|Full Year 2016||Full Year 2017||Full Year 2017 vs 2016|
Meanwhile, Clinical Laboratory revenues were $82.4m, a decrease of 0.4% versus 2016. This decrease was due to the impact of older products which were culled at the end of 2016. Excluding this factor underlying Clinical Laboratory revenues would have increased, largely driven by higher Diabetes and Autoimmunity revenues.The gross margin for the year was 42.3% compared to 43.3% in 2016. This decrease was mainly attributable to the foreign exchange impact on distributor pricing and sales mix. In the case of Infectious Diseases revenues we had an increase of sales to China, which are lower margin while our higher margin US sales fell thus negatively impacting overall margins. Research and Development expenses for the year increased by $0.6m to $5.7m. Meanwhile, Selling General and Administrative expenses increased from $29.5m to $30m, an increase of 1.7%. This was due to higher amortisation charges as well as normal inflationary pressures on wages and overheads. Operating profit for the year decreased from $7.5m to $5.5m in 2017. This decrease was mainly attributable to the lower gross margin combined with increased indirect costs. Profit after tax (before the impact of once-off items & non-cash financial income) was $2.3m which compares to $3.6m in 2016. This reduction is due to the lower operating profit mentioned above, partly offset by a lower tax charge. An overall tax credit was recorded in Q4, 2017 following the impact of recent changes to the US tax code on the Company's deferred tax balances. Basic EPS (excluding once-off charges & non-cash financial income) for the year was 10.6 cents versus 15.7 cents in 2016. Meanwhile, unconstrained diluted EPS was 25.7 cents compared to 29.0 cents in 2016. Earnings before interest, tax, depreciation, amortisation and share option expense for the year was $11.5m. The above measures exclude the impact of once-off charges amounting to $44.2m, more details of which are provided below.
Quarter 4 Results Total revenues for Q4, 2017 were $24.6m which compares to $23.7m in Q4, 2016, an increase of $0.9m and were broken down as follows:
|2016Quarter 4||2017 Quarter 4||Increase/ (decrease)|
Gross profit for Q4, 2017 amounted to $10.2m representing a gross margin of 41.5%. Whilst this was higher than the 40% achieved in Q4, 2016, it was lower than the gross margin reported in the other quarters of 2017 and this was attributable to the impact of the lower margin Infectious Diseases sales to China.Research and Development expenses of $1.5m were higher than the equivalent quarter last year ($1.3m) though it was consistent with levels incurred in more recent quarters. Selling, General and Administrative (SG&A) expenses for the quarter at $7.6m were $0.4m higher than Q4, 2016. This was due to higher amortisation charges and wage and overhead inflation. Operating profit for the quarter was $0.8m, which is higher than the $0.6m achieved in Q4, 2016. This is due to the combination of the higher revenues and gross margin, partly offset by higher indirect costs. The profit after tax, before once-off charges and non-cash financial income, for the quarter was $0.9m and compares favourably to $0.1m for the equivalent period last year. In addition to the improved operating profit this was also due a larger tax credit arising from recent changes in the US tax code. The basic EPS (excluding once-off charge and non-cash financial income) for the quarter was 4.2 cents versus 0.2 cents in Q4, 2016. Unconstrained diluted EPS for the quarter amounted to 7.7 cents, which compares to 4.3 cents in the equivalent quarter in 2016. Cash generated from operations during the quarter was $4.8m, though this was offset by capital expenditure of $4.7m and interest and tax of $0.4m thus resulting in free cash outflows for the quarter of $0.3m. Other major cash outflows for the quarter included share buybacks of $1.3m, interest payments of $2.3m and $1.0m of payments incurred in relation to the closure of our facility in Sweden. Overall, this resulted in a cash balance at the end of the year of $57.6m.
Earnings before interest, tax, depreciation, amortisation and share option expense for the quarter was $2.4m.The above measures exclude the impact of once-off charges amounting to $44.2m, more details of which are provided below. Impairment and Once-off Charges During the period the Company recognised impairment and once-off charges amounting to $44.2m (net of tax) which is broken down in the table below.
|Flood Damage (Kansas City)||0.9|
|Settlement for Back Royalties||0.5|
|Sweden Closure Provision||(1.6||)|
|Transfer of foreign currency translation reserve (Sweden)||2.8|
In addition to the impairment charge, the Company has recognised a number of once-off items which are as follows:
- Flood damage at our Kansas City facility. In late 2017 there was severe flooding in the Kansas City area caused by extremely heavy rainfall. The impact on our plant was accentuated by ongoing engineering works being undertaken on a nearby waterway. This caused significant damage to instrumentation inventory due to the electric and electronic components contained therein. Given the plants location on a flood plain, insurance coverage was not available to cover the particular circumstances. The financial implications of the flooding was limited to damage to inventory. By rescheduling new production runs the Company was able to ensure that all customer orders were met during the quarter.
- Back royalties were payable in relation to a dispute over the application of the terms of a licence agreement to which the Company is a party. Rather than undergo a lengthy and costly legal dispute, both parties reached a mutually acceptable agreement. The charge of $0.5m includes a payment of back royalties covering a period of five years plus legal fees incurred up to the point of settlement.
- There was a reduction in the provisions required to meet our legal and commercial obligations following the closure of our Swedish facility in late 2016. The Company has negotiated settlements with a number of counterparties which were lower than had been originally estimated. The resultant excess provision of $1.6m is now being released to the income statement.
- Separately on Sweden, with the resolution of the above mentioned items, our Swedish entity has now totally ceased to operate and consequently we are now unwinding its associated foreign currency translation reserve. This is a non-cash accounting adjustment transferring the foreign currency translation reserve from Other Reserves to Accumulated Surplus and has no impact on net assets in the balance sheet.
Share BuybackDuring the quarter the Company bought back 328,000 shares at an average price of $4.95 and a total value of $1.6m, of which $1.3m was paid out during the quarter. This brings the total buyback for the year to over 1.3 million shares at an average price of $5.55 and a total value of $7.5m. A further 27,000 shares at an average price of $5.15 were bought back during the period since the end of 2017. Comments Commenting on the results Kevin Tansley, Chief Financial Officer stated "The profit before non-cash and once-off items for 2017 amounted to $2.3m compared to $3.6m in the previous year. Overall revenues were slightly lower and gross margins continued to be impacted by foreign exchange factors. Meanwhile, indirect costs increased by 1.8% for the year. This resulted in a diluted EPS of 25.7 cents versus 29 cents in 2016. However, we did see improved financial performance in Q4, 2017 versus the equivalent quarter last year. In particular, the higher revenues and improved gross margins contributed to enhanced operating profit and resulted in an increase in diluted earnings per share from 4.3 cent to 7.7 cents." Commenting, Ronan O'Caoimh, Chief Executive Officer stated "Our revenues in 2017 were $99.1m which was slightly lower than $99.6m in 2016. This reduction was attributable to the impact of a number of products which were culled at the end of 2016. Our HIV revenues were broadly flat and this reflects our continuing domination of the confirmatory HIV market in Africa. Meanwhile, our Clinical Laboratory revenues (excluding culled products) experienced growth driven by higher Diabetes and Autoimmunity product sales. In the year ahead, we will focus on continuing to grow revenues with particular emphasis on Diabetes and Autoimmunity. In this regard, we will benefit from our return to the Brazilian market, which is expected midway through the year. We will continue seek new markets for all of products, including Infectious Diseases where we will seek to counter the continuing decline of USA sales. From a HIV perspective we will look to grow revenues with the launch of our new screening assay."
Forward-looking statements in this release are made pursuant to the "safe harbor" provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development commercialisation and technological difficulties, and other risks detailed in the Company's periodic reports filed with the Securities and Exchange Commission.Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information please see the Company's website: www.trinitybiotech.com.
|Trinity Biotech plc|
|Consolidated Income Statements|
|(US$000's except share data)||Three Months Ended Dec 31, 2017 (unaudited)||Three Months Ended Dec 31, 2016 (unaudited)||Year Ended Dec 31, 2017 (unaudited)||Year Ended Dec 31, 2016 (unaudited)|
|Cost of sales||(14,370||)||(14,202||)||(57,251||)||(56,518||)|
|Gross profit %||41.5%||40.0%||42.3%||43.3%|
|Other operating income||27||28||101||239|
|Research & development expenses||(1,539||)||(1,330||)||(5,658||)||(5,041||)|
|Selling, general and administrative expenses||(7,611||)||(7,206||)||(29,961||)||(29,451||)|
|Indirect share based payments||(249||)||(378||)||(893||)||(1,349||)|
|Net financing expense||(952||)||(961||)||(3,874||)||(3,849||)|
|(Loss)/Profit before tax, non-cash & once-off items||(142||)||(368||)||1,604||3,642|
|Income tax credit / (expense)||1,028||421||697||(41||)|
|Profit after tax before non-cash & once-off items||886||53||2,301||3,601|
|Non-cash financial income||489||4,860||1,667||1,552|
|Impairment & once-off items (net of tax)||(44,238||)||(105,779||)||(44,238||)||(105,779||)|
|Loss after tax and once-off items||(42,863||)||(100,866||)||(40,270||)||(100,626||)|
|Loss per ADR (US cents)||(202.9||)||(443.1||)||(186.2||)||(438.2||)|
|Earnings per ADR (US cents)**||4.2||0.2||10.6||15.7|
|Diluted loss per ADR (US cents)||(159.9||)*||(373.1||)*||(138.9||)*||(344.8||)*|
|Diluted earnings per ADR (US cents)**||7.7||*||4.3||*||25.7||*||29.0||*|
|Weighted average no. of ADRs used in computing basic earnings per ADR||21,129,969||22,761,641||21,621,602||22,964,703|
|Weighted average no. of ADRs used in computing diluted earnings per ADR||26,385,912||28,031,122||26,877,545||28,299,399|
|Trinity Biotech plc|
|Consolidated Balance Sheets|
|Dec 31, 2017 US$ '000 (unaudited)||Sept 30, 2017 US$ '000 (unaudited)||June 30, 2017 US$ '000 (unaudited)||Dec 31, 2016 US$ '000 (unaudited)|
|Property, plant and equipment||5,800||15,191||14,462||13,403|
|Goodwill and intangible assets||64,754||92,185||90,438||87,275|
|Deferred tax assets||8,698||15,074||15,352||14,556|
|Total non-current assets||80,023||123,354||121,125||116,104|
|Trade and other receivables||20,740||24,603||24,856||22,586|
|Income tax receivable||1,440||1,427||1,220||1,205|
|Cash, cash equivalents and deposits||57,607||62,529||63,977||77,108|
|Total current assets||112,592||121,270||123,673||133,488|
|EQUITY AND LIABILITIES|
|Equity attributable to the equity holders of the parent|
|Income tax payable||310||502||582||175|
|Trade and other payables||20,845||22,923||22,572||25,028|
|Total current liabilities||21,230||23,500||23,229||25,278|
|Exchangeable senior note payable||94,825||95,316||95,245||96,491|
|Deferred tax liabilities||10,832||18,839||18,818||18,361|
|Total non-current liabilities||106,189||114,737||114,703||115,587|
|TOTAL EQUITY AND LIABILITIES||192,615||244,624||244,798||249,592|
|Trinity Biotech plc|
|Consolidated Statement of Cash Flows|
|(US$000's)||Three Months Ended Dec 31, 2017 (unaudited)||Three Months Ended Dec 31, 2016 (unaudited)||Year EndedD ec 31, 2017 (unaudited)||Year Ended Dec 31, 2016 (unaudited)|
|Cash and cash equivalents at beginning of period||62,529||84,751||77,108||101,953|
|Operating cash flows before changes in working capital||3,088||3,294||12,768||16,245|
|Changes in working capital||1,727||1,325||(535||)||(2,147||)|
|Cash generated from operations||4,815||4,619||12,233||14,098|
|Net Interest and Income taxes paid||(445||)||(64||)||(121||)||(327||)|
|Capital Expenditure & Financing (net)||(4,696||)||(4,185||)||(15,255||)||(21,165||)|
|Free cash flow||(326||)||370||(3,143||)||(7,394||)|
|Payment of HIV-2 licence fee||-||-||(1,112||)||(1,112||)|
|30 year Exchangeable Note interest payment||(2,300||)||(2,300||)||(4,600||)||(4,600||)|
|Cash and cash equivalents at end of period||57,607||77,108||57,607||77,108|
|Contact:||Trinity Biotech plc||Lytham Partners LLC|
|Kevin Tansley||Joe Diaz, Joe Dorame & Robert Blum|