22 Jun 2009 07:00
22 June 2009
IMMUNODIAGNOSTIC SYSTEMS HOLDINGS PLC
Preliminary Results for the year ended 31 March 2009
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 preliminary results for the year ended 31 March 2009.
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 51.4% to £24.94m (2008: £16.47m)*
Gross profit up 61.6% to £16.58m (2008: £10.26m)*
Profit from operations up 27.9% to £5.37m (2008: £4.20m)*
Pre-tax profit up 27.1% to £4.78m (2008: £3.76m)*
Overall Profitability attributable to Ordinary shareholders was up 69.9% to £4.82m (2008: £2.8m)
Fully diluted earnings per share (continuing) up 21.8% to 16.2p (2008: 13.3p)
Fully diluted earnings per share (including discontinued) up 37.7% to 18.6p (2008: 13.5p)
Strong balance sheet with minimal gearing of 18.7% (comprising cash £4.5m and debt of £14.0m)
Dividend up 10% to 1.65p (2008: 1.5p)
Operational Highlights:
Sales of flagship Vitamin D product up 85.5% compared to same period last year
Integration of acquisitions and disposal of haematology division
Launch of IDS iSYS automated Vitamin D assay in February 2009
Strong pipeline of complementary products for the IDS iSYS
* from continuing operations
David Evans, Chairman said:
"If we continue to deliver against the outlined strategic plan then we will be on track to be not only the largest independent IVD Company in the UK but its most profitable and one of the most prized within the niche we operate in.
"The trading for the first two months of the year is in line with management expectations.
"To date (since acquiring Biocode Hycel) we have placed or sold circa 40 instruments, as we move on throughout the year I anticipate that the rate of evaluations and placements of the IDS-iSYS will increase and that additional infrastructure is currently being put in place to ensure that the rate of placements is increased."
Contacts:
| Immunodiagnostic Systems Holdings Plc | Tel: 0191 519 0660 |
| Roger Duggan, Chief Executive | |
| Paul Hailes, Finance Director | http://www.idsplc.com |
| Brewin Dolphin Investment Banking | Tel: 0845 213 4730 |
| Andrew Emmott | |
| Walbrook PR Ltd | Tel: 020 7933 8787 |
| Paul McManus | Mob: 07980 541 893 |
| paul.mcmanus@walbrookpr.com |
Chairman's Statement
I have pleasure in reporting yet another year of progress at Immunodiagnostic Systems despite some of the most challenging conditions encountered since the Company floated in 2004.
The visible progress that we have seen both in top-line turnover growth and bottom-line profitability has to be viewed against a backcloth of a number of factors that have influenced the reported result and the financial status of the Company.
The positive factors
The continuing slew of studies underlining the importance of Vitamin D as a measure of overall patient well-being as well as its role specifically in bone disease per se. This has fed its way into the public consciousness as evidenced by the columns of print devoted to the subject matter in our national newspapers. The positive impact of this has resulted in our Vitamin D sales increasing by 85.5% to £12.8m (2008: £6.9m)
The continued progress of the work on the IDS-iSYS culminating in its launch at the end of February 2009. This was a significant achievement in its own right but we all recognise the road ahead of us as the instrument is rolled out.
The disposal of the haematology division to Escalon-Drew was achieved on the last day of December and was the culmination of a long and arduous process by all concerned.
The negative factors
During the year we looked to make an acquisition of a North American diagnostic company that in the Board's view would have strengthened our IP position and offered significant competitive advantage. Those discussions were as protracted as the divestment of the haematology division and in the end we had to conclude that to proceed with the acquisition would have been too dilutive to you as a shareholder and we had to stare that reality in the face and walk away. It was undoubtedly a sore one.
Due to a combination of circumstances in large part driven by the new economic climate but also in part caused by being distracted by some of the above and also by the growing recognition that a greater proportion of the IDS-iSYS instruments will need to be placed this resulted in the necessity to raise additional working capital to de-leverage our position with our bank. Whilst I will not argue against the rationale for the fundraising the process itself was needlessly painful both in terms of the professional hanger-ons that are used and also the placing process itself. We raised £3.1m through a placing of 2,397,268 Ordinary Shares at 130p. The only excuse that I can offer was that myself and the rest of the Board had no alternative with regard to its timing and I accept all the criticism with regard to the uneven playing field that is created for private shareholders. The support of the Directors in the placing process was actually key to getting the placing away in some of the worst market conditions I have experienced.
Results
The results and analysis as set out below have differentiated between continuing and discontinued operations in a manner that should enable you to understand more fully the economic activity of the Group in the year .
Turnover
| Continuing | Continuing | % | Discontinued | Discontinued | % | Total | Total | % |
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||
| £24.9m | £16.5m | 50.9 | £2.4m | £2.2m | 9.1 | £27.4m | £18.7m | 46.5 |
The Group achieved substantial growth in its continuing operations primarily supported by the growth in Vitamin D but with growth across all product areas with the exception of sales of third party products which was impacted by the loss of the distribution rights from Brahm's Diagnostics GmbH - a German based manufacturer of diagnostic test kits.
Gross Profit
| Continuing | Continuing | % | Discontinued | Discontinued | % | Total | Total | % |
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||
| £16.6m | £10.3m | 61.1 | £1.3m | £1.2m | 8.3 | £17.9m | £11.5m | 55.7 |
Gross Profit %
The overall total gross margin percentage increased from 61.5% to 65.3% reflecting the change in the product mix resulting primarily from the divestment of the Haematology Division at the end of the third quarter of the Group's financial year.
Gross margin percentages for the ongoing business increased from 62.4% to 66.7% reflecting both the sale of higher margin products and the loss of lower margin third-party products.
Operating Profit
| Continuing | Continuing | % | Discontinued | Discontinued | % | Total | Total | % |
| 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||
| £5.37m | £4.2m | 27.9 | £0.03m | £0.08m | (62.5) | £5.40m | £4.28m | 26.2 |
The overall operating profit was impacted by three material items;
aborted acquisition costs of £428k
a book loss of £547k relating to the foreign exchange change in contingent consideration of Biocode Hycel
net exchange gains from on-going trading activity of £602k due to the weakness of the pound
Gain on Sales
The Group recorded a gain on the sale of the Haematology division of £642k.
Financing
Overall Financing costs have increased from £614k (£572k from continuing operations) to £754k (of which £703k relates to continuing operations) reflecting a full year's impact of the borrowing incurred in the prior year.
Taxation
The charge to taxation is £585k compared with £954k in the previous year reflecting the different profits by jurisdiction as well as the utilisation of carry forward losses in certain territories and the impact of R&D tax credits.
Profit after taxation
Overall profit has increased from £2.8m to £4.8m reflecting an overall increase of 71.4% and in essence the same numbers apply for continuing operations.
EPS
The overall Earnings per Ordinary Share has increased from 14.346p to 19.433p an increase of 35.5%. Fully diluted the total increase by % is up 37.7% (18.569p vs 13.489p).
Balance Sheet
Current Assets
Cash at the bank was £4.46m (2008:£2.97m) reflecting the benefits of the December 2008 share placing of just over £3m gross
Trade and other receivables increased from £4.8m to £9.2m, the increase reflecting in large part the monies due from Escalon Drew in relation to the divestment of the haematology division
Inventories have decreased from £6.2m to £5.7m reflecting in the main the divestment of the haematology division.
Liabilities
Bank borrowings have increased from £13.0m to £13.7m. Due in part to an additional loan of €1.8m entered into for the acquisition of a technology licence and the fall in the strength of Sterling.
Provisions
The main change in the provision has been to reduce the earn-out liability in relation to Biocode Hycel reflecting revised assumptions. That aspect of the provision has been reduced by £1.96m.
Direction and Growth
I am extremely pleased with how, despite disparate locations and cultures, the key aspects of the IDS-iSYS have been brought together to ensure its launch. This augurs well for the future but we have to be also realistic as to the challenges in front of us.
The strategic direction as set out in my report of last year and commented on in other ways in the CEO's report overleaf continues to be the right direction for the Group as a whole with the minor exception of additional refinement to the Alliance Concept.
If we continue to deliver against the outlined strategic plan then we will be on track to be not only the largest independent IVD Company in the UK but its most profitable and one of the most prized within the niche we operate in. It will be a challenge to maintain such independence.
The main challenges that I refer to above in terms of executing the plan will be determined by ; the rate of new product development, the rate of instrument manufacture and finally our ability to increase the level of traction with instrument evaluation and placement. To the latter in particular we need to make a significant investment in high quality and experienced personnel.
Outlook
The trading for the first two months of the year is in line with management expectations.
To date (since acquiring Biocode Hycel) we have placed or sold circa 40 instruments, as we move on throughout the year I anticipate that the rate of evaluations and placements of the IDS-iSYS will increase and that additional infrastructure is currently being put in place to ensure that the rate of placements is increased.
I look forward to updating you throughout the current financial year on;
Additional product launches on IDS-iSYS
Regulatory submission and anticipated approval in key territories primarily the USA
Additional expansion of our IP portfolio
Finally the progress that we have made over the past year has only been achieved through the combination of the unstinting effort by our employees and your continued support as a Shareholder and I would like to formally record my thanks to both groups.
David Evans
Non-Executive Chairman
19 June 2009
CHIEF EXECUTIVE'S REVIEW
The year 2008/9 was a year fraught with difficulties for companies the world over, with the global financial crisis impacting every marketplace. Such stormy conditions present challenges of varying degrees of severity to every aspect of business, testing the readiness and robustness of any enterprise. IDS is certainly not immune from these malevolent forces, and whilst we have been buffeted and bruised en voyage, I believe that we have come through a demanding year with a highly creditable performance.
The major challenges facing the company at the outset of the year were two-fold. First, we sought to further consolidate the IDS Group subsequent to the two acquisitions of 2007 (namely Nordic Bioscience Diagnostics, NBD, in July and Biocode Hycel in September). Secondly, we needed to ensure the completion of the fully automated IDS-iSYS analyser with our flagship Vitamin D technology on-board, and successfully launch the system to an expectant market.
We have demonstrated excellent progress and achievement in both regards.
Group Integration: The acquisition of NBD brought us valuable intellectual property (IP) together with products including the prestigious CTX-I and N-Mid Osteocalcin kits, and also prospects in the R&D pipeline. Product manufacture has transferred to our Boldon, UK facility, and the pipeline has since delivered a novel product in the form of an Aggrecan ELISA (aggrecan is a biomarker of cartilage turnover). As importantly, the IP accompanying the acquisition has been further exploited in the ongoing development of both N-Mid Osteocalcin and CTX-I for the IDS-iSYS, both of which will duly launch in 2009 and 2010 respectively, and more 'NBD' products will appear in the not-too-distant future.
The Biocode Hycel acquisition has been a more demanding exercise and integration is ongoing. In our last Annual Report, we disclosed the intended disposal of the Haematology Division of Biocode Hycel, located near Rennes and in Paris, having determined that this was not a core interest of IDS, employing as it does different technology and servicing a market unaddressed by IDS. The progress of the sale was sorely impacted by the global financial meltdown, and it was finally drawn to a successful conclusion on December 31st. The disposal of this loss-making division on acceptable terms has significantly reduced the complexity of the business and reduced demands on management resources at a time when we have such a great deal to achieve. As a consequence we have reorganised our European operations, minimising duplication of effort and maximising benefits obtainable from a broader background of collective experience. We are relocating both the Biocode Hycel and IDS Eurl sales and administration functions to a new single location in Paris. The distribution of our Biochemistry products has been transferred from Rennes to Liège, where they are manufactured. All of the manufacture of products for the IDS-iSYS is currently, and will be, undertaken in our facility in Liège by dedicated equipment and staff trained for the purpose. IDS-iSYS analyzers are developed and manufactured at our facility in Pouilly in Burgundy. The whole of our ELISA manufacturing is being located in Boldon, where we are able to optimally scale-up and automate manufacture. We have now fully implemented our existing ERP system in Boldon and elements of this system will be established at our operating sites during the current year prior to installing a Group wide solution during the next 2-3 years.
All Group sites are working to establish a common quality system during the current year.
The IDS-iSYS: The launch of the IDS-iSYS with specialised immunoassay products has been proclaimed by ourselves, and acknowledged by our shareholders, to be a major milestone in the development of the company. It heralds the entry of the company into a higher echelon of activity within the IVD industry. We duly made our entrance as a player in automated immunoassay at the end of February this year, a little later than anticipated but with a system truly ready to impress the most demanding Clinical Biochemist. Our strategy within the automation arena is as explicit as our long-standing strategy with manual immunoassays: IDS seeks to become the preferred supplier of specialist automated products in our chosen areas of application. We do not wish to stray into the fiercely-competitive automated 'commodity IVD' sector occupied by the Top 5 multi-billion dollar protagonists.
Vitamin D is an excellent example of that specialisation. Historically a very difficult analyte to measure in human serum or plasma, only three significant players (including IDS) are players in this market. Our competitors in the market, Diasorin and Roche, both have very substantial numbers of automated analysers placed throughout the world. Diasorin has been largely unchallenged in the automated Vitamin D market since the demise of Nichols Institute Diagnostics (April 2006). Enter IDS-iSYS 25 Hydroxy Vitamin D!
IDS has succeeded in marrying its expertise and IP in Vitamin D technology to the advanced features offered by the IDS-iSYS to solve the analytical problems presented by this difficult analyte. The result is a product that we believe offers significant advantages over competing automated methods, particularly with respect to sensitivity, specificity, precision and reproducibility, and this will facilitate market penetration and increase our market share. IDS-iSYS Vitamin D is a fully-optimised and automated 'closed' system offering 'walk away' ease of use which greatly improves consistency of analysis, attractive features for the hard-pressed, quality-conscious laboratory manager or physician.
But one product does not make 'a Specialist'. A key area of differentiation between IDS and our immediate competitors is that throughout the remainder of 2009 and into 2010/11 and beyond, IDS will be adding highly complementary bone and skeletal products to the menu of the IDS-iSYS, such as Parathyroid Hormone (PTH), CTX-I, N-Mid Osteocalcin, PINP, Bone-Specific Alkaline Phosphatase (BSAP), TRAP 5B, and still more. As with our manual assays, IDS will offer the most comprehensive range of products in bone and skeletal research and diagnostics. Additional sector specialisms are being implemented such as growth factors and hypertension, of which more anon.
Launching our proven Vitamin D technology on the IDS-iSYS represents a major opportunity for the company to capitalise on the burgeoning growth in Vitamin D testing. Figures released last year by a number of the largest reference laboratories in the USA, and quoted in USA Today, showed that requests for Vitamin D testing increased by over 90%, 80% and 74% at LabCorp, Quest Laboratories and the Mayo Clinic respectively, and more recent data released by SFRL (the French IVD trade association) indicate that the French market has more than tripled in less than two years (from €3.7m to €11.5m between Q2 2007 and Q1 2009).
IDS has enjoyed a remarkable increase in sales of our existing manual Vitamin D products (+ 86% FY2009 vs FY2008). I believe that we will see our automated Vitamin D sales take off steeply throughout the remainder of 2009 and take a significant share of the market from our existing competitors. The IDS-iSYS has the flexibility to automate not only immunoassay, but also biochemistry and coagulation tests. This will give us 'an edge' when placing systems in those busy laboratories needing to determine specific biochemistries such as calcium, phosphate and creatinine levels simultaneously with Vitamin D and PTH in (for example) chronic renal failure patient samples.
The IDS Strategy revisited: So, what of our explicit 3-pronged strategy proclaimed in the previous Annual Reports, namely that of New Product Development, Geographic Growth and Acquisition?
I am happy to disclose that this remains in place, subject only to interpretation and implementation in accord with the prevailing business environment. Automation is now a common theme in delivering on this strategy.
New Product Development: Our development resources in Boldon and Liège are primarily dedicated to the delivery of automated versions of the excellent manual products that have supported our decade of consistent sales growth, and these will appear on the IDS-iSYS in the fullness of time. New analytes, licensed-in where necessary, are in development as automated and/or manual products as appropriate. New product development is seen as a core ongoing activity at IDS, not a luxury, to ensure that we develop and maintain the most competitive range of biomarker tests in the future.
Geographic growth: In the near- to mid-term our geographic growth will come from the international roll-out of the IDS-iSYS, through IDS Group companies in our 'direct' territories (UK, USA, Germany, France, Scandinavia, Austria and Switzerland) and through our established distributor network in territories such as Italy, Spain, Canada and Australia. This is a major undertaking. The creation of the infrastructure required to support a growing number of sophisticated instruments in each of the major territories, to provide product support, engineers, training, software and hardware upgrades, is a task not to be undertaken lightly. Fortunately we have the personnel to do this, with in-depth knowledge and experience within the 'old' Biocode Hycel organisation and with the pick of ex-Nichols Institute Diagnostics personnel.
Our subsidiaries continue to perform well. Annual turnover at IDS Inc has exceeded $10m for the first time, a growth of 82%. In Europe, IDS Eurl and IDS GmbH have combined revenues exceeding last year's total by 67%, and IDS Nordic achieved more than €1m in revenues in its first full year of operation. Our export sales through distributors, supported from Boldon, delivered sales of £4.9m, an increase year on year of 49%.
Acquisition Activities: Our appetite for acquisition of IP, product or company remains tempered and highly selective. In July, we successfully concluded negotiations to obtain a licence from a European IVD corporation to develop what we believe will become a major analyte on the IDS-iSYS. This product, and the deal, will be disclosed at launch in July 2009.
In another aspiration, the financial conditions that came to taint the year did not work in our favour. An attractive potential acquisition comprising company, products and IP made good progress but eventually had to be aborted at an advanced stage. Costs of this activity have been formally accounted for, and must also be put down to experience.
FY2009 has proven to be a very demanding year which tested us profoundly. I am pleased to say that we have held our course admirably despite winds of change and the occasional gale. The continued organic growth of our 'traditional' products is about to be augmented, and in years to come to be eclipsed, by the impressive IDS-iSYS with a growing menu of products. All in all, we can consider this to have been a very satisfactory year during which we have added significantly to longer term shareholder value.
Roger Duggan, PhD
Chief Executive
19 June 2009
FINANCIAL REVIEW
Financial Highlights
Once again we have seen a significant increase in both sales and profitability. We have also launched our automated platform the IDS-iSYS which should contribute significantly towards future growth.
Turnover
Turnover from our continuous business increased by circa 51% to £24,937,000 (2008: £16,471,000). Direct sales into the USA and mainland Europe experienced significant growth, helped in the second half of the year by the strengthening of the US dollar and the Euro.
Gross Margin
Our gross margin increased for the twelve month period to 66.50% (gross profit £16,580,000) from 62.30% in 2008 (gross profit £10,261,000). Contributions behind this increase were the better product mix (more IDS manufactured product) and the strengthening of the US dollar and Euro during the second half of 2008.
Operating Costs and Profits
Our R&D expenditure for 2009 increased in line with management expectations to £3,805,000 up from £2,246,000 in 2008. However, management believes that R&D expenditure will start to fall post the launch of the IDS-iSYS.
Distribution and Administrative expenses increased by £5,157,000 to £11,214,000 compared to £6,057,000 in 2008. This increase was expected, as for the first time we accounted for a full twelve months worth of activities of the enlarged group.
The charge for depreciation and amortisation of intangibles was £1,428,000 compared to £933,000 in 2008. As expected this charge has increased due to the launch of the IDS-iSYS and the commencement of its respective capitalised R&D being released to the profit and loss account.
EBITDA
The Group reports an increase in earnings before interest, tax, depreciation and amortisation (EBITDA) from £5,245,000 in 2008 to £6,991,000, an increase of 33%.
Turnover by Product Area
| Year ending 31 March: | 2009 | 2008 | Change |
| £'000 | £'000 | % | |
| Vitamin D | 12,820 | 6,897 | 85.88% |
| Octeia | 1,971 | 1,378 | 43.03% |
| Gamma B | 211 | 213 | -0.94% |
| Other | 657 | 467 | 40.69% |
| Automation | 475 | 212 | 124.06% |
| Total of IDS products | 16,134 | 9,167 | 76.00% |
| Distribution of | |||
| third party sales | 2,119 | 2,723 | -22.18% |
| Nordic Bioscience | 3,431 | 2,614 | 31.25% |
| Biocode Hycel | 3,253 | 1,967 | 65.38% |
| Total turnover | 24,937 | 16,471 | 51.40% |
Dividend Policy and Dividend
The board is proposing a dividend for the year of 1.65p (2008: 1.5p); subject to the approval of shareholders in the Annual General Meeting. The dividend per share will be paid on 21st August 2009 to shareholders on the register at the close of business on 24th July 2009.
Balance Sheet
The Group's fixed assets at 31 March 2009 were £60,768,000 (2008: £50,518,000) which consisted of tangible assets of £4,161,000, intangible assets of £56,603,000 and investments of £4,000. Intangible assets principally relate to the patents and goodwill acquired on acquisitions.
Inventories have decreased to £5,737,000 (2008: £6,222,000) and receivables have increased to £9,158,000 (2008: £4,763,000) while current liabilities have increased to £10,124,000 (2008: £8,807,000). Liabilities due after one year have increased to £19,282,000 (2008: 18,678,000).
Financial Instruments
This report shows that the Group has had a very good year with record sales and profitability. A major contributor to this success has been the increase in both the number of orders received and the number of active customers who purchase product. As we develop and introduce new products we expect this growth to continue.
There are of course always risks associated with a business and as the in vitro diagnostic market develops there is the possibility that increasing competition from larger companies with greater financial and other resources than those directly available to the Group will appear. The directors are aware of this and are looking to work closely with these larger companies in an attempt to make them customers for the Group's products rather than direct competitors.
Our progress on our strategic objectives is monitored by the Board of Directors by reference to six key performance indicators applied on a Group-wide basis. The Groups performance for 2009 and 2008 is shown below:
| Financial KPI | 2009 | 2008 | Variance |
| Annual increase in sales | 47% | 88% | (41%) |
| Number of net invoices issued | 21,172 | 10,399 | 10,773 |
| Gross margin | 66.50% | 62.30% | 4.20% |
| Profit after tax | 19.33% | 17.22% | 2.11% |
| Basic earnings per share | 19.433p | 14.346p | 5.087p |
| Diluted earnings per share | 18.569p | 13.489p | 5.080p |
Other Business
Changes to Goodwill
A period end review of the "earn out provision" relating to the acquisition of Biocode Hycell resulted in an adjustment to Goodwill, Provisions and our Income Statement. The number of IDS-iSYS included in the "earn out provision" now reflects managements thoughts on how many can be placed and or sold during the earn out period.
As a result of this review Goodwill was reduced by £2,509,000, Provisions was reduced by £1,962,000 and the Income Statement was debited with £547,000. The charge to the Income Statement resulted from the movement in the exchange rate between Sterling and the Euro at the time of the acquisition to 31 March 2009, being 1.4734 and 1.0763 respectively multiplied by the number of instruments and discounted by 8.9%.
Haematology Consideration
The table below shows the time frame of the consideration to be received by the Company from the disposal of the Haematology business to EMC which completed on 31 December 2008:
| Payment upon completion | € 25,000 |
| Payment after 18 months | € 800,000 |
| Payment after 30 months | € 1,000,000 |
| Payment after 36 months | € 1,000,000 |
| Payment after 48 months | € 1,375,000 |
IDS-iSYS Amortisation
Post launch of the IDS-iSYS automated analyser the Company now has to amortise the costs of development. After review the Board agreed to write these costs over the remaining patent life of the instrument (18 years).
Paul Hailes
Finance Director
19 June 2009
CONSOLIDATED INCOME STATEMENT
for the year ended 31 March 2009
| 2009 | 2008 | ||
| £ | £ | ||
| REVENUE | 24,936,906 | 16,471,340 | |
| Cost of sales | (8,356,580) | (6,210,537) | |
| Gross profit | 16,580,326 | 10,260,803 | |
| Distribution costs | (4,600,918) | (2,603,290) | |
| Administrative expenses | (6,612,592) | (3,453,537) | |
| PROFIT FROM OPERATIONS | 5,366,816 | 4,203,976 | |
| Finance income | 117,553 | 124,319 | |
| 5,484,369 | 4,328,295 | ||
| Finance costs | (702,849) | (571,707) | |
| PROFIT BEFORE TAX | 4,781,520 | 3,756,588 | |
| Income tax expense | (585,343) | (953,942) | |
| PROFIT FOR THE YEAR FROM CONTINUING ACTIVITIES | 4,196,177 | 2,802,646 | |
| Profit for the year from discontinued activities | 623,780 | 34,046 | |
| PROFIT FOR THE YEAR ATTRIBUTABLE TO EQUITY HOLDERS OF PARENT | 4,819,957 | 2,836,692 | |
| EARNINGS PER SHARE | |||
| From continuing operations | |||
| Basic | 16.918p | 14.174p | |
| Diluted | 16.166p | 13.327p | |
| From continuing and discontinued operations | |||
| Basic | 19.433p | 14.346p | |
| Diluted | 18.569p | 13.489p | |
CONSOLIDATED BALANCE SHEET
As at 31 March 2009
| 2009 | 2008 | ||
| £ | £ | ||
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Property, plant and equipment | 4,161,154 | 3,066,410 | |
| Goodwill | 19,463,756 | 18,837,818 | |
| Other intangible assets | 37,139,180 | 28,609,885 | |
| Investments | 3,696 | 3,696 | |
| 60,767,786 | 50,517,809 | ||
| CURRENT ASSETS | |||
| Inventories | 5,737,202 | 6,221,897 | |
| Trade and other receivables | 8,598,131 | 4,763,136 | |
| Income tax assets | 559,740 | - | |
| Cash and cash equivalents | 4,455,920 | 2,973,452 | |
| 19,350,993 | 13,958,485 | ||
| TOTAL ASSETS | 80,118,779 | 64,476,294 | |
| LIABILITIES | |||
| CURRENT LIABILITIES | |||
| Short term portion of long term borrowings | 2,634,240 | 3,370,313 | |
| Trade and other payables | 6,240,156 | 5,426,707 | |
| Income tax liabilities | 1,249,663 | 10,062 | |
| 10,124,059 | 8,807,082 | ||
| NET CURRENT ASSETS | 9,226,934 | 5,151,403 | |
| NON-CURRENT LIABILITIES | |||
| Long term borrowings | 11,291,523 | 9,840,897 | |
| Provisions | 3,165,425 | 5,127,823 | |
| Deferred tax liabilities | 4,446,964 | 3,115,531 | |
| Deferred income | 377,866 | 593,368 | |
| 19,281,778 | 18,677,619 | ||
| TOTAL LIABILITIES | 29,405,837 | 27,484,701 | |
| NET ASSETS | 50,712,942 | 36,991,593 | |
| TOTAL EQUITY | |||
| Called up share capital | 528,316 | 479,453 | |
| Share premium account | 28,499,692 | 25,543,742 | |
| Other reserves | 12,165,927 | 5,909,070 | |
| Retained earnings | 9,525,542 | 5,065,863 | |
| 50,719,477 | 36,998,128 | ||
| Treasury shares | (6,535) | (6,535) | |
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 50,712,942 | 36,991,593 | |
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 March 2009
| 2009 | 2008 | ||
| £ | £ | ||
| OPERATING ACTIVITIES | |||
| Cash generated from operations | 6,367,085 | 845,828 | |
| Income taxes paid | (302,478) | (676,748) | |
| Interest paid | (754,220) | (614,340) | |
| NET CASH FROM/(USED BY) OPERATING ACTIVITIES | 5,310,387 | (445,260) | |
| INVESTING ACTIVITIES | |||
| Acquisition of subsidiaries, net of cash acquired | (52,305) | (17,453,285) | |
| Acquisition of investments in associates | - | (696) | |
| Purchases of other intangible assets | (4,326,248) | (2,371,176) | |
| Purchases of property, plant and equipment | (1,423,450) | (765,550) | |
| Interest received | 117,553 | 124,319 | |
| NET CASH USED BY INVESTING ACTIVITIES | (5,684,450) | (20,466,388) | |
| FINANCING ACTIVITIES | |||
| Proceeds from issue of shares for cash | 3,004,813 | 12,002,550 | |
| Proceeds of new borrowings | 1,404,720 | 13,727,935 | |
| Repayments of borrowings | (2,613,241) | (532,246) | |
| Repayments of hire-purchase obligations | (85,351) | (69,283) | |
| Dividends paid | (360,278) | (201,600) | |
| NET CASH FROM FINANCING ACTIVITIES | 1,350,663 | 24,927,356 | |
| EFFECT OF EXCHANGE RATE DIFFERENCES | 505,868 | (2,002,098) | |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 1,482,468 | 2,013,610 | |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 2,973,452 | 959,842 | |
| CASH AND CASH EQUIVALENTS AT END OF YEAR | 4,455,920 | 2,973,452 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2009
| Called up share capital | Share premium account | Merger reserve | Share based payments reserve | Currency translation reserve | Retained earnings | Treasury shares | Total | |
| £ | £ | £ | £ | £ | £ | £ | £ | |
| At 1 April 2007 | 266,893 | 935,701 | 582,999 | 231,359 | (11,421) | 2,430,771 | (6,535) | 4,429,767 |
| Profit for the year | 2,836,692 | 2,836,692 | ||||||
| Foreign exchange translation differences on foreign currency net investment in subsidiaries | 4,606,116 | 4,606,116 | ||||||
| Tax effect of treatment of foreign currency translation differences | 430,610 | 430,610 | ||||||
| Share based payments | 69,407 | 69,407 | ||||||
| Dividends paid | (201,600) | (201,600) | ||||||
| Shares issued in the period (net of expenses) | 212,560 | 24,608,041 | 24,820,601 | |||||
| At 31 March/1 April 2008 | 479,453 | 25,543,742 | 582,999 | 300,766 | 5,025,305 | 5,065,863 | (6,535) | 36,991,593 |
| Profit for the year | 4,819,957 | 4,819,957 | ||||||
| Foreign exchange translation differences on foreign currency net investment in subsidiaries | 5,573,258 | 5,573,258 | ||||||
| Tax effect of treatment of foreign currency translation differences | 465,922 | 465,922 | ||||||
| Share based payments | 217,677 | 217,677 | ||||||
| Dividends paid | (360,278) | (360,278) | ||||||
| Shares issued in the period (net of expenses) | 48,863 | 2,955,950 | 3,004,813 | |||||
| At 31 March 2009 | 528,316 | 28,499,692 | 582,999 | 518,443 | 11,064,485 | 9,525,542 | (6,535) | 50,712,942 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 March 2009
1. ACCOUNTING POLICIES
a) BASIS OF ACCOUNTING
The consolidated financial statements are prepared under the historical cost convention in accordance with applicable International Financial Reporting Standards (IFRS) as adopted by the European Union and issued by the International Accounting Standards Board (IASB). IFRS includes all IFRS, IAS, ISCs and IFRICs and the financial statements have been prepared in accordance with those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The measurement basis and principal accounting policies are unchanged from the previous year and are set out below.
b) BASIS OF PREPARATION
The financial statements are prepared on the historical cost basis except for certain financial assets which are stated at their fair values.
The preparation of financial statements in conformity with IFRS requires the directors to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expense. The estimates and judgements are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these financial statements.
c) FOREIGN CURRENCIES
The results and financial position of the Group are expressed in pounds sterling, its functional currency. Transactions in currencies other than pounds sterling are recorded at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to sterling at the foreign exchange rate ruling at that date. Exchange differences arising on translation are recognised in the consolidated income statement for the period.
Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at the rates prevailing at the dates when the fair value was determined. Non-monetary assets and liabilities that are measured at historical cost in a foreign currency (eg property, plant and equipment purchased in a foreign currency) are translated using the exchange rate prevailing at the date of the transaction. Exchange differences arising on the translation of net assets are effected through the statement of recognised income and expense.
Where a non-monetary foreign currency loan forms part of the net investment in a foreign subsidiary, on consolidation the exchange differences are recognised directly in equity to the extent the loan qualifies as an effective hedge.
d) BUSINESS COMBINATIONS
The financial statements incorporate the financial statements of the Company and all its subsidiaries. Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group since date of transition. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of the acquisition over the fair value of assets and liabilities is recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired the difference is recognised directly in the income statement.
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly (but normally through voting rights granted through the Company's shareholdings), to govern the financial and operating policies of an entity to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements.
Acquisitions
On acquisition, the assets and liabilities of a subsidiary, including identifiable intangible assets, are measured at their fair value at the date of acquisition. Any excess of the cost of acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill. Goodwill is reviewed for impairment annually and any impairment is recognised immediately in the income statement. Any excess of fair value of the identifiable net assets acquired over the cost of acquisition is credited to the income statement on acquisition. Goodwill recorded on business combinations prior to IFRS transition has not been restated and has either been written off to reserves or capitalised according to the UK GAAP accounting standards then in force. On disposal or closure of a previously acquired business, the attributable goodwill previously written off to reserves is not included in determining the profit or loss on disposal.
The results and cash flows relating to the business are included in the consolidated accounts from the date of combination.
e) REVENUE RECOGNITION
Revenue is measured by reference to the fair value of consideration received or receivable for goods and services provided in the normal course of business, excluding VAT. Revenue is recognised upon the performance of services or the sales of goods when risk is transferred to the customer. Where services are based on performance or specific deliverables the income is accounted for as the right to consideration for performance is earned.
f) SEGMENTAL REPORTING
Segmental reporting is based on geographic segments. A geographic segment is a group of assets and operations that provide a product or service within a particular economic environment and that is subject to risks and returns that are different from segments operating in different economic environments.
g) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually.
All research costs, which consist predominantly of salaries, are charged to the income statement as incurred.
Development costs, which consist predominantly of salaries and third party direct costs, are capitalised as an intangible asset when recognition criteria are met and, in particular, it is clear that the development expenditure will generate future economic benefit. Otherwise development costs are charged to the income statement as incurred. Capitalised costs are amortised over 5 years from the date the product commences commercial production.
All development expenditure incurred on automation of IDS products on the IDS-iSYS will be capitalised and amortised over 18 years from the date the product commences commercial production. Development expenditure on research use only products will be expensed as incurred as there is uncertainty as to the magnitude of future revenues being sufficient to cover the development costs.
Research and development of clinical products - all expenditure incurred up to feasibility stage is expensed off - all expenditure post feasibility will be capitalised and amortised post product launch over 5 years.
Other intangible assets, including product technology, acquired as part of a business acquisition are capitalised at fair value at the date of acquisition. Purchased intangible assets acquired separately are capitalised at cost. After initial recognition, all intangible fixed assets are measured at cost less accumulated amortisation and any accumulated impairment losses.
The TRAP patent was recognised at fair value on the acquisition of a subsidiary. The amount capitalised is the consideration in excess of the book values of the assets and liabilities at the date of acquisition. The directors consider 20 years as a reasonable period of estimated useful life.
Where an intangible asset has been assigned an indefinite useful life, it is not amortised and is reviewed for impairment either annually or more frequently if events or changes in circumstances indicate a possible decline in the carrying value.
Intangible assets which have been assigned a finite life are amortised on a straight line basis over the assets' useful life of up to 20 years and are tested for impairment if events or changes in circumstances indicate that the carrying value may have declined. Useful lives are examined every year and adjustments are made, where applicable, on a prospective basis. Amortisation of intangible assets is charged in the income statement under administrative expenses.
h) TANGIBLE ASSETS
Property, plant and equipment
Property, plant and equipment is shown at cost, net of depreciation and any provision for impairment. Depreciation is provided on all property, plant and equipment at varying rates calculated to write off cost to the expected current residual value by equal annual instalments over their estimated useful economic lives.
The principal rates employed are:
| Property | - over the life of the lease |
| Fixtures, Fittings & Equipment | - over 5-7 years |
| Motor Vehicles | - over 4 years |
Disposal of assets
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying amount of the asset and is recognised in the income statement. The gain or loss arising from the sale is included in administrative expense in the income statement.
i) INVESTMENTS
Fixed asset investments are stated at cost after making provision for any impairment in their value.
j) IMPAIRMENT
Impairment is determined by comparing the recoverable amount of the cash-generating unit or Group of cash-generating units ("CGU") which are expected to benefit from the asset to its carrying value. The recoverable amount is the greater of an asset's value in use and its fair value less costs to sell. Value in use is calculated by discounting the future cash flows expected to be derived from the asset or Group of assets in a CGU at an appropriate pre tax discount rate. Where the recoverable amount is less than the carrying value, the asset is considered impaired and is written down through the income statement to its recoverable amount.
k) INVENTORIES
Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. For inventories that are ordinarily interchangeable, cost is calculated using the weighted average method. Net realisable value is based on estimated selling price less estimated cost of disposal.
Work in progress is valued on the basis of direct costs plus attributable overheads based on normal level of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the valuation of the work in progress.
l) LEASE AND HIRE PURCHASE COMMITMENTS
Assets held under hire purchase agreements are capitalised in the balance sheet at the fair value of the assets and are depreciated over their useful lives. The capital element of future obligations under the contract is included in liabilities in the balance sheet.
The interest element of the rental obligations is charged to the income statement over the period of the lease and represents a constant proportion of the balance of capital repayments outstanding.
All other leases are classified as operating leases and rentals are charged to the income statement on a straight line basis over the lease term.
m) PENSIONS
Trading companies operate defined contribution pension schemes for employees. The assets of the schemes are held separately from those of the Company. The annual contributions payable are charged to the income statement.
n) FINANCIAL ASSETS
Trade receivables
Trade receivables are initially recognised at fair value and thereafter at amortised cost using the effective interest rate. A provision for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of these receivables. The amount of the provision is recognised in the income statement. Trade receivables do not carry any interest charge.
Cash
Cash includes cash in hand, deposits held at call with banks, and bank overdrafts. Bank overdrafts are shown within current liabilities on the balance sheet.
o) FINANCIAL LIABILITIES
Trade payables
Trade payables are non-interest-bearing and are initially measured at fair value and thereafter at amortised cost using the effective interest rate.
Borrowings
Interest-bearing loans and bank overdrafts are initially carried at the fair value. Finance charges, including premia payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis to the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
p) GOVERNMENT GRANTS
Government grants in respect of capital expenditure are treated as deferred income and are credited to the income statement over the estimated useful life of the assets to which they relate. Revenue grants are credited to the income statement in the period to which they relate.
q) PROVISIONS
Provisions for liabilities are recognised where the Group has a present commitment at the balance sheet date arising from a past event and where the extent of the commitment can be estimated reliably.
r) SHARE-BASED PAYMENTS
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. The Group issues equity-settled and cash-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.
The fair value is measured by the use of the Black-Scholes option pricing model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.
A liability equal to the portion of the goods or services received is recognised at the current fair value determined at each balance sheet date for cash-settled share-based payments. Changes in fair value are recognised through the profit and loss account.
All equity-settled share-based payments are ultimately recognised as an expense in the income statement with a corresponding credit to reserves.
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital and, where appropriate, share premium.
s) TAXATION
Current tax is the tax currently payable based on taxable results for the year.
Deferred income taxes are calculated using the liability method on temporary differences. However, deferred tax is not provided on the initial recognition of an asset or a liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax is generally provided on the difference between the carrying amounts of assets and liabilities and their tax bases. In addition, tax losses available to be carried forward as well as other income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
t) FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provisions of that instrument.
The Group uses foreign currency loans to hedge its overseas exposure and fixed rate interest swaps to hedge its term loan interest rate exposure. The Group does not use derivative financial instruments for speculative purposes.
Interest rate swaps are initially recognised at cost and are subsequently re-measured to fair value at each balance sheet date. Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise. These valuations are provided by the issuing financial institution.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contracts and the host contracts are not carried at fair value with unrealised gains or losses reported in the income statement.
u) EQUITY
Equity comprises the following:
share capital represents the nominal value of equity shares.
share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.
retained earnings include all current and prior period results as disclosed in the income statement.
Merger reserve represents the share premium and capital redemption reserve in existence in the subsidiary at the date of merger.
Share based payment reserve is the corresponding entry to the expense arising from equity-settled share-based payments.
v) CRITICAL JUDGEMENTS IN APPLYING THE GROUP'S ACCOUNTING POLICIES
In the process of applying the Group's accounting policies, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements.
Research and development
Research and development expenditure is capitalised as an intangible asset when recognition criteria are met and, in particular, it is clear that the development expenditure will generate future economic benefit. The development of the IDS-iSYS instrument and a range of tests to be run on it are seen as development expenditure so relevant costs are capitalised and amortised over 18 years from the date the product commences commercial production.
Identification and valuation of intangible assets on acquisition
The directors use their judgement to identify the separate intangible assets and then determine a fair value for each based upon the consideration paid, the nature of the asset, industry statistics, future potential and other relevant factors. These fair values will be reviewed for impairment annually.
Segmental analysis
The Group's principal activity consists of manufacturing and distributing medical diagnostic products. The directors believe that these activities comprise one business unit and consequently segmental analysis by business segment is not considered necessary.
Contingent consideration
The acquisition of Biocode Hycel SA included a contingent consideration clause in the form of a commitment to pay the former shareholders of the acquired company for each IDS-iSYS instrument placed by the group as per the Sales and Purchase Agreement. In determining the fair value attributable to this commitment, the directors considered current sales forecasts and discounted, applying a discount factor of 8.9%, being the Group's weighted average cost of capital.
w) KEY SOURCES OF ESTIMATION UNCERTAINTY
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Useful lives
The Group uses forecast cash flow information and estimates of future growth to assess whether goodwill and other intangible fixed assets are impaired, and to determine the useful economic lives of its goodwill and intangible assets. If the results of operations in a future period are adverse to the estimates used a reduction in useful economic life may be required.
x) Standards not yet effective
The directors do not expect any of the standards below which are issued but not yet effective to have a material impact on the financial information.
IFRS 8 'Operating Segments' (effective for periods commencing on or after 1 January 2009).
IFRS 8 introduces new disclosure requirements for segmental information and supersedes IAS 14 'Segmental Reporting'.
The directors do not believe that the impact of the change in disclosure arising from the following standards will be significant.
IAS 1 (amended) Presentation of Financial Statements (effective for periods commencing on or after 1 January 2009).
IAS 1 introduces a Statement of Comprehensive Income for all non-owner changes in equity. In addition Balance Sheet and Cash Flow Statement will be renamed the Statement of Financial Position and Statement of Cash Flows. The directors will reflect the changes in the appropriate financial statements.
IFRS 2 (amended) Share based payments (effective for periods commencing on or after 1 January 2009)
The changes to IFRS 2 clarifies the treatment of non-vesting conditions and the definitions of 'vest' and 'vesting conditions'.
2. SEGMENTAL INFORMATION
For management purposes, the Group is currently organised into three geographical operating regions, UK, Europe and USA. These regions are the basis on which the Group reports, by origin, its primary segment information.
The main activity of the Group is the manufacturing and distributing of medical diagnostic products. No separate business segments have been identified for management purposes.
Inter-segment sales are priced based on the market selling price for the individual item obtainable by the purchasing segment, reduced by a margin equivalent to the gross margin that would be expected to have been achieved by purchasing the item on the local wholesale market.
Year ended 31 March 2009:
REVENUE
| UK £000 | Europe £000 | USA £000 | Adjustments £000 | Consolidated £000 | ||
| External sales | 7,789 | 13,421 | 6,176 | - | 27,386 | |
| Inter-segment sales | 8,136 | 5,105 | - | (13,241) | - | |
| Total revenue | 15,925 | 18,526 | 6,176 | (13,241) | 27,386 | |
| Discontinued operations | - | 2,449 | - | - | 2,449 | |
| Revenue from continuing operations | 15,925 | 16,077 | 6,176 | (13,241) | 24,937 | |
RESULT
| Profit from operations | 4,984 | 432 | 1,062 | (95) | 6,383 |
| Investment income | 88 | 375 | 2 | (347) | 118 |
| Finance costs | (2,511) | (234) | - | 1,991 | (754) |
| Profit before tax | 2,561 | 573 | 1,064 | 1,549 | 5,747 |
| Income tax expense | (567) | 525 | (425) | (460) | (927) |
| Profit after tax | 1,994 | 1,098 | 639 | 1089 | 4,820 |
| Discontinued operations | - | (18) | - | - | (18) |
| Profit after tax from continuing operations | 1,994 | 1,116 | 639 | 1,089 | 4,838 |
BALANCE SHEET
| Segment assets | 62,728 | 48,329 | 1,859 | (32,797) | 80,119 | |
| Segment liabilities | (26,839) | (22,735) | (494) | 20,662 | (29,406) | |
| 35,889 | 25,594 | 1,365 | (12,135) | 50,713 | ||
| Capital additions | 3,183 | 2,620 | 34 | - | 5,837 |
| Depreciation and amortisation | 362 | 1,055 | 11 | - | 1,428 |
Year ended 31 March 2008:
REVENUE
| UK £000 | Europe £000 | USA £000 | Adjustments £000 | Consolidated £000 | ||
| External sales | 6,932 | 8,866 | 2,862 | - | 18,660 | |
| Inter-segment sales | 3,770 | 1,894 | - | (5,664) | - | |
| Total revenue | 10,702 | 10,760 | 2,862 | (5,664) | 18,660 | |
| Discontinued operations | - | 2,189 | - | - | 2,189 | |
| Revenue from continuing operations | 10,702 | 8,571 | 2,862 | (5,664) | 16,471 | |
RESULT
| Profit from operations | 3,467 | 552 | 432 | (170) | 4,281 |
| Investment income | 82 | 328 | 4 | (290) | 124 |
| Finance costs | (2,085) | (344) | - | 1,815 | (614) |
| Profit before tax | 1,464 | 536 | 436 | 1,355 | 3,791 |
| Income tax expense | (319) | (42) | (166) | (427) | (954) |
| Profit after tax | 1,145 | 494 | 270 | 928 | 2,837 |
| Discontinued operations | - | 34 | - | - | 34 |
| Profit after tax from continuing operations | 1,145 | 460 | 270 | 928 | 2,803 |
BALANCE SHEET
| Segment assets | 57,702 | 30,795 | 681 | (24,702) | 64,476 | |
| Segment liabilities | (26,689) | (18,810) | (244) | 18,259 | (27,484) | |
| 31,013 | 11,985 | 437 | (6,443) | 36,992 | ||
| Capital additions | 1,190 | 25,332 | 10 | - | 26,532 |
| Depreciation and amortisation | 285 | 643 | 5 | - | 933 |
3. PROFIT FROM OPERATIONS
Profit from operations is stated after charging/(crediting):
| 2009 | 2008 | |
| £ | £ | |
| Amortisation of government grants re fixed assets | (284,733) | (179,724) |
| Amortisation of other intangible assets | 693,034 | 426,474 |
| Depreciation of owned plant, property and equipment | 678,157 | 451,500 |
| Depreciation of assets held under hire purchase agreements | 56,678 | 54,633 |
| Operating lease costs | 441,692 | 204,745 |
| Share-based payments | 217,677 | 69,407 |
| Net (gain) / loss on foreign currency translation of trading items | (602,368) | (17,877) |
| Loss on foreign currency translation of contingent consideration | 546,770 | - |
| Costs relating to an abortive acquisition | 427,741 | - |
| Research and development | 243,995 | 364,474 |
| Staff costs (note 5) | 10,734,303 | 6,769,666 |
| Auditor's remuneration (see below) | 243,682 | 108,765 |
Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of both audit and non-audit services:
| 2009 | 2008 |
| £ | £ |
Audit services
| - statutory audit of parent and consolidated accounts | 113,850 | 108,765 |
| Other services relating to taxation - compliance services | 14,550 | 1,754 |
| Work performed by associates of Baker Tilly in respect of consolidation returns or local legislative requirements | 16,257 | 850 |
| Services relating to corporate finance transactions entered into or proposed to be entered into by or on behalf of the company | 99,025 | - |
| 243,682 | 111,369 |
4. DISCONTINUED OPERATIONS
Discontinued operations refer to the disposal of the Haematology Division of Biocode Hycel. IDS determined that this was not a core interest of the Group, employing as it does different technology and servicing a market unaddressed by IDS. The sale was completed on 31 December 2009. The disposal of this division on acceptable terms has significantly reduced the complexity of the business and reduced demands on management resources.
The profit after tax from discontinued operations is made up as follows:
| 2009 | 2008 | |
| £ | £ | |
| Gain on disposal | 641,588 | - |
| Trading result | (17,808) | 34,046 |
| 623,780 | 34,046 |
The results of the haematology business for the period from 1 April to 31 December 2008, which have been included in the consolidated financial statements, are as follows:
| 2009 | 2008 | |
| £ | £ | |
| Revenue | 2,449,192 | 2,188,672 |
| Cost of sales | (1,138,852) | (1,018,537) |
| Gross profit | 1,310,340 | 1,170,135 |
| Distribution costs | (735,075) | (724,571) |
| Administrative expenses | (541,702) | (368,885) |
| Profit from operations | 33,563 | 76,679 |
| Finance costs | (51,371) | (42,633) |
| Loss/profit after tax | (17,808) | 34,046 |
Cash flows from discontinued operations are as follows:
| 2009 | 2008 | |
| £ | £ | |
| Operating cash flows | 33,563 | 76,679 |
| Investing cash flows | - | - |
| Financing cash flows | (51,371) | (42,633) |
| (17,808) | 34,046 |
The gain on disposal is calculated as follows:
| 2009 | |
| £ | |
| Net proceeds | 3,741,549 |
| Net assets disposed of | (2,758,633) |
| Gain on disposal before tax | 982,916 |
| Tax on gain on disposal | (341,328) |
| 641,588 |
The net proceeds of the disposal are calculated as follows:
| Gross consideration | 4,088,785 |
| Transaction costs incurred | (347,236) |
| 3,741,549 |
The net assets disposed of are as follows:
| Property, plant and equipment | 42,571 |
| Other intangible assets | 244,415 |
| Inventories | 1,530,423 |
| Trade and other receivables | 941,224 |
| 2,758,633 |