IDH.L Regulatory News (IDH)

12 April 2012

Immunodiagnostic Systems Holdings plc

Trading Update

Immunodiagnostic Systems Holdings plc ("IDS" or "the Company" or "the Group"), a leading producer of manual and automated specialist diagnostic testing kits and instrumentation for the clinical and research markets, today provides a trading update for the financial year ended 31 March 2012.

Financial update

Group revenue is expected to be 6% ahead of the prior year at £53.4m (2011: £50.2m) which is in line with the trading update provided on 23 January 2012.

Operating costs on a pre-exceptional basis are expected to be in line with previous guidance.

The Group's operations are expected to have generated £6.9m of cash during the year. Closing net cash was £6.8m at 31 March 2012 (2011: Net debt £0.1m).

Strategy update

The Group continues to pursue its strategy of developing and marketing a range of specialist tests in areas not well served by existing providers to form a strong proposition that differentiates IDS from its competitors. The IDS- iSYS system and its test menu fulfil a significant unmet market need and is particularly suited for the small and medium sized laboratories. Increasing the range of tests available for use on the IDS-iSYS will enhance the value and appeal of the system. Investment in product development will increase in the current financial year.

The recent launch of the 1,25-Dihydroxy vitamin D assay on the IDS-iSYS, the first automated test for 1,25 Dihydroxy vitamin D, is a key step in the continued expansion of the test menu. This launch follows that of PTH 1-34 and the clearance for USA sales of intact PTH and our growth factor panel (hGH, IGF-1 and IGFBP3) during the year to 31 March 2012. Up to five additional automated tests are planned for release in the current financial year with tests used in the diagnosis of hypertension (renin and aldosterone) on schedule for release in the first quarter and others to follow later in the year. Following the initial release of these tests the Group will make the appropriate regulatory application for FDA clearance to allow sales in the USA to commence.

The Group is benefitting from the appointment of its new Sales and Marketing director and in particular from the changes that have been initiated in the Group's key markets. The Group has prioritised investment to further strengthen its sales execution.

While increasing its investment in product development and in sales and marketing, the Group is making progress in implementing steps to enhance the overall profitability of the business. The realignment of the Company's cost base is progressing to plan. Operating overheads excluding depreciation and amortisation are being targeted to reduce by 10%, equivalent to £2m on an annualised basis. The realignment of the Group's cost base is expected to result in a non-recurring charge estimated at £1.3m for the year ended 31 March 2012.

The Company's new Finance Director, Gerard Murray, took up his position on 2 April 2012 in time for the start of the new financial year.

Manual tests & IDS-iSYS

Despite difficult conditions in the vitamin D testing market, the combined revenue from manual and automated vitamin D kits increased by 9%, to £36.5m (2011: £33.5m).

As expected, revenue from sales of manual vitamin D tests decreased as a result of both increased competition and also customers acquiring automated IDS-iSYS vitamin D kits in preference to manual kits. Manual vitamin D revenues fell by 10% to £25.3m (2011: £27.9m).

Overall revenue from the Group's automated IDS-iSYS testing system increased by 63% to £16.9m (2011: £10.4m), equating to 32% of total Group revenue. Sales and placements of the IDS-iSYS system increased during the year to 31 March 2012. A further 126 instruments have been sold or placed, net of returns from customers, representing an increase of 52% over the installed base as at 31 March 2011. The total number of systems placed or sold post launch (net of returns) is 367. Further details are set out below:

Average revenue per instrument from the Group's reagent rental accounts was in line with management expectations at £84,000 (2011: £102,000). As indicated at the time of the interim results, this reduction in average rental per instrument had been expected in the near term. In periods prior to the year ended 31 March 2011, a number of early IDS-iSYS system placements were made to high throughput customers. This has been followed by placements to accounts with lower rates of test throughput in the year ended 31 March 2012 which has been reflected in the average revenue per instrument. While the majority of IDS-iSYS revenues currently come from vitamin D testing, the continuing expansion of the IDS-iSYS test menu will provide the opportunity for non-vitamin D focused customers to take system placements.

Balance Sheet

The Group has generated positive cash flows during the year and as result the Group's net cash position as at 31 March 2012 was £6.8m (2011: Net debt £0.1m). Cash at bank increased by £4.7m to £11.0m (2011: £6.3m) and borrowings decreased by £2.2m to £4.2m (2011: £6.4m).

The Board is undertaking a review of the options available to it to secure the recoverability of an outstanding €3.2m debt related to the December 2008 disposal of its Haematology Division, a business originally acquired in 2007 as part of the Biocode Hycel acquisition, as well as other outstanding commercial issues arising from the latter. This review is scheduled to be complete in time for the Company's preliminary results in June 2012.

Outlook

The Board believes that increased competition in the vitamin D market will be a permanent feature and, as previously reported, the Group is actively supporting its direct sales and distributor sales with better marketing tools and more competitive pricing.

Investment in new product development to expand the range of automated IDS-iSYS tests will increase in the current financial year and beyond. The Board believes that IDS-iSYS' carefully selected portfolio of specialised assay panels provides the Group with an attractive market opportunity with appeal to a range of laboratories which will be enhanced as further assays are launched. As a consequence the Board expects the volume of IDS-iSYS system placements to be at a similar level in the new financial year as those achieved in the year ended 31 March 2012.

The Board maintains the view that overall revenues will show similar year on year growth in the new financial year with the decline in manual vitamin D test volumes combined with more competitive pricing being offset by increased IDS-iSYS revenues as a result of new placements and an increasing number of automated tests becoming available.

The Company will issue its preliminary results for the year ended 31 March 2012 on Monday 25 June 2012.

For further information: