interest payable and similar charges (83,758) (23,956) ---------------------- ----------------------PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 1,174,167 270,114 Taxation (257,247) (57,831) ---------------------- ----------------------PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 916,920 212,283 ====================== ====================== EARNINGS PER SHAREBasic and diluted 6.871p 2.611p All transactions arise from continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 31 March 2006 2006 2005 £ £Profit for the financial year 916,920 212,283 -------------------- --------------------Total recognised gains and losses relating to the year 916,920 212,283Foreign exchange translation differences on foreign currency net (9,606) 1,113investment in subsidiaries --------------------- ---------------------Total recognised gains and losses since the last financial statements 907,314 213,396 ===================== ============== CONSOLIDATED BALANCE SHEETAs at 31 March 2006 2006 2005 £ £ FIXED ASSETSIntangible assets 1,093,719 1,065,355Tangible assets 746,429 603,269Investments - 234Investment in associates 1,769 15,286 --------------------- --------------------- 1,841,917 1,684,144 --------------------- --------------------- CURRENT ASSETSStocks 805,203 762,602Debtors due within one year 1,562,693 1,271,256Cash at bank and in hand 885,094 446,675 --------------------- --------------------- 3,252,990 2,480,533CREDITORSAmounts falling due within one year (1,663,737) (1,508,285) --------------------- ---------------------NET CURRENT ASSETS 1,589,253 972,248 --------------------- ---------------------TOTAL ASSETS LESS CURRENT LIABILITIES 3,431,170 2,656,392 CREDITORSAmounts falling due after more than one year (440,984) (581,601) --------------------- --------------------- 2,990,186 2,074,791PROVISIONS FOR LIABILITIES AND CHARGESDeferred Tax 58,852 -Other provisions 27,020 271,272Share of associates net liabilities 12,270 14,310Deferred income 24,317 28,256 --------------------- --------------------- 2,867,727 1,760,953 ===================== ===================== CAPITAL AND RESERVESCalled up share capital 266,913 266,913Share premium account 935,681 965,957Other reserves 582,999 582,999Profit and loss account 1,084,404 177,090 --------------------- --------------------- 2,869,997 1,992,959Own shares (2,270) (232,006) --------------------- ---------------------SHAREHOLDERS' FUNDS 2,867,727 1,760,953 ===================== ===================== CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 March 2006 2006 2005 £ £ Net cash flow from operating activities 1,215,881 (248,230) Returns on investments and servicing of finance (68,952) (16,516) Taxation (127,889) (68,268) Capital expenditure and financial investment (291,402) (82,150) Acquisitions - (760,380) -------------------- --------------------CASH OUTFLOW BEFORE FINANCING 727,638 (1,175,544) Financing (286,655) 1,532,268 --------------------- ---------------------INCREASE IN CASH IN THE YEAR 440,983 356,724 ===================== ===================== RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT) 2006 2005 £ £ Increase in cash in the year 440,983 356,724 Net cash outflow/(inflow) from bank loans 195,385 (536,644)Cash outflow/(inflow) in respect of hire purchase 60,994 40,580 -------------------- --------------------CHANGE IN NET DEBT RESULTING FROM CASH FLOWS 697,362 (139,340) New hire purchase (170,423) - -------------------- --------------------MOVEMENT IN NET FUNDS/(DEBT) IN THE YEAR 526,939 (139,340) ==================== ====================NET (DEBT)/FUNDS AT 1 APRIL 2005 (357,461) (218,121) -------------------- --------------------NET FUNDS/(DEBT) AT 31 MARCH 2006 169,478 (357,461) ===================== ===================== NOTES TO THE FINANCIAL STATEMENTSFor the Year Ended 31 March 2006 1. BASIS OF PREPARATION The financial information set out in this announcement does not constitute theCompany's statutory accounts for the years ended 31 March 2006 or 2005. Thefinancial information for the year ended 31 March 2005 is derived from theImmunodiagnostic Systems Holdings Plc statutory financial statements for theyear ended 31 March 2005 which have been delivered to the Registrar ofCompanies. The auditors reported on those financial statements; their report wasunqualified and did not contain a statement under s237 (2) or (3) Companies Act1985. The statutory financial statements for the year ended 31 March 2006 willbe finalised on the basis of the financial information presented by thedirectors in this preliminary announcement and will be delivered to theRegistrar of Companies following the Company's Annual General Meeting. The accounts when published will be available from the Company's registeredoffice 10 Didcot Way, Boldon Business Park, Boldon, Tyne & Wear, NE35 9PD,United Kingdom. 2. TURNOVER & SEGMENTAL INFORMATION An analysis of turnover by destination is given below: 2006 2005 £ £United Kingdom 2,146,716 1,845,805Overseas 5,985,965 3,588,840 -------------------------- -------------------------- 8,132,681 5,434,645 ========================== ========================== Turnover and profit before tax, relate principally to the main activity of themanufacturing and distributing of medical diagnostic products, and attributableto the continuing operations of the groups. 3. EARNINGS PER ORDINARY SHARE The calculations of earnings per share are based on the following profits andnumbers of shares. 2006 2005 2006 2005 Alternative Alternative EPS EPS £ £ £ £ Profit on ordinary activities after tax 916,920 212,283 916,920 235,634 ============ ============ ============= ============= No. No. No. No.Weighted average no of shares:For basic and diluted earnings per share 13,344,667 8,130,363 13,344,667 8,130,363 ============ ============ ============= ============= Basic and diluted earnings per share 6.871p 2.611p 6.871p 2.898p The alternative earnings per share presented is calculated using net profitbefore exceptional items (2005 -exceptional item - diminution in value ofgoodwill in associate, and amounts written off investments, a net reduction tonet profits of £23,351), in order to demonstrate their impact on the earningsper share. Diluted earnings weighted average number of shares has been calculated on theordinary shares of the group in issue during the year, no additional shares havebeen included in the calculation in respect of the share options granted asdetailed in note 35 as the conditions for exercising the options included in theperformance criteria have not been met. 4. RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS GROUP 2006 2005 £ £Profit for the financial year 916,920 212,283Foreign exchange translation differences on foreign (9,606) 1,113currency net investment in subsidiaries --------------- ------------- 907,314 213,396Issue of shares (30,276) 1,036,204Gift of shares to employees by EBT 229,736 - --------------- -------------Net addition to funds 1,106,774 1,249,600 Transfer of non-equity shares to equity - 57,000 Opening equity shareholders' funds 1,760,953 454,353 --------------- -------------Closing shareholders' equity funds 2,867,727 1,760,953 =============== =============NON-EQUITY SHAREHOLDERS' FUNDS Opening shareholders' non-equity funds - 57,000Non-equity shares converted to equity - (57,000) =============== =============Closing shareholders' non-equity funds - - =============== =============TOTAL SHAREHOLDERS' FUNDS 2,867,727 1,760,953 =============== ============= At 31 March 2006, the Immunodiagnostics Systems Holdings plc had an investmentin its own shares via the Employee Benefit Trust. During the year 1,062,797shares were gifted to employees. The number of own shares held at 31 March 2006was 10,503 ordinary shares (2005 - 1,073,300). The market value of the sharesat the year which had not unconditionally vested in employees was £12,394. Theconsideration paid for own shares was £2,270 (2005:£232,006). COMPANY 2006 2005 £ £ Profit for the financial period 1,317 6,154Issue of shares - 1,232,870Gift of shares to employees by EBT 229,736 - --------------- -------------Net addition to funds 231,053 1,239,024Initial recognition of consideration paid - (232,006)for the company's own sharesShare issue costs (30,276) -Opening shareholders' equity funds 1,007,018 - --------------- -------------TOTAL SHAREHOLDERS' FUNDS 1,207,795 1,007,018 =============== ============= The consideration paid for own shares was £2,270 and is included intotal shareholders funds above. 5. CASH FLOWS a Reconciliation of operating profit to net cash inflow from operatingactivities 2006 2005 £ £ Operating profit 1,254,595 325,998Amortisation of intangible fixed assets 129,990 101,828Depreciation of tangible fixed assets 160,545 124,071Profit on disposal of fixed assets - 88Amortisation of government grants (3,939) (3,939)Increase in stocks (42,601) (285,896)Increase in debtors (291,437) (146,154)Increase/(decrease) in creditors 8,728 (358,975)Decrease in provisions - (5,251) --------------- -------------Net cash inflow/(outflow) from operating activities 1,215,881 (248,230) =============== ============= b Analysis of cash flows for headings netted in the cash flow Returns on investment and servicing of finance Interest received 14,806 7,440Interest paid (77,955) (21,356)Interest element of hire purchase (5,803) (2,600) --------------- -------------Net cash outflow from returns on investments and servicing of (68,952) (16,516)finance =============== ============= Taxation Taxation (127,889) (68,268) =============== ============= Capital expenditure and financial investment Payments to acquire intangible fixed assets (158,354) (31,017)Payments to acquire tangible fixed assets (133,282) (92,426)Receipts from sale of fixed assets - 6,000Grant received - 35,293Receipt from sale of fixed asset investment 234 - --------------- -------------Net cash outflow for capital expenditure and financial (291,402) (82,150)investment =============== ============= Acquisitions Purchase of subsidiary undertakings - (750,731)Cash acquired with subsidiary - 35,317Acquisition of investments in associated undertakings - (44,966) --------------- -------------Net cash outflow from acquisitions - (760,380) =============== ============= 2006 2005 £ £FinancingIssue of shares - 1,036,204New bank loans - 624,957Share issue costs (30,276) -Repayment of bank loans (195,385) (88,313)Capital element of hire purchase (60,994) (40,580) --------------- -------------Net cash inflow from financing (286,655) 1,532,268 =============== ============= c Analysis of net debt At At 1 Apr 2005 Cash flows Other changes 31 Mar 2006 £ £ £ £ Cash in hand and at bank 446,675 438,419 - 885,094Overdrafts (2,564) 2,564 - - --------------- -------------- ----------------- -------------- 444,111 440,983 - 885,094 --------------- -------------- ----------------- --------------Debt due within 1 year (206,160) 206,160 (205,962) (205,962)Debt due after 1 year (579,131) (10,775) 205,962 (383,944)Hire purchase agreements (16,281) 60,994 (170,423) (125,710) --------------- -------------- ----------------- -------------- (801,572) 256,379 (170,423) (715,616) --------------- -------------- ----------------- --------------Total (357,461) 697,362 (170,423) 169,478 =============== ============== ================= ============== This information is provided by RNS The company news service from the London Stock Exchange