IDH.L Regulatory News (IDH)

15 April 2014

Immunodiagnostic Systems Holdings plc

Trading Update

Financial results in line with Board's expectations

Return to top line growth

Good progress on strategic initiatives

Immunodiagnostic Systems Holdings plc ("IDS", "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 year ended 31 March 2014.

Financial update

IDS can confirm that results for the year ended 31 March 2014 are anticipated to be in line with the Board's expectations and the guidance given at the time of the interim results announcement in November 2013.

Total revenues are expected to be c. £52.3 million (2012/13: £49.8 million), representing c. 5% growth. The increase in revenue was primarily driven by the continued growth in automated revenue of c. 21%, compared to the prior year. Manual revenue declined by c. 18% over the same period.

Adjusted EBIT, before exceptional items, is expected to be marginally ahead of the prior year adjusted EBIT (2012/13: £9.8 million).

Closing net funds increased and were c. £27 million as at 31 March 2014 (31 March 2013: £20 million; 30 September 2013 £24 million).

IDS-iSYS instrument placements

Direct instruments are those sold or placed with IDS reagent rental customers in the Group's core markets of the USA and Europe (excluding distributor territories of Spain and Italy). During the year direct instrument placements were 35 (net of returns) (2012/13: 88). As expected we saw a modest pick-up in direct placements in the second half of the financial year (H2 2013/14: 19) compared to the first half (H1 2013/14: 16). Whilst the overall net placement figure was disappointing, we did see a marked improvement in the net placements figure in the fourth quarter, compared to the previous three quarters. This was mainly due to a noticeably better net placement performance in the USA following a planned restructuring of the US sales operation initiated in the first half of 2013/14. Average revenue per direct instrument was c. £71k per annum (calculated on a rolling 12 month basis) (2012/13: £72k).  Over the year the total number of instruments placed or sold (directly or through distributors) and sold to OEM partners was 92 (2012/13: 138).

Strategic initiatives

We continue to pursue our three strategic initiatives: increasing the menu of assays available on the IDS-iSYS, improving our instrumentation through the development of the Mark II IDS-iSYS ("Mark II") and building our presence in growth markets. We have made good progress in all of these areas:

i) Increasing the menu of assays available on the IDS-iSYS

Our business model is focused on developing and launching a range of assays for use on our proprietary IDS-iSYS instrument through internal development and partnership. Following the recruitment of Hans-Werner Griesser, as Group Technical Director, in September 2013, we are now focused on accelerating our internal assay development programme.

We are pleased to announce that we anticipate launching a new enhanced version of our 1,25 Vitamin D fully automated IDS-iSYS assay, the IDS-iSYS 1,25 Vit DXp, initially in Europe, in H1 2014/15. This new version has significantly enhanced workflow benefits for our customers as the sample pre-treatment is performed onboard the IDS-iSYS. The launch of this assay will enable us to maintain our leading position in this niche market. We are currently working towards FDA clearances for our bone markers: osteocalcin, BAP and P1NP and our hypertension marker: aldosterone with further European product launches planned to broaden our hypertension panel (cortisol) and our bone panel (Bone TRAP and MGP). 

Our assay development partnerships continue to progress well. In particular, our Chinese R&D and distribution partner Beijing Leadman Biochemistry Technology Co, Ltd ("Leadman") is close to completing the adaptation of 30 of its assays for use on the IDS-iSYS instrument. These assays will initially be sold in the Chinese market but we expect a number of these assays will be attractive in certain of our other core markets.

ii) Next generation Mark II instrument

The development of the Mark II is proceeding according to plan and we are on track to launch the new system in Europe in the first half of 2015. The key benefits of the Mark II include its low manufacturing cost and its ability to be connected to laboratory track systems.

Our current internal estimates suggest that the Mark II instrument will be significantly cheaper to manufacture than our existing IDS-iSYS. In addition, we have successfully demonstrated the Mark II connecting to one of the major track systems. We are working with a number of track system providers to ensure this capability is made available to our customers using a range of track systems.

iii) Building our presence in growth markets

Increasing our geographic sales and distribution coverage and, in particular, improving our exposure to rapidly expanding growth markets, are core priorities. We are currently focused on developing our presence in China and Brazil.

In China, we anticipate the IDS-iSYS registration to be complete by Q3 2014/15 and we continue to work closely with our partner, Leadman, to develop our launch strategy in this important market. In Brazil, we have opened a subsidiary and recruited a team to exploit opportunities in the Brazilian market, and to act as a hub for the wider South American region. We are in active discussions with a number of large laboratory chains and we anticipate the registration of our lead products will be complete by Q3 2014/15.

Outlook

Execution of the strategic initiatives set out above is expected to lead to continued modest revenue growth in 2014/15 counteracted to some degree by the effect of operating cost investment made in 2013/14.

Patrik Dahlen, CEO of IDS, commented:

"We are pleased with our trading performance during the year which was in line with guidance, saw a return to top line growth and was ahead of the previous year. We were particularly encouraged by our fourth quarter direct instrument placement performance, which was driven by an improved contribution from the USA.

With further new product launches later this year, our next generation system development on track and near-term expansion into growth markets we have made solid progress in executing our three key strategic initiatives and we look forward to capitalising on the opportunities ahead of us."

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