TIDMIDH

RNS Number : 4202U

Immunodiagnostic Systems Hldgs PLC

22 November 2019

22 November 2019

Immunodiagnostic Systems Holdings PLC

Unaudited Interim Results for the six-month period ended 30 September 2019

Summary of Group Results

 
                                                                          LFL* Change % 
 GBPm                                                                   H1 FY20    H1 FY19 
                                     H1 FY20     H1 FY19     H1 FY18          v          v 
                                                                        H1 FY19    H1 FY18 
 Group Revenue                          18.8        18.5        18.7         0%         0% 
    Automated Business Revenue          11.0        10.8        11.6         0%       (6%) 
    Manual Business Revenue              5.7         6.1         6.0       (8%)         2% 
    Technology Business Revenue          2.1         1.6         1.0        32%        51% 
 Adjusted** EBITDA                       2.9         1.9         3.4        49%      (44%) 
 Profit /(Loss) from Operations          0.6       (0.2)         1.1 
 Closing Cash and Cash 
  Equivalents                           28.1        27.8        29.7 
--------------------------------  ----------  ----------  ----------  ---------  --------- 
 

* Like for like 'LFL' numbers have been restated to remove the impact of foreign exchange movements in the period by restating the prior period results using the exchange rates of the current period.

** Before exceptional items of GBPnil (H1 FY19: credit of GBP0.1m; H1 FY18: credit of GBP0.1m) - see reconciliation in the Financial Review section.

Key Business Developments H1 FY20

Total Group revenue was GBP18.8m in H1 FY20 which represents an increase of 2% versus H1 FY19. On a constant currency and scope basis ("LFL"), the revenues were flat versus the comparative period.

Revenues of the Automated business grew 2% versus H1 FY19 on a reported basis, however remain unchanged versus the prior period on a LFL basis, with growth in our speciality assay panels covering declines in our 25-OH Vitamin D revenues.

Growth in our Technology business of 32% on a LFL basis, offset LFL declines in our Manual business of 8%.

Adjusted EBITDA, our core metric for measuring underlying profitability, increased from GBP1.9m to GBP2.9m. This was favourably impacted by an increase in gross margin, a decline in operating costs, and a change in our accounting for leases required by the introduction of a new accounting standard. More details are provided in the Financial Review.

Key Operational KPIs

IDS's key operational KPIs are summarized below, with further details provided in the Chief Executive's Statement:

 
 
                                                H1 FY20   H1 FY19 
 Gross Instrument Placements - Direct 
  Territories [1]                                    18        15 
 Instrument Returns                                (14)      (12) 
 Net Instrument Placements - Direct 
  Territories                                         4         3 
 Instrument Sales - Distribution Territories 
  [2]                                                14        13 
                                               --------  -------- 
 Total Gross Instrument Sales / Placements 
  [1]+[2]                                            32        28 
                                               --------  -------- 
 
 Average Assays Per Instrument                      5.4       4.8 
 New Assay Launches                                   0         0 
 
 Annualised revenue per employee GBP000's           138       130 
---------------------------------------------  --------  -------- 
 

The KPI's set out above above show positive underlying momentum versus H1 FY19. The exception was instrument returns, which are higher than the prior period mainly due to the loss of one significant customer which ran a single assay across multiple machines. Consequently, we expect instrument returns to be lower in H2 than H1.

Two assays are in the latter phases of development and we expect to launch these with a CE mark in H2 FY20.

Jaap Stuut, CEO of IDS, commented:

"I am pleased to deliver a LFL revenue number in line with the comparable period last year. We have returned our speciality Automated business to growth, which is vital for IDS as this is key to our mid and long-term profitability. Our Manual business declined mainly due to a significant one-off order in the previous year, and we expect a stronger second half performance from this business unit.

Profitability improved significantly versus the comparable period, mainly due to several operational cost saving projects and pricing and upsell initiatives within the sales team gaining traction.

We maintain confidence in achieving our goal of increasing full year revenue on a LFL basis versus FY19."

Notes:

Immunodiagnostic Systems Holdings PLC ("IDS" or "the Group") is a specialist producer of manual and automated diagnostic testing kits and instruments for the clinical and research markets.

For further information:

 
 Immunodiagnostic Systems Holdings PLC   Tel : +44 (0)191 519 
                                          0660 
 Jaap Stuut, CEO 
  Paul Martin, Finance Director 
 
 Peel Hunt LLP                           Tel : +44 (0)20 7418 
                                          8900 
 James Steel/Oliver Jackson 
 

Chief Executive's Statement

Overview

On a reported basis, Group revenue increased by 2%, however on a LFL basis Group revenue was in line with H1 FY19. Growth in our Automated and Technology businesses was offset by a decline in our Manual business.

Below is a discussion of the main developments and actions taken in our business units during the period:

   1.   AUTOMATED BUSINESS 
   1.1       Revenue Performance 
 
                                                       LFL Change % 
                     H1 FY20   H1 FY19   H1 FY18   H1 FY20 v    H1 FY19 
                      GBP000    GBP000    GBP000     H1 FY19          v 
                                                                H1 FY18 
                    --------  --------  --------  ----------  --------- 
 25-OH Vitamin 
  D                    2,325     2,839     3,317       (20%)      (12%) 
                    --------  --------  --------  ----------  --------- 
 Speciality 
  - IDS                7,059     6,679     6,920          5%       (2%) 
                    --------  --------  --------  ----------  --------- 
 Speciality 
  - Partners             871       569       488         52%        17% 
                    --------  --------  --------  ----------  --------- 
 Instrument 
  Sales & Service        736       714       879          3%      (26%) 
                    --------  --------  --------  ----------  --------- 
 Total                10,991    10,801    11,604          0%       (6%) 
                    --------  --------  --------  ----------  --------- 
 

In the current period, revenue remained flat on a LFL basis due to the following reasons:

25-OH Vitamin D revenue declined by GBP0.5m versus H1 FY19, or 20% on a LFL basis. This is a similar absolute rate of decline as seen between H1 FY19 and H1 FY18. The decline is due to a reduction in demand for 25-OH Vitamin D assay volumes in the market and the impact of "Vitamin D only" instrument returns in the US during the second half of FY19.

Speciality - IDS revenue grew by 5% LFL versus H1 FY19, with improved performance across most indication areas, particularly our bone and growth panels, aided by instrument placements at the end of FY19 becoming operational. Q2 saw an improvement in growth trajectory versus Q1, where this business stream declined 2% LFL versus the prior year. We believe we can improve the growth trajectory of this segment as we release new endocrinology assays, which is key to our mid and long-term profitability.

Speciality - Partners revenue encompasses the sales of assays developed by IDS's partners and sold under the IDS brand. These consist of 52 assays in the fields of Autoimmunity and Infectious Disease. Revenue in this segment grew by 52% LFL, a further acceleration in the growth rate compared to the previous year. The autoimmunity panel is an area of focus for IDS. When combined with our legacy endocrinology assays, we have a unique panel in the market which is of interest to laboratories who previously had to run autoimmunity and endocrinology tests on different analysers.

   1.2       Instrument Placements 

An analysis of instrument placements and sales over the previous five half-year periods is set out below:

 
                              H1 FY20   H2 FY19   H1 FY19   H2 FY18   H1 FY18 
 Direct Gross Placements 
  [1]                              18        22        15        16        18 
 Direct Returns                  (14)      (12)      (12)      (16)       (9) 
 Direct Net Placements              4        10         3         0         9 
 
 Sales to Distributors 
 [2]                               14        34        13        19        17 
 Total Analyser 
  sales [1] +[2]                   32        56        28        35        35 
--------------------------   --------  --------  --------  --------  -------- 
 

Direct instruments are those instruments which are sold or placed with reagent rental IDS end-user customers in the Group's core markets of the US, Europe (excluding distributor territories of Spain and Italy) and Brazil. Returns in H1 FY20 were higher than H1 FY19 mainly due to the loss of one significant customer which ran a single assay across multiple machines.

We have set ourselves an ambitious target to achieve 100 gross new placements (FY19: 84) across our Automated business (direct and distribution) during FY20, which would be the strongest performance since FY13. We have visibility on several large deals in our sales pipeline, which if closed during Q3, should enable us to reach this target.

   1.3          Assays per Instrument 

Average assays being run on each instrument stands at 5.4, versus 4.8 at 30 September 2018. This reflects uptake of our enlarged assay portfolio which now includes Autoimmune, Infectious Disease and Allergy panels. The greater variety of assays run on our analysers will increase their "stickiness" in laboratories and help to minimise instrument returns in the future. If we continue our current upselling trend, we are on target to achieve our goal of having an average of seven assays per instrument by the end of FY21.

   1.4          Sales Process 

As noted in our Annual Report & Accounts 2019, we have focused our attention on enhancing our European sales organisation. This new team has bedded into the organisation and have had a number of successes in upselling assays to our existing customers, as well as retaining a number of key accounts whose contracts were retendered during the period. In addition, 16 of the 18 gross placements in H1 FY20 were generated in Europe, and we look forward to continued success in this region in H2.

In the US, we continue to face challenges to improve automated sales performance. This is mainly due to the lack of assays in our portfolio, however we gained FDA approval for an additional assay in the US during H1. We are focusing on expanding our assay menu in the US over the long-term to enable us to reach a menu with critical mass.

   1.5          Assay Development and Product Registration 

We did not release any new IDS Speciality (Endocrinology) assays during the period, however the R&D team delivered a successful performance improvement to a key existing assay. We have targeted the release of two new assays in the second half of the year, one of which will be developed by a partner. Over the last two years we have improved our underlying development processes, however still need to improve in terms of adhering to development schedules and deliverables. Moving forward our focus will be on ensuring our R&D team has the technical skill set to develop high quality specialised assays, along with the project management skillset to ensure deadlines are met.

On the product registration side, we received FDA approval for one additional assay, however we do not expect

any further FDA approvals during FY20.   We anticipate at least two further approvals in FY21. 

The table below shows the assays available on the IDS analyser range under the IDS brand, split by the main regulatory approvals:

 
                                     Sep 19   Sep 18 
 Endocrinology - CE approved         22       22 
                                    -------  ------- 
 Endocrinology - FDA approved        11       10 
                                    -------  ------- 
 Endocrinology - NMPA approved       4        4 
                                    -------  ------- 
 
 Autoimmune - CE approved            29       29 
                                    -------  ------- 
 Infectious Disease - CE approved    23       22 
                                    -------  ------- 
 Allergy - CE approved               60       59 
                                    -------  ------- 
 
 Total - CE approved                 134      132 
                                    -------  ------- 
 
   2.   MANUAL BUSINESS 
 
                                                             LFL Change % 
                           H1 FY20   H1 FY19   H1 FY18   H1 FY20 v    H1 FY19 
                            GBP000    GBP000    GBP000     H1 FY19          v 
                                                                      H1 FY18 
                          --------  --------  --------  ----------  --------- 
 25-OH Vitamin 
  D                            604       556       660          6%      (15%) 
                          --------  --------  --------  ----------  --------- 
 Speciality - IDS            2,446     2,524     2,495        (5%)         2% 
                          --------  --------  --------  ----------  --------- 
 Speciality - Purchased        872       987       924       (14%)         9% 
                          --------  --------  --------  ----------  --------- 
 Diametra                    1,816     2,069     1,932       (13%)         6% 
                          --------  --------  --------  ----------  --------- 
 Total                       5,738     6,136     6,011        (8%)         2% 
                          --------  --------  --------  ----------  --------- 
 
   2.1                  Revenue Performance 

The Manual business saw a decline of 8% LFL versus H1 FY19. Our goal is to improve the revenue trajectory of this business as we move through the second half of the year.

   2.2                  Sales Process, Portfolio Development 

Our Manual business unit team continues to make progress in developing our global distribution network. During H2, focus will be on leveraging this network to improve performance. A second direction for improving the quality of the Manual business is an upgrade of the assay portfolio with speciality/niche assays, thus reducing competition and pricing pressure in the mass market part of our product portfolio. The upgrade of the portfolio will come either through internal development or "OEM in" deals with partners.

   3.   TECHNOLOGY BUSINESS 
 
                                                       LFL Change % 
                      H1 FY20   H1 FY19   H1 FY18    H1 FY20    H1 FY19 
                       GBP000    GBP000    GBP000          v          v 
                                                     H1 FY19    H1 FY18 
                     --------  --------  --------  ---------  --------- 
 Royalty Income             -        35        69      (99%)      (42%) 
                     --------  --------  --------  ---------  --------- 
 Technology Income      2,062     1,523       973        36%        57% 
                     --------  --------  --------  ---------  --------- 
 Total                  2,062     1,558     1,042        32%        51% 
                     --------  --------  --------  ---------  --------- 
 
   3.1                  Revenue Performance 

Our Technology business - comprising the sale of instruments and ancillaries to OEM partners - continues to grow, with LFL growth of 32% versus H1 FY19, generated mainly from two active OEM partners. Revenues from this business have doubled since H1 FY18.

   3.2                  Sales Process 

We are currently pursuing several leads which would result in additional partners using the IDS analyser technology on an OEM basis, and successful conclusion of these deals will allow us to diversify and continue to grow this business.

Financial review

Group revenues were GBP18.8m, an increase of 2% compared to the revenues of GBP18.5m recorded in H1 FY19. LFL revenues remained constant from the prior half year.

Adjusted EBITDA (before exceptional items) was GBP2.9m, an increase of GBP1.0m compared to H1 FY19. This increase in adjusted EBITDA was mainly driven by an improved gross margin, due to sales upselling and cost control initiatives, as well as a reduction in research and development costs.

Adjusted EBITDA was also favourably impacted by GBP0.3m due to the change in lease accounting policy mandated by IFRS 16 'Leases', which is described in Section A1 below.

The Group generated free cash flow to equity, being cash flow before returns to shareholders, of GBP0.4m (H1 FY19: GBP1.1m). The reasons for this decrease, despite the increased EBITDA, is explained in section D below.

   A.    SUMMARY OF INCOME STATEMENT 
 
 
                                          H1 FY20     H1 FY19       FY19 
                                           GBP000      GBP000     GBP000 
-------------------------------------  ----------  ----------  --------- 
 Revenue                                   18,791      18,495     38,513 
-------------------------------------  ----------  ----------  --------- 
 Gross profit                               8,411       7,892     16,696 
 Gross margin                               44.8%       42.7%      43.4% 
 Sales and marketing                      (4,403)     (4,553)    (9,075) 
 Research and development                   (893)     (1,274)    (2,444) 
 General and administrative expenses      (2,473)     (2,331)    (4,837) 
-------------------------------------  ----------  ----------  --------- 
 Total operating costs                    (7,769)     (8,158)   (16,356) 
 Exceptional items                              -          43         89 
-------------------------------------  ----------  ----------  --------- 
 Profit/ (loss) from operations               642       (223)        429 
 
   Add back 
 Depreciation and amortisation              2,215       2,159      4,457 
 Exceptional items                              -        (43)       (89) 
-------------------------------------  ----------  ----------  --------- 
 Adjusted EBITDA                            2,857       1,893      4,797 
-------------------------------------  ----------  ----------  --------- 
 

A1 Change in Accounting Policy

The introduction of IFRS 16 'Leases' means that leases held by IDS, which were previously defined as operating leases, are now deemed to be finance leases. This means that costs previously classified as rental expenditure are now included within depreciation and interest, and as a result EBITDA is favourably impacted by GBP279k in H1 FY20, with depreciation increasing by a similar amount. As a result, the introduction of IFRS 16 did not materially impact operating profit.

Full disclosure as to the impact of adopting IFRS 16 is given in Note 1 of the Interim Results. The H1 FY19 results have not been restated to reflect the impact of adopting IFRS 16.

A2 Foreign Exchange

The average exchange rates used to translate Euros and US Dollars to Pounds Sterling are as follows:

 
 
 Average exchange rates        H1 FY20   H1 FY19   FY19 
----------------------------  --------  --------  ----- 
 Pounds Sterling: US Dollar       1.26      1.34   1.32 
 Pounds Sterling: Euro            1.13      1.13   1.13 
----------------------------  --------  --------  ----- 
 

The movement in FX rates favourably impacted reported revenue by 2% but had a negligible impact on EBITDA and operating profit.

In the period, 68% (H1 FY19: 65%) of the Group's revenues were denominated in Euros, and 20% (H1 FY19: 21%) were denominated in US Dollars.

A3 Gross Profit

Gross profit was GBP8.4m (H1 FY19: GBP7.9m) implying a gross margin of 44.8% (H1 FY19: 42.7%).

As we noted in the Annual Report & Accounts 2019, our margin had previously declined as the result of a shift in revenue from higher margin direct business to lower margin distribution territories. During H1 FY20 distribution revenues increased to around 24% of Group revenues (H1 FY19: 22%). During the period, a number of controls were put in place to ensure that in all territories we are valuing our product offering appropriately and this led to improved gross margins.

Several cost initiatives to reduce wastage in our main automated assay manufacturing plant in Liege have been successfully implemented and we are continuing to pursue these initiatives to generate further efficiencies. Additionally, we realised further economies of scale in our Pouilly instrument production site, which produced 69 analysers in H1 FY20 versus 46 in the comparative period with a largely unchanged team.

As a result of the ongoing implementation of these efficiency projects, as well as the leverage effect we expect to see from increased sales volumes, we believe IDS can achieve gross margins in excess of 50% in the medium term.

A4 Operating costs

The Group's total operating costs (before exceptional items) comprise:

 
                                    H1 FY20  % revenue  H1 FY19  % revenue 
                                     GBP000              GBP000 
----------------------------------  -------  ---------  -------  --------- 
Sales and marketing                 (4,403)      23.4%  (4,553)      24.6% 
Research and development              (893)       4.8%  (1,274)       6.9% 
General and administrative 
 expenses                           (2,473)      13.2%  (2,331)      12.6% 
Operating costs (pre-exceptional)   (7,769)      41.3%  (8,158)      44.1% 
----------------------------------  -------  ---------  -------  --------- 
 

Total spend on operating costs has declined to GBP7.8m (H1 FY19: GBP8.2m), and as a result operating costs have reduced to 41.3% of revenue (H1 FY19: 44.1%).

The reduction is mainly due to lower spend in research and development arising due to the timing of project related spend with third parties.

Revenue per headcount, our key measure of operational efficiency, improved by 6% to GBP138k per employee, up from GBP130k per employee in H1 FY19. However, this still lags well behind best in class competitors, such as Diasorin, who achieve over GBP300k of revenue per employee.

A5 Exceptional items

Exceptional items during the current and previous financial periods comprise:

 
                     H1 FY20   H1 FY19 
                      GBP000    GBP000 
 ---------------------------  -------- 
 Restructuring income      -        43 
-----------------------  ---  -------- 
 
 

There were no exceptional items in H1 FY20. In H1 FY19 the exceptional income related to the release of an unused redundancy provision for the closure of our sales offices in FY18.

A6 Finance expense

Net finance expense was GBP0.9m (H1 FY19: GBP0.3m) and relates mainly to foreign exchange losses on intercompany loans, hence they have no cash flow impact. We are looking at a strategy to net down a number of these intercompany balances to reduce our exposure to such fluctuations in the future.

A7 Taxation

The Group's effective tax rate for the current period is based on an estimate of the rate for the full financial year and is 107% (H1 FY19: 42%) giving a tax credit of GBP0.2m (H1 FY19: GBP0.2m). Before exceptional items, prior year adjustments and the effect of rate changes on deferred tax balances, the effective rate is 60% (H1 FY19: 48%).

A8 Earnings per share

Basic earnings per share improved to 0.1p (H1 FY19: -1.0p).

A9 Business Unit Performance

An analysis of the financial performance of each business unit is provided below:

 
 H1 FY20 GBP000     Automated   Manual   Technology    Total 
 Revenue               10,991    5,738        2,062   18,791 
                   ----------  -------  -----------  ------- 
 Gross Profit           5,318    2,378          715    8,411 
                   ----------  -------  -----------  ------- 
 Adjusted EBITDA        1,612    1,044          201    2,857 
                   ----------  -------  -----------  ------- 
 Adjusted EBITDA 
  %                     14.7%    18.2%         9.7%    15.2% 
                   ----------  -------  -----------  ------- 
 
 
 H1 FY19 GBP000     Automated   Manual   Technology    Total 
 Revenue               10,801    6,136        1,558   18,495 
                   ----------  -------  -----------  ------- 
 Gross Profit           4,943    2,499          450    7,892 
                   ----------  -------  -----------  ------- 
 Adjusted EBITDA          768    1,064           61    1,893 
                   ----------  -------  -----------  ------- 
 Adjusted EBITDA 
  %                      7.1%    17.3%         3.9%    10.2% 
                   ----------  -------  -----------  ------- 
 

Encouragingly EBITDA in our Automated business was GBP1.6m, more than double the comparable period, for the reasons set out in section A3 and A4 above.

Despite the decline in Manual business revenue, EBITDA of GBP1.0m remained broadly consistent with the previous year, due to higher gross margins arising as a result of several targeted price increases in distribution territories where our prices were deemed too low.

Finally, profitability improved in our Technology business which returned EBITDA of GBP0.2m, due to the leverage impact of the higher revenues versus the comparable period.

   B.    HEADCOUNT 

A summary of IDS headcount by function is given below:

 
 Headcount (FTE basis)             30 Sep 19   31 Mar   30 Sep 
                                                   19       18 
 Operations                              125      130      126 
 
 Sales and marketing                      75       78       81 
      thereof field sales force           23       24       25 
 
 Research and development                 38       40       45 
 
 General and administrative               35       35       34 
 Total                                   273      283      286 
--------------------------------  ----------  -------  ------- 
 

Annualised revenue per employee for H1 FY20 increased to GBP138,000 per FTE (H1 FY19: GBP130,000).

   C.    SUMMARY OF BALANCE SHEET 

C1 Equity

The Group's net assets at 30 September 2019 are GBP56.7m (30 September 2018: GBP55.5m).

C2 Working Capital

The Group net working capital increased to GBP11.3m from GBP10.1m at 30 September 2018. This equates to 30% (30 September 2018: 27%) of annualised revenue.

The increase has been driven by higher stock levels of analysers and related raw materials, which we expect will be sold or placed during the second half of the year.

   D.    SUMMARY OF CASH FLOW STATEMENT 

A summary of the Group's cashflow is set out below:

 
                                      H1 FY20   H1 FY19      FY19 
                                       GBP000    GBP000    GBP000 
-----------------------------------  --------  --------  -------- 
 (Loss)/profit before tax               (230)     (523)       842 
 Depreciation and amortisation          2,215     2,159     4,457 
 Income taxes received                    331     1,052       838 
 Other adjusting items                    885       136     (589) 
 Movements in working capital           (564)       149       232 
-----------------------------------  --------  --------  -------- 
 Cash generated from operating 
  activities                            2,637     2,973     5,780 
 Cash used in investing activities    (1,929)   (1,822)   (4,426) 
 Cash used in financing activities      (486)   (1,932)   (2,019) 
-----------------------------------  --------  --------  -------- 
 Net increase/(decrease) in cash 
  and cash equivalents                    222     (781)     (665) 
-----------------------------------  --------  --------  -------- 
 
 Add back 
  Share buy back                            -     1,358     1,358 
 Dividend                                 201       500       500 
-----------------------------------  --------  --------  -------- 
 Free cash flow to equity                 423     1,077     1,193 
-----------------------------------  --------  --------  -------- 
 

Cash generated from operating activities fell to GBP2.6m (H1 FY19: GBP3.0m). The lower cash generated is mainly due to a lower income tax credit in H1 FY20 as well as an outflow due to the increase in working capital explained earlier. The "other adjusting items" line mainly reflects the non-cash impacting foreign exchange losses as explained in section A6.

As a result, free cash flow to equity decreased to GBP0.4m (H1 FY19: GBP1.1m).

During the period the Group returned GBP0.2m (H1 FY19: 1.9m) to shareholders by way of dividends and share buy backs.

As at 30 September 2019, the Group's cash and cash equivalents are GBP28.1m (30 September 2018: GBP27.8m; 31 March 2019: GBP27.7m).

   E.     BREXIT 

We have now had two "practise runs" at preparing for a no deal Brexit, firstly at the end of March 2019 and recently at the end of October 2019. While these preparations have not led to significant additional costs, they have absorbed significant amounts of time and resources which could have been spent productively elsewhere.

While we hope the risk of a no deal Brexit is receding, the Brexit risks remain as stated in our Annual Report & Accounts 2019.

   F.     OUTLOOK 

The results for H1 FY20 are in line with our expectations, and we continue to target full year LFL revenue growth when compared to FY19.

Unaudited consolidated interim income statement

For the six-month period to 30 September 2019

 
 
                                               6 Months      6 Months   Year ended 
                                                  ended         ended     31 March 
                                                 30 Sep   30 Sep 2018         2019 
                                                   2019 
                                        Note     GBP000        GBP000       GBP000 
 
                                         2, 
 Revenue                                  3      18,791        18,495       38,513 
 Cost of sales                                 (10,380)      (10,603)     (21,817) 
 
 Gross profit                                     8,411         7,892       16,696 
 Sales and marketing costs                      (4,403)       (4,553)      (9,075) 
 Research and development costs                   (893)       (1,274)      (2,444) 
 General and administrative expenses            (2,473)       (2,331)      (4,837) 
                                       -----  ---------  ------------  ----------- 
 Operating costs pre-exceptional 
  items                                         (7,769)       (8,158)     (16,356) 
 
           Restructuring income                       -            43           89 
   Total exceptional items               4            -            43           89 
-------------------------------------  -----  ---------  ------------ 
 
 Operating costs                                (7,769)       (8,115)     (16,267) 
 
 Profit/(loss) from operations                      642         (223)          429 
 
 Finance income                                     108            69          495 
 Finance costs                                    (980)         (369)         (82) 
 
 (Loss)/profit before tax                         (230)         (523)          842 
 
 Income tax credit/(charge)              6          246           218         (46) 
 
 Profit/(loss) for the period 
  attributable to owners of the 
   parent                                            16         (305)          796 
                                       =====  =========  ============  =========== 
 
 Earnings/(loss) per share 
 From continuing operations 
 Basic                                   5         0.1p        (1.0p)         2.7p 
 Diluted                                 5         0.1p        (1.0p)         2.7p 
 
 

Unaudited interim statement of other comprehensive income

For the six-month period to 30 September 2019

 
                                          6 Months   6 Months   Year ended 
                                             ended      ended     31 March 
                                            30 Sep     30 Sep         2019 
                                              2019       2018 
                                            GBP000     GBP000       GBP000 
 
 Profit/(loss) for the period                   16      (305)          796 
 Other comprehensive income to be 
  reclassified to profit or loss in 
  subsequent periods: 
  Currency translation differences           1,575        780        (505) 
 Other comprehensive income/(expense) 
  to be reclassified to profit or loss 
  in subsequent periods, before and 
  after tax                                  1,575        780        (505) 
 
 Other comprehensive expense not to 
  be reclassified to profit or loss 
  in subsequent periods: 
 Remeasurement of defined benefit 
  plan                                        (39)       (56)         (40) 
 Other comprehensive expense not to 
  be reclassified to profit or loss 
  in subsequent periods, before tax           (39)       (56)         (40) 
 
 Tax relating to other comprehensive 
  income not to be reclassified to 
  profit or loss in subsequent periods           -         14           14 
                                         ---------  ---------  ----------- 
 Other comprehensive income/(expense), 
  net of tax                                 1,536        738        (531) 
                                         ---------  ---------  ----------- 
 
 Total comprehensive income for the 
  period 
  attributable to owners of the parent       1,552        433          265 
                                         =========  =========  =========== 
 

Unaudited consolidated interim balance sheet

As at 30 September 2019

 
                                           30 Sep     30 Sep   31 March 
                                             2019       2018       2019 
                                                    Restated 
                                    Note   GBP000     GBP000     GBP000 
 Assets 
 Non-current assets 
 Property, plant and equipment              8,500      7,191      6,852 
 Other intangible assets                   11,123     11,138     11,177 
 Deferred tax assets                          284        328         70 
 Other non-current assets                     110        357        283 
                                           20,017     19,014     18,382 
 Current assets 
 Inventories                                9,043      8,308      7,819 
 Contract assets                              402        321        380 
 Trade and other receivables                8,016      7,410      8,958 
 Income tax receivable                      2,528      2,523      2,667 
 Cash and cash equivalents                 28,148     27,752     27,713 
                                           48,137     46,314     47,537 
                                   -----  -------  ---------  --------- 
 Total assets                              68,154     65,328     65,919 
                                   -----  -------  ---------  --------- 
 
 Liabilities 
 Current liabilities 
 Short-term portion of long-term 
  borrowings                                  554         81         82 
 Trade and other payables                   5,974      5,856      6,511 
 Contract liabilities                         166         44        278 
 Income tax payable                           348        284        369 
 Provisions                          7         47         60         46 
 Deferred income                               28         85         33 
                                            7,117      6,410      7,319 
                                   -----  -------  ---------  --------- 
 Net current assets                        41,020     39,904     40,218 
                                   -----  -------  ---------  --------- 
 
 Non-current liabilities 
 Long-term portion of long-term 
  borrowings                                2,062      1,176      1,092 
 Employee benefit obligations                 403        395        363 
 Provisions                          7        884        839        846 
 Deferred tax liabilities                     947      1,049        996 
                                            4,296      3,459      3,297 
 Total liabilities                         11,413      9,869     10,616 
                                   -----  -------  ---------  --------- 
 Net assets                                56,741     55,459     55,303 
                                   =====  =======  =========  ========= 
 
 
 
 Total equity 
 Called up share capital          8      589      589      589 
 Share premium account            8   32,345   32,345   32,345 
 Other reserves                        6,235    5,945    4,660 
 Retained earnings                    17,572   16,580   17,709 
 Equity attributable to owners 
  of the parent                       56,741   55,459   55,303 
                                     =======  =======  ======= 
 

Unaudited consolidated interim cash flow statement

For the six-month period to 30 September 2019

 
                                           6 Months   6 Months   Year ended 
                                              ended      ended     31 March 
                                             30 Sep     30 Sep         2019 
                                               2019       2018 
                                             GBP000     GBP000       GBP000 
 
 (Loss)/profit before tax                     (230)      (523)          842 
 Adjustments for: 
 Depreciation of property, plant 
  and equipment                               1,185      1,055        2,187 
 Amortisation of intangible assets            1,030      1,104        2,270 
 Loss on disposal of property, plant 
  and equipment                                   2          8           36 
 Share-based payment charge                      11         12           24 
 Finance income                               (108)       (69)        (495) 
 Finance costs                                  980        369           82 
 Other exceptional items                          -       (43)         (89) 
 Operating cash flows before movements 
  in working capital                          2,870      1,913        4,857 
 (Increase)/decrease in inventories           (910)        208        1,012 
 Decrease/(increase) in receivables           1,182        755        (959) 
 (Decrease)/increase in payables, 
  provisions and deferred income              (836)      (814)          179 
 Cash generated by operations                 2,306      2,062        5,089 
 Cash outflow related to exceptional 
  costs                                           -      (141)        (147) 
 Income taxes received                          331      1,052          838 
 Net cash from operating activities           2,637      2,973        5,780 
                                          ---------  ---------  ----------- 
 Investing activities 
 Purchases of other intangible assets         (922)    (1,221)      (2,492) 
 Purchases of property, plant and 
  equipment                                 (1,115)      (822)      (2,122) 
 Disposals of property, plant and 
  equipment                                       -        152           26 
 Interest received                              108         69          162 
 Net cash used by investing activities      (1,929)    (1,822)      (4,426) 
                                          ---------  ---------  ----------- 
 Financing activities 
 Repayments of borrowings                     (215)       (41)         (79) 
 Interest paid                                 (70)       (33)         (82) 
 Dividends paid                               (201)      (500)        (500) 
 Purchase of own shares                           -    (1,358)      (1,358) 
 Net cash used by financing activities        (486)    (1,932)      (2,019) 
                                          ---------  ---------  ----------- 
 Net increase/(decrease) in cash 
  and cash equivalents                          222      (781)        (665) 
 Effect of exchange rate differences            213          -        (155) 
 Cash and cash equivalents at beginning 
  of period                                  27,713     28,533       28,533 
                                          ---------  ---------  ----------- 
 Cash and cash equivalents at end 
  of period                                  28,148     27,752       27,713 
                                          =========  =========  =========== 
 

Unaudited consolidated statement of changes in equity

 
                                     Share     Share      Other   Retained     Total 
                                   capital   premium   reserves   earnings 
                                             account 
                                    GBP000    GBP000     GBP000     GBP000    GBP000 
 At 1 April 2019                       589    32,345      4,660     17,709    55,303 
 Change in accounting 
  policy (note 1)                        -         -          -         76        76 
 Restated as at 1 April 
  2019                                 589    32,345      4,660     17,785    55,379 
 Profit for the period                   -         -          -         16        16 
 Other comprehensive 
  income 
   Foreign exchange translation 
    differences on foreign 
    currency net investment 
    in subsidiaries                      -         -      1,575          -     1,575 
   Remeasurement of defined 
    benefit plan                         -         -          -       (39)      (39) 
 Total comprehensive 
  income                                 -         -      1,575       (23)     1,552 
 Transactions with 
  owners 
   Share-based payments                  -         -          -         11        11 
   Dividends paid                        -         -          -      (201)     (201) 
 At 30 September 2019                  589    32,345      6,235     17,572    56,741 
                                  ========  ========  =========  =========  ======== 
 
 At 1 April 2018                       589    32,345      5,165     18,773    56,872 
 Loss for the period                     -         -          -      (305)     (305) 
 Other comprehensive 
  income 
   Foreign exchange translation 
    differences on foreign 
    currency net investment 
    in subsidiaries                      -         -        780          -       780 
   Remeasurement of defined 
    benefit plan                         -         -          -       (56)      (56) 
   Tax effect on remeasurement 
    of defined benefit 
    plan                                 -         -          -         14        14 
 Total comprehensive 
  income                                 -         -        780      (347)       433 
 Transactions with 
  owners 
   Share-based payments                  -         -          -         12        12 
   Dividends paid                        -         -          -      (500)     (500) 
   Purchase of own shares                -                         (1,358)   (1,358) 
 At 30 September 2018                  589    32,345      5,945     16,580    55,459 
                                  ========  ========  =========  =========  ======== 
 
 
                                           Share     Share      Other   Retained     Total 
                                         capital   premium   reserves   earnings 
                                                   account 
                                          GBP000    GBP000     GBP000     GBP000    GBP000 
 At 1 April 2018                             589    32,345      5,165     18,773    56,872 
 Profit for the year                           -         -          -        796       796 
 Other comprehensive income 
   Foreign exchange translation 
    differences on foreign 
    currency net investment 
    in subsidiaries                            -         -      (505)          -     (505) 
   Remeasurement of defined 
    benefit plan                               -         -          -       (40)      (40) 
   Tax effect on remeasurement 
    of defined benefit plan                    -         -          -         14        14 
 Total comprehensive (expense)/income          -         -      (505)        770       265 
 Transactions with owners 
   Share-based payments                        -         -          -         24        24 
   Dividends paid                              -         -          -      (500)     (500) 
   Purchase of own shares                      -         -          -    (1,358)   (1,358) 
 At 31 March 2019                            589    32,345      4,660     17,709    55,303 
                                        ========  ========  =========  =========  ======== 
 

Notes to the Interim Financial Statements

For the six month period to 30 September 2019

1 Basis of preparation

The unaudited condensed financial statements for the six months ended 30 September 2019 have been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union. They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2019. The unaudited condensed financial information has been prepared using the same accounting policies and methods of computation used to prepare the Group's Annual Report & Accounts for the year ended 31 March 2019 that are described on pages 58 to 67 of that report which can be found on the Group's website at www.idsplc.com. The annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union.

New standards or interpretations not yet effective for the financial year ending 31 March 2020 are as follows: -

   --      IAS 1 - Presentation of Financial Instruments - Amendments to the definition of material; 

-- IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - Amendments to the definition of material;

   --      IFRS 3 - Business Combinations - Amendments to clarify the definition of a business; 
   --      IFRS 17 - Insurance Contracts; and 

-- IFRS 9 - Financial Instruments - Amendments regarding pre-replacement issues in the context of the IBOR reform.

Adoption of IFRS 15

IFRS 15 'Revenue from Contracts with Customers' became effective for the financial year ending 31 March 2019, thus was adopted in the Group's Annual Report & Accounts for the year ended 31 March 2019. Adoption resulted in the reclassification of amounts invoiced in advance and in arrears relating to customer reagent and service revenue. The impact of adoption on the balance sheet for the six months ended 30 September 2018 is set out below. The income statement for the six months ended 30 September 2018 is unchanged.

 
 
                                               Before            IFRS 15              After 
                                     reclassification   reclassification   reclassification 
 30 September 2018                             GBP000             GBP000             GBP000 
---------------------------------   -----------------  -----------------  ----------------- 
 Assets 
 Non-current assets 
 Property, plant and equipment                  7,191                                 7,191 
 Other intangible assets                       11,138                                11,138 
 Deferred tax assets                              328                                   328 
 Other non-current assets                         357                                   357 
                                               19,014                                19,014 
 Current assets 
 Inventories                                    8,308                                 8,308 
 Contract assets                                    -                321                321 
 Trade and other receivables                    7,731              (321)              7,410 
 Income tax receivable                          2,523                                 2,523 
 Cash and cash equivalents                     27,752                                27,752 
                                               46,314                                46,314 
 ---------------------------------  -----------------  -----------------  ----------------- 
 Total assets                                  65,328                                65,328 
                                    -----------------  -----------------  ----------------- 
 
 Liabilities 
 Current liabilities 
 Short-term portion of long-term 
  borrowings                                       81                                    81 
 Trade and other payables                       5,856                                 5,856 
 Contract liabilities                               -                 44                 44 
 Income tax payable                               284                                   284 
 Provisions                                        53                                    53 
 Deferred income                                  129               (44)                 85 
                                                6,403                                 6,403 
 ---------------------------------  -----------------  -----------------  ----------------- 
 Net current assets                            39,911                                39,911 
                                    -----------------  -----------------  ----------------- 
 
 Non-current liabilities 
 Long-term portion of long-term 
  borrowings                                    1,176                                 1,176 
 Employee benefit obligations                     395                                   395 
 Provisions                                       846                                   846 
 Deferred tax liabilities                       1,049                                 1,049 
                                                3,466                                 3,466 
 Total liabilities                              9,869                                 9,869 
                                    -----------------  -----------------  ----------------- 
 Net assets                                    55,459                                55,459 
                                    =================  =================  ================= 
 
 Total equity 
 Called up share capital                          589                                   589 
 Share premium account                         32,345                                32,345 
 Other reserves                                 5,945                                 5,945 
 Retained earnings                             16,580                                16,580 
 Equity attributable to 
  owners of the parent                         55,459                                55,459 
                                    =================  =================  ================= 
 

Adoption of IFRS 16

In the period ended 30 September 2019, the Group has applied IFRS 16 'Leases' for the first time.

The Group has adopted IFRS 16 retrospectively from 1 April 2019 but has not restated comparatives for the FY19 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and adjustments arising from the adoption of IFRS 16 have therefore been recognised in the opening balance sheet on 1 April 2019.

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as operating leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the Group's incremental borrowing rate as of 1 April 2019. The incremental borrowing rate applied to the lease liabilities on 1 April 2019 was 3.00%. The associated right-of-use assets were measured on a retrospective basis as if the new rules had always been applied.

The change in accounting policy affected the following items in the balance sheet on 1 April 2019:

- Property, plant and equipment - increased by GBP1,489,000

- Short-term portion of long-term borrowings - increased by GBP322,000

- Long-term portion of long-term borrowings - increased by GBP1,091,000

The net impact on retained earnings on 1 April 2019 was an increase of GBP76,000.

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

- The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;

- The accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short-term leases;

- The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease; and

- The accounting for operating leases with remaining total contractual payments of less than $5,000 as at 1 April 2019 as short-term leases.

Until the year ended 31 March 2019, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases were charged to profit or loss on a straight-line basis over the period of the lease.

From 1 April 2019, leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

- Fixed payments, less any incentives receivable,

- Variable lease payments that are based on an index or a rate,

- Amounts expected to be payable by the lessee under residual value guarantees,

- The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

- Payment of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

- The amount of the initial measurement of the lease liability;

- Any lease payments made at or before the commencement date, less any lease incentives received;

- Any initial direct costs; and

- Restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 month or less. Low-value assets comprise small items of furniture or equipment.

The impact on profit or loss for the six-month period ended 30 September 2019 was the following:

- Depreciation charge - increased by GBP256,000

- Finance costs - increased by GBP21,000

- Lease rental expense - decreased by GBP279,000

As the Group has adopted this accounting policy change using the modified retrospective approach in the current period comparatives have not been restated.

The financial information for the six months ended 30 September 2019 is not reviewed by PricewaterhouseCoopers LLP and accordingly no opinion has been given. The comparative financial information for the year ended 31 March 2019 has been extracted from the Annual Report & Accounts 2019. The financial information contained in this interim report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006 and does not reflect all of the information contained in the Group's Annual Report & Accounts 2019. The annual financial statements for the year ended 31 March 2019, which were approved by the Board of Directors on 18 June 2019, received an unqualified audit report, did not contain a statement under section 498 (2) or (3) of the Companies Act 2006 and have been filed with the Registrar of Companies.

2 Revenue

An analysis of the Group's revenue split by the key product types is as follows:

 
 H1 FY20                           Recognised   Recognised     Total 
                                  on delivery    over time 
                                       GBP000       GBP000    GBP000 
------------------------------  -------------  -----------  -------- 
 
 25-OH Vitamin D                        2,325            -     2,325 
 Speciality - IDS                       7,059            -     7,059 
 Speciality - partners                    871            -       871 
 Instrument sales                         469          267       736 
------------------------------  -------------  -----------  -------- 
 Total automated                       10,724          267    10,991 
------------------------------  -------------  -----------  -------- 
 Automated revenue comprises: 
 Operating lease rental                     -        1,601     1,601 
 Reagent revenue                        9,390            -     9,390 
------------------------------  -------------  -----------  -------- 
 
 25-OH Vitamin D                          604            -       604 
 Speciality - IDS                       2,446            -     2,446 
 Speciality - purchased                   872            -       872 
 Diametra                               1,816            -     1,816 
------------------------------  -------------  -----------  -------- 
 Total manual                           5,738            -     5,738 
 Technology                             1,813          249     2,062 
 Total revenue                         18,275          516    18,791 
------------------------------  -------------  -----------  -------- 
 
 
 H1 FY19                           Recognised   Recognised     Total 
                                  on delivery    over time 
                                       GBP000       GBP000    GBP000 
------------------------------  -------------  -----------  -------- 
 
 25-OH Vitamin D                        2,839            -     2,839 
 Speciality - IDS                       6,679            -     6,679 
 Speciality - partners                    569            -       569 
 Instrument sales                         504          210       714 
------------------------------  -------------  -----------  -------- 
 Total automated                       10,591          210    10,801 
------------------------------  -------------  -----------  -------- 
 Automated revenue comprises: 
 Operating lease rental                     -        1,612     1,612 
 Reagent revenue                        9,189            -     9,189 
------------------------------  -------------  -----------  -------- 
 
 25-OH Vitamin D                          556            -       556 
 Speciality - IDS                       2,524            -     2,524 
 Speciality - purchased                   987            -       987 
 Diametra                               2,069            -     2,069 
------------------------------  -------------  -----------  -------- 
 Total manual                           6,136            -     6,136 
 Technology                             1,504           54     1,558 
 Total revenue                         18,231          264    18,495 
------------------------------  -------------  -----------  -------- 
 
 
 FY19                              Recognised   Recognised     Total 
                                  on delivery    over time 
                                       GBP000       GBP000    GBP000 
------------------------------  -------------  -----------  -------- 
 
 25-OH Vitamin D                        5,537            -     5,537 
 Speciality - IDS                      13,737            -    13,737 
 Speciality - partners                  1,332            -     1,332 
 Instrument sales                       1,605          424     2,029 
------------------------------  -------------  -----------  -------- 
 Total automated                       22,211          424    22,635 
------------------------------  -------------  -----------  -------- 
 Automated revenue comprises: 
 Operating lease rental                              3,226     3,226 
 Reagent revenue                       19,409                 19,409 
------------------------------  -------------  -----------  -------- 
 
 25-OH Vitamin D                        1,061            -     1,061 
 Speciality - IDS                       5,179            -     5,179 
 Speciality - purchased                 2,058            -     2,058 
 Diametra                               4,024            -     4,024 
------------------------------  -------------  -----------  -------- 
 Total manual                          12,322            -    12,322 
 Technology                             3,449          107     3,556 
 Total revenue                         37,982          531    38,513 
------------------------------  -------------  -----------  -------- 
 

Operating lease rental relates to contracts implicit in agreements for the placing of IDS-iSYS instruments with customers and the related sale of reagents, and is estimated based on averages. The IFRIC 4 imputed revenue has been restated for the period ending 30 September 2018 from GBP2,460,000 to GBP1,612,000. This change is due to a revised methodology which excludes directly placed customer machines which have been sold and adjusts for iSYS machines where the annual revenue is lower than the average per machine imputed IFRIC 4 operating lease rental.

Contract assets

 
                                 H1 FY20   H1 FY19      FY19 
                                  GBP000    GBP000    GBP000 
                                                              ---- 
 Current contract assets relating to 
 automated reagent sales                   402           321   380 
----------------------------------------  --------  --------  ---- 
 
 

Contract liabilities

 
                                            H1 FY20   H1 FY19     FY19 
                                             GBP000    GBP000     GBP000 
 Current contract liabilities relating 
 to instrument sales                            166        44       278 
-----------------------------------------  --------  --------  -------- 
 

3 Segmental information

The Group applies IFRS 8 Operating Segments. IFRS 8 requires provision of segmental information for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Group considers that the role of chief operating decision-maker is performed by the Board of Directors.

Analysis of revenue is prepared and monitored on a geographical and business unit basis. Operational performance is monitored on a business unit basis by the Board of Directors. All balance sheet and cash flow information received and reviewed by the Board of Directors is prepared at a Group level.

 
 H1 FY20                             Automated    Manual   Technology      Total 
                                        GBP000    GBP000       GBP000     GBP000 
----------------------------------  ----------  --------  -----------  --------- 
 
 Revenue                                10,991     5,738        2,062     18,791 
 Cost of Sales                         (5,673)   (3,360)      (1,347)   (10,380) 
----------------------------------  ----------  --------  -----------  --------- 
 Gross profit                            5,318     2,378          715      8,411 
 
 Sales and marketing                   (3,347)     (841)        (215)    (4,403) 
 Research and development                (803)         -         (90)      (893) 
 General and administrative 
  expenses                             (1,502)     (732)        (239)    (2,473) 
----------------------------------  ----------  --------  -----------  --------- 
 Operating costs pre-exceptional 
  items                                (5,652)   (1,573)        (544)    (7,769) 
----------------------------------  ----------  --------  -----------  --------- 
 Adjusted EBIT                           (334)       805          171        642 
----------------------------------  ----------  --------  -----------  --------- 
 Exceptional items 
 Restructuring costs                                                           - 
----------------------------------  ----------  --------  -----------  --------- 
 Total exceptional items                                                       - 
----------------------------------  ----------  --------  -----------  --------- 
 EBIT                                                                        642 
 Finance income                                                              108 
 Finance costs                                                             (980) 
----------------------------------  ----------  --------  -----------  --------- 
 Loss before tax                                                           (230) 
----------------------------------  ----------  --------  -----------  --------- 
 
 Adjusted EBIT                           (334)       805          171        642 
 Add: Depreciation & amortisation        1,946       239           30      2,215 
 Adjusted EBITDA                         1,612     1,044          201      2,857 
----------------------------------  ----------  --------  -----------  --------- 
 
 
 H1 FY19                             Automated    Manual   Technology      Total 
                                        GBP000    GBP000       GBP000     GBP000 
----------------------------------  ----------  --------  -----------  --------- 
 
 Revenue                                10,801     6,136        1,558     18,495 
 Cost of Sales                         (5,858)   (3,637)      (1,108)   (10,603) 
----------------------------------  ----------  --------  -----------  --------- 
 Gross profit                            4,943     2,499          450      7,892 
 
 Sales and marketing                   (3,483)     (877)        (193)    (4,553) 
 Research and development              (1,261)         -         (13)    (1,274) 
 General and administrative 
  expenses                             (1,388)     (747)        (196)    (2,331) 
----------------------------------  ----------  --------  -----------  --------- 
 Operating costs pre-exceptional 
  items                                (6,132)   (1,624)        (402)    (8,158) 
----------------------------------  ----------  --------  -----------  --------- 
 Adjusted EBIT                         (1,189)       875           48      (266) 
----------------------------------  ----------  --------  -----------  --------- 
 Exceptional items 
 Restructuring credit                                                         43 
----------------------------------  ----------  --------  -----------  --------- 
 Total exceptional items                                                      43 
----------------------------------  ----------  --------  -----------  --------- 
 EBIT                                                                      (223) 
 Finance income                                                               69 
 Finance costs                                                             (369) 
----------------------------------  ----------  --------  -----------  --------- 
 Loss before tax                                                           (523) 
----------------------------------  ----------  --------  -----------  --------- 
 
 Adjusted EBIT                         (1,189)       875           48      (266) 
 Add: Depreciation & amortisation        1,957       189           13      2,159 
 Adjusted EBITDA                           768     1,064           61      1,893 
----------------------------------  ----------  --------  -----------  --------- 
 
 
 FY19                                Automated    Manual   Technology      Total 
                                        GBP000    GBP000       GBP000     GBP000 
----------------------------------  ----------  --------  -----------  --------- 
 
 Revenue                                22,635    12,322        3,556     38,513 
 Cost of Sales                        (12,581)   (6,738)      (2,498)   (21,817) 
----------------------------------  ----------  --------  -----------  --------- 
 Gross profit                           10,054     5,584        1,058     16,696 
 
 Sales and marketing                   (6,920)   (1,761)        (394)    (9,075) 
 Research and development              (2,333)         -        (111)    (2,444) 
 General and administrative 
  expenses                             (2,947)   (1,456)        (434)    (4,837) 
----------------------------------  ----------  --------  -----------  --------- 
 Operating costs pre-exceptional 
  items                               (12,200)   (3,217)        (939)   (16,356) 
----------------------------------  ----------  --------  -----------  --------- 
 Adjusted EBIT                         (2,146)     2,367          119        340 
----------------------------------  ----------  --------  -----------  --------- 
 Exceptional items 
 Restructuring credit                                                         89 
----------------------------------  ----------  --------  -----------  --------- 
 Total exceptional items                                                      89 
----------------------------------  ----------  --------  -----------  --------- 
 EBIT                                                                        429 
 Finance income                                                              495 
 Finance costs                                                              (82) 
----------------------------------  ----------  --------  -----------  --------- 
 Profit before tax                                                           842 
----------------------------------  ----------  --------  -----------  --------- 
 
 Adjusted EBIT                         (2,146)     2,367          119        340 
 Add: Depreciation & amortisation        4,044       388           25      4,457 
 Adjusted EBITDA                         1,898     2,755          144      4,797 
----------------------------------  ----------  --------  -----------  --------- 
 

4 Exceptional items

The Group incurred a number of exceptional items during the previous financial period:

 
                        H1 FY20   H1 FY19      FY19 
                         GBP000    GBP000    GBP000 
 ------------------------------  --------  -------- 
 Restructuring income         -        43        89 
 Total exceptional items      -        43        89 
--------------------------  ---  --------  -------- 
 
 

In H1 FY20, exceptional items were nil.

In H1 FY19, an exceptional credit of GBP43k was recorded, relating to the reversal of a portion of certain redundancy provisions booked in FY18.

In FY19, there was an exceptional credit of GBP0.1m due to the reversal of restructuring provisions related to our France and Italy operations which were not utilised.

5 Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The Group has dilutive potential ordinary shares relating to contingently issuable shares under the Group's share option scheme. At 30 September 2019, the performance criteria for the vesting of the awards under the option scheme had been met and consequently the shares in question are included in the diluted EPS calculation.

The calculations of earnings per share are based on the following profits and numbers of shares.

 
                                    6 Months      6 Months   Year ended 
                                       ended         ended     31 March 
                                 30 Sep 2019   30 Sep 2018         2019 
 
                                      GBP000        GBP000       GBP000 
 
 Profit/(loss) on ordinary 
  activities after tax                    16         (305)          796 
                                ============  ============  =========== 
 
                                      Number        Number       Number 
 Weighted average no of 
  shares: 
 For basic earnings per 
  share                           28,784,097    29,284,981   29,034,539 
 Effect of dilutive potential 
  ordinary shares: 
 -Share Options                       14,112        24,697       16,806 
 For diluted earnings per 
  share                           28,798,209    29,309,678   29,051,345 
                                ============  ============  =========== 
 
 Basic earnings /(loss) 
  per share                             0.1p        (1.0p)         2.7p 
 Diluted earnings/(loss) 
  per share                             0.1p        (1.0p)         2.7p 
 

6 Taxation

The estimated tax rate for FY20 of 107% (H1 FY19: 39%) has been applied to the profit before tax for the six months to 30 September 2019.

The Group's tax rate is substantially impacted by the claims for R&D relief in certain territories.

7 Provisions

 
                                                                                    Onerous 
                                        Leavers      Warranty    Dilapidation         lease    Restructuring 
                                      provision     provision       provision     provision        provision     Total 
                                         GBP000        GBP000          GBP000        GBP000           GBP000    GBP000 
 At 1 April 2019                            357            46             489             -                -       892 
  Foreign exchange movement                  12             1               -             -                -        13 
  Reassessment in the period                 26             -               -             -                -        26 
 At 30 September 2019                       395            47             489             -                -       931 
                                   ============  ============  ==============  ============  ===============  ======== 
 
 At 1 April 2018                            271             7             479            89              147       993 
  Foreign exchange movement                   4             -               -             1                2         7 
  Utilised during the period                (2)             -               -          (90)            (178)     (270) 
  Release in the period                     (1)             -               -             -               98        97 
  Reassessment in the period                 88             -               -             -             (16)        72 
 At 30 September 2018                       360             7             479             -               53       899 
                                   ============  ============  ==============  ============  ===============  ======== 
 
 At 1 April 2018                            271             7             479            89              147       993 
  Foreign exchange movement                 (6)             -               -           (2)              (3)      (11) 
  Release in the year                         -             -               -          (20)             (43)      (63) 
  Utilised during the year                    -             -               -          (67)            (101)     (168) 
  Unwind of discount                          -             -              10             -                -        10 
  Reassessment in the year                   92            39               -             -                -       131 
                                   ============  ============  ==============  ============  ===============  ======== 
 At 31 March 2019                           357            46             489             -                -       892 
                                   ============  ============  ==============  ============  ===============  ======== 
 
 At 30 September 2019 
 Included in current liabilities              -            47               -             -                -        47 
                     non-current 
                      liabilities           395             -             489             -                -       884 
                                            395            47             489             -                -       931 
                                   ============  ============  ==============  ============  ===============  ======== 
 
 At 30 September 2018 
 Included in current liabilities              -             7               -             -               53        60 
                     non-current 
                      liabilities           360             -             479             -                -       839 
                                            360             7             479             -               53       899 
                                   ============  ============  ==============  ============  ===============  ======== 
 
 At 31 March 2019 
 Included in current liabilities              -            46               -             -                -        46 
                     non-current 
                      liabilities           357             -             489             -                -       846 
                                            357            46             489             -                -       892 
                                   ============  ============  ==============  ============  ===============  ======== 
 

When employees leave Dia.Metra S.r.l, by law the company is required to pay to that employee an amount equal to one month's salary for each year they have worked at the Company. The scheme is Trattamento di Fine Rapporto ('TFR'). A provision for this obligation is recognised in the balance sheet, but there is considerable uncertainty over the timing of the settlement due to lack of forward visibility of employees leaving service. The present value of the potential liability to current employees as at 30 September 2019 is GBP395,000.

The warranty provision relates to warranties given for the first year of operation of IDS-iSYS systems. This is reassessed each year. It is expected that these costs will be incurred in line with normal warranty terms of one year from the placements of the instrument.

The dilapidations provision relates to one leased building in Boldon, UK. At its earliest it will be required to be settled in July 2020, at the first 5-year break point in a 15-year lease. The discounted expected future cash flows to restore the remaining leased building amounted to GBP489,000 at the balance sheet date.

The onerous lease provision related to the leased sales office in Paris following the restructure in IDS France in the year ending 31 March 2017 and the subsequent vacation of this office in the year ending 31 March 2018. The office was vacated in May 2018 and the provision was fully utilised in the previous financial year.

The restructuring provision related to unpaid settlements from the restructure of the IDS business actioned in FY18, which have now been settled.

8 Share Capital

 
                                                              30 Sep 2019               30 Sep 2018      31 March 2019 
                                                                   GBP000                    GBP000             GBP000 
 Equity Shares 
 Authorised: 
 75,000,000 Ordinary Shares of GBP0.02 each at 
  30 September 2019, 31 March 2019 and 30 
  September 
  2018                                                              1,500                     1,500              1,500 
                                                 ========================  ========================  ================= 
 
 Share Capital 
 Allotted, called up and fully paid: 
 28,784,097 (30 September 2018: 28,784,097, 31 
  March 2019: 28,784,097) Ordinary shares of 2p 
  each (excluding own shares held)                                    576                       576                576 
 Own shares held of 2p each 666,078 (30 
  September 2018: 666,078, 31 March 2019: 
  666,078)                                                             13                        13                 13 
                                                                      589                       589                589 
                                                 ========================  ========================  ================= 
 
 Share Premium 
 Balance carried forward                                           32,345                    32,345             32,345 
                                                 ========================  ========================  ================= 
 

9 Financial assets and financial liabilities

The carrying value of the financial assets and liabilities are not materially different from their fair value.

10 Interim results

These results were approved by the Board of Directors on Friday 22 November 2019. Copies of this unaudited interim report will be available to the public from the Group's registered office and www.idsplc.com.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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