Filed by Bowne Pure Compliance
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2007
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report .................
Commission file number: 0-22320
Trinity Biotech plc
(Exact Name of Registrant as specified in its charter
and translation of Registrants name into English)
Ireland
(Jurisdiction of incorporation or organization)
IDA Business Park, Bray, Co. Wicklow, Ireland
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of each exchange on which registered |
None
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None |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
American Depositary Shares (each representing 4 A Ordinary Shares, par value $0.0109)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:
74,756,765 Class A Ordinary Shares and 700,000 Class B Shares
(as of December 31, 2007)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes o No þ
If this report is an annual or transition report, indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer þ Non-accelerated filer o
Indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 o Item 18 þ
If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
This Annual Report on Form 20-F is incorporated by reference into our Registration Statements on
Form
F-3 File No. 333-113091, 333-112568, 333-116537, 333-103033, 333-107363, 333-114099 and
333-124385 and our Registration Statements on Form S-8 File No. 33-76384, 333-220, 333-5532,
333-7762 and 333-124384.
As used herein, references to we, us, Trinity Biotech or the Group in this form 20-F shall
mean Trinity Biotech plc and its world-wide subsidiaries, collectively. References to the Company
in this annual report shall mean Trinity Biotech plc.
Our financial statements are presented in US Dollars and are prepared in accordance with
International Financial Reporting Standards (IFRS) both as issued by the International
Accounting Standards Board (IASB) and as subsequently adopted by the European Union (EU). The
IFRS applied are those effective for accounting periods beginning on or after 1 January 2007.
Consolidated financial statements are required by Irish law to comply with IFRS as adopted by the
EU which differ in certain respects from IFRS as issued by the IASB. These differences
predominantly relate to the timing of adoption of new standards by the EU. However, as none of
the differences are relevant in the context of Trinity Biotech, the consolidated financial
statements for the periods presented comply with IFRS both as issued by the IASB and as adopted by
the EU. All references in this annual report to Dollars and $ are to US Dollars, and all
references to euro or are to European Union euro. Except as otherwise stated herein, all
monetary amounts in this annual report have been presented in US Dollars. For presentation
purposes all financial information, including comparative figures from prior periods, have been
stated in round thousands.
During the year, a resolution was passed by the shareholders of Trinity Biotech at an Extraordinary
General Meeting held on October 1, 2007 to de-list from the Irish Stock Exchange with effect from
expiry of the relevant notice to the Irish Stock Exchange, being November 5, 2007. The Companys
shares continue to be traded on the NASDAQ National Market Listing.
Item 1 Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2 Offer Statistics and Expected Timetable
Not applicable.
Item 3 Selected Consolidated Financial Data
The following selected consolidated financial data of Trinity Biotech as at December 31, 2007 and
2006 and for each of the years ended December 31, 2007, 2006 and 2005 have been derived from, and
should be read in conjunction with, the audited consolidated financial statements and notes thereto
set forth in Item 18 of this annual report. The selected consolidated financial data as at
December 31, 2005 and 2004 and for the year ended December 31, 2004 are derived from the audited
consolidated financial statements not appearing in this Annual Report. This data should be read in
conjunction with the financial statements, related notes and other financial information included
elsewhere herein.
1
CONSOLIDATED STATEMENT OF OPERATIONS DATA
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Year ended December, 31 |
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2007 |
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2006 |
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2005 |
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2004 |
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Total |
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Total |
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Total |
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Total |
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US$000 |
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US$000 |
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US$000 |
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US$000 |
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Revenues |
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143,617 |
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118,674 |
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98,560 |
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80,008 |
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Cost of sales |
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(75,643 |
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(62,090 |
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(51,378 |
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(40,047 |
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Cost of sales restructuring expenses |
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(953 |
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Cost of sales inventory write off/ provision |
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(11,772 |
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(5,800 |
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Total cost of sales |
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(88,368 |
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(67,890 |
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(51,378 |
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(40,047 |
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Gross profit |
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55,249 |
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50,784 |
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47,182 |
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39,961 |
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Other operating income |
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413 |
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275 |
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161 |
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302 |
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Research and development expenses |
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(6,802 |
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(6,696 |
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(6,070 |
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(4,744 |
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Research and development restructuring expenses |
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(6,907 |
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Total research and development expenses |
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(13,709 |
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(6,696 |
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(6,070 |
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(4,744 |
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Selling, general and administrative expenses |
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(51,010 |
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(42,422 |
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(34,651 |
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(29,332 |
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Selling, general and administrative restructuring
expenses (including goodwill impairment of US$19,156,000) |
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(20,315 |
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Total selling, general and administrative expenses |
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(71,325 |
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(42,422 |
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(34,651 |
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(29,332 |
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Operating (loss)/ profit |
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(29,372 |
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1,941 |
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6,622 |
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6,187 |
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Financial income |
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457 |
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1,164 |
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389 |
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302 |
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Financial expenses |
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(3,148 |
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(2,653 |
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(1,058 |
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(824 |
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Net financing costs |
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(2,691 |
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(1,489 |
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(669 |
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522 |
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(Loss)/ profit before tax |
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(32,063 |
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452 |
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5,953 |
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5,665 |
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Income tax (expense)/ credit |
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(3,309 |
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2,824 |
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(673 |
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49 |
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(Loss)/ profit for the year (all attributable to equity
holders) |
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(35,372 |
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3,276 |
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5,280 |
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5,714 |
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Basic (loss)/ earnings
per A ordinary share
(US Dollars) |
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(0.47 |
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0.05 |
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0.09 |
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0.10 |
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Basic (loss)/ earnings per B ordinary share
(US Dollars) |
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(0.94 |
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0.10 |
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0.18 |
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0.20 |
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Diluted (loss)/ earnings per A ordinary share
(US Dollars) |
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(0.47 |
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0.05 |
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0.09 |
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0.09 |
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Diluted (loss)/ earnings per B ordinary share
(US Dollars) |
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(0.94 |
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0.10 |
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0.18 |
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0.18 |
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Basic (loss)/ earnings per ADS
(US Dollars) |
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(1.86 |
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0.19 |
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0.36 |
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0.41 |
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Diluted (loss)/ earnings per ADS
(US Dollars) |
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(1.86 |
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0.19 |
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0.35 |
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0.37 |
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Weighted average number of A shares used in computing
basic EPS |
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76,036,579 |
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70,693,753 |
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58,890,084 |
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55,132,024 |
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Weighted average number of A shares used in computing
diluted EPS |
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76,036,579 |
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72,125,740 |
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67,032,382 |
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65,527,802 |
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2
Consolidated Balance Sheet Data
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December |
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December |
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December |
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December |
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31,2007 |
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31,2006 |
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31, 2005 |
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31, 2004 |
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US$000 |
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US$000 |
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US$000 |
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US$000 |
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Net current assets (current assets less current liabilities) |
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36,298 |
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61,435 |
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44,964 |
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53,448 |
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Non current liabilities |
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(35,623 |
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(45,928 |
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(19,083 |
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(16,636 |
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Total assets |
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215,979 |
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249,131 |
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184,602 |
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156,040 |
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Capital stock |
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991 |
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978 |
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830 |
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776 |
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Shareholders equity |
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136,845 |
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167,262 |
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133,618 |
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118,894 |
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No dividends were declared in any of the periods from December 31, 2004 to December 31, 2007.
Risk Factors
Before you invest in our shares, you should be aware that there are various risks, which are
described below. You should consider carefully these risks together with all of the other
information included in this annual report before you decide to purchase our shares.
Trinity Biotechs operating results may be subject to fluctuations.
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Trinity Biotechs operating results may fluctuate as a result of many factors related to
its business, including the competitive conditions in the industry, major reorganisations of
the Groups activities, loss of significant customers, delays in the development of new
products and currency fluctuations, as described in more detail below, and general factors
such as the size and timing of orders, the prevalence of various diseases and general economic
conditions. In the event of lower operating profits, this could have a negative impact on cash
generated from operations and also negatively impact shareholder value. |
A need for capital might arise in the future if Trinity Biotechs capital requirements increase or
revenues decrease.
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Up to now Trinity Biotech has funded its operations through the sale of its shares and
securities convertible into shares, cashflows from operations and bank borrowings. Trinity
Biotech expects that the proceeds of equity financings, bank borrowings, lease financing,
current working capital and sales revenues will fund its existing operations and payment
obligations. However, if our capital requirements are greater than expected, or if our
revenues do not generate sufficient cashflows to fund our operations, we may need to find
additional financing which may not be available on attractive terms or at all. Any future
financing could have an adverse effect on our current shareholders or the price of our shares
in general. |
Trinity Biotechs acquisition strategy may be less successful than expected, and therefore, growth
may be limited.
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Trinity Biotech has historically grown organically and through the acquisition of, and
investment in, other companies, product lines and technologies. There can be no guarantees
that recent or future acquisitions can be successfully assimilated or that projected growth in
revenues or synergies in operating costs can be achieved. Our ability to integrate future
acquisitions may also be adversely affected by inexperience in dealing with new technologies,
and changes in regulatory or competitive environments. Additionally, even during a successful
integration, the investment of managements time and resources in the new enterprise may be
detrimental to the consolidation and growth of our existing business. |
The diagnostics industry is highly competitive, and Trinity Biotechs research and development
could be rendered obsolete by technological advances of competitors.
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Trinity Biotechs principal business is the supply of medical diagnostic test kits and
related diagnostic instrumentation. The diagnostics industry is extremely competitive.
Trinity Biotech is competing directly with companies which have greater capital resources and
larger marketing and business organisations than Trinity Biotech. Trinity Biotechs ability to
grow revenue and earnings may be adversely impacted by competitive product and pricing
pressures and by its inability to gain or retain market share as a result of the action of
competitors. |
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We have invested in research and development (R&D) but there can be no guarantees that our R&D
programmes will not be rendered technologically obsolete or financially non-viable by the
technological advances of our
competitors, which would also adversely affect our existing product lines and inventory. The
main competitors of Trinity Biotech (and their principal products with which Trinity Biotech
competes) include Dade-Behring (Sysmex® CA, D-Dimer plus, Enzygnost®), Zeus Scientific Inc.
(Zeus EIA, IFA), Diasorin Inc. (ETI), Abbott Diagnostics (AxSYM, IMx), Diagnostic Products
Corp. DPC (Immulite), Bio-Rad (ELISA, WB & A1c), Roche Diagnostics (COBAS AMPLICOR,
Ampliscreen, Accutrend) and OraSure Technologies, Inc (OraQuick ®). |
Trinity Biotech is highly dependent on suitable distributors worldwide.
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Trinity Biotech currently distributes its product portfolio through distributors in
approximately 80 countries worldwide. Our continuing economic success and financial security
is dependent on our ability to secure effective channels of distribution on favourable trading
terms with suitable distributors. |
Trinity Biotechs business could be adversely affected by changing market conditions resulting in
the reduction of the number of institutional customers.
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The diagnostics industry is in transition with a number of changes that affect the market
for diagnostic test products. Changes in the healthcare industry delivery system have resulted
in major consolidation among reference laboratories and in the formation of multi-hospital
alliances, reducing the number of institutional customers for diagnostic test products. There
can be no assurance that we will be able to enter into and/or sustain contractual or other
marketing or distribution arrangements on a satisfactory commercial basis with these
institutional customers. |
Trinity Biotechs long-term success depends on its ability to develop new products subject to
stringent regulatory control. Even if new products are successfully developed, Trinity Biotechs
proprietary know-how, manufacturing techniques and trade secrets may be copied by competitors.
Furthermore, Trinity Biotechs patents have a limited life time and are thereafter subject to
competition with generic products. Also, competitors might claim an exclusive patent for products
Trinity Biotech plans to develop.
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We are committed to significant expenditure on research and development (R&D). However,
there is no certainty that this investment in research and development will yield technically
feasible or commercially viable products. Our organic growth and long-term success is
dependent on our ability to develop and market new products but this work is subject to very
stringent regulatory control and very significant costs in research, development and
marketing. Failure to introduce new products could significantly slow our growth and
adversely affect our market share. |
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Even when products are successfully developed and marketed, Trinity Biotechs ownership of
the technology behind these products has a finite life. In general, generic competition, which
can arise through replication of the Trinity Biotechs proprietary know-how, manufacturing
techniques and trade secrets or after the expiration of a patent, can have a detrimental
effect on a products revenue, profitability and market share. There can be no guarantee that
the net income and financial position of Trinity Biotech will not be adversely affected by
competition from generic products. Conversely, on occasion, certain companies have claimed
exclusive patent, copyright and other intellectual property rights to technologies in the
diagnostics industry. If these technologies relate to Trinity Biotechs planned products,
Trinity Biotech would be obliged to seek licences to use this technology and, in the event of
being unable to obtain such licences or it being obtainable on grounds that would be
materially disadvantageous to Trinity Biotech, we would be precluded from marketing such
products, which could adversely impact our revenues, sales and financial position. |
4
Trinity Biotechs patent applications could be rejected or the existing patents could be
challenged; our technologies could be subject to patent infringement claims; and trade secrets and
confidential know-how could be obtained by competitors.
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We can provide no assurance that the patents Trinity Biotech may apply for will be
obtained or that existing patents will not be challenged. The patents owned by Trinity
Biotech and its subsidiaries may be challenged by third parties through litigation and
could adversely affect the value of our patents. We can provide no assurance that our
patents will continue to be commercially valuable. |
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Trinity Biotech currently owns 30 US patents with remaining patent lives varying from
less than one year to 16 years. In addition to these US patents, Trinity Biotech owns a
total of 7 additional non-US patents with expiration dates varying between the years 2008
and 2023. |
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Also, our technologies could be subject to claims of infringement of patents or
proprietary technology owned by others. The cost of enforcing our patent and technology
rights against infringers or defending our patents and technologies against infringement
charges by others may be high and could adversely affect our business. |
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Trade secrets and confidential know-how are important to our scientific and commercial
success. Although we seek to protect our proprietary information through confidentiality
agreements and other contracts, we can provide no assurance that others will not
independently develop the same or similar information or gain access to our proprietary
information. |
Trinity Biotechs business is heavily regulated and non-compliance with applicable regulations
could reduce revenues and profitability.
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Our manufacturing and marketing of diagnostic test kits are subject to government
regulation in the United States of America by the Food and Drug Administration (FDA),
and by comparable regulatory authorities in other jurisdictions. The approval process for
our products, while variable across countries, is generally lengthy, time consuming,
detailed and expensive. Our continued success is dependent on our ability to develop and
market new products, some of which are currently awaiting approval from these regulatory
authorities. There is no certainty that such approval will be granted or, even once
granted, will not be revoked during the continuing review and monitoring process. |
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We are required to comply with extensive post market regulatory requirements.
Non-compliance with applicable regulatory requirements of the FDA or comparable foreign
regulatory bodies can result in enforcement action which may include recalling products,
ceasing product marketing, paying significant fines and penalties, and similar actions
that could limit product sales, delay product shipment, and adversely affect
profitability. |
Trinity Biotechs success is dependent on certain key management personnel.
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Trinity Biotechs success is dependent on certain key management personnel. Our key
employees at December 31, 2007 were Ronan OCaoimh, our Executive Chairman, Brendan
Farrell, our CEO, Rory Nealon, our COO, Jim Walsh, Director and Kevin Tansley, our CFO and
Secretary. Competition for qualified employees among biotechnology companies is intense,
and the loss of such personnel or the inability to attract and retain the additional highly
skilled employees required for the expansion of our activities, could adversely affect our
business. In the USA, the UK, France, Germany and Sweden we have been able to attract and
retain qualified personnel. In Ireland, we have experienced some difficulties in attracting
and retaining staff due to competition from other employers in our industry and due to the
strength of the Irish economy. |
Trinity Biotech is dependent on its suppliers for the primary raw materials required for its test
kits.
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The primary raw materials required for Trinity Biotechs test kits consist of antibodies,
antigens or other reagents, glass fibre and packaging materials which are acquired from third
parties. Although Trinity Biotech does not expect to be dependent upon any one source for
these raw materials, alternative sources of antibodies with the characteristics and quality
desired by Trinity Biotech may not be available. Such unavailability could affect the quality
of our products and our ability to meet orders for specific products. |
5
Trinity Biotech may be subject to liability resulting from its products or services.
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Trinity Biotech may be subject to claims for personal injuries or other damages
resulting from its products or services. Trinity Biotech has global product liability
insurance in place for its manufacturing subsidiaries up to a
maximum of 6,500,000 (US$9,569,000) for any one accident, limited to a maximum of
6,500,000 (US$9,569,000) in any one year period of insurance. A deductible of US$25,000
is applicable to each insurance event that may arise. There can be no assurance that our
product liability insurance is sufficient to protect us against liability that could have a
material adverse effect on our business. |
Currency fluctuations may adversely affect our earnings and assets.
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Trinity Biotech records its transactions in US Dollars, euro and Swedish Kroner and
prepares its financial statements in US Dollars. A substantial portion of our expenses is
denominated in euro. However, Trinity Biotechs revenues are primarily denominated in US
Dollars. As a result, the Group is affected by fluctuations in currency exchange rates,
especially the exchange rate between the US dollar and the euro, which may adversely affect
our earnings and assets. The percentage of 2007 consolidated revenue denominated in US Dollars
was approximately 65%. Of the remaining 35% revenue, 27% relates to revenue denominated in
Euro and 8% relates to sterling, yen and Swedish Kroner denominated revenues. Thus, a 10%
decrease in the value of the euro would have approximately a 3% adverse impact on consolidated
revenues. |
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As part of the process of mitigating foreign exchange risk, the principal exchange risk
identified by Trinity Biotech is with respect to fluctuations in the euro. This is
attributable to the level of euro denominated expenses exceeding the level of euro denominated
revenues thus creating a euro deficit. Trinity Biotech continuously monitors its exposure to
foreign currency movements and based on expectations on future exchange rate exposure
implements a hedging policy which may include covering a portion of this exposure through the
use of forward contracts. In the medium term, our objective is to increase the level of
non-US Dollar denominated revenue, thus creating a natural hedge of the non-US Dollar
expenditure. |
The conversion of our outstanding employee share options and warrants would dilute the ownership
interest of existing shareholders.
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The warrants issued in 2004 and the total share options exercisable at December 2007, as
described in Item 18, note 20 to the consolidated financial statements, are convertible into
American Depository Shares (ADSs), 1 ADS representing 4 Class A Ordinary Shares. The
exercise of the share options exercisable and of the warrants will likely occur only when the
conversion price is below the trading price of our ADSs and will dilute the ownership
interests of existing shareholders. For instance, should the options and warrant holders of
the 6,417,223 A Ordinary shares (1,604,306 ADSs) exercisable at December 31, 2007 be
exercised, Trinity Biotech would have to issue 6,417,223 additional A ordinary shares
(1,604,306 ADSs). On the basis of 74,756,765 A ordinary shares outstanding at December 31,
2007, this would effectively dilute the ownership interest of the existing shareholders by
approximately 8%. |
It could be difficult for US holders of ADSs to enforce any securities laws claims against Trinity
Biotech, its officers or directors in Irish Courts.
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At present, no treaty exists between the United States and Ireland for the reciprocal
enforcement of foreign judgements. The laws of Ireland do however, as a general rule,
provide that the judgements of the courts of the United States have in Ireland the same
validity as if rendered by Irish Courts. Certain important requirements must be satisfied
before the Irish Courts will recognise the United States judgement. The originating court
must have been a court of competent jurisdiction, the judgement may not be recognised if it
is based on public policy, was obtained by fraud or its recognition would be contrary to
Irish public policy. Any judgement obtained in contravention of the rules of natural
justice will not be enforced in Ireland. |
6
Item 4 Information on the Company
History and Development of the Company
Trinity Biotech (the Group) develops, acquires, manufactures and markets medical diagnostic
products for the clinical laboratory and point-of-care (POC) segments of the diagnostic market.
These products are used to detect autoimmune, infectious and sexually transmitted diseases,
diabetes and disorders of the blood, liver and intestine. The Group is also a significant provider
of raw materials to the life sciences industry. The Group sells worldwide in over 80 countries
through its own sales force and a network of international distributors and strategic partners.
Trinity Biotech was incorporated as a public limited company (plc) registered in Ireland in 1992.
The Company commenced operations in 1992 and, in October 1992, completed an initial public
offering of its securities in the US. The principal officers of the Group are located at IDA
Business Park, Bray, Co Wicklow, Ireland. The Group has expanded its product base through internal
development and acquisitions.
The Group, which has its headquarters in Bray Ireland, employs in excess of 750 people worldwide
and markets its portfolio of over 500 products to customers in 80 countries around the world.
Trinity Biotech markets its products in the US and the rest of the world through a combination of
direct selling and a network of national and international distributors. The Group has established
direct sales forces in the US, Germany, France and the UK. Trinity Biotech has manufacturing
facilities in Bray, Ireland, Umea, Sweden and Lemgo, Germany, in Europe and in Jamestown, New York,
Carlsbad, California and Kansas City, Missouri in the USA.
The following represents the acquisitions made by Trinity Biotech in recent years.
Acquisition of the immuno-technology business of Cortex Biochem Inc
In September 2007, the Group acquired the immuno-technology business of Cortex Biochem Inc
(Cortex) for a total consideration of US$2,925,000, consisting of cash consideration of
US$2,887,000 and acquisition expenses of US$38,000.
Acquisition of certain components of the distribution business of Sterilab Services UK
In October 2007, the Group acquired certain components of the distribution business of Sterilab
Services UK (Sterilab), a distributor of Infectious Diseases products, for a total consideration
of US$1,489,000, consisting of cash consideration of US$1,480,000 and acquisition expenses of
US$9,000.
Acquisition of Haemostasis business of bioMerieux Inc
In June 2006, Trinity Biotech acquired the haemostasis business of bioMerieux Inc. (bioMerieux)
for a total consideration of US$44.4 million, consisting of cash consideration of US$38.2 million,
deferred consideration of US$5.5 million (net of discounting) and acquisition expenses of US$0.7
million. At December 31, 2006, Trinity Biotech had accrued US$5,688,000 for the deferred
consideration to be paid in June 2007 and June 2008 (see Item 18, note 24 to the consolidated
financial statements). Deferred consideration of US$3,208,000 was paid to bioMerieux in June 2007.
At December 31, 2007, the Group has accrued deferred consideration US$2,725,000 (net of
discounting) to be paid in June 2008.
Acquisition of the distribution business of Laboratoires Nephrotek SARL
In October, 2006, Trinity Biotech acquired the French distribution business of Laboratoires
Nephrotek SARL (Nephrotek) for a total consideration of US$1,175,000, consisting of cash
consideration of US$1,060,000 and acquisition expenses of US$115,000.
Acquisition of Primus Corporation
In July 2005, Trinity Biotech completed the acquisition of Primus Corporation for US$14.3 million
before costs, consisting of a cash consideration of US$8.6 million and a one year promissory note
of US$3.0 million. An additional US$2.7 million of additional consideration was paid to the
shareholders in 2006 based on the growth of the business during 2005 less an adjustment for the
working capital at the date of acquisition. Primus Corporation is a leader in the field of
providing tests for the detection and monitoring of diabetes patients.
Acquisition of Research Diagnostics Inc
In March 2005, Trinity Biotech purchased the assets of Research Diagnostics Inc (RDI) for US$4.2
million in cash. RDI provides a comprehensive range of immunodiagnostic products to pharmaceutical
companies, diagnostic manufacturers and research facilities worldwide.
7
Principal Markets
The primary market for Trinity Biotechs tests remains the US. During fiscal year 2007, the Group
sold 48% (US$68.4 million) (2006: 51% or US$60.7 million) (2005: 51% or US$50.6 million) of product
in the US. Sales to non-US (principally European and Asian/ African) countries represented 52%
(US$75.2 million) for fiscal year 2007 (2006: 49% or US$57.9 million) (2005: 49% or US$47.9
million).
For a more comprehensive segmental analysis please refer to Item 5, Results of Operations and
Item 18, note 2 to the consolidated financial statements.
Principal Products
Trinity Biotech develops, acquires, manufactures and markets a wide range of diagnostic products.
The complete portfolio is divided into 4 product lines which are sold under the following
established brand names:
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Infectious |
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Clinical |
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Haemostasis |
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Diseases |
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Chemistry |
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Point of Care |
Biopool®
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Bartels®
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Primus
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UniGold |
Amax
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CAPTIA
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EZ
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Capillus |
Destiny
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MarDx®
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Recombigen® |
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MicroTrak |
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MarBlot® |
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In December 2007, the haemostasis, infectious diseases and clinical chemistry product lines were
amalgamated into a single product line, Clinical Laboratory.
Haemostasis
The haemostasis product line comprises of test kits and instrumentation used for the detection of
blood disorders. Trinity Biotech has two established ranges of haemostasis products, Biopool® and
Amax, which were acquired by the Group in 2001 and 2002 respectively. The Amax range of products
includes a portfolio of diagnostic instrumentation including the Destiny range.
Following the acquisition of the bioMerieux haemostasis product line in 2006, the haemostasis
product line has been rationalised into a single core Trini brand and has become the largest
product line in revenue terms within Trinity Biotech. The acquisition of bioMerieux has
significantly increased the market share of Trinity Biotech within the haemostasis market. In
particular, the acquisition has strengthened the Groups position in our direct selling markets in
the USA, the UK, France and Germany.
The haemostasis market continues to grow, driven by increasing demands for blood clotting and
bleeding tests due to an aging population and improvement in healthcare systems.
Trinity Biotech instrumentation and assays for haemostasis are recognised as being among the
highest quality available. The comprehensive product offering is marketed globally to hospitals,
clinical laboratories, commercial reference laboratories and research institutions.
As part of the Group restructuring announced in December 2007, a number of Haemostasis products
were identified to be culled (See item 18, note 3, Restructuring expenses and impairment).
Infectious Diseases
The infectious diseases product line is the most diverse within Trinity Biotech. The products are
used to perform tests on patient samples and the results generated are reported to physicians to
guide diagnosis for a broad range of infectious diseases. The Trinity Biotech product line has
grown to include diagnostic kits for autoimmune diseases (e.g. lupus, celiac and rheumatoid
arthritis), hormonal imbalances, sexually transmitted diseases (syphilis, chlamydia and herpes),
intestinal infections, lung/bronchial infections, cardiovascular and a wide range of other
diseases.
8
The vast majority of the infectious diseases product line is FDA cleared for sale in the USA and CE
marked for sale in Europe. Products are sold in over 80 countries, with the focus on North
America, Europe and Asia.
The main drivers of expansion and opportunity for the product line have been:
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The increased Trinity Biotech instrumentation offering/portfolio through collaboration
with Adaltis and Dynex and implementation of a system sell (i.e. combining instruments and
reagents) strategy; |
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Focus on key accounts in affiliate markets; |
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Expansion of product portfolio to meet market demands. |
As part of the Group restructuring announced in December 2007, a number of Infectious Diseases
products were identified to be culled (See item 18, note 3, Restructuring expenses and impairment).
Clinical Chemistry
The Trinity Biotech speciality clinical chemistry business includes products such as ACE, Bile
Acids, Lactate, Oxalate and G6PDH that are clearly differentiated in the marketplace. These
products are suitable for both manual and automated testing and have proven performance in the
diagnosis of many disease states from liver and kidney disease to G6PDH deficiency which is an
indicator of haemolytic anaemia.
In 2005 Trinity Biotech acquired Primus Corporation, a leader in the field of in-vitro diagnostic
testing for haemoglobin A1c and haemoglobin variants, used in the detection of diabetes. Primus
manufactures a range of instrumentation using patented HPLC (high pressure liquid chromatography)
technology. These products are the most accurate and precise methods available for detection and
monitoring the patient status and overall diabetic control. Primus sells the products to
physicians offices and reference laboratories directly in the USA and via a distribution network
in other countries. In addition, the Group is in the process of developing a variant haemoglobin
assay for neo-natal screening and a sub one minute HbA1c test.
Point of Care (POC)
Point of Care refers to diagnostic tests which are carried out in the presence of the patient.
Trinity Biotechs current range of POC tests principally test for the presence of HIV antibodies.
The Groups principal products are UniGold and Capillus.
UniGold and Capillus products have been used for several years in voluntary counselling and
testing centres (VCTs) in sub-Saharan Africa where they provide a cornerstone to early detection
and treatment intervention. In the USA, the Centres for Disease Control (CDC) recommend the use of
rapid tests to control the spread of HIV/AIDS. As part of this, UniGold HIV is used in public
health facilities, hospitals and other outreach facilities. Trinity Biotech, through both UniGold
and Capillus, make a very significant contribution to the global effort to meet the challenge of
HIV.
In November 2007, Trinity Biotech received FDA clearance on the Tristat point-of-care system, which
will be used in physician laboratories, diabetes clinics and health centres for the rapid
determination of Haemoglobin A1c.
Sales and Marketing
Trinity Biotech sells its product through its own direct sales-force in four countries: the United
States, Germany, France and the United Kingdom. In the United States there are approximately 97
sales and marketing professionals responsible for the sale of the Trinity Biotech range of
haemostasis reagents and instrumentation, clinical chemistry, point of care and infectious disease
products. The Group also has sales forces of 26 in Germany, 11 in France and 16 in the UK. In
addition to our direct sales operations, Trinity Biotech also operates in approximately 80
countries, through over 300 independent distributors and strategic partners.
Manufacturing and Raw Materials
Trinity Biotech uses a wide range of biological and non-biological raw materials. The primary raw
materials required for Trinity Biotechs test kits consist of antibodies, antigens, human plasma,
latex beads, rabbit brain phospholipids, bovine source material, other reagents, glass fibre and
packaging materials. The reagents used as raw materials have been acquired for the most part from
third parties. Although Trinity Biotech is not dependent upon any one source for such raw
materials, alternative sources of antibodies and antigens with the specificity and sensitivity
desired by Trinity Biotech may not be available from time-to-time. Such unavailability could
affect the supply of its products and its ability to meet orders for specific products, if such
orders are obtained. Trinity Biotechs growth may be limited by its ability to obtain or develop
the necessary quantity of antibodies or antigens required for specific products. Thus, Trinity
Biotechs strategy is, whenever possible, to establish alternative sources of supply of antibodies.
9
Competition
The diagnostic industry is very competitive. There are many companies, both public and private,
engaged in the sale of medical diagnostic products and diagnostics-related research and
development, including a number of well-known pharmaceutical and chemical companies. Competition
is based primarily on product reliability, customer service and price. The Groups competition
includes several large companies such as, but not limited to, Roche, Abbott, Johnson & Johnson,
Bayer and Dade-Behring.
Patents and Licences
Patents
Many of the Trinity Biotechs tests are not protected by specific patents, due to the significant
cost of putting patents in place for Trinity Biotechs wide range of products. However, Trinity
Biotech believes that substantially all of its tests are protected by proprietary know-how,
manufacturing techniques and trade secrets.
From time-to-time, certain companies have asserted exclusive patent, copyright and other
intellectual property rights to technologies that are important to the industry in which Trinity
Biotech operates. In the event that any of such claims relate to its planned products, Trinity
Biotech intends to evaluate such claims and, if appropriate, seek a licence to use the protected
technology. There can be no assurance that Trinity Biotech would, firstly, be able to obtain
licences to use such technology or, secondly, obtain such licences on satisfactory commercial
terms. If Trinity Biotech or its suppliers are unable to obtain or maintain a licence to any such
protected technology that might be used in Trinity Biotechs products, Trinity Biotech could be
prohibited from marketing such products. It could also incur substantial costs to redesign its
products or to defend any legal action taken against it. If Trinity Biotechs products should be
found to infringe protected technology, Trinity Biotech could also be required to pay damages to
the infringed party.
Licences
Trinity Biotech has entered into a number of key licensing arrangements including the following:
In 2005 Trinity Biotech obtained a license from the University of Texas for the use of Lyme antigen
(Vlse), thus enabling the inclusion of this antigen in the Groups Lyme diagnostic products.
Trinity also entered a Biological Materials License Agreement with the Centre for Disease Control
(CDC) in Atlanta, GA, USA for the rights to produce and sell the CDC developed HIV Incidence assay.
In 2002, Trinity Biotech obtained the Unipath and Carter Wallace lateral flow licences under
agreement with Inverness Medical Innovations (IMI). In 2006, Trinity Biotech renewed its license
agreement with Inverness Medical Innovations covering IMIs most up to date broad portfolio of
lateral flow patents, and expanded the field of use to include over the counter (OTC) for HIV
products, thus ensuring Trinity Biotechs freedom to operate in the lateral flow market with its
UniGold technology.
On December 20, 1999 Trinity Biotech obtained a non-exclusive commercial licence from the National
Institute of Health (NIH) in the US for NIH patents relating to the general method of producing
HIV-1 in cell culture and methods of serological detection of antibodies to HIV-1.
Trinity Biotech has also entered into a number of licence/supply agreements for key raw materials
used in the manufacture of its products.
Government Regulation
The preclinical and clinical testing, manufacture, labelling, distribution, and promotion of
Trinity Biotechs products are subject to extensive and rigorous government regulation in the
United States and in other countries in which Trinity Biotechs products are sought to be
marketed. The process of obtaining regulatory clearance varies, depending on the product
categorisation and the country, from merely notifying the authorities of intent to sell, to
lengthy formal approval procedures which often require detailed laboratory and clinical testing
and other costly and time-consuming processes. The main regulatory bodies which require extensive
clinical testing are the Food and Drug Administration (FDA) in the US, the Irish Medicines Board
(as the authority over Trinity Biotech in Europe) and Health Canada.
The process in each country varies considerably depending on the nature of the test, the perceived
risk to the user and patient, the facility at which the test is to be used and other factors. As
48% of Trinity Biotechs 2007 revenues were generated in the US and the US represents
approximately 43% of the worldwide diagnostics market, an overview of FDA regulation has been
included below.
10
FDA Regulation
Our products are medical devices subject to extensive regulation by the FDA under the Federal Food,
Drug, and Cosmetic Act. The FDAs regulations govern, among other things, the following
activities: product development, testing; labelling, storage, premarket clearance or approval,
advertising and promotion and sales and distribution.
Access to US Market. Each medical device that Trinity Biotech may wish to commercially distribute
in the US will require either pre-market notification (more commonly know as 510(k)) clearance or
premarket application (PMA) approval prior to commercial distribution. Devices intended for use
in blood bank environments fall under even more stringent review and require a Blood Licence
Application (BLA). Some low risk devices are exempted from these
requirements. The FDA has introduced fees for the review of 510(k) and PMA applications. The fee
for a PMA or BLA in 2007 is in excess of US$280,000.
510(k) Clearance Pathway. To obtain 510(k) clearance, Trinity Biotech must submit a premarket
notification demonstrating that the proposed device is substantially equivalent in intended use and
in safety and effectiveness to a predicate device either a previously cleared class I or II
device or a class III preamendment device, for which the FDA has not called for PMA applications.
The FDAs 510(k) clearance pathway usually takes from 3 to 9 months, but it can take longer. After
a device receives 510(k) clearance, any modification that could significantly affect its safety or
effectiveness, or that would constitute a major change in its intended use, requires a new 510(k)
clearance or could even require a PMA approval.
PMA Approval Pathway. A device that does not qualify for 510(k) clearance generally will be
placed in class III and required to obtain PMA approval, which requires proof of the safety and
effectiveness of the device to the FDAs satisfaction. A PMA application must provide extensive
preclinical and clinical trial data and also information about the device and its components
regarding, among other things, device design, manufacturing and labeling. In addition, an advisory
committee made up of clinicians and/or other appropriate experts is typically convened to evaluate
the application and make recommendations to the FDA as to whether the device should be approved. It
generally takes from one to three years but can take longer.
Although the FDA is not bound by the advisory panel decision, the panels recommendation is
important to the FDAs overall decision making process. The PMA approval pathway is more costly,
lengthy and uncertain than the 510(k) clearance process. It generally takes from one to three
years or even longer. After approval of a PMA, a new PMA or PMA supplement is required in the
event of a modification to the device, its labeling or its manufacturing process. The FDA has
recently implemented substantial fees for the submission and review of PMA applications.
BLA approval pathway. BLA approval is required for some products intended for use in a blood
bank environment, where the blood screened using these products may be administered to an
individual following processing. This approval pathway involves even more stringent review of the
product.
Clinical Studies. A clinical study is required to support a PMA application and is required for a
510(k) premarket notification. Such studies generally require submission of an application for an
Investigational Device Exemption (IDE) showing that it is safe to test the device in humans and
that the testing protocol is scientifically sound.
Postmarket Regulation
After the FDA permits a device to enter commercial distribution, numerous regulatory requirements
apply, including the Quality System Regulation (QSR), which requires manufacturers to follow
comprehensive testing, control, documentation and other quality assurance procedures during the
manufacturing process; labeling regulations; the FDAs general prohibition against promoting
products for unapproved or off-label uses; and the Medical Device Reporting (MDR) regulation,
which requires that manufacturers report to the FDA if their device may have caused or contributed
to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a
death or serious injury if it were to recur.
Trinity Biotech is subject to inspection by the FDA to determine compliance with regulatory
requirements. If the FDA finds any failure to comply, the agency can institute a wide variety of
enforcement actions, ranging from a public warning letter to more severe sanctions such as fines,
injunctions, and civil penalties; recall or seizure of products; the issuance of public notices or
warnings; operating restrictions, partial suspension or total shutdown of production; refusing
requests for 510(k) clearance or PMA approval of new products; withdrawing 510(k) clearance or PMA
approvals already granted; and criminal prosecution.
11
Unanticipated changes in existing regulatory requirements or adoption of new requirements could
have a material adverse effect on the Group. Any failure to comply with applicable QSR or other
regulatory requirements could have a material adverse effect on the Groups revenues, earnings and
financial standing.
There can be no assurances that the Group will not be required to incur significant costs to
comply with laws and regulations in the future or that laws or regulations will not have a
material adverse effect upon the Groups revenues, earnings and financial standing.
CLIA classification
Purchasers of Trinity Biotechs clinical diagnostic products in the United States may be regulated
under The Clinical Laboratory Improvements Amendments of 1988 (CLIA) and related federal and
state regulations. CLIA is intended to
ensure the quality and reliability of clinical laboratories in the United States by mandating
specific standards in the areas of personnel qualifications, administration and participation in
proficiency testing, patient test management, quality control, quality assurance and inspections.
The regulations promulgated under CLIA established three levels of diagnostic tests (waived,
moderately complex and highly complex) and the standards applicable to a clinical laboratory
depend on the level of the tests it performs.
Export of products subject to 510(k) notification requirements, but not yet cleared to market, are
permitted without FDA export approval, if statutory requirements are met. Unapproved products
subject to PMA requirements can be exported to any country without prior FDA approval provided,
among other things, they are not contrary to the laws of the destination country, they are
manufactured in substantial compliance with the QSR, and have been granted valid marketing
authorisation in Australia, Canada, Israel, Japan, New Zealand, Switzerland, South Africa or member
countries of the European Union or of the European Economic Area (EEA). FDA approval must be
obtained for exports of unapproved products subject to PMA requirements if these export conditions
are not met.
There can be no assurance that Trinity Biotech will meet statutory requirements and/or receive
required export approval on a timely basis, if at all, for the marketing of its products outside
the United States.
Regulation outside the United States
Distribution of Trinity Biotechs products outside of the United States is also subject to foreign
regulation. Each countrys regulatory requirements for product approval and distribution are
unique and may require the expenditure of substantial time, money, and effort. There can be no
assurance that new laws or regulations will not have a material adverse effect on Trinity Biotechs
business, financial condition, and results of operation. The time required to obtain needed
product approval by particular foreign governments may be longer or shorter than that required for
FDA clearance or approval. There can be no assurance that Trinity Biotech will receive on a timely
basis, if at all, any foreign government approval necessary for marketing its products.
Organisational Structure
Trinity Biotech plc and its subsidiaries (the Group) is a manufacturer of diagnostic test kits
and instrumentation for sale and distribution worldwide. Trinity Biotechs executive offices are
located at Bray, Co. Wicklow, Ireland while its research and development, manufacturing and
marketing activities are principally conducted at Trinity Biotech Manufacturing Limited, based in
Bray, Co. Wicklow, Ireland, Trinity Biotech (UK Sales) Limited, based in Berkshire England, Trinity
Biotech GmbH, based in Lemgo, Germany, and at Trinity Biotech (USA), MarDx Diagnostics Inc, Primus
Corporation and Biopool US Inc. based in Jamestown, New York State, Carlsbad, California, Kansas
City, Missouri and Berkeley Heights, New Jersey respectively. The Groups distributor of raw
materials for the life sciences industry, Fitzgerald Industries, is based in Concord, Massachusetts
and Bray, Co. Wicklow, Ireland.
For a more comprehensive schedule of the subsidiary undertakings of the Group please refer to Item
18, note 32 to the consolidated financial statements.
12
Property, Plant and Equipment
Trinity Biotech has six manufacturing sites worldwide, three in the US (Jamestown, NY, Kansas City,
MO and Carlsbad, CA), one in Bray, Co. Wicklow, Ireland, one in Umea, Sweden and one in Lemgo,
Germany. The US and Irish facilities are each FDA and ISO registered facilities. As part of its
ongoing commitment to quality, Trinity Biotech was granted the latest ISO 9001: 2000 and ISO 13485:
2003 certification. This certificate was granted by the Underwriters Laboratory, an
internationally recognised notified body. It serves as external verification that Trinity Biotech
has an established an effective quality system in accordance with an internationally recognised
standard. By having an established quality system there is a presumption that Trinity Biotech will
consistently manufacture products in a controlled manner. To achieve this certification Trinity
Biotech performed an extensive review of the existing quality system and implemented any additional
regulatory requirements.
Trinity Biotechs Irish manufacturing and research and development facilities consisting of
approximately 45,000 square feet are located at IDA Business Park, Bray, Co. Wicklow. This facility
is ISO 9001 approved and was purchased in December 1997. The facilities include offices, research
and development laboratories, production laboratories, cold storage and drying rooms and warehouse
space. Trinity Biotech spent US$4.2 million buying and fitting out the facility. In December 1999,
the Group sold the facility for net proceeds of US$5.2 million and leased it back from the third
party purchaser for 20 years. The current annual rent, which is reviewed every five years, is set
at 479,000 (US$705,000).
Trinity Biotech has entered into a number of related party transactions with JRJ Investments
(JRJ), a partnership owned by Mr OCaoimh and Dr Walsh, directors of the Company, and directly
with Mr Caoimh and Dr Walsh, to provide current and potential future needs for the Groups
manufacturing and research and development facilities, located at IDA Business Park, Bray, Co.
Wicklow, Ireland. In July 2000, Trinity Biotech entered into a 20 year lease with JRJ for a 25,000
square foot warehouse adjacent to the existing facility at a current annual rent of 275,000
(US$405,000). In November 2002, Trinity Biotech entered into an agreement for a 25 year lease with
JRJ, for 16,700 square feet of offices at an annual rent of 381,000 (US$561,000), payable from
2004. In December 2007, the Group entered into an agreement with Mr OCaoimh and Dr Walsh pursuant
to which the Group took a lease on an additional 43,860 square foot manufacturing facility in Bray,
Ireland at a rate of 17.94 per square foot (including fit out) giving a total annual rent of
787,000 (US$1,158,000). See Item 7 Major Shareholders and Related Party Transactions).
Trinity Biotech USA operates from a 24,000 square foot FDA and ISO 9001 approved facility in
Jamestown, New York. The facility was purchased by Trinity Biotech USA in 1994. Additional
warehousing space is also leased in upstate New York at an annual rental charge of US$118,000.
MarDx operates from two facilities in Carlsbad, California. The first facility comprises 21,500
square feet and is the subject of a five year lease, renewed in 2006, at an annual rental cost of
US$251,000. The second adjacent facility comprises 14,500 square feet and is the subject of a five
year lease, renewed in 2006, at an annual rental cost of US$165,000.
Trinity Biotech also operates from an additional facility located in Umea, Sweden. The Umea
facility is 8,712 square feet and the annual rental is US$129,000. The lease, renewed in December
2006, expires in December 2008. This lease will not be renewed in December 2008, as the closure of
Swedish manufacturing operation will be completed during 2008 (See Item 18, Note 3, Restructuring
expenses and impairment).
Trinity Biotech GmbH owns an ISO 9001 approved manufacturing and office facility of 78,000 square
feet in Lemgo, Germany.
Trinity Biotech also has sales and marketing functions which operate from additional premises in
the UK and France. Trinity Biotech leases two units in Berkshire, UK, at an annual rent of £91,000
(US$182,000). In 2006, Trinity Biotech entered into a lease for a 5,750 square foot premises in
Paris, France, at an annual rent of 46,000 (US$69,000).
Additional office space is leased by the Group in Ireland, Kansas City, Missouri, Concord,
Massachusetts and Berkeley Heights, New Jersey at an annual cost of US$170,000, US$100,000,
US$109,000 and US$266,000, respectively.
Capital expenditures and divestitures
Trinity Biotech has no divestitures or significant capital expenditures in progress.
13
Item 5 Operating and Financial Review and Prospects
Operating Results
Trinity Biotechs consolidated financial statements include the attributable results of Trinity
Biotech plc and all its subsidiary undertakings collectively. This discussion covers the years
ended December 31, 2007, December 31, 2006 and December 31, 2005, and should be read in
conjunction with the consolidated financial statements and notes thereto appearing elsewhere in
this Form 20-F. The financial statements have been prepared in accordance with IFRS both as
issued by the International Accounting Standards Board (IASB) and as subsequently adopted by the
European Union (EU) (together IFRS).
Trinity Biotech has availed of the exemption under SEC rules to prepare consolidated financial
statements without a reconciliation to U.S. generally accepted accounting principles (US GAAP)
as at and for the three year period ended December 31, 2007 as Trinity Biotech is a foreign
private issuer and the financial statements have been prepared in accordance with IFRS both as
issued by the International Accounting Standards Board (IASB) and as subsequently adopted by the
European Union (EU).
Overview
Trinity Biotech develops, manufactures and markets diagnostic test kits used for the clinical
laboratory and point of care (POC) segments of the diagnostic market. These test kits are used
to detect infectious diseases, sexually transmitted diseases, blood disorders and autoimmune
disorders. The Group markets over 500 different diagnostic products in approximately 80
countries. In addition, the Group manufactures its own and distributes third party haemostasis
and infectious diseases diagnostic instrumentation. The Group, through its Fitzgerald operation,
is also a significant provider of raw materials to the life sciences industry.
Factors affecting our results
The global diagnostics market is growing due to, among other reasons, the ageing population and the
increasing demand for rapid tests in a clinical environment.
Our revenues are directly related to our ability to identify high potential products while they
are still in development and to bring them to market quickly and effectively. Efficient and
productive research and development is crucial in this environment as we, like our competitors,
search for effective and cost-efficient solutions to diagnostic problems. The growth in new
technology will almost certainly have a fundamental effect on the diagnostics industry as a whole
and upon our future development.
The comparability of our financial results for the years ended December 31, 2007, 2006, 2005 and
2004 have been impacted by acquisitions made by the Group in each of the four years. In 2007, the
Group acquired the immuno-technology assets of Cortex and certain components of the distribution
business of Sterilab. In 2006, the Group acquired the Haemostasis business of bioMerieux and a
direct selling entity in France. In 2005, Group acquired Primus Corporation and Research
Diagnostics Inc. In 2004, the Group acquired Fitzgerald Industries International inc (Fitzgerald)
and certain components of Adaltis US Inc.
For further information about the Groups principal products, principal markets and competition
please refer to Item 4, Information on the Company.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with IFRS. The
preparation of these financial statements requires us to make estimates and judgements that affect
the reported amount of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities.
On an on-going basis, we evaluate our estimates, including those related to intangible assets,
contingencies and litigation. We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the results of which form
the basis for making judgements about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.
We believe the critical accounting policies described below reflect our more significant judgements
and estimates used in the preparation of our consolidated financial statements.
14
Research and development expenditure
We write-off research and development expenditure as incurred, with the exception of expenditure on
projects whose outcome has been assessed with reasonable certainty as to technical feasibility,
commercial viability and recovery of costs through future revenues. Such expenditure is
capitalised at cost within intangible assets and amortised over its expected useful life of 15
years, which commences when commercial production starts.
Factors which impact our judgement to capitalise certain research and development expenditure
include the degree of regulatory approval for products and the results of any market research to
determine the likely future commercial success of products being developed. We review these
factors each year to determine whether our previous estimates as to feasibility, viability and
recovery should be changed.
In December 2007, as part of an overall restructuring announced the Group announced its
intention to focus on a smaller number of R&D projects, with a particular focus on projects which
will make the greatest contribution to the strategic growth and development of the Group. This
decision was made independently of and in advance of the Groups annual impairment review. As
part of the Group restructuring it was decided to terminate or suspend a number of projects. As a
result, US$5,134,000 of development costs were written off for the year ended December 31, 2007.
The write off of capitalised developments costs in 2007 relates to a number of specific projects,
the two most significant being the HIV over-the-counter (OTC) product and the development of the
HIV Western Blot confirmatory test which account for US$2,772,000 of the total amount of
capitalised development costs written off of US$5,134,000. The decision to suspend the HIV OTC
project is based on the latest assessment of expected market size for this product. The Groups
market assessment, carried out at the time of the Group restructuring, indicated that the market
opportunity for this product was significantly less than was originally envisaged. The Groups
decision to suspend the development of its HIV Western Blot confirmatory test is also due to
changes in the marketplace. In particular the emergence of specific information in late 2007
indicating that Western Blot technology would no longer be required for carrying out confirmatory
testing for HIV was a major factor in this assessment. The remaining development projects, which
account for US$2,631,000 of the total capitalised development costs being written off in 2007 have
resulted from the strategic decision made by the Group in 2007 to focus on a smaller number of R&D
projects.
At December 31, 2007 the carrying value of capitalised development costs was US$19,150,000 (2006:
US$17,290,000) (see Item 18, note 12 to the consolidated financial statements). The increase in
2007 was attributable to development costs of US$7,508,000 being capitalised during 2007, foreign
exchange movements of US$33,000 and partially offset by the write-off of capitalised development
costs for the year ended December 31, 2007 of US$5,134,000, referred to above, arising from the
decision taken by the Group to suspend development of a number of on-going projects (See Item 18,
note 3, Restructuring expenses and impairment) and amortisation of US$547,000. Given the level or
amount of expected cash flows that will result from the successful conclusion of the Companys
on-going development projects when compared to their respective carrying values, any reasonably
possible change in estimate of cashflows would not result in a change to these carrying values. In
the event that any of the projects cannot be completed this would result in a write off of the
balance in question. The projects which are currently in progress have a range of carrying values
up to US$5,988,000.
Impairment of intangible assets and goodwill
Definite lived intangible assets are reviewed for indicators of impairment annually while goodwill
and indefinite lived assets are tested for impairment annually, individually or at the cash
generating unit level. Factors considered important, as part of an impairment review, include the
following:
|
|
|
Significant underperformance relative to expected historical or projected future operating results; |
|
|
|
|
Significant changes in the manner of our use of the acquired assets or the strategy for our
overall business; |
|
|
|
|
Obsolescence of products; |
|
|
|
|
Significant decline in our stock price for a sustained period; and our market capitalisation
relative to net book value. |
15
When we determine that the carrying value of intangibles, non-current assets and related goodwill
may not be recoverable based upon the existence of one or more of the above indicators of
impairment, any impairment is measured based on our
estimates of projected net discounted cash flows expected to result from that asset, including
eventual disposition. Our estimated impairment could prove insufficient if our analysis
overestimated the cash flows or conditions change in the future. As part of the impairment review
for 2007, updated estimates of cash flows from sales were employed based on the latest sales and
forecast information available. These revised estimates resulted in an impairment loss of
US$19,156,000 on goodwill being recognised in 2007, which represented the excess of the carrying
value over the discounted future cashflows. The Group has also recognised a specific impairment
loss of US$1,094,000 against the carrying value of the technology assets acquired from bioMerieux
in 2006. The impairment loss represents 25% of the carrying value of the technology assets at the
date of the group restructuring, as the products being culled represent approximately 25% of sales
of those products acquired from bioMerieux. The remaining useful economic life of the remaining
75% of the carrying value of the technology asset is unaffected and was amortised on a straight
line basis, through December 31, 2007. No other assets were impaired as a direct result of the
product rationalisation (See Item 18, note 11 to the consolidated financial statements).
In the event that there was a variation of 10% in the assumed level of future growth in revenues,
which would represent a reasonably likely range of outcomes, there would be the following impact on
the level of the goodwill impairment loss recorded at December 31, 2007:
|
|
|
An increase in goodwill impairment of US$23.5 million in the event of a 10% decrease in
the growth in revenues. |
|
|
|
|
A decrease in goodwill impairment of US$18.6 million in the event of a 10% increase in
the growth in revenues. |
Similarly if there was a 10% variation in the discount rate used to calculate the potential
goodwill impairment of the carrying values, which would represent a reasonably likely range of
outcomes, there would be the following impact on the level of the goodwill impairment loss recorded
at December 31, 2007:
|
|
|
An increase in goodwill impairment of US$18.0 million in the event of a 10% increase in
the discount rate. |
|
|
|
|
A decrease in goodwill impairment of US$16.3 million in the event of a 10% decrease in
the discount rate. |
The impairment reviews carried out at December 31, 2006 and December 31 2005 did not result in any
impairment of intangible assets, non-current assets or related goodwill. A 10% variation in the
discount rate or growth in revenues used to calculate the potential impairment of the carrying
values would not have resulted in an impairment of assets at December 31, 2006 or December 31,
2005.
Allowance for slow-moving and obsolete inventory
We evaluate the realisability of our inventory on a case-by-case basis and make adjustments to our
inventory provision based on our estimates of expected losses. We write off any inventory that is
approaching its use-by date and for which no further re-processing can be performed. We also
consider recent trends in revenues for various inventory items and instances where the realisable
value of inventory is likely to be less than its carrying value. Given the allowance is calculated
on the basis of the actual inventory on hand at the particular balance sheet date, there were no
material changes in estimates made during 2005, 2006 or 2007 which would have an impact on the
carrying values of inventory during those periods, except as discussed below.
At December 31, 2007 our allowance for slow moving and obsolete inventory was US$18,234,000 which
represents approximately 29.1% of gross inventory value. This compares with US$7,284,000, or
approximately 13.8% of gross inventory value, at December 31, 2006 (see Item 18, note 15 to the
consolidated financial statements) and US$3,564,000, or approximately 9.1% of gross inventory
value, at December 31, 2005. The change in the estimated allowance for slow moving and obsolete
inventory as a percentage of gross inventory in 2007 compared to 2006 was principally due to a
US$11,772,000 provision recorded in 2007 arising from the rationalisation of the Groups
haemostasis and infectious diseases product lines announced as part of the Groups restructuring of
its business in December 2007 (See Item 18, note 3 to the consolidated financial statements). In
the case of finished inventory the size of this provision has been calculated based on the expected
future sales of products which are being rationalised. In the case of raw materials and work in
progress the size of the provision has been based on expected future production of these products.
Management is satisfied that the assumptions made with respect to future sales and production
levels of these products are reasonable to ensure the adequacy of this provision. The change in the
estimated allowance for slow moving and obsolete inventory as a percentage of gross inventory in
2006 compared to 2005 was principally due a provision put in place during 2006 in relation to the
discontinuation of a number of haemostasis products following the acquisition of the haemostasis
business of bioMerieux. In the event that the estimate of the provision required for slow moving
and obsolete inventory was to increase or decrease by 2% of gross inventory, which would represent
a reasonably likely range of outcomes, then a change in allowance of US$1,253,000 at December 31,
2007 (2006: US$1,057,000) (2005: US$802,000) would result.
16
Allowance for impairment of receivables
We make judgements as to our ability to collect outstanding receivables and where necessary make
allowances for impairment. Such impairments are made based upon a specific review of all
significant outstanding receivables. In
determining the allowance, we analyse our historical collection experience and current economic
trends. If the historical data we use to calculate the allowance for impairment of receivables
does not reflect the future ability to collect outstanding receivables, additional allowances for
impairment of receivables may be needed and the future results of operations could be materially
affected. Given the specific manner in which the allowance is calculated, there were no material
changes in estimates made during 2007 or 2006 which would have an impact on the carrying values of
receivables in these periods. At December 31, 2007, the allowance was US$657,000 which represents
approximately 0.5% of Group revenues. This compares with US$1,074,000 at December 31, 2006 which
represents approximately 0.9% of Group revenues (see Item 18, note 16 to the consolidated financial
statements) and to US$587,000 at December 31, 2005, which represents approximately 0.6% of Group
revenues. In the event that this estimate was to increase or decrease by 0.4% of Group revenues,
which would represent a reasonably likely range of outcomes, then a change in the allowance of
US$574,000 at December 31, 2007 (2006: US$475,000) (2005: US$394,000) would result.
Accounting for income taxes
Significant judgement is required in determining our worldwide income tax expense provision. In the
ordinary course of a global business, there are many transactions and calculations where the
ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue
sharing and cost reimbursement arrangements among related entities, the process of identifying
items of revenue and expense that qualify for preferential tax treatment and segregation of foreign
and domestic income and expense to avoid double taxation. In addition, we operate within multiple
taxing jurisdictions and are subject to audits in these jurisdictions. These audits can involve
complex issues that may require an extended period of time for resolution. Although we believe
that our estimates are reasonable, no assurance can be given that the final tax outcome of these
matters will not be different than that which is reflected in our historical income tax provisions
and accruals. Such differences could have a material effect on our income tax provision and profit
in the period in which such determination is made. Deferred tax assets and liabilities are
determined using enacted or substantially enacted tax rates for the effects of net operating losses
and temporary differences between the book and tax bases of assets and liabilities.
While we have considered future taxable income and ongoing prudent and feasible tax planning
strategies in assessing whether deferred tax assets can be recognised, there is no assurance that
these deferred tax assets may be realisable. The extent to which recognised deferred tax assets are
not realisable could have a material adverse impact on our income tax provision and net income in
the period in which such determination is made. In addition, we operate within multiple taxing
jurisdictions and are subject to audits in these jurisdictions. These audits can involve complex
issues that may require an extended period of time for resolution. In managements opinion,
adequate provisions for income taxes have been made.
Item 18, note 13 to the consolidated financial statements outlines the basis for the deferred tax
assets and liabilities and includes details of the unrecognized deferred tax assets at year end.
The Group derecognized deferred tax assets arising on unused tax losses except to the extent that
there are sufficient taxable temporary differences relating to the same taxation authority and the
same taxable entity which will result in taxable amounts against which the unused tax losses can be
utilised before they expire. The derecognition of these deferred tax assets was considered
appropriate in light of the increased tax losses caused by the restructuring and uncertainty over
the timing of the utilisation of the tax losses. Except for the derecognition of deferred tax
assets there were no material changes in estimates used to calculate the income tax expense
provision during 2007, 2006 or 2005.
Impact of Recently Issued Accounting Pronouncements
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) both as issued by the International Accounting Standards Board
(IASB) and as subsequently adopted by the European Union (EU). The IFRS applied are those
effective for accounting periods beginning on or after 1 January 2007. Consolidated financial
statements are required by Irish law to comply with IFRS as adopted by the EU which differ in
certain respects from IFRS as issued by the IASB. These differences predominantly relate to the
timing of adoption of new standards by the EU. However, as none of the differences are relevant in
the context of Trinity Biotech, the consolidated financial statements for the periods presented
comply with IFRS both as issued by the IASB and as adopted by the EU. During 2007, the IASB and the
International Financial Reporting Interpretations Committee (IFRIC) issued additional standards,
interpretations and amendments to existing standards which are effective for periods starting after
the date of these financial statements. A list of these additional standards, interpretations and
amendments, and the potential impact on the financial statements of the Group, is outlined in Item
18, note 1(z).
17
Results of Operations
Year ended December 31, 2007 compared to the year ended December 31, 2006
The following compares our results in the year ended December 31, 2007 to those of the year ended
December 31, 2006 under IFRS. Our analysis is divided as follows:
|
1. |
|
Overview |
|
|
2. |
|
Revenues |
|
|
3. |
|
Operating Expenses |
|
|
4. |
|
Retained Profit |
1. Overview
The financial results for the year ended December 31, 2007 are impacted by the announcement made
by Trinity Biotech in December 2007 to restructure its business. The restructuring included the
following elements:
|
|
|
the rationalisation of the Haemostasis and Infectious Diseases reagent and
instrumentation product lines resulting in an inventory write off of US$11,772,000; |
|
|
|
|
the closure of the Groups operation in Sweden, resulting in an inventory write off of
US$147,000 (included in the total inventory write off in 2007 of US$11,772,000), a write
down of property, plant & equipment of US$42,000, termination payments of US$332,000 and
accrued lease obligations of US$116,000; |
|
|
|
|
the streamlining of the Groups development activities which resulted in a write off
of capitalised development and license costs of US$6,667,000 and, |
|
|
|
|
the reorganisation of the US sales force coupled with a redundancy programme to reduce
headcount across the Group resulting in additional termination payments of US$1,703,000
(exclusive of termination payments made as part of the closure of the Swedish
manufacturing operation of US$332,000). Total termination payments for the year amounted
to US$2,035,000 of which US$2,016,000 has been accrued at December 31, 2007. |
In addition, in accordance with IAS 36, Impairment of Assets, the Group also recognised an
impairment provision of US$19,156,000 against goodwill. A further US$1,094,000 was written off
technology intangible assets acquired from BioMerieux and this charge is included in research and
development expenses as part of the total amount written off for capitalised development and
license costs of US$6,667,000. Please refer to Item 18, note 3 to the consolidated financial
statements for a more comprehensive discussion on the restructuring in 2007.
The impact of this restructuring and goodwill impairment is a charge to the statement of
operations after tax of US$38,363,000 for the year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
|
Impairment |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
Inventory provision |
|
|
11,772 |
|
|
|
|
|
|
|
11,772 |
|
Termination payments |
|
|
953 |
|
|
|
|
|
|
|
953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,725 |
|
|
|
|
|
|
|
12,725 |
|
|
|
|
|
|
|
|
|
|
|
Research & development |
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of capitalised development and license costs |
|
|
6,667 |
|
|
|
|
|
|
|
6,667 |
|
Termination payments |
|
|
240 |
|
|
|
|
|
|
|
240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,907 |
|
|
|
|
|
|
|
6,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administration expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill |
|
|
|
|
|
|
19,156 |
|
|
|
19,156 |
|
Termination payments |
|
|
842 |
|
|
|
|
|
|
|
842 |
|
Lease obligation provision |
|
|
116 |
|
|
|
|
|
|
|
116 |
|
Other |
|
|
201 |
|
|
|
|
|
|
|
201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,159 |
|
|
|
19,156 |
|
|
|
20,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total restructuring expenses and goodwill impairment
before tax |
|
|
20,791 |
|
|
|
19,156 |
|
|
|
39,947 |
|
Income tax impact of restructuring expenses and
goodwill impairment |
|
|
(1,584 |
) |
|
|
|
|
|
|
(1,584 |
) |
|
|
|
|
|
|
|
|
|
|
Total restructuring expenses and goodwill impairment
after tax |
|
|
19,207 |
|
|
|
19,156 |
|
|
|
38,363 |
|
|
|
|
|
|
|
|
|
|
|
18
In 2007 Group revenues increased by US$24.9 million, which represents a growth rate of 21%. In
2007 haemostasis continues to be the Groups most significant product line representing 42% of
product revenues. Haemostasis revenues increased by 31% in 2007, primarily due to the full year
impact of the acquisition of the haemostasis business of BioMerieux in 2006. The remaining
revenues came from the infectious diseases (29%), point of care (12%) and clinical
chemistry (17%) product lines. Geographically, 48% of sales were generated in the Americas, 30% in
Europe and 22% in the rest of the world.
The gross margin for the year ended December 31, 2007 was 38%. In 2007, as part of the overall
restructuring expense, the Group recognised US$11,772,000 in cost of sales for inventory written
off relating to those haemostasis and infectious diseases products and instruments being
rationalised for the year ended December 31, 2007. The Group also recognised an additional charge
of US$953,000 in cost of sales for termination payments for the year ended December 31, 2007.
Excluding the impact of the US$12.7 million for the restructuring expenses, the gross margin would
be 47% which is broadly consistent with the gross margin for the year ended December 31, 2006,
excluding the impact of the inventory provision of US$5.8 million, of 48%.
The operating loss was US$29,372,000 for the year ended December 31, 2007 which compares to an
operating profit of US$1,941,000 for the year ended December 31, 2006. The movement is primarily
due to the impact of the US$39.9 million for restructuring expenses and goodwill impairment.
Excluding the impact of the restructuring expenses and goodwill impairment in 2007 and the
inventory provision of US$5.8 million in 2006, the operating profit increased by 37% primarily due
to increased sales, of which US$13,523,000 relates to the impact of acquisitions made in 2007 and
2006 and US$11,420,000 is as a result of organic growth. However, the impact of increased sales,
which grew by 21%, was offset by increased selling, general & administrative (SG&A) and research
and development (R&D) costs. This resulted in an operating margin, excluding the impact of the
restructuring expenses and goodwill impairment, of 7%. In 2006, the operating margin, excluding the
impact of the US$5.8 million inventory provision was also 7%.
The loss for the year ended December 31, 2007 was US$35,372,000 which compares to a profit for the
year ended December 31, 2006 of US$3,276,000. Excluding the after tax impact of the restructuring
expenses and goodwill impairment, the profit for the year would be US$2,991,000, which represents a
decrease in profit for the year of 9% (compared to an increase in operating profit of 37%).
Although profit before tax increased in 2007, the profit after tax was lower than 2006. This is due
to the impact of the derecognition of deferred tax assets of US$3,780,000 in relation to unused tax
losses and higher net interest financing costs in 2007.
2. Revenues
The Groups revenues consist of the sale of diagnostic kits and related instrumentation and the
sale of raw materials to the life sciences industry.
Revenues on the sale of the above products are generally recognised on the basis of shipment to
customers. The Group ships its products on a variety of freight terms, including ex-works, CIF
(carriage including freight) and FOB (free on board), depending on the specific terms agreed with
customers. In cases where the Group ships on terms other than ex-works, the Group does not
recognise the revenue until its obligations have been fulfilled in accordance with the shipping
terms.
No right of return exists in relation to product sales except in instances where demonstrable
product defects occur. The Group has defined procedures for dealing with customer complaints
associated with such product defects as they arise.
The Group also derives a portion of its revenues from leasing infectious diseases and haemostasis
diagnostic instruments to customers. In cases where the risks and rewards of ownership of the
instrument passes to the customer, the fair value of the instrument is recognised at the time of
sale matched by the related cost of sale. In the case of operating leases of instruments which
typically involve commitments by the customer to pay a fee per test run on the instruments, revenue
is recognised on the basis of customer usage of the instruments. In certain markets, the Group also
earns revenue from servicing infectious diseases and haemostasis instrumentation located at
customer premises.
19
Revenues by Product Line
The following table sets forth selected sales data for each of the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Infectious diseases |
|
|
41,293 |
|
|
|
42,051 |
|
|
|
(2 |
%) |
Haemostasis |
|
|
60,759 |
|
|
|
46,476 |
|
|
|
31 |
% |
Clinical Chemistry |
|
|
17,061 |
|
|
|
14,868 |
|
|
|
15 |
% |
Point of Care |
|
|
24,504 |
|
|
|
15,279 |
|
|
|
60 |
% |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
143,617 |
|
|
|
118,674 |
|
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
Trinity Biotechs consolidated revenues for the year ended December 31, 2007 were US$143,617,000
compared to consolidated revenues of US$118,674,000 for the year ended December 31, 2006, which
represents an overall increase of US$24,943,000.
Infectious Diseases Revenues
Sales of infectious diseases products have decreased by US$758,000. This decrease is principally
due to a reduction in sales of flu anti-bodies through our Fitzgerald business due to a poor flu
season principally attributable to mild winter conditions in Fitzgeralds US and Asian markets.
This was partially offset by improved Lyme sales in the US, increased sales in the Groups direct
selling operation in France during its first full year of trading and the impact of the acquisition
of Sterilab in the United Kingdom.
Haemostasis Revenues
The net increase in haemostasis revenues of US$14,283,000 is principally attributable to increased
sales arising from the full year impact of the acquisition of the haemostasis business of
BioMerieux in 2006 (US$12,224,000). The remaining increase is attributable to the 8% growth in the
Groups Amax and Biopool product ranges (US$2,059,000).
Clinical Chemistry Revenues
The increase in clinical chemistry revenues of US$2,193,000 is principally due to international
sales of the Primus products. Primus specialises in the field of in vitro diagnostic testing for
haemoglobin A1c and haemoglobin variants (used in the detection and monitoring of diabetes
patients).
Point of Care
Sales of Point of Care products have increased by US$9,225,000 which is primarily attributable to
increased sales of Trinitys Unigold rapid HIV test in Africa and the US.
Revenues by Geographical Region
The following table sets forth selected sales data, analysed by geographic region, based on
location of customer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
68,481 |
|
|
|
60,748 |
|
|
|
13 |
% |
Europe |
|
|
43,631 |
|
|
|
34,452 |
|
|
|
27 |
% |
Asia/Africa |
|
|
31,505 |
|
|
|
23,474 |
|
|
|
34 |
% |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
143,617 |
|
|
|
118,674 |
|
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
20
The US$7,733,000 increase in the Americas is primarily attributable to the following factors:
|
|
|
An increase in haemostasis sales including the full year impact of bioMerieux
haemostasis products which was acquired in June 2006 (US$12,224,000); |
|
|
|
|
the growth in the sales of Trinitys Unigold rapid HIV test. |
The US$9,179,000 increase in Europe is primarily due to increased sales arising from the full year
impact of the acquisition of BioMerieux and sales of Infectious Diseases products in France.
The US$8,031,000 increase in Asia/Africa is primarily due to increased sales of Trinitys Unigold
rapid HIV tests in Africa.
For further information about the Groups principal products, principal markets and competition
please refer to Item 4, Information on the Company.
3. Operating Expenses
The following table sets forth the Groups operating expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
143,617 |
|
|
|
118,674 |
|
|
|
21 |
% |
Cost of sales |
|
|
(75,643 |
) |
|
|
(62,090 |
) |
|
|
22 |
% |
Cost of sales restructuring expenses |
|
|
(953 |
) |
|
|
|
|
|
|
100 |
% |
Cost of sales inventory write off/ provision |
|
|
(11,772 |
) |
|
|
(5,800 |
) |
|
|
103 |
% |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
55,249 |
|
|
|
50,784 |
|
|
|
9 |
% |
Other operating income |
|
|
413 |
|
|
|
275 |
|
|
|
50 |
% |
Research & development |
|
|
(6,802 |
) |
|
|
(6,696 |
) |
|
|
2 |
% |
Research & development restructuring expenses |
|
|
(6,907 |
) |
|
|
|
|
|
|
100 |
% |
SG&A expenses |
|
|
(51,010 |
) |
|
|
(42,422 |
) |
|
|
20 |
% |
SG&A expenses restructuring expenses |
|
|
(20,315 |
) |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
Operating (loss)/ profit |
|
|
(29,372 |
) |
|
|
1,941 |
|
|
|
(1614 |
%) |
|
|
|
|
|
|
|
|
|
|
Cost of sales
Total cost of sales increased by US$20,478,000 from US$67,890,000 for the year ended December 31,
2006 to US$88,368,000, for the year ended December 31, 2007, an increase of 30%. The increase is
primarily attributable to the restructuring expenses of US$12,725,000 recognised in cost of sales
in 2007, partially offset by the inventory provision in 2006 of US$5.8 million. Cost of sales,
excluding the impact of the restructuring expenses of US$12.7 million in 2007 and the US$5.8
million inventory provision in 2006, increased by US$13,553,000 from US$62,090,000 for the year
ended December 31, 2006 to US$75,643,000, for the year ended December 31, 2007, an increase of 22%.
This increase in cost of sales is broadly in line with the increase in revenues for the Group.
Cost of sales excluding the US$12.7 million for the inventory write off and restructuring expenses
for the year represents 53% of revenues, which is broadly in line with the cost of sales excluding
the US$5.8 million inventory provision as a percentage of revenue in 2006 (52%). See Revenues
section above for details on movements in revenues during 2007.
Included in cost of sales for the year ended December 31, 2007 is US$12,725,000 for the inventory
write off and restructuring expenses, resulting from a decision taken by the Board of Directors of
Trinity Biotech during 2007 to restructure the business. Under the restructuring plan, Trinity
Biotech undertook to reduce the number of products and instruments within the two key product
lines of haemostasis and infectious diseases. As a result, the Group has recognised US$11,772,000
for inventory written off relating to those haemostasis and infectious diseases products and
instruments being rationalised for the year ended December 31, 2007. As part of the restructuring,
the Group also recognised an additional amount of US$953,000 in cost of sales for termination
payments for the year ended December 31, 2007.
21
In 2006, the Group made a US$5.8 million inventory provision resulting from the acquisition of the
haemostasis business of bioMerieux in 2006. This arose from the process of combining the acquired
bioMerieux range of products with the Groups existing product range. As part of this process it
was decided to discontinue various existing products, hence the requirement for the inventory
provision.
Gross margin
The gross margin for 2007 was 38% which compares to a gross margin in 2006 of 43%. The decrease in
gross margin in 2007 is primarily attributable to the impact of the restructuring expenses and
goodwill impairment. Excluding the impact
of the US$12.7 million restructuring expenses, the gross margin would have been 47%, which is
broadly in line with the 2006 gross margin excluding the impact of the US$5.8 million inventory
provision of 48%.
Research and development expenses
Research and development (R&D) expenditure increased to US$13,709,000 in 2007 compared to
expenditure of US$6,696,000 in 2006. The increase in research and development expenditure is
primarily attributable to the total restructuring expenses recognised in R&D in 2007 of
US$6,907,000. The total R&D restructuring expenses of US$6,907,000 consists of US$5,134,000 of
development costs written off, US$439,000 for license costs written off and a further US$1,094,000
written off technology intangible assets acquired from BioMerieux. Termination payments included in
R&D amounted to US$240,000. Research and development expenditure, excluding the impact of the
write-off of capitalised development and license costs of US$6,667,000 and termination payments of
US$240,000 resulting from the restructuring activities, increased to US$6,802,000 in 2007 compared
to expenditure of US$6,696,000 in 2006. This represents 5% of consolidated revenues, which is
consistent with 2006. For a consideration of the Companys various R&D projects see Research and
Products under Development in Item 5 below.
Selling, General & Administrative expenses (SG&A)
The following table outlines the breakdown of SG&A expenses in 2007 compared to a similar breakdown
for 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
Increase/ |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
(decrease) |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
SG&A (excl.
share-based payments
and amortisation) |
|
|
46,368 |
|
|
|
38,719 |
|
|
|
7,649 |
|
|
|
20 |
% |
SG&A restructuring
expenses and
goodwill impairment |
|
|
20,315 |
|
|
|
|
|
|
|
20,315 |
|
|
|
100 |
% |
Share-based payments |
|
|
1,224 |
|
|
|
1,016 |
|
|
|
208 |
|
|
|
20 |
% |
Amortisation |
|
|
3,418 |
|
|
|
2,687 |
|
|
|
731 |
|
|
|
27 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
71,325 |
|
|
|
42,422 |
|
|
|
28,903 |
|
|
|
68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling General & Administrative Expenditure (excluding share-based payments and amortisation)
Total SG&A expenses increased from US$42,422,000 for the year ended December 31, 2006 to
US$71,325,000 for the year ended December 31, 2007, which represents an increase of US$28,903,000.
The increase is primarily due to the restructuring expenses and an increase in SG&A expenses
excluding share-based payments and amortisation. Total SG&A expenses excluding share-based payments
and amortisation increased from US$38,719,000 for the year ended December 31, 2006 to US$66,683,000
for the year ended December 31, 2007, which represents an increase of 72%. Of the total increase of
US$38,719,000, US$20,315,000 relates to restructuring expenses incurred in 2007. SG&A expenses
(excluding restructuring expenses, goodwill impairment, share-based payments and amortisation)
increased 20% or by US$7,649,000 from US$38,719,000 to US$46,368,000, which compares to revenue
growth of 21% during the same period.
22
The principal reasons for the increase in SG&A expenses (excluding restructuring expenses, goodwill
impairment, share-based payments and amortisation) of US$7,649, 000 in 2007, are as follows:
|
|
|
Increased SG&A costs in the Head Office/Irish operations of US$4,327,000. This is
mainly due to a combination of strengthening of the Groups marketing and central
administration functions in conjunction with increased professional fees associated with
the implementation of Sarbanes Oxley; |
|
|
|
|
An increase of US$2,057,000 in the Groups European operations (excluding Ireland). Of
this increase, US$1,465,000 related to the full year impact of the direct sales operation
in France acquired in 2006. The remaining increase of US$592,000 arose principally in the
UK mainly due to the increase in employee numbers
and related costs associated with the expansion of this entity following the acquisition of
the haemostasis business of bioMerieux in 2006. |
|
|
|
|
Increased SG&A costs of US$1,265,000 in the USA. This is primarily due to the full year
impact of the increased personnel and related costs following the acquisition of the
haemostasis business of bioMerieux in June 2006. |
SG&A restructuring expenses and goodwill impairment
Arising from the 2007 impairment review, a goodwill impairment loss of US$19,156,000 was
recognised in the consolidated statement of operations for the year ended December 31, 2007. This
impairment loss arose in Trinity Biotech Manufacturing Limited, one of the Groups cash generating
units (CGUs). Trinity Biotech Manufacturing Limited manufactures haemostasis, infectious
diseases, point of care and clinical chemistry products at its plant in Bray, Ireland, which are
then sold to third party distributors and other selling entities within the Group. A further
US$1,094,000 was written off technology intangible assets acquired by BioMerieux and this charge
is included in research and development expenses as part of the total amount written off for
capitalised development and license costs of US$6,667,000. The remaining restructuring expenses of
US$1,159,000 included in SG&A primarily relate to termination payments (US$842,000) and onerous
lease obligations resulting from the closure of the Swedish manufacturing operation (US$116,000).
Share-based payments
The Group recorded a total charge to the statement of operations in 2007 of US$1,403,000 (2006:
US$1,141,000) for share-based payments. Of the 2007 charge US$71,000 (2006: US$89,000) was charged
against cost of sales. Of the remaining US$1,332,000, US$108,000 (2006: US$36,000) was charged
against research and development expenses and US$1,224,000 (2006: US$1,016,000) was charged against
selling general and administrative expenses.
The expense represents the value of share options granted to directors and employees which is
charged to the statement of operations over the vesting period of the underlying options. The
Group has used a trinomial valuation model for the purposes of valuing these share options with the
key inputs to the model being the expected volatility over the life of the options, the expected
life of the option and the risk free rate. The expense for 2007 is broadly in line with that of
2006 and is due to the impact of the newly issued options being offset by a reduction in the
expense resulting from forfeiture of previous share options, granted to employees and key
management personnel but not vested at the time of forfeiture. For further details refer to Item
18, note 20 to the consolidated financial statements.
Amortisation
The increase in amortisation of US$731,000 from US$2,687,000 to US$3,418,000 is largely
attributable to the impact of amortisation of intangible assets acquired as part of the Groups
acquisitions in 2007 and 2006 (see Item 18, note 27 to the consolidated financial statements). The
Group acquired the haemostasis business of BioMerieux and a direct selling operation in France in
2006 and the full year impact of these acquisitions on the 2007 amortisation charge was US$579,000.
A further US$56,000 was amortised in relation to intangible assets valued on the acquisition of the
immuno-technology business of Cortex and certain components of the distribution business of
Sterilab, a distributor of Infectious Diseases products, in 2007.
The remaining increase of US$96,000 is mainly attributable to amortisation of development costs
which were capitalised and are now being amortised over the expected life of the products to which
they related.
23
4. ( Loss)/ profit for the year
The following table sets forth selected statement of operations data for each of the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
Operating (loss)/ profit |
|
|
(29,372 |
) |
|
|
1,941 |
|
|
|
(1613 |
%) |
Net financing costs |
|
|
(2,691 |
) |
|
|
(1,489 |
) |
|
|
81 |
% |
|
|
|
|
|
|
|
|
|
|
(Loss)/ profit before tax |
|
|
(32,063 |
) |
|
|
452 |
|
|
|
(7194 |
%) |
Income tax (expense)/ credit |
|
|
(3,309 |
) |
|
|
2,824 |
|
|
|
(217 |
%) |
|
|
|
|
|
|
|
|
|
|
(Loss)/ profit of the year |
|
|
(35,372 |
) |
|
|
3,276 |
|
|
|
(1180 |
%) |
|
|
|
|
|
|
|
|
|
|
Net Financing Costs
Net financing costs increased to US$2,691,000 compared to US$1,489,000 in 2006. This increase is
primarily due to the impact of the additional debt financing taken on by the Group during 2006 and
2007. The loan facility was amended in July 2006, increasing the original loan facility by US$30
million from US$13,340,000 to US$43,340,000 due to the acquisition of the haemostasis business of
bioMerieux. In October 2007, the revolver loan element of the facility increased by US$5 million
from US$2,000,000 to US$7,000,000 to fund the acquisition of Cortex and Sterilab in 2007. The
increased interest expense in relation to this additional debt was offset by lower interest charges
in relation the Groups convertible notes as they were being repaid during 2006. Deposit interest
earned during the year decreased from US$1,164,000 in 2006 to US$457,000 due to lower cash balances
held on deposit.
Taxation
The Group recorded a net tax charge of US$3,309,000 for the year ended December 31, 2007. This
compared to a tax credit of US$2,824,000 for 2006. This represented a decrease in current tax of
US$98,000 which is more than offset by an increase in deferred tax of US$6,231,000. The decrease
in current tax is primarily attributable to current year losses in the US, Ireland and Germany
resulting from the restructuring. The net deferred tax expense is primarily attributable to the
derecognition of deferred tax assets in relation to unused tax losses. The derecognition of these
deferred tax assets was considered appropriate due to uncertainty over the timing of the
utilisation of the unused tax losses. For further details on the Groups tax charge please refer
to Item 18, note 9 and note 13 to the consolidated financial statements.
(Loss)/ profit for the year
The loss for the year amounted to US$35,372,000 which represents a decrease of US$38,648,000 when
compared to the profit for year of US$3,276,000 in 2006. Excluding the after tax impact of the
inventory write off, restructuring expenses and goodwill impairment of US$38,363,000, the profit
for the year would have been US$2,991,000. This compares to a profit for the year ended December
31, 2006, excluding the after tax impact of the US$5.8 million inventory provision, of
US$3,276,000.
24
Year ended December 31, 2006 compared to the year ended December 31, 2005
The following compares our results in the year ended December 31, 2006 to those of the year ended
December 31, 2005 under IFRS. Our analysis is divided as follows:
|
1. |
|
Overview |
|
|
2. |
|
Revenues |
|
|
3. |
|
Operating Expenses |
|
|
4. |
|
Retained Profit |
1. Overview
In 2006 consolidated revenues increased by US$20.1 million, which represents a growth rate of
20.4%. In 2006 haemostasis became the Groups most significant product line representing 39% of
product revenues. The remaining revenues came from the infectious diseases (35%), point of care
(13%) and clinical chemistry (13%) product lines. Geographically, 51% of sales were generated in
the Americas, 29% in Europe and 20% in the rest of the world.
The gross margin for the year ended December 31, 2006 was 43%. Following the acquisition of the
haemostasis business of bioMerieux, Trinity Biotech sought to combine the range of products
acquired with the Groups existing product range. As part of this process it was decided to
discontinue various existing products and this resulted in a US$5.8 million provision against the
existing inventory of the Group. Excluding the impact of the US$5.8 million inventory provision,
the gross margin was 48% which is consistent with the gross margin for the year ended December 31,
2005.
Operating profit decreased by 71%, primarily due to the impact of the US$5.8 million inventory
provision. Excluding the impact of this inventory write-off the operating profit increased by 17%
primarily due to increased sales. However, the impact of increased sales, which grew by 20%, was
offset by increased selling, general & administrative (SG&A) and research and development (R&D)
costs. This caused the operating margin, excluding the impact of the inventory write off, to remain
at the 2005 level of 7%.
The profit for the year decreased by 38% primarily due to the impact of the inventory provision
(compared to a decrease of 71% in operating profit). The lower level of decrease in profit of the
year compared to the level of decrease in operating profit is due to the impact of higher net
interest financing costs in 2006 being more than offset by the impact of an overall income tax
credit. Excluding the after tax impact of the inventory write-off, the increase in profit for the
year ended December 31, 2006 was US$2,224,000, an increase of 42%.
2. Revenues
The Groups revenues consist of the sale of diagnostic kits and related instrumentation and the
sale of raw materials to the life sciences industry.
Revenues on the sale of the above products are generally recognised on the basis of shipment to
customers. The Group ships its products on a variety of freight terms, including ex-works, CIF
(carriage including freight) and FOB (free on board), depending on the specific terms agreed with
customers. In cases where the Group ships on terms other than ex-works, the Group does not
recognise the revenue until its obligations have been fulfilled in accordance with the shipping
terms.
No right of return exists in relation to product sales except in instances where demonstrable
product defects occur. The Group has defined procedures for dealing with customer complaints
associated with such product defects as they arise.
The Group also derives a portion of its revenues from leasing infectious diseases and haemostasis
diagnostic instruments to customers. In cases where the risks and rewards of ownership of the
instrument passes to the customer, the fair value of the instrument is recognised at the time of
sale matched by the related cost of sale. In the case of operating leases of instruments which
typically involve commitments by the customer to pay a fee per test run on the instruments, revenue
is recognised on the basis of customer usage of the instruments. In certain markets, the Group also
earns revenue from servicing infectious diseases and haemostasis instrumentation located at
customer premises.
25
Revenues by Product Line
The following table sets forth selected sales data for each of the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2006 |
|
|
2005 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Infectious diseases |
|
|
42,051 |
|
|
|
44,078 |
|
|
|
(5 |
%) |
Haemostasis |
|
|
46,476 |
|
|
|
29,766 |
|
|
|
56 |
% |
Clinical Chemistry |
|
|
14,868 |
|
|
|
11,880 |
|
|
|
25 |
% |
Point of Care |
|
|
15,279 |
|
|
|
12,836 |
|
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
118,674 |
|
|
|
98,560 |
|
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
Trinity Biotechs consolidated revenues for the year ended December 31, 2006 were US$118,674,000
compared to consolidated revenues of US$98,560,000 for the year ended December 31, 2005, which
represents an overall increase of US$20,114,000.
Infectious Diseases
Sales of infectious diseases products have decreased by US$2,027,000. This decrease is principally
due to a reduction in sales of US$2,338,000 to Wampole. This decrease was partially offset by an
increase of US$311,000 which is attributable to the net increase in non Wampole sales over a wide
range of infectious diseases products.
Haemostasis Revenues
The increase in haemostasis revenues of US$16,710,000 is principally attributable to the impact of
the acquisition of the haemostasis business of bioMerieux in June 2006 (US$20.9 million), which has
been offset by a decline in existing sales compared to 2005.
Clinical Chemistry Revenues
The increase in clinical chemistry revenues of US$2,988,000 is principally due to increased sales
arising from the full year impact of the acquisition of Primus in July 2005. Primus specialises in
the field of in vitro diagnostic testing for haemoglobin A1c and haemoglobin variants (used in the
detection and monitoring of diabetes patients).
Point of Care
Sales of Point of Care products have increased by US$2,443,000 which is primarily attributable to
increased sales of Trinitys Unigold rapid HIV test in the USA and to a lesser extent increased
sales of rapid HIV products in Africa.
Revenues by Geographical Region
The following table sets forth selected sales data, analysed by geographic region, based on
location of customer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2006 |
|
|
2005 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
60,748 |
|
|
|
50,627 |
|
|
|
20 |
% |
Europe |
|
|
34,452 |
|
|
|
25,301 |
|
|
|
36 |
% |
Asia/Africa |
|
|
23,474 |
|
|
|
22,632 |
|
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
118,674 |
|
|
|
98,560 |
|
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
The US$10,121,000 increase in the Americas is primarily attributable to the following factors:
|
|
|
The inclusion of sales of US$9,822,000 of bioMerieux haemostasis products from the date
of acquisition in June 2006; |
|
|
|
|
The full year impact of Primus, which was acquired in July 2005, of US$3,012,000; |
|
|
|
|
Partially offset by the US$2,338,000 reduction in sales to Wampole. |
26
The US$9,151,000 increase in Europe is primarily due to the impact of the acquisition of the
haemostasis business of bioMerieux acquired in June 2006.
The US$842,000 increase in Asia/Africa is primarily due to the impact of the acquisition of the
haemostasis business of bioMerieux acquired in June 2006 (US$1,714,000). This was largely offset by
lower sales of US$658,000 of Fitzgerald products following the particularly strong flu season in
2005.
For further information about the Groups principal products, principal markets and competition
please refer to Item 4, Information on the Company.
3. Operating Expenses
The following table sets forth the Groups operating expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2006 |
|
|
2005 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
|
Revenues |
|
|
118,674 |
|
|
|
98,560 |
|
|
|
20 |
% |
Cost of sales |
|
|
(62,090 |
) |
|
|
(51,378 |
) |
|
|
21 |
% |
Cost of sales inventory provision |
|
|
(5,800 |
) |
|
|
|
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
50,784 |
|
|
|
47,182 |
|
|
|
8 |
% |
Other operating income |
|
|
275 |
|
|
|
161 |
|
|
|
71 |
% |
Research & development |
|
|
(6,696 |
) |
|
|
(6,070 |
) |
|
|
10 |
% |
SG&A expenses |
|
|
(42,422 |
) |
|
|
(34,651 |
) |
|
|
23 |
% |
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
1,941 |
|
|
|
6,622 |
|
|
|
(71 |
%) |
|
|
|
|
|
|
|
|
|
|
Cost of sales
Cost of sales (excluding the impact of the US$5.8 million inventory provision) increased by
US$10,712,000 from US$51,378,000 for the year ended December 31, 2005 to US$62,090,000, for the
year ended December 31, 2006, an increase of 21%. This increase in cost of sales is broadly in
line with the increase in revenues for the Group. Cost of sales excluding the US$5.8 million
inventory provision for the year represents 52% of revenues, the same level as in 2005. See
Revenues section above for details on movements in revenues during 2006.
The Group made a US$5.8 million inventory provision resulting from the acquisition of the
haemostasis business of bioMerieux in 2006. This arose from the process of combining the acquired
bioMerieux range of products with the Groups existing product range. As part of this process it
was decided to discontinue various existing products, hence the requirement for the inventory
provision.
Gross Margin
The gross margin for 2006 was 43%. Excluding the impact of the US$5.8 million inventory write-off
the gross margin would have been 48%, the same level as in 2005. The gross margin for the first 6
months of 2006 was 49%. This fell to 47% in the second 6 months of 2006. This is largely due to
the acquisition of the haemostasis business of bioMerieux Inc., as haemostasis products tend to
have a lower margin on average than the other Trinity Biotech product lines.
Research and development
Research and development expenditure increased to US$6,696,000 in 2006 compared to expenditure of
US$6,070,000 in 2005. This represents 6% of consolidated revenues, which is consistent with 2005.
For a consideration of the Companys various R&D projects see Research and Products under
Development in Item 5 below.
27
Selling, General & Administrative expenses (SG&A)
The following table outlines the breakdown of SG&A expenses in 2006 compared to a similar breakdown
for 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
Increase/ |
|
|
|
|
|
|
2006 |
|
|
2005 |
|
|
(decrease) |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A (excl.
share-based payments
and amortisation) |
|
|
38,719 |
|
|
|
31,800 |
|
|
|
6,919 |
|
|
|
22 |
% |
Share-based payments |
|
|
1,016 |
|
|
|
1,048 |
|
|
|
(32 |
) |
|
|
(3 |
%) |
Amortisation |
|
|
2,687 |
|
|
|
1,803 |
|
|
|
884 |
|
|
|
49 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
42,422 |
|
|
|
34,651 |
|
|
|
7,771 |
|
|
|
23 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling General & Administrative Expenditure (excluding share-based payments and amortisation)
SG&A (excluding share-based payments and amortisation) increased 22% or by US$6,919,000 from
US$31,800,000 to US$38,719,000, which compares to revenue growth of 20% during the same period.
The principal reasons for the increase in SG&A expenses of US$6,919,000 in 2006, is as follows:
|
|
|
Increased SG&A costs of US$3,901,000 in the USA. This is partially due to the full year
impact of Primus which was acquired in July 2005 of US$2,524,000. The remaining increase of
US$1,377,000 is mainly attributable to increased personnel and related costs following the
acquisition of the haemostasis business of bioMerieux; |
|
|
|
|
Increased SG&A costs in the Head Office/Irish operations of US$1,390,000. This is
mainly due to a combination of strengthening of the Groups marketing and central
administration functions in conjunction with the increase in scale of the Group and level
of activity of the Irish manufacturing operation; |
|
|
|
|
An increase of US$1,538,000 in the Groups European operations (excluding Ireland). Of
this increase US$363,000 related to the newly established direct sales operation in France.
The remaining increase of US$1,175,000 arose principally in Germany and UK mainly due to
the increase in employee numbers and related costs associated with the expansion of these
entities following the acquisition of the haemostasis business of bioMerieux. |
Share-based payments
The Group recorded a total charge to the statement of operations in 2006 of US$1,141,000 (2005:
US$1,368,000) for share-based payments. Of the 2006 charge US$89,000 (2005: US$110,000) was
charged against cost of sales. Of the remaining US$1,052,000, US$36,000 (2005: US$210,000) was
charged against research and development expenses and US$1,016,000 (2005: US$1,048,000) was charged
against selling and general administration expenses.
The expense represents the value of share options granted to directors and employees which is
charged to the statement of operations over the vesting period of the underlying options. The
Group has used a trinomial valuation model for the purposes of valuing these share options with the
key inputs to the model being the expected volatility over the life of the options, the expected
life of the option and the risk free rate. The expense for 2006 is broadly in line with that of
2005 and is due to the impact of the newly issued options being offset by a reduction in the
expense resulting from forfeiture and expiration of previous share options granted to employees and
key management personnel.
Amortisation
The increase in amortisation of US$884,000 from US$1,803,000 to US$2,687,000 is largely
attributable to the amortisation of intangible assets acquired as part of the Groups acquisitions
in 2005 and 2006. The impact of the full year of the acquisition of Primus and RDI, both of which
were acquired in 2005, was US$172,000 whilst a further US$585,000 was amortised in relation to
intangible assets valued on the acquisition of the haemostasis business of bioMerieux and the
direct selling operation in France in 2006.
The remaining increase of US$127,000 is mainly attributable to amortisation of development costs
which were capitalised and are now being amortised over the expected life of the products to which
they related.
28
4. Profit for the year
The following table sets forth selected statement of operations data for each of the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2006 |
|
|
2005 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
Operating Profit |
|
|
1,941 |
|
|
|
6,622 |
|
|
|
(71 |
%) |
Net financing costs |
|
|
(1,489 |
) |
|
|
(669 |
) |
|
|
123 |
% |
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
452 |
|
|
|
5,953 |
|
|
|
(92 |
%) |
Income tax credit/(expense) |
|
|
2,824 |
|
|
|
(673 |
) |
|
|
(520 |
%) |
|
|
|
|
|
|
|
|
|
|
Profit of the year |
|
|
3,276 |
|
|
|
5,280 |
|
|
|
(38 |
%) |
|
|
|
|
|
|
|
|
|
|
Net Financing Costs
Net financing costs increased to US$1,489,000 compared to US$669,000 in 2005. This increase is
primarily due to the impact of the additional debt financing taken on by the Group during 2006 due
to the acquisition of the haemostasis business of bioMerieux. The loan facility was amended in July
2006, increasing the original loan facility by US$30 million from US$13,340,000 to US$43,340,000.
The increased interest expense in relation to this additional debt was offset by lower interest
charges in relation the Groups convertible notes as they were being repaid during 2006 and an
increase in deposit interest earned during the year of US$775,000 due to a combination of higher
cash balances and higher interest rates.
Taxation
The Group recorded a net tax credit of US$2,824,000 in the year ended December 31, 2006. This
compared to a tax charge of US$673,000 for 2005. This represented an increase in current tax of
US$16,000 which is more than offset by a decrease in deferred tax of US$3,513,000. The increase in
current tax is primarily attributable to an increase in current year profits in the Groups Irish
operations. The net deferred tax credit is primarily attributable to an increase in deferred tax
assets arising from current year losses in certain of the Groups subsidiary undertakings. The
increase in deferred tax assets was partially offset by an increase in deferred tax liabilities
attributable to an upfront deduction for certain development expenditure and licence fees,
primarily in Ireland, for items that have not as yet been expensed in the Groups statement of
operations.
Profit for the year
Profit for the year decreased by US$2,004,000, from US$5,280,000 to US$3,276,000. Excluding the
after tax impact of the inventory provision of US$5,800,000, the profit for the year was
US$7,504,000, an increase of US$2,224,000 (42%) and represents 6% of consolidated revenues, which
is the same level as in 2005.
Liquidity and Capital Resources
Financing
Trinity Biotech has a US$48,340,000 club banking facility with AIB plc and Bank of Scotland
(Ireland) Limited (the banks). The facility consists of a five year term loan of US$41,340,000
and a one year revolver of US$7,000,000. The facility was amended in October 2007, increasing the
original revolver loan element of the facility by US$5 million from US$2,000,000 to US$7,000,000.
The term loan is repayable in ten equal biannual instalments which commenced in January 2007. Two
principal repayments of US$4,134,000 each were paid during 2007. This facility is secured by the
assets of the Group (see Item 18, note 28 (c) to the consolidated financial statements).Various
covenants apply to the Groups bank borrowings. As at December 31, 2007, the Group was in breach of
a number of these covenants which had been waived by the banks. The covenants which were breached
concerned the level of earnings before taxation, depreciation and amortisation for the year end
December 31, 2007 and the level of the Groups net debt and net assets excluding intangible assets
at December 31, 2007. Following these breaches the Group has agreed new covenants with the banks
under revised terms and conditions for the facility. These covenants have been calculated based on
the expected future results and cash flows of the Group. Given the basis on which these revised
covenants have been calculated and the headroom that they afford, the directors believe that the
revised covenants as well as the other terms and conditions of the facility will be complied with
by the Group in future periods. In addition to agreeing to revised covenants, since December 31,
2007 the Group has agreed a revised repayment schedule for the outstanding debt, which will result
in an extension to the repayment period and will reduce the level of repayments in the 12 months
after December 31, 2007 (See Item 18, note 30 to the consolidated financial statements). At
December 31, 2007, the total amount outstanding under the facility amounted to US$39,808,000. The
debt is stated net of unamortised funding costs of US$264,000.
29
The additional US$5 million loan facility was used to fund the Groups acquisitions during 2007.
In September 2007, the Group acquired the Immuno-technology business of Cortex Biochem Inc
(Cortex) for a total consideration of US$2,925,000, consisting of cash consideration of
US$2,887,000 and acquisition expenses of US$38,000. In October 2007, the Group acquired certain
components of the distribution business of Sterilab Services UK (Sterilab), a distributor of
Infectious Diseases products, for a total of US$1,489,000, consisting of cash consideration of
US$1,480,000 and acquisition expenses of US$9,000.
At December 31, 2007, the balance outstanding on the convertible notes, resulting from the private
placement of US$20,00,000 in July 2003 and a further US$5,000,000 in January 2004, was US$nil
(2006: US$1,836,000), including accrued interest at year end of US$nil (2006: US$14,000). The final
principal repayment was made on January 2, 2007 by way of shares.
In April 2006, Trinity Biotech completed the private placement of 11,593,840 of Class A Ordinary
Shares of the Group. Net proceeds from this placement after costs associated with the deal amounted
to US$24,010,000.
Working capital
In the Groups opinion the Group will have access to sufficient funds to support its existing
operations for at least the next 12 months. These funds will consist of the Groups existing cash
resources, cash generated from operations and where required debt and/or equity funding or the
proceeds of asset disposals.
The amount of cash generated from operations will depend on a number of factors which include the
following:
|
|
|
The ability of the Group to continue to generate revenue growth from its existing
product lines; |
|
|
|
|
The ability of the Group to generate revenues from new products following the successful
completion of its development projects; |
|
|
|
|
The extent to which capital expenditure is incurred on additional property plant and
equipment; |
|
|
|
|
The level of investment required to undertake both new and existing development
projects; |
|
|
|
|
Successful working capital management in the context of a growing group. |
Where cash generated from operations is not sufficient to meet the Groups obligations, additional
debt or equity funding will need to be raised. The cost and availability of debt funding will
depend on prevailing interest rates at the time and the size and nature of the funding being
provided. The availability of debt and equity will depend on market conditions at the time, which
is of relevance at present given the constraints being experienced in international funding
markets.
The Group expects that it will have access to sufficient funds to repay the debt obligations which
were outstanding at December 31, 2007. These obligations include the repayment of the remaining
bank loans, deferred consideration and finance leases. The timing of these repayment obligations
and the expected maturity dates are set out in more detail in Item 11.
In the event that the Group makes any further acquisitions, we believe that the Group may be
required to obtain additional debt and/or equity funding. The exact timing and amount of such
funding will depend on the Groups ability to identify and secure acquisition targets which fit
with the Groups growth strategy and core competencies.
Cash management
As at December 31, 2007, Trinity Biotechs consolidated cash and cash equivalents were
US$8,700,000. This compares to cash and cash equivalents, excluding restricted cash, of
US$2,821,000 at December 31, 2006. At December 31, 2006, the Group also had US$15,500,000 which
was required to be held on interest-bearing deposit. As a result, this cash of US$15,500,000 was
shown as a financial asset at December 31, 2006. This requirement to hold a certain amount of cash
on interest bearing deposit was removed by the Groups banks in March 2007.
30
Cash generated from operations for the year ended December 31, 2007 amounted to US$18,178,000
(2006: US$8,317,000), an increase of US$9,861,000. The increase in cash generated from operations
of US$9,861,000 is attributable to an increase in operating cash flows before changes in working
capital of US$2,415,000 and favourable working capital movements of US$7,446,000. The increase in
operating cash flows before changes in working capital of US$2,415,000 is primarily due to higher
net profits arising from additional revenue in 2007. The favourable working capital movements are
primarily due to an improvement in cash flows from trade and other receivables of US$15,188,000
which was partially offset by increased cash outflows with respect to inventories (US$1,667,000)
and reduced cash flows from trade and other payables (US$6,075,000). The cash generated from
operations were attributable to a loss before interest and taxation of US$29,372,000 (2006: profit
before interest and taxation of US$1,941,000), as adjusted for non cash items of US$47,459,000
(2006: US$13,731,000) plus cash inflows due to changes in working capital of US$91,000 (2006: cash
outflows of US$7,355,000).
The increase in other non cash charges from US$13,731,000 for the year ended December 31, 2006 to
US$47,459,000 for the year ended December 31, 2007 is mainly attributable to the restructuring
activity in 2007 (see Item 18, note 3 to the consolidated financial statements). As part of this
restructuring it was decided to discontinue various existing products and this resulted in an
inventory writeoff of US$11,772,000 in 2007. The Group recognised an inventory provision of
US$5,800,000 during 2006. The Group also decided to suspend development of a number of on-going
projects, resulting in a write-off of capitalised development and license costs for the year ended
December 31, 2007 of US$6,667,000. An impairment loss of US$19,156,000 was also recognised against
the intangible assets of the Group during 2007. The remaining increase in non cash charges is
attributable to increased depreciation, amortisation and share based expenses of US$605,000,
US$731,000 and US$262,000 respectively in 2007.
The net cash inflows in 2007 due to changes in working capital of US$91,000 are due to the
following:
|
|
|
A decrease in accounts receivable by US$5,226,000 due to better collections of
outstanding debtor receipts; |
|
|
|
|
An increase in trade and other payables by US$1,966,000 due to the combination of
increased activity in the Group, including the impact of the acquisitions undertaken during
the year; |
|
|
|
|
An increase in inventory by US$7,101,000 due to a combination of increased activity in
the Group and the building up safety stock levels on key finished products. |
Net interest paid amounted to US$2,373,000 (2006: US$803,000). This consisted of interest paid of
US$2,802,000 (2006: US$1,642,000) on the Groups interest bearing debt including bank loans,
convertible notes and finance leases and was partially offset by interest received of US$429,000
(2006: US$839,000) on the Groups cash deposits.
Net cash outflows from investing activities for the year ended December 31, 2007 amounted to
US$8,415,000 (2006: US$63,267,000) which were principally made up as follows:
|
|
|
Payments for acquisitions in 2007 (US$4,414,000) consisting of payments for the
acquisition of the immuno-technology business of Cortex of US$2,925,000 (including
acquisition expenses) and payments for the acquisition of certain components of the
distribution business of Sterilab of US$1,489,000 (including acquisition expenses). In
addition, payments were made during 2007 relating to acquisitions in 2006 totalling
US$3,472,000. Deferred consideration of US$3,208,000 and US$239,000 was paid to bioMerieux
and Nephrotek respectively during 2007. A further amount of US$25,000 was paid during 2007
relating to accrued acquisition expenses at December 31, 2006; |
|
|
|
|
Payments to acquire intangible assets of US$7,851,000 (2006: US$6,085,000), which
principally related to development expenditure capitalised as part of the Groups on-going
product development activities; |
|
|
|
|
Acquisition of property, plant and equipment of US$8,262,000 (2006: US$4,751,000)
incurred as part of the Groups investment programme for its manufacturing and distribution
activities; |
|
|
|
|
Movements in financial fixed assets, which resulted in a cash inflow of US$15,500,000 in
2007 (2006: a cash outflow of US$6,500,000), was due to the requirement to maintain a
certain level of cash deposits (restricted cash) with the Groups lending banks being
removed during 2007. At December 31, 2006 the Group was required to keep US$15,500,000 on
deposit as restricted cash with its lending banks. This restriction was removed during
2007, resulting in a cash outflow from investing activities of US$15,500,000 in 2007. |
Net cashflows used in financing activities for the year ended December 31, 2007 amounted to
US$1,108,000 (2006: cash inflow of US$48,621,000). The Group received US$5,000,000 from its
revolver loan facility to fund the acquisition of Cortex and Sterilab in 2007 and raised US$454,000
(2006: US$25,265,000) from issuing share capital. The Group also received net cash inflows from
finance lease obligations of US$1,793,000 (2006: net cash outflow of US$198,000). These inflows
were offset by the repayment of debt and other liabilities of US$8,285,000 (2006: US$1,276,000) and
expenses paid in connection with share issues and debt financing of US$70,000 (2006: US$1,526,000).
31
The majority of the Groups activities are conducted in US Dollars. The primary foreign exchange
risk arises from the fluctuating value of the Groups euro denominated expenses as a result of the
movement in the exchange rate between the US Dollar and the euro. Trinity Biotech continuously
monitors its exposure to foreign currency movements and based on expectations on future exchange
rate exposure implements a hedging policy which may include covering a portion of this exposure
through the use of forward contracts. When used, these forward contracts are cashflow hedging
instruments whose objective is to cover a portion of these euro forecasted transactions.
As at December 31, 2007, total year end borrowings were US$42,133,000 (2006: US$45,294,000) and
cash and cash equivalents were US$8,700,000 (2006: US$2,821,000 (US$18,321,000 inclusive of
restricted cash)). For a more comprehensive discussion of the Groups level of borrowings at the
end of 2007, the maturity profile of the borrowings, the Groups use of financial instruments, its
currency and interest rate structure and its funding and treasury policies please refer to Item 11
Qualitative and Quantitative Disclosures about Market Risk.
Contractual obligations
The following table summarises our minimum contractual obligations and commercial commitments,
including interest, as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by Period |
|
|
|
|
|
|
|
less than 1 |
|
|
|
|
|
|
|
|
|
|
more than |
|
|
|
Total |
|
|
year |
|
|
1-3 Years |
|
|
3-5 Years |
|
|
5 years |
|
Contractual Obligations |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Bank loans |
|
|
44,330 |
|
|
|
17,497 |
|
|
|
18,430 |
|
|
|
8,403 |
|
|
|
|
|
Capital (finance) lease
obligations |
|
|
2,616 |
|
|
|
779 |
|
|
|
1,048 |
|
|
|
789 |
|
|
|
|
|
Other financial liabilities |
|
|
2,725 |
|
|
|
2,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease obligations |
|
|
62,551 |
|
|
|
4,943 |
|
|
|
8,050 |
|
|
|
6,436 |
|
|
|
43,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
112,222 |
|
|
|
25,944 |
|
|
|
27,528 |
|
|
|
15,628 |
|
|
|
43,122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech incurs debt and raises equity to pursue its policy of growth through acquisition.
Trinity Biotech believes that, with further funds generated from operations, it will have
sufficient funds to meet its capital commitments and continue existing operations for the
foreseeable future, in excess of 12 months. If operating margins on sales were to decline
substantially, if the Groups increased investment in its US direct sales force was not to
generate comparable margins in sales or if the Group was to make a large and unanticipated cash
outlay, the Group would have further funding requirements. If this were the case, there can be no
assurance that financing will be available at attractive terms, or at all. The Group believes
that success in raising additional capital or obtaining profitability will be dependent on the
viability of its products and their success in the market place. Since December 31, 2007 the
Group has agreed amendments to its bank facility, for more information see Item 18, note 30.
Impact of Inflation
Although Trinity Biotechs operations are influenced by general economic trends, Trinity Biotech
does not believe that inflation had a material effect on its operations for the periods presented.
Management believes, however, that continuing national wage inflation in Ireland and the impact of
inflation on costs generally will result in a sizeable increase in the Irish facilitys operating
costs in 2008.
Impact of Currency Fluctuation
Trinity Biotechs revenue and expenses are affected by fluctuations in currency exchange rates
especially the exchange rate between the US Dollar and the euro. Trinity Biotechs revenues are
primarily denominated in US Dollars and its expenses are incurred principally in US Dollars and
euro. The weakening of the US Dollar could have an adverse impact on future profitability.
Management are actively seeking to increase the size of the euro revenue base to mitigate this
risk. The revenues and costs incurred by US subsidiaries are denominated in US Dollars.
Trinity Biotech holds most of its cash assets in US Dollars. As Trinity Biotech reports in US
Dollars, fluctuations in exchange rates do not result in exchange differences on these cash
assets. Fluctuations in the exchange rate between the euro and the US Dollar may impact on the
Groups euro monetary assets and liabilities and on euro expenses and consequently the Groups
earnings.
32
Off-Balance Sheet Arrangements
After consideration of the following items the Groups management have determined that there are no
off-balance sheet arrangements which need to be reflected in the financial statements.
Leases with Related Parties
The Group has entered into lease arrangements for premises in Ireland with JRJ Investments (JRJ),
a partnership owned by Mr OCaoimh and Dr Walsh, directors of Trinity Biotech plc, and directly
with Mr OCaoimh and Dr Walsh. Independent valuers have advised Trinity Biotech that the rent
fixed with respect to these leases represents a fair market rent. Details of these leases with
related parties are set out in Item 4 Information on the Company, Item 7 Major Shareholders and
Related Party Transactions and Item 18, note 29 to the consolidated financial statements.
Research & Development (R&D) carried out by third parties
Certain of the Groups R&D activities have been outsourced to third parties. These activities are
carried out in the normal course of business with these companies.
Research and Products under Development
History
Historically, Trinity Biotech had been primarily focused on infectious diseases diagnostics. The
Group acquired a broad portfolio of microtitre plate (EIA) and Western Blot products and has
added to these over the last number of years through additional internally developed products.
More recently, the Group has entered into several other diagnostic areas including haemostasis and
clinical chemistry. The Research and Development (R&D) activities of the Group have mirrored
this expansion by developing new products in these areas also.
Centres of Excellence
Trinity Biotech has research and development groups focusing separately on microtitre plate based
tests, rapid tests, western blot products, clinical chemistry products, haemostasis and
immunofluorescent assays. These groups are located in Ireland, Germany and the US and largely
mirror the production capability at each production site, hence creating a centre of excellence
for each product type. In addition to in-house activities, Trinity Biotech sub-contracts some
research and development from time to time to independent researchers based in the US and Europe.
The following is a list of the principal projects which are currently being undertaken by the R&D
groups within Trinity Biotech.
Microtitre Plate Development Group
Development of microtitre plate assay for the detection of EU Lyme IgG and IgM
Trinity Biotech is already a leading supplier of diagnostic tests for the detection of Lyme
disease. Development was recently completed of two new tests to specifically detect for strains of
Lyme disease prevalent in Europe. Development and transfer to production was completed by December
2006 including some clinical trial data. Final clinical data was completed in early 2007 which will
allow the product to be CE marked and launched in early 2008.
HIV Incidence Assay
In late 2005, Trinity entered a Biological Materials License Agreement with the Centre for Disease
Control (CDC) in Atlanta, Georgia, for the rights to produce and sell the CDC devised HIV
Incidence assay. The technology was transferred to Trinity during 2006 and the product was
developed by the Group during 2007 with the design and development of key raw materials. Final
development is planned to take place in early 2008 followed by the launch of the product
worldwide.
Western Blot Development Group
A Western Blot kit is a test where antigens (usually proteins) from a specific bacteria or virus
are transferred onto a nitrocellulose strip. When a patients plasma is added to the strip, if
antibodies to that bacteria or virus are present in a patients sample, then they will bind to the
specific antigens on the strip. If antibodies to any of the antigens are present in sufficient
concentration, coloured bands corresponding to one or more of those antigens will be visible on the
reacted nitrocellulose strip.
US Lyme Western Blot
For many years, Trinity Biotechs US Domestic Lyme Western Blot has been a market leader. During
2006, a project was undertaken to further develop the product by adding additional process controls
to the test, increasing the effectiveness of the product in the end-users hands. This work was
successfully completed and Group launched the enhanced product in late 2007.
33
Automated Blotting Instrument and Blot Scanner
In 2006 a project was initiated to introduce the use of an automated blotting instrument with
Trinity Biotechs Western Blot tests, initially focusing on the US Lyme Western Blot allowing
increased throughput for end-users. This work progressed successfully, culminating on the
commencement of validation of the system in late 2006. Validation was completed in early 2007 with
launch of the system, which is called TrinBlot. The Group intends to extend the range of products
which can be used on the TrinBlot. In addition to the automated blotter, work is also completed on
adapting an automated scanner to aid in the interpretation of the western blots. This system was
validated and launched in late 2007.
Clinical Chemistry
TriStat POC
Trinity Biotech, at its Kansas City site, has developed a point of care test called TriStat for the
measurement of haemoglobin A1c for which FDA approval was obtained in late 2007. The Groups
submission for CLIA waiver is currently being considered by the FDA and approval is expected in
early 2008 which will allow a full launch of the product during 2008.
Haemoglobin assay development
In 2007 the Group initiated a project to develop a variant haemoglobin assay for neo-natal
screening and a sub one minute HbA1c test. Development will continue into 2008 and both of these
tests are expected to launch in 2009.
Medium throughput HPLC for Haemoglobin testing
This project entails the development of a new HPLC instrument to replace the current PDQ analyzer.
The new instrument will allow access to markets not previously open to Trinity Biotech due to
instrument price and test capability (A1c and variant). Development was initiated in 2007 and is
expected to continue through 2008.
Haemostasis Development Group
Destiny Max Development Project
The Group is in the process of developing a new high throughput haemostasis instrument called the
Destiny Max. The Destiny Max instrument is intended to meet the requirements of large
laboratories, commercial laboratories, reference laboratories and anti-coagulation clinics, i.e.
high volume laboratories. In so doing, Trinity Biotech will be able to compete effectively in an
overall system approach whereby placement of the Destiny Max instruments will drive increased sales
of the associated Trinity Biotech reagents, controls and accessories. Development of the
instrument continued in 2007. Trinity Biotech is currently finalising the final design and software
aspects of the instrument. Completion of the development and validation phase of the project is
scheduled for late 2008. Launch of the instrument onto the various worldwide markets is expected to
take place in late 2008, with launch in the USA following thereafter post FDA approval.
Trend Information
For information on trends in future operating expenses and capital resources, see Results of
Operations, Liquidity and Capital Resources and Impact of Inflation under Item 5.
34
Item 6 Directors and Senior Management
Directors
|
|
|
|
|
|
|
Name |
|
Age |
|
Title |
|
Ronan OCaoimh |
|
|
52 |
|
|
Executive Chairman |
Brendan K. Farrell
|
|
|
60 |
|
|
Chief Executive Officer |
Rory Nealon
|
|
|
40 |
|
|
Director, Chief Operations Officer |
Jim Walsh, PhD
|
|
|
49 |
|
|
Non Executive Director |
Denis R. Burger, PhD
|
|
|
64 |
|
|
Non Executive Director |
Peter Coyne
|
|
|
48 |
|
|
Non Executive Director |
Executive Officers |
|
|
|
|
|
|
Kevin Tansley
|
|
|
37 |
|
|
Chief Financial Officer & Company Secretary |
Board of Directors & Executive Officers
Ronan OCaoimh, Executive Chairman,
co-founded Trinity Biotech in June 1992 and acted as Chief
Financial Officer until March 1994 when he became Chief Executive Officer. He was also elected
Chairman in May 1995. In November 2007, it was decided to separate the role of Chief Executive
Officer and Chairman and Mr OCaoimh assumed the role of Executive Chairman. Prior to joining
Trinity Biotech, Mr OCaoimh was Managing Director of Noctech Limited, an Irish diagnostics
company. Mr OCaoimh was Finance Director of Noctech Limited from 1988 until January 1991 when he
became Managing Director. Mr OCaoimh holds a Bachelor of Commerce degree from University College
Dublin and is a Fellow of the Institute of Chartered Accountants in Ireland.
Brendan Farrell, Chief Executive Officer, joined Trinity Biotech in July 1994 and acted as
President until November 2007 when he was appointed Chief Executive Officer. He was previously
Marketing Director of B.M. Browne Limited, a company involved in the marketing and distribution of
medical and diagnostic products. Prior to that he was Chief Executive of Noctech Limited, an Irish
based diagnostics company, following six years with Baxter Healthcare where he was Director of
European Business Development. Mr Farrell has a Masters degree in Biochemistry from University
College Cork.
Rory Nealon, Chief Operations Officer, joined Trinity Biotech as Chief Financial Officer and
Company Secretary in January 2003. He was appointed Chief Operations Officer in November 2007.
Prior to joining Trinity Biotech, he was Chief Financial Officer of Conduit plc, an Irish directory
services provider with operations in Ireland, the UK, Austria and Switzerland. Prior to joining
Conduit he was an Associate Director in AIB Capital Markets, a subsidiary of AIB Group plc, the
Irish banking group. Mr Nealon holds a Bachelor of Commerce degree from University College Dublin,
is a Fellow of the Institute of Chartered Accountants in Ireland, a member of the Institute of
Taxation in Ireland and a member of the Institute of Corporate Treasurers in the UK.
Jim Walsh, PhD, Non-executive director, joined Trinity Biotech in October 1995 as Chief Operations
Officer. Dr. Walsh resigned from the role of Chief Operations Officer in 2007. Prior to joining the
Trinity Biotech, Dr Walsh was Managing Director of Cambridge Diagnostics Ireland Limited (CDIL).
He was employed with CDIL since 1987. Before joining CDIL he worked with Fleming GmbH as Research
& Development Manager. Dr Walsh has a degree in Chemistry and a PhD in Microbiology from
University College Galway. Dr Walsh remains on the Board as a non executive director of the
Company.
35
Denis R. Burger, PhD, Non-executive director, co-founded Trinity Biotech in June 1992 and acted as
Chairman from June 1992 to May 1995. He is currently a non-executive director of the Company and
serves as an independent director on the boards of two other NASDAQ-listed companies. Until March
2007, Dr Burger was the Chairman and Chief Executive Officer of AVI Biopharma Inc, an Oregon based
bio-technology Company. He was also a co-founder and, from 1981 to 1990, Chairman of Epitope Inc.
In addition, Dr Burger has held a professorship in the Department of Microbiology and Immunology
and Surgery (Surgical Oncology) at the Oregon Health Sciences University in Portland. Dr Burger
received his degree in Bacteriology and Immunology from the University of California in Berkeley in
1965 and his Master of Science and PhD in 1969 in Microbiology and Immunology from the University
of Arizona.
Peter Coyne, Non-executive director, joined the board of Trinity Biotech in November 2001 as a
non-executive director. Mr Coyne is a director of AIB Corporate Finance, a subsidiary of AIB Group
plc, the Irish banking group. He has extensive experience in advising public and private groups on
all aspects of corporate strategy. Prior to joining AIB, Mr Coyne trained as a chartered
accountant and was a senior manager in Arthur Andersens Corporate Financial Services practice. Mr
Coyne holds a Bachelor of Engineering degree from University College Dublin and is a Fellow of the
Institute of Chartered Accountants in Ireland.
Kevin Tansley, Chief Financial Officer, joined Trinity Biotech in June 2003 and was appointed Chief
Financial Officer and Secretary to the Board of Directors in November 2007. Prior to joining
Trinity Biotech in 2003, Mr Tansley held a number of financial positions in the Irish electricity
utility ESB. Mr Tansley holds a Bachelor of Commerce degree from University College Dublin and is a
Fellow of the Institute of Chartered Accountants in Ireland.
Compensation of Directors and Officers
The basis for the executive directors remuneration and level of annual bonuses is determined by
the Remuneration Committee of the board. In all cases, bonuses and the granting of share options
are subject to stringent performance criteria. The Remuneration Committee consists of Dr Denis
Burger (committee chairman and senior independent director), Mr Peter Coyne and Mr Ronan OCaoimh.
Directors remuneration shown below comprises salaries, pension contributions and other benefits
and emoluments in respect of executive directors. Non-executive directors are remunerated by fees
and the granting of share options. Non-executive directors who perform additional services on the
audit committee or Remuneration Committee receive additional fees. The fees payable to
non-executive directors are determined by the board. Each director is reimbursed for expenses
incurred in attending meetings of the board of directors.
Total directors and non-executive directors remuneration, excluding pension, for the year ended
December 31, 2007 amounted to US$2,370,000. The pension charge for the year amounted to US$147,000.
See Item 18, note 6 to the consolidated financial statements. The split of directors remuneration
set out by director is detailed in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined |
|
|
|
|
|
|
|
|
|
Salary/ |
|
|
Performance |
|
|
contribution |
|
|
Total |
|
|
Total |
|
|
|
Benefits |
|
|
related bonus |
|
|
pension |
|
|
2007 |
|
|
2006 |
|
Director |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Ronan OCaoimh |
|
|
656 |
|
|
|
207 |
|
|
|
64 |
|
|
|
927 |
|
|
|
854 |
|
Brendan Farrell |
|
|
509 |
|
|
|
125 |
|
|
|
47 |
|
|
|
681 |
|
|
|
602 |
|
Rory Nealon |
|
|
365 |
|
|
|
124 |
|
|
|
20 |
|
|
|
509 |
|
|
|
377 |
|
Jim Walsh |
|
|
169 |
|
|
|
85 |
|
|
|
16 |
|
|
|
270 |
|
|
|
399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,699 |
|
|
|
541 |
|
|
|
147 |
|
|
|
2,387 |
|
|
|
2,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Total |
|
Non-executive |
|
Fees |
|
|
2007 |
|
|
2006 |
|
director |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Denis R. Burger |
|
|
65 |
|
|
|
65 |
|
|
|
50 |
|
Peter Coyne |
|
|
65 |
|
|
|
65 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130 |
|
|
|
130 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial |
|
|
|
|
|
|
|
|
|
Defined |
|
|
|
|
|
|
|
Officer & |
|
Salary/ |
|
|
Performance |
|
|
contribution |
|
|
Total |
|
|
Total |
|
Company |
|
Benefits |
|
|
related bonus |
|
|
pension |
|
|
2007 |
|
|
2006 |
|
Secretary |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Kevin Tansley * |
|
|
53 |
|
|
|
|
|
|
|
2 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53 |
|
|
|
|
|
|
|
2 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
appointed November 1, 2007 |
As at December 31, 2007 there are no amounts which are set aside or accrued by the Company or its
subsidiaries to provide pension, retirement or similar benefits for the directors.
The total share-based compensation expense recognised in the consolidated statement of operations
in 2007 in respect of options granted to both executive and non executive directors amounted to
US$920,000. See Item 18, note 6 to the consolidated financial statements.
No options were granted to the directors during 2007. The directors were granted 860,000 share
options during 2006.
In addition, see Item 7 Major Shareholders and Related Party Transactions for further information
on the compensation of Directors and Officers.
Board Practices
The Articles of Association of Trinity Biotech provide that one third of the directors in office
(other than the Managing Director or a director holding an executive office with Trinity Biotech)
or, if their number is not three or a multiple of three, then the number nearest to but not
exceeding one third, shall retire from office at every annual general meeting. If at any annual
general meeting the number of directors who are subject to retirement by rotation is two, one of
such directors shall retire and if the number of such directors is one that director shall retire.
Retiring directors may offer themselves for re-election. The directors to retire at each annual
general meeting shall be the directors who have been longest in office since their last
appointment. As between directors of equal seniority the directors to retire shall, in the
absence of agreement, be selected from among them by lot.
In accordance with the Articles of Association of the Company, Mr. Denis Burger will retire by
rotation and, being eligible, offer himself for re-election at the Annual General Meeting of the
Company.
The board has established audit, remuneration and compensation committees. The functions and
membership of the Remuneration Committee are described above. The Audit Committee reviews the
Groups annual and interim financial statements and reviews reports on the effectiveness of the
Groups internal controls. It also appoints the external auditors, reviews the scope and results of
the external audit and monitors the relationship with the auditors. The Audit Committee comprises
the two independent non-executive directors of the Group, Mr Peter Coyne (committee chairman) and
Dr Denis Burger. The Compensation Committee comprises Mr Ronan OCaoimh (Committee Chairman), Mr
Brendan Farrell and Mr Rory Nealon. The Compensation Committee administers the Employee Share
Option Plan. The Committee determines the exercise price and the term of the options. Options
granted to the members of the Committee are approved by the Remuneration Committee and individual
option grants in excess of 30,000 shares are approved by the full board of directors. Share options
granted to non-executive directors are decided by the other members of the board.
Because Trinity Biotech is a foreign private issuer, it is not required to comply with all of the
corporate governance requirements set forth in NASDAQ Rule 4350 as they apply to U.S. domestic
companies. The Groups corporate governance measures differ in the following significant ways.
First, the Audit Committee of the Group currently consists of two members while U.S. domestic
companies listed on NASDAQ are required to have three members on their audit committee. Second,
the board of directors of the Group has only two independent, non-executive directors, while U.S.
domestic companies are required to have a majority of independent directors on their board. In
addition, the Group has not appointed an independent nominations committee or adopted a board
resolution addressing the nominations process. Finally, the Groups Executive Chairman serves on
the Groups Remuneration Committee with two non-executive independent directors, while U.S.
domestic companies are required to have executive officer compensation determined by a
remuneration committee comprised solely of independent directors or a majority of the independent
directors.
37
Employees
As of December 31, 2007, Trinity Biotech had 762 employees (2006: 826) consisting of 48 research
scientists and technicians, 450 manufacturing and quality assurance employees, and 264 finance,
administration and marketing staff (2006: a research director and 44 research scientists and
technicians, 520 manufacturing and quality assurance employees, and 261 finance, administration and
marketing staff). Trinity Biotechs future hiring levels will depend on the growth of revenues.
The geographic spread of the Groups employees was as follows: 312 in Bray, Co. Wicklow, Ireland,
317 in its US operations, 97 in Germany, 12 in the United Kingdom, 18 in France and 6 in Sweden.
Stock Option Plan
The board of directors has adopted the Employee Share Option Plan, as most recently updated in
2006, (the Plan), the purpose of which is to provide Trinity Biotechs employees, consultants,
officers and directors with additional incentives to improve Trinity Biotechs ability to attract,
retain and motivate individuals upon whom Trinity Biotechs sustained growth and financial success
depends. The Plan is administered by a Compensation Committee designated by the board of
directors. Options under the Plan may be awarded only to employees, officers, directors and
consultants of Trinity Biotech.
The exercise price of options is determined by the Compensation Committee. The term of an option
will be determined by the Compensation Committee, provided that the term may not exceed seven
years from the date of grant. All options will terminate 90 days after termination of the option
holders employment, service or consultancy with Trinity Biotech (or one year after such
termination because of death or disability) except where a longer period is approved by the board
of directors. Under certain circumstances involving a change in control of Trinity Biotech, the
Committee may accelerate the exercisability and termination of options. As of February 29, 2008,
4,977,083 of the options outstanding were held by directors and officers of Trinity Biotech.
As of February 29, 2008 the following options were outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of A |
|
|
Range of |
|
|
Range of |
|
|
|
Ordinary Shares |
|
|
Exercise Price |
|
|
Exercise Price |
|
|
|
Subject to Option |
|
|
per Ordinary Share |
|
|
per ADS |
|
|
Total options outstanding |
|
|
7,788,878 |
|
|
US$0.98-US$4.00 |
|
|
US$ |
3.92-US$16.00 |
|
In addition, in January 2004, the Group completed a private placement and as part of this the
investors were granted five year warrants to purchase an aggregate of 1,058,824 A Ordinary Shares
of Trinity Biotech at an exercise price of US$5.25 per ordinary share and the agent received
200,000 warrants to purchase 200,000 A Ordinary Shares of Trinity Biotech at an exercise price of
US$5.25 per ordinary share. As of February 29, 2008 there were warrants to purchase 1,258,824 A
Ordinary Shares in the Group outstanding.
Item 7
Major Shareholders and Related Party Transactions
As of February 29, 2008 Trinity Biotech has outstanding 74,756,765 A Ordinary shares and 700,000
B Ordinary shares. Such totals exclude 9,047,702 shares issuable upon the exercise of
outstanding options and warrants.
The following table sets forth, as of February 29, 2008, the Trinity Biotech A Ordinary Shares
and B Ordinary Shares beneficially held by (i) each person believed by Trinity Biotech to
beneficially hold 5% or more of such shares, (ii) each director and officer of Trinity Biotech, and
(iii) all officers and directors as a group.
Except as otherwise noted, all of the persons and groups shown below have sole voting and
investment power with respect to the shares indicated. The Group is not controlled by another
corporation or government.
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of A |
|
|
Percentage |
|
|
Number of B |
|
|
Percentage |
|
|
Percentage |
|
|
|
Ordinary Shares |
|
|
Outstanding |
|
|
Ordinary Shares |
|
|
Outstanding |
|
|
Total |
|
|
|
Beneficially |
|
|
A Ordinary |
|
|
Beneficially |
|
|
B Ordinary |
|
|
Voting |
|
|
|
Owned |
|
|
Shares |
|
|
Owned |
|
|
Shares |
|
|
Power |
|
|
Ronan OCaoimh |
|
|
4,837,287 |
(1) |
|
|
6.4 |
% |
|
|
|
|
|
|
|
|
|
|
6.3 |
% |
Brendan Farrell |
|
|
1,934,135 |
(2) |
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
2.5 |
% |
Rory Nealon |
|
|
531,250 |
(3) |
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
|
|
0.7 |
% |
Jim Walsh |
|
|
1,889,240 |
(4) |
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
2.5 |
% |
Denis R. Burger |
|
|
182,833 |
(5) |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
0.2 |
% |
Peter Coyne |
|
|
155,833 |
(6) |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
0.2 |
% |
Kevin Tansley |
|
|
39,999 |
(7) |
|
|
0.05 |
% |
|
|
|
|
|
|
|
|
|
|
0.05 |
% |
Potenza Investments
Inc,
(Potenza)
Statenhof Building,
Reaal 2A 23 50AA
Leiderdorp
Netherlands |
|
|
|
|
|
|
|
|
|
|
500,000 |
(8) |
|
|
71.4 |
% |
|
|
1.3 |
% |
Officers and
Directors as a
group (7 persons) |
|
|
9,570,577 |
(1)(2)(3)(4)(5)(6)(7) |
|
|
12.55 |
% |
|
|
|
|
|
|
|
|
|
|
12.0 |
% |
|
|
|
(1) |
|
Includes 1,145,832 shares issuable upon exercise of options. |
|
(2) |
|
Includes 1,345,000 shares issuable upon exercise of options. |
|
(3) |
|
Includes 331,250 shares issuable upon exercise of options. |
|
(4) |
|
Includes 535,625 shares issuable upon exercise of options. |
|
(5) |
|
Includes 135,833 shares issuable upon exercise of options. |
|
(6) |
|
Includes 155,833 shares issuable upon exercise of options. |
|
(7) |
|
Includes 39,999 shares issuable upon exercise of options. |
|
(8) |
|
These B shares have two votes per share. |
Related Party Transactions
The Group has entered into various arrangements with JRJ Investments (JRJ), a partnership owned
by Mr OCaoimh and Dr Walsh, directors of Trinity Biotech, and directly with Mr OCaoimh and Dr
Walsh, to provide for current and potential future needs to extend its premises at IDA Business
Park, Bray, Co. Wicklow, Ireland.
In July 2000, Trinity Biotech entered into an agreement with JRJ pursuant to which the Group took a
lease of a 25,000 square foot premises adjacent to the existing facility for a term of 20 years at
a rent of 7.62 per square foot for an annual rent of 190,000 (US$260,000). During 2006,
the rent on this property was reviewed and increased to 11.00 per square foot, resulting in an
annual rent of 275,000 (US$377,000).
In November 2002, the Group entered into an agreement for a 25 year lease with JRJ for offices that
have been constructed adjacent to its premises at IDA Business Park, Bray, Co. Wicklow, Ireland.
The annual rent of 381,000 (US$522,000) is payable from January 1, 2004.
39
In December 2007, the Group entered into an agreement with Mr OCaoimh and Dr Walsh pursuant to
which the Group took a lease on an additional 43,860 square foot manufacturing facility in Bray,
Ireland at a rate of 17.94 per square foot (including fit out) giving a total annual rent of
787,000 (US$1,158,000).
Independent valuers have advised the Group that the rent in respect of each of the leases
represents a fair market rent.
Trinity Biotech and its directors (excepting Mr OCaoimh and Dr Walsh who express no opinion on
this point) believe that the arrangements entered into represent a fair and reasonable basis on
which the Group can meet its ongoing requirements for premises.
Rayville Limited, an Irish registered company, which is wholly owned by the four executive
directors and certain other executives of the Group, owns all of the B non-voting Ordinary Shares
in Trinity Research Limited, one of the Groups subsidiaries. The B shares do not entitle the
holders thereof to receive any assets of the company on a winding up. All of the A voting
ordinary shares in Trinity Research Limited are held by the Group. Trinity Research Limited may,
from time to time, declare dividends to Rayville Limited and Rayville Limited may declare dividends
to its shareholders out of those amounts. Any such dividends paid by Trinity Research Limited are
ordinarily treated as a compensation expense by the Group in the consolidated financial statements
prepared in accordance with IFRS, notwithstanding their legal form of dividends to minority
interests, as this best represents the substance of the transactions.
In December 2006, the Remuneration Committee of the Board approved the payment of a dividend of
US$5,331,000 by Trinity Research Limited to Rayville Limited on the B shares held by it. This
amount was then lent back by Rayville to Trinity Research Limited. This loan was partially used to
fund executive compensation in 2007 and will fund future executive compensation over the next
number of years under the arrangement described above, with the amount of such funding being
reflected in compensation expense over the corresponding period. As the dividend is matched by a
loan from Rayville Limited to Trinity Research Limited which is repayable solely at the discretion
of the Remuneration Committee of the Board and is unsecured and interest free, the Group netted the
dividend paid to Rayville Limited against the corresponding loan from Rayville Limited in the 2007
and 2006 consolidated financial statements.
The amount of payments to Rayville included in compensation expense was US$1,410,000, US$1,911,000
and US$2,061,000 for 2005, 2006 and 2007 respectively, of which US$1,333,000, US$1,779,000 and
US$1,867,000 respectively related to the key management personnel of the Group. There were no
dividends payable to Rayville Limited as of December 31, 2005, 2006 or 2007. Of the US$2,061,000
of payments made to Rayville Limited in 2007, US$955,000 represented repayments of the loan to
Trinity Research Limited referred to above.
Item 8 Financial Information
Legal Proceedings
Trinity Biotech was not involved in any significant legal proceedings during 2007. A legal dispute
regarding the distribution agreements with Inverness Medical Innovations Inc. was settled in August
2006.
Item 9 The Offer and Listing
Trinity Biotechs American Depository Shares (ADSs) are listed on the NASDAQ National Cap Market
under the symbol TRIB. In 2005, the Trinity Biotech adjusted the ratio of American Depository
Receipts (ADSs) to Ordinary Shares and changed its NASDAQ Listing from the NASDAQ Small Capital
listing to a NASDAQ National Market Listing. The ratio of ADSs to underlying Ordinary Shares has
changed from 1 ADS : 1 Ordinary Share to 1 ADS : 4 Ordinary Shares and all historical data has
been restated as a result.
40
The Groups A Ordinary Shares were also listed and traded on the Irish Stock Exchange until
November 2007, whereby the Company de-listed from the Irish Stock Exchange. The Groups
depository bank for ADSs is The Bank of New York. On February 29, 2008, the reported closing sale
price of the ADSs was US$4.58 per ADS. The following tables set forth the range of quoted high
and low sale prices of Trinity Biotechs ADSs for (a) the years ended December 31, 2003, 2004,
2005, 2006 and 2007; (b) the quarters ended March 31, June 30, September 30 and December 31, 2006;
March 31, June 30, September 30 and December 31, 2007; and (c) the months of March, April, May,
June, July, August, September, October, November and December 2007 and January and February 2008
as reported on NASDAQ. These quotes reflect inter-dealer prices without retail mark-up, mark-down
or commission and may not necessarily represent actual transactions.
|
|
|
|
|
|
|
|
|
|
|
ADSs |
|
|
|
High |
|
|
Low |
|
Year Ended December 31 |
|
|
|
|
|
|
|
|
2003 |
|
$ |
26.88 |
|
|
$ |
5.00 |
|
2004 |
|
$ |
23.96 |
|
|
$ |
9.40 |
|
2005 |
|
$ |
11.72 |
|
|
$ |
6.28 |
|
2006 |
|
$ |
9.54 |
|
|
$ |
7.09 |
|
2007 |
|
$ |
11.75 |
|
|
$ |
5.72 |
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
|
|
|
|
|
|
Quarter ended March 31 |
|
$ |
9.31 |
|
|
$ |
8.20 |
|
Quarter ended June 30 |
|
$ |
9.51 |
|
|
$ |
7.45 |
|
Quarter ended September 30 |
|
$ |
9.30 |
|
|
$ |
7.09 |
|
Quarter ended December 31 |
|
$ |
9.54 |
|
|
$ |
8.34 |
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
|
|
|
|
|
|
Quarter ended March 31 |
|
$ |
10.45 |
|
|
$ |
8.68 |
|
Quarter ended June 30 |
|
$ |
11.74 |
|
|
$ |
9.13 |
|
Quarter ended September 30 |
|
$ |
11.75 |
|
|
$ |
10.05 |
|
Quarter ended December 31 |
|
$ |
11.40 |
|
|
$ |
5.72 |
|
|
|
|
|
|
|
|
|
|
Month Ended |
|
|
|
|
|
|
|
|
March 31, 2007 |
|
$ |
10.05 |
|
|
$ |
8.81 |
|
April 30, 2007 |
|
$ |
10.82 |
|
|
$ |
9.13 |
|
May 31, 2007 |
|
$ |
11.28 |
|
|
$ |
10.51 |
|
June 30, 2007 |
|
$ |
11.74 |
|
|
$ |
11.11 |
|
July 31, 2007 |
|
$ |
11.75 |
|
|
$ |
10.33 |
|
August 31, 2007 |
|
$ |
11.45 |
|
|
$ |
10.05 |
|
September 30, 2007 |
|
$ |
11.41 |
|
|
$ |
10.25 |
|
October 31, 2007 |
|
$ |
11.40 |
|
|
$ |
8.76 |
|
November 30, 2007 |
|
$ |
9.28 |
|
|
$ |
8.10 |
|
December 31, 2007 |
|
$ |
8.45 |
|
|
$ |
5.72 |
|
January 31, 2008 |
|
$ |
6.95 |
|
|
$ |
6.20 |
|
February 29, 2008 |
|
$ |
6.55 |
|
|
$ |
4.52 |
|
The number of record holders of Trinity Biotechs ADSs as at February 29, 2008 amounts to 431,
inclusive of those brokerage firms and/or clearing houses holding Trinity Biotechs securities for
their clientele (with each such brokerage house and/or clearing house being considered as one
holder).
41
Item 10 Memorandum and
Articles of Association
Objects
The Companys objects, detailed in Clause 3 of its Memorandum of Association, are varied and wide
ranging and include principally researching, manufacturing, buying, selling and distributing all
kinds of patents, pharmaceutical, medicinal and diagnostic preparations, equipment, drugs and
accessories. They also include the power to acquire shares or other interests or securities in
other companies or businesses and to exercise all rights in relation thereto. The Companys
registered number in Ireland is 183476.
Powers and Duties of Directors
A director may enter into a contract and be interested in any contract or proposed contract with
the Company either as vendor, purchaser or otherwise and shall not be liable to account for any
profit made by him resulting therefrom provided that he has first disclosed the nature of his
interest in such a contract at a meeting of the board as required by Section 194 of the Irish
Companies Act 1963. Generally, a director must not vote in respect of any contract or arrangement
or any proposal in which he has a material interest (otherwise than by virtue of his holding of
shares or debentures or other securities in or through the Group). In addition, a director shall
not be counted in the quorum at a meeting in relation to any resolution from which he is barred
from voting.
A director is entitled to vote and be counted in the quorum in respect of certain arrangements in
which he is interested (in the absence of some other material interest). These include the giving
of a security or indemnity to him in respect of money lent or obligations incurred by him for the
Group, the giving of any security or indemnity to a third party in respect of a debt or obligation
of the Group for which he has assumed responsibility, any proposal concerning an offer of shares or
other securities in which he may be interested as a participant in the underwriting or
sub-underwriting and any proposal concerning any other company in which he is interested provided
he is not the holder of or beneficially interested in 1% or more of the issued shares of any class
of share capital of such company or of voting rights.
The Board may exercise all the powers of the Group to borrow money but it is obliged to restrict
these borrowings to ensure that the aggregate amount outstanding of all monies borrowed by the
Group does not, without the previous sanction of an ordinary resolution of the Company, exceed an
amount equal to twice the adjusted capital and reserves (both terms as defined in the Articles of
Association). However, no lender or other person dealing with the Group shall be obliged to see or
to inquire whether the limit imposed is observed and no debt incurred in excess of such limit will
be invalid or ineffectual unless the lender has express notice at the time when the debt is
incurred that the limit was or was to be exceeded.
Directors are not required to retire upon reaching any specific age and are not required to hold
any shares in the capital of the Group. The Articles provide for retirement of the directors by
rotation.
All of the above mentioned powers of directors may be varied by way of a special resolution of the
shareholders.
Rights, Preferences and Restrictions Attaching to Shares
The A Ordinary Shares and the B Ordinary Shares rank pari passu in all respects save that the
B Ordinary Shares have two votes per share and the right to receive dividends and participate in
the distribution of the assets of the Company upon liquidation or winding up at a rate of twice
that of the A Ordinary Shares.
Where a shareholder or person who appears to be interested in shares fails to comply with a request
for information from the Company in relation to the capacity in which such shares or interest are
held, who is interested in them or whether there are any voting arrangements, that shareholder or
person may be disenfranchised and thereby restricted from transferring the shares and voting rights
or receiving any sums in respect thereof (except in the case of a liquidation). In addition, if
cheques in respect of the last three dividends paid to a shareholder remain uncashed, the Company
is, subject to compliance with the procedure set out in the Articles of Association, entitled to
sell the shares of that shareholder.
At a general meeting, on a show of hands, every member who is present in person or by proxy and
entitled to vote shall have one vote (so, however, that no individual shall have more than one
vote) and upon a poll, every member present in person or by proxy shall have one vote for every
share carrying voting rights of which he is the holder. In the case of joint holders, the vote of
the senior (being the first person named in the register of members in respect of the joint
holding) who tendered a vote, whether in person or by proxy, shall be accepted to the exclusion of
votes of the other joint holders.
42
One third of the directors other than an executive director or, if their number is not three or a
multiple of three, then the number nearest to but not exceeding one third, shall retire from office
at each annual general meeting. If, however, the number of directors subject to retirement by
rotation is two, one of such directors shall retire. If the number is one, that director shall
retire. The directors to retire at each annual general meeting shall be the ones who have been
longest in office since their last appointment. Where directors are of equal seniority, the
directors to retire shall, in the absence of agreement, be selected by lot. A retiring director
shall be eligible for re-appointment and shall act as director throughout the meeting at which he
retires. A separate motion must be put to a meeting in respect of each director to be appointed
unless the meeting itself has first agreed that a single resolution is acceptable without any vote
being given against it.
The Company may, subject to the provisions of the Companies Acts, 1963 to 2007 of Ireland, issue
any share on the terms that it is, or at the option of the Company is to be liable, to be redeemed
on such terms and in such manner as the Company may determine by special resolution. Before
recommending a dividend, the directors may reserve out of the profits of the Company such sums as
they think proper which shall be applicable for any purpose to which the profits of the Company may
properly be applied and, pending such application, may be either employed in the business of the
Company or be invested in such investments (other than shares of the Company or of its holding
company (if any)) as the directors may from time to time think fit.
Subject to any conditions of allotment, the directors may from time to time make calls on members
in respect of monies unpaid on their shares. At least 14 days notice must be given of each call.
A call shall be deemed to have been made at the time when the directors resolve to authorise such
call.
The Articles do not contain any provisions discriminating against any existing or prospective
holder of securities as a result of such shareholder owning a substantial number of shares.
Action Necessary to Change the Rights of Shareholders
In order to change the rights attaching to any class of shares, a special resolution passed at a
class meeting of the holders of such shares is required. The provisions in relation to general
meetings apply to such class meetings except the quorum shall be two persons holding or
representing by proxy at least one third in nominal amount of the issued shares of that class. In
addition, in order to amend any provisions of the Articles of Association in relation to rights
attaching to shares, a special resolution of the shareholders as a whole is required.
Calling of AGMs and EGMs of Shareholders
The Company must hold a general meeting as its annual general meeting each year. Not more than 15
months can elapse between annual general meetings. The annual general meetings are held at such
time and place as the directors determine and all other general meetings are called extraordinary
general meetings. Every general meeting shall be held in Ireland unless all of the members
entitled to attend and vote at it consent in writing to it being held elsewhere or a resolution
providing that it be held elsewhere was passed at the preceding annual general meeting. The
directors may at any time call an extraordinary general meeting and such meetings may also be
convened on such requisition, or in default may be convened by such requisitions, as is provided by
the Companies Acts, 1963 to 2007 of Ireland.
In the case of an annual general meeting or a meeting at which a special resolution is proposed, 21
clear days notice of the meeting is required and in any other case it is seven clear days notice.
Notice must be given in writing to all members and to the auditors and must state the details
specified in the Articles of Association. A general meeting (other than one at which a special
resolution is to be proposed) may be called on shorter notice subject to the agreement of the
auditors and all members entitled to attend and vote at it. In certain circumstances provided in
the Companies Acts, 1963 to 2007 of Ireland, extended notice is required. These include removal of
a director. No business may be transacted at a general meeting unless a quorum is present. Five
members present in person or by proxy (not being less than five individuals) representing not less
than 40% of the ordinary shares shall be a quorum. The Company is not obliged to serve notices
upon members who have addresses outside Ireland and the US but otherwise there are no limitations
in the Articles of Association or under Irish law restricting the rights of non-resident or foreign
shareholders to hold or exercise voting rights on the shares in the Company.
However, the Financial Transfers Act, 1992 and regulations made thereunder prevent transfers of
capital or payments between Ireland and certain countries. These restrictions on financial
transfers are more comprehensively described in Exchange Controls below. In addition, Irish
competition law may restrict the acquisition by a party of shares in the Company but this does not
apply on the basis of nationality or residence.
43
Other Provisions of the Memorandum and Articles of Association
The Memorandum and Articles of Association do not contain any provisions:
|
|
|
which would have an effect of delaying, deferring or preventing a change in control of the
Company and which would operate only with respect to a merger, acquisition or corporate
restructuring involving the Company (or any of its subsidiaries); or |
|
|
|
|
governing the ownership threshold above which a shareholder ownership must be disclosed; or |
|
|
|
|
imposing conditions governing changes in the capital which are more stringent than is
required by Irish law. |
The Company incorporates by reference all other information concerning its Memorandum and Articles
of Association from the Registration Statement on Form F-1 on June 12, 1992.
Irish Law
Pursuant to Irish law, Trinity Biotech must maintain a register of its shareholders. This register
is open to inspection by shareholders free of charge and to any member of the public on payment of
a small fee. The books containing the minutes of proceedings of any general meeting of Trinity
Biotech are required to be kept at the registered office of the Company and are open to the
inspection of any member without charge. Minutes of meetings of the Board of Directors are not open
to scrutiny by shareholders. Trinity Biotech is obliged to keep proper books of account. The
shareholders have no statutory right to inspect the books of account. The only financial records,
which are open to the shareholders, are the financial statements, which are sent to shareholders
with the annual report. Irish law also obliges Trinity Biotech to file information relating to
certain events within the Company (new share capital issues, changes to share rights, changes to
the Board of Directors). This information is filed with the Companies Registration Office (the
CRO) in Dublin and is open to public inspection. The Articles of Association of Trinity Biotech
permit ordinary shareholders to approve corporate matters in writing provided that it is signed by
all the members for the time being entitled to vote and attend at general meeting. Ordinary
shareholders are entitled to call a meeting by way of a requisition. The requisition must be signed
by ordinary shareholders holding not less than one-tenth of the paid up capital of the Company
carrying the right of voting at general meetings of the Company. Trinity Biotech is generally
permitted, subject to company law, to issue shares with preferential rights, including preferential
rights as to voting, dividends or rights to a return of capital on a winding up of the Company.
Any shareholder who complains that the affairs of the Company are being conducted or that the
powers of the directors of the Company are being exercised in a manner oppressive to him or any of
the shareholders (including himself), or in disregard of his or their interests as shareholders,
may apply to the Irish courts for relief. Shareholders have no right to maintain proceedings in
respect of wrongs done to the Company.
Ordinarily, our directors owe their duties only to Trinity Biotech and not its shareholders. The
duties of directors are twofold, fiduciary duties and duties of care and skill. Fiduciary duties
are owed by the directors individually and owed to Trinity Biotech. Those duties include duties to
act in good faith towards Trinity Biotech in any transaction, not to make use of any money or other
property of Trinity Biotech, not to gain directly or indirectly any improper advantage for himself
at the expense of Trinity Biotech, to act bona fide in the interests of Trinity Biotech and
exercise powers for the proper purpose. A director need not exhibit in the performance of his
duties a greater degree of skill than may reasonably be expected from a person of his knowledge and
experience. When directors, as agents in transactions, make contracts on behalf of the Company,
they generally incur no personal liability under these contracts.
It is Trinity Biotech, as principal, which will be liable under them, as long as the directors have
acted within Trinity Biotechs objects and within their own authority. A director who commits a
breach of his fiduciary duties shall be liable to Trinity Biotech for any profit made by him or for
any damage suffered by Trinity Biotech as a result of the breach. In addition to the above, a
breach by a director of his duties may lead to a sanction from a Court including damages of
compensation, summary dismissal of the director, a requirement to account to Trinity Biotech for
profit made and restriction of the director from acting as a director in the future.
Material Contracts
See Item 4 History and Development of the Company regarding acquisitions made by the Group.
44
Exchange Controls and Other Limitations
Affecting Security Holders
Irish exchange control regulations ceased to apply from and after December 31, 1992. Except as
indicated below, there are no restrictions on non-residents of the Republic of Ireland dealing in
domestic securities which includes shares or depository receipts of Irish companies such as
Trinity Biotech, and dividends and redemption proceeds, subject to the withholding where
appropriate of withholding tax as described under Item 10, are freely transferable to non-resident
holders of such securities.
The Financial Transfers Act, 1992 was enacted in December 1992. This Act gives power to the
Minister of Finance of the Republic of Ireland to make provision for the restriction of financial
transfers between the Republic of Ireland and other countries. Financial transfers are broadly
defined and include all transfers, which would be movements of funds within the meaning of the
treaties governing the European Communities. The acquisition or disposal of ADSs representing
shares issued by an Irish incorporated company and associated payments may fall within this
definition. In addition, dividends or payments on redemption or purchase of shares, interest
payments, debentures or other securities in an Irish incorporated company and payments on a
liquidation of an Irish incorporated company would fall within this definition. Currently, orders
under this Act prohibit any financial transfer to or by the order of or on behalf of residents of
the Federal Republic of Yugoslavia, Federal Republic of Serbia, Angola and Iraq, any financial
transfer in respect of funds and financial resources belonging to the Taliban of Afghanistan (or
related terrorist organisations), financial transfers to the senior members of the Zimbabwean
government and financial transfers to any persons, groups or entities listed in EU Council
Decision 2002/400/EC of June 17, 2002 unless permission for the transfer has been given by the
Central Bank of Ireland. Trinity Biotech does not anticipate that Irish exchange controls or
orders under the Financial Transfers Act, 1992 will have a material effect on its business.
For the purposes of the orders relating to Iraq and the Federal Republic of Yugoslavia,
reconstituted in 1991 as Serbia and Montenegro, a resident of those countries is a person living
in these countries, a body corporate or entity operating in these countries and any person acting
on behalf of any of these persons.
Any transfer of, or payment for, an ordinary share or ADS involving the government of any country
which is currently the subject of United Nations sanctions, any person or body controlled by any
government or country under United Nations sanctions or any persons or body controlled acting on
behalf of these governments of countries, may be subject to restrictions required under these
sanctions as implemented into Irish law.
Taxation
The following discussion is based on US and Republic of Ireland tax law, statutes, treaties,
regulations, rulings and decisions all as of the date of this annual report. Taxation laws are
subject to change, from time to time, and no representation is or can be made as to whether such
laws will change, or what impact, if any, such changes will have on the statements contained in
this summary. No assurance can be given that proposed amendments will be enacted as proposed, or
that legislative or judicial changes, or changes in administrative practice, will not modify or
change the statements expressed herein.
This summary is of a general nature only. It does not constitute legal or tax advice nor does it
discuss all aspects of Irish taxation that may be relevant to any particular Irish Holder or US
Holder of ordinary shares or ADSs.
This summary does not discuss all aspects of Irish and US federal income taxation that may be
relevant to a particular holder of Trinity Biotech ADSs in light of the holders own circumstances
or to certain types of investors subject to special treatment under applicable tax laws (for
example, financial institutions, life insurance companies, tax-exempt organisations, and non-US
taxpayers) and it does not discuss any tax consequences arising under the laws of taxing
jurisdictions other than the Republic of Ireland and the US federal government. The tax treatment
of holders of Trinity Biotech ADSs may vary depending upon each holders own particular situation.
Prospective purchasers of Trinity Biotech ADSs are advised to consult their own tax advisors as to
the US, Irish or other tax consequences of the purchase, ownership and disposition of such ADSs.
45
US Federal Income Tax Consequences to US Holders
The following is a summary of the material US federal income tax consequences that generally would
apply with respect to the ownership and disposition of Trinity Biotech ADSs, in the case of a
purchaser of such ADSs who is a US Holder (as defined below) and who holds the ADSs as capital
assets. This summary is based on the US Internal Revenue Code of 1986, as amended (the Code),
Treasury Regulations promulgated thereunder, and judicial and administrative interpretations
thereof, all as in effect on the date hereof and all of which are subject to change either
prospectively or retroactively. For the purposes of this summary, a US Holder is: an individual
who is a citizen or a resident of the United States; a corporation created or organised in or under
the laws of the United States or any political subdivision thereof; an estate whose income is
subject to US federal income tax regardless of its source; or a trust that (a) is subject to the
primary supervision of a court within the United States and the control of one or more US persons
or (b) has a valid election in effect under applicable US Treasury regulations to be treated as a
US person.
This summary does not address all tax considerations that may be relevant with respect to an
investment in ADSs. This summary does not discuss all the tax consequences that may be relevant to
a US holder in light of such holders particular circumstances or to US holders subject to special
rules, including persons that are non-US holders, broker dealers, financial institutions, certain
insurance companies, investors liable for alternative minimum tax, tax exempt organisations,
regulated investment companies, non-resident aliens of the US or taxpayers whose functional
currency is not the dollar, persons who hold ADSs through partnerships or other pass-through
entities, persons who acquired their ADSs through the exercise or cancellation of employee stock
options or otherwise as compensation for services, investors that actually or constructively own
10% or more of Trinity Biotechs voting shares, and investors holding ADSs as part of a straddle or
appreciated financial position or as part of a hedging or conversion transaction.
If a partnership or an entity treated as a partnership for US federal income tax purposes owns
ADSs, the US federal income tax treatment of a partner in such a partnership will generally depend
upon the status of the partner and the activities of the partnership. A partnership that owns ADSs,
the partners in such partnership should consult their tax advisors about the US federal income tax
consequences of holding and disposing of ADSs.
This summary does not address the effect of any US federal taxation other than US federal income
taxation. In addition, this summary does not include any discussion of state, local or foreign
taxation. You are urged to consult your tax advisors regarding the foreign and US federal, state
and local tax considerations of an investment in ADSs.
For US federal income tax purposes, US Holders of Trinity Biotech ADSs will be treated as owning
the underlying Class A Ordinary Shares, represented by the ADSs held by them. The gross amount of
any distribution made by Trinity Biotech to US Holders with respect to the underlying shares
represented by the ADSs held by them, including the amount of any Irish taxes withheld from such
distribution, will be treated for US federal income tax purposes as a dividend to the extent of
Trinity Biotechs current and accumulated earnings and profits, as determined for US federal income
tax purposes. The amount of any such distribution that exceeds Trinity Biotechs current and
accumulated earnings and profits will be applied against and reduce a US Holders tax basis in the
holders ADSs, and any amount of the distribution remaining after the holders tax basis has been
reduced to zero will constitute capital gain. The capital gain will be treated as a long-term, or
short-term, capital gain depending on whether or not the holders ADSs have been held for more than
one year as of the date of the distribution.
Dividends paid by Trinity Biotech generally will not qualify for the dividends received deduction
otherwise available to US corporate shareholders.
Subject to complex limitations, any Irish withholding tax imposed on such dividends will be a
foreign income tax eligible for credit against a US Holders US federal income tax liability (or,
alternatively, for deduction against income in determining such tax liability). The limitations
set out in the Code include computational rules under which foreign tax credits allowable with
respect to specific classes of income cannot exceed the US federal income taxes otherwise payable
with respect to each such class of income. Dividends generally will be treated as foreign-source
passive category income or, in the case of certain US Holders, general category income for US
foreign tax credit purposes. Further, there are special rules for computing the foreign tax credit
limitation of a taxpayer who receives dividends subject to a reduced tax, see discussion below.
46
A US Holder will be denied a foreign tax credit with respect to Irish income tax withheld from
dividends received on the ordinary shares to the extent such US Holder has not held the ordinary
shares for at least 16 days of the 31-day period beginning on the date which is 15 days before the
ex-dividend date or to the extent such US Holder is under an obligation to make related payments
with respect to substantially similar or related property. Any days during which a US Holder has
substantially diminished its risk of loss on the ordinary shares are not counted toward meeting the
16-day holding period required by the statute. The rules relating to the determination of the
foreign tax credit are complex, and you should consult with your personal tax advisors to determine
whether and to what extent you would be entitled to this credit.
Subject to certain limitations, qualified dividend income received by a noncorporate US Holder in
tax years beginning on or before December 31, 2010 will be subject to tax at a reduced maximum tax
rate of 15%. Distributions taxable as dividends paid on the ordinary shares should qualify for the
15% rate provided that either: (i) we are entitled to benefits under the income tax treaty between
the United States and Ireland (the Treaty) or (ii) the ADSs are readily tradable on an
established securities market in the US and certain other requirements are met. We believe that we
are entitled to benefits under the Treaty and that the ADSs currently are readily tradable on an
established securities market in the US. However, no assurance can be given that the ordinary
shares will remain readily tradable. The rate reduction does not apply unless certain holding
period requirements are satisfied. With respect to the ADSs, the US Holder must have held such
ADSs for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date.
The rate reduction also does not apply to dividends received from passive foreign investment
companies, see discussion below, or in respect of certain hedged positions or in certain other
situations. The legislation enacting the reduced tax rate contains special rules for computing the
foreign tax credit limitation of a taxpayer who receives dividends subject to the reduced tax rate.
US Holders of Trinity Biotech ADSs should consult their own tax advisors regarding the effect of
these rules in their particular circumstances.
Upon a sale or exchange of ADSs, a US Holder will recognise a gain or loss for US federal income
tax purposes in an amount equal to the difference between the amount realised on the sale or
exchange and the holders adjusted tax basis in the ADSs sold or exchanged. Such gain or loss
generally will be capital gain or loss and will be long-term or short-term capital gain or loss
depending on whether the US Holder has held the ADSs sold or exchanged for more than one year at
the time of the sale or exchange.
For US federal income tax purposes, a foreign corporation is treated as a passive foreign
investment company (or PFIC) in any taxable year in which, after taking into account the income
and assets of the corporation and certain of its subsidiaries pursuant to the applicable look
through rules, either (1) at least 75% of the corporations gross income is passive income or (2)
at least 50% of the average value of the corporations assets is attributable to assets that
produce passive income or are held for the production of passive income. Based on the nature of its
present business operations, assets and income, Trinity Biotech believes that it is not currently
subject to treatment as a PFIC. However, no assurance can be given that changes will not occur in
Trinity Biotechs business operations, assets and income that might cause it to be treated as a
PFIC at some future time.
If Trinity Biotech were to become a PFIC, a US Holder of Trinity Biotech ADSs would be required to
allocate to each day in the holding period for such holders ADSs a pro rata portion of any
distribution received (or deemed to be received) by the holder from Trinity Biotech, to the extent
the distribution so received constitutes an excess distribution, as defined under US federal
income tax law. Generally, a distribution received during a taxable year by a US Holder with
respect to the underlying shares represented by any of the holders ADSs would be treated as an
excess distribution to the extent that the distribution so received, plus all other distributions
received (or deemed to be received) by the holder during the taxable year with respect to such
underlying shares, is greater than 125% of the average annual distributions received by the holder
with respect to such underlying shares during the three preceding years (or during such shorter
period as the US Holder may have held the ADSs). Any portion of an excess distribution that is
treated as allocable to one or more taxable years prior to the year of distribution during which
Trinity Biotech was classified as a PFIC would be subject to US federal income tax in the year in
which the excess distribution is made, but it would be subject to tax at the highest tax rate
applicable to the holder in the prior tax year or years. The holder also would be subject to an
interest charge, in the year in which the excess distribution is made, on the amount of taxes
deemed to have been deferred with respect to the excess distribution. In addition, any gain
recognised on a sale or other disposition of a US Holders ADSs, including any gain recognised on a
liquidation of Trinity Biotech, would be treated in the same manner as an excess distribution. Any
such gain would be treated as ordinary income rather than as capital gain. Finally, the 15% reduced
US federal income tax rate otherwise applicable to dividend income as discussed above, will not
apply to any distribution made by Trinity Biotech in any taxable year in which it is a PFIC (or
made in the taxable year following any such year), whether or not the distribution is an excess
distribution.
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If Trinity Biotech became a PFIC, a US Holder may make a qualifying electing fund election in the
year Trinity Biotech first becomes a PFIC or in the year the holder acquires the shares, whichever
is later. This election provides for a current inclusion of Trinity Biotechs ordinary income and
capital gain income in the US Holders US taxable income. In return, any gain on sale or other
disposition of a US Holders ADSs in Trinity Biotech, if it were classified as a PFIC, will be
treated as capital, and the interest penalty will not be imposed. This election is not made by
Trinity Biotech, but by each US Holder.
Alternatively, if the ADSs are considered marketable stock a US Holder may elect to
mark-to-market its ADSs, and such US Holder would not be subject to the rules described above.
Instead, such US Holder would generally include in income any excess of the fair market value of
the ADSs at the close of each tax year over its adjusted basis in the ADSs. If the fair market
value of the ADSs had depreciated below the US Holders adjusted basis at the close of the tax year,
the US Holder may generally deduct the excess of the adjusted basis of the ADSs over its fair
market value at that time. However, such deductions generally would be limited to the net
mark-to-market gains, if any, that the US Holder included in income with respect to such ADSs in
prior years. Income recognized and deductions allowed under the mark-to-market provisions, as well
as any gain or loss on the disposition of ADSs with respect to which the mark-to-market election is
made, is treated as ordinary income or loss (except that loss is treated as capital loss to the
extent the loss exceeds the net mark-to-market gains, if any, that a US Holder included in income
with respect to such ordinary shares in prior years). However, gain or loss from the disposition
of ordinary shares (as to which a mark-to-market election was made) in a year in which Trinity
Biotech is no longer a PFIC, will be capital gain or loss. The ADSs should be considered
marketable stock if they traded at least 15 days during each calendar quarter of the relevant
calendar year in more than de minimis quantities.
If Trinity Biotech were to become a CFC, each US Holder treated as a US Ten-percent Shareholder
would be required to include in income each year such US Ten-percent Shareholders pro rata share
of Trinity Biotechs undistributed Subpart F income. For this purpose, Subpart F income
generally would include interest, original issue discount, dividends, net gains from the
disposition of stocks or securities, net gains on forward and option contracts, receipts with
respect to securities loans and net payments received with respect to equity swaps and similar
derivatives.
Any undistributed Subpart F income included in a US Holders income for any year would be added to
the tax basis of the US Holders ADSs. Amounts distributed by Trinity Biotech to the US Holder in
any subsequent year would not be subject to further US federal income tax in the year of
distribution, to the extent attributable to amounts so included in the US Holders income in prior
years under the CFC rules but would be treated, instead, as a reduction in the tax basis of the US
Holders ADSs, the PFIC rules discussed above would not apply to any undistributed Subpart F income
required to be included in a US Holders income under the CFC rules, or to the amount of any
distributions received from Trinity Biotech that were attributable to amounts so included.
Distributions made with respect to underlying shares represented by ADSs may be subject to
information reporting to the US Internal Revenue Service and to US backup withholding tax at a rate
equal to the fourth lowest income tax rate applicable to individuals (which, under current law, is
28%). Backup withholding will not apply, however, if the holder (i) is a corporation or comes
within certain exempt categories, and demonstrates its eligibility for exemption when so required,
or (ii) furnishes a correct taxpayer identification number and makes any other required
certification.
Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules
may be credited against a US Holders US tax liability, and a US Holder may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the appropriate claim for
refund with the Internal Revenue Service.
Any US Holder who holds 10% or more in vote or value of Trinity Biotech will be subject to certain
additional United States information reporting requirements.
US Holders may be subject to state or local income and other taxes with respect to their ownership
and disposition of ADSs. US Holders of ADSs should consult their own tax advisers as to the
applicability and effect of any such taxes.
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Republic of Ireland Taxation
For the purposes of this summary, an Irish Holder means a holder of ordinary shares or ADSs
evidenced by ADSs that (i) beneficially owns the ordinary shares or ADSs registered in their name;
(ii) in the case of individual holders, are resident, ordinarily resident and domiciled in Ireland
under Irish taxation laws; (iii) in the case of holders that are companies, are resident in Ireland
under Irish taxation laws; and (iv) are not also resident in any other country under any double
taxation agreement entered into by Ireland.
For Irish taxation purposes, Irish Holders of ADSs will be treated as the owners of the underlying
ordinary shares represented by such ADSs.
Solely for the purposes of this summary of Irish Tax Considerations, a US Holder means a holder
of ordinary shares or ADSs evidenced by ADSs that (i) beneficially owns the ordinary shares or ADSs
registered in their name; (ii) is resident in the United States for the purposes of the Republic of
Ireland/United States Double Taxation Convention (the Treaty); (iii) in the case of an individual
holder, is not also resident or ordinarily resident in Ireland for Irish tax purposes; (iv) in the
case of a corporate holder, is not a resident in Ireland for Irish tax purposes and is not
ultimately controlled by persons resident in Ireland; and (v) is not engaged in any trade or
business in Ireland and does not perform independent personal services through a permanent
establishment or fixed base in Ireland.
The Board of Directors does not expect to pay dividends for the foreseeable future. Should Trinity
Biotech begin paying dividends, such dividends will generally be subject to dividend withholding
tax (DWT) at the standard rate of income tax in force at the time the dividend is paid, currently
20%. Under current legislation, where DWT applies, Trinity Biotech will be responsible for
withholding it at source. DWT will not be withheld where an exemption applies and where Trinity
Biotech has received all necessary documentation from the recipient prior to payment of the
dividend.
Corporate Irish Holders will generally be entitled to claim an exemption from DWT by delivering a
declaration, which confirms that the company is resident in Ireland for tax purposes, to Trinity
Biotech in the form prescribed by the Irish Revenue Commissioners. Such corporate Irish Holders
will generally not otherwise be subject to Irish tax in respect of dividends received.
Individual Irish Holders will be subject to income tax on the gross amount of any dividend (that
is the amount of the dividend received plus any DWT withheld), at their marginal rate of tax
(currently either 20% or 41% depending on the individuals circumstances). Individual Irish
Holders will be able to claim a credit against their resulting income tax liability in respect of
DWT withheld. Individual Irish Holders may, depending on their circumstances, also be subject to
the Irish health levy of up to 2.5% and pay related social insurance contribution of up to 3% in
respect of their dividend income.
Shareholders who are individuals resident in the US (and certain other countries) and who are not
resident or ordinarily resident in Ireland may receive dividends free of DWT where the shareholder
has provided Trinity Biotech with the relevant declaration and residency certificate required by
legislation.
Corporate shareholders that are not resident in Ireland and who are ultimately controlled by
persons resident in the US (or certain other countries) or corporate holders of ordinary shares
resident in a relevant territory (being a country with which Ireland has a double tax treaty, which
includes the United States) or resident in a member state of the European Union other than Ireland
which are not controlled by Irish residents or whose principal class of shares or its 75% parents
principal class of shares are substantially or regularly traded on a recognised stock exchange in a
country with which Ireland has a tax treaty, may receive dividends free of DWT where they provide
Trinity Biotech with the relevant declaration, auditors certificate and Irish Revenue
Commissioners certificate or a certificate from the tax authority in the relevant territory as
required by Irish law.
US resident holders of ordinary shares (as opposed to ADSs) should note that these documentation
requirements may be burdensome. As described below, these documentation requirements do not apply
in the case of holders of ADSs. US resident holders who do not comply with the documentation
requirements or otherwise do not qualify for an exemption may be able to claim treaty benefits
under the treaty. US resident holders who are entitled to benefits under the treaty will be able to
claim a partial refund of DWT from the Irish Revenue Commissioners.
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Special DWT arrangements are available in the case of shares held by US resident holders in Irish
companies through American depository banks using ADSs who enter into intermediary agreements with
the Irish Revenue Commissioners and hence such banks are viewed as qualifying intermediaries under
Irish Tax legislation.
Under such agreements, American depository banks who receive dividends from Irish companies and pay
the dividends on to the US resident ADS holders are allowed to receive and pass on a dividend from
the Irish company on a gross basis (without any withholding) if:
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the depository banks ADS register shows that the direct beneficial owner of the
dividends has a US address on the register, or |
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there is an intermediary between the depository bank and the beneficial shareholder and
the depository bank receives confirmation from the intermediary that the beneficial
shareholders address in the intermediarys records is in the US. |
Where the above procedures have not been complied with and DWT is withheld from dividend payments
to US Holders of ordinary shares or ADSs evidenced by ADSs, such US Holders can apply to the Irish
Revenue Commissioners claiming a full refund of DWT paid by filing a declaration, a certificate of
residency and, in the case of US Holders that are corporations, an auditors certificate, each in
the form prescribed by the Irish Revenue Commissioners.
The DWT rate applicable to US Holders is reduced to 5% under the terms of the Treaty for corporate
US Holders holding 10% or more of our voting shares, and to 15% for other US Holders. While this
will, subject to the application of Article 23 of the Treaty, generally entitle US Holders to claim
a partial refund of DWT from the Irish Revenue Commissioners, US Holders will, in most
circumstances, likely prefer to seek a full refund of DWT under Irish domestic legislation.
Under the Irish Taxes Consolidation Act 1997, non-Irish shareholders may, unless exempted, be
liable to DWT tax on dividends received from Trinity Biotech. Such a shareholder will not suffer
DWT on dividends if the shareholder is:
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an individual resident in the US (or certain other countries with which Ireland has a
double taxation treaty) and who is neither resident nor ordinarily resident in Ireland; or |
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a corporation that is not resident in Ireland and which is ultimately controlled by
persons resident in the US (or certain other countries with which Ireland has a double
taxation treaty); or |
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a corporation that is not resident in Ireland and whose principal class of shares (or
its 75% parents principal class of shares) are substantially or regularly traded on a
recognised stock exchange; or |
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is otherwise entitled to an exemption from DWT. |
Disposals of Ordinary Shares or ADSs
Irish Holders that acquire ordinary shares or ADSs will generally be considered, for Irish tax
purposes, to have acquired their ordinary shares or ADSs at a base cost equal to the amount paid
for the ordinary shares or ADSs. On subsequent dispositions, ordinary shares or ADSs acquired at an
earlier time will generally be deemed, for Irish tax purposes, to be disposed of on a first in
first out basis before ordinary shares or ADSs acquired at a later time. Irish Holders that
dispose of their ordinary shares or ADSs will be subject to Irish capital gains tax (CGT) to the
extent that the proceeds realised from such disposition exceed the indexed base cost of the
ordinary shares or ADSs disposed of and any incidental expenses. The current rate of CGT is 20%.
Indexation of the base cost of the ordinary shares or ADSs will only be available up to December
31, 2002, and only in respect of ordinary shares or ADSs held for more than 12 months prior to
their disposal.
Irish Holders that have unutilised capital losses from other sources in the current, or any
previous tax year, can generally apply such losses to reduce gains realised on the disposal of the
ordinary shares or ADSs.
An annual exemption allows individuals to realise chargeable gains of up to 1,270 in each tax
year without giving rise to CGT. This exemption is specific to the individual and cannot be
transferred between spouses. Irish Holders are required, under Irelands self-assessment system,
to file a tax return reporting any chargeable gains arising to them in a particular tax year.
Where disposal proceeds are received in a currency other than euro they must be translated into
amounts to calculate the amount of any chargeable gain or loss. Similarly, acquisition costs
denominated in a currency other than euro must be translated at the date of acquisition in euro
amounts.
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Irish Holders that realise a loss on the disposition of ordinary shares or ADSs will generally be
entitled to offset such allowable losses against capital gains realised from other sources in
determining their CGT liability in a year. Allowable losses which remain unrelieved in a year may
generally be carried forward indefinitely for CGT purposes and applied against capital gains in
future years.
Transfers between spouses will not give rise to any chargeable gain or loss for CGT purposes with
the acquiring spouse acquiring the same pro rata base cost and acquisition date as that of the
transferring spouse.
US Holders will not be subject to Irish capital gains tax (CGT) on the disposal of ordinary shares
or ADSs provided that such ordinary shares or ADSs are quoted on a stock exchange at the time of
disposition. The stock exchange for this purpose is the Nasdaq National Market (NASDAQ). While it
is our intention to continue the quotation of ADSs on NASDAQ, no assurances can be given in this
regard.
If, for any reason, our ADSs cease to be quoted on NASDAQ, US Holders will not be subject to CGT on
the disposal of their ordinary shares or ADSs provided that the ordinary shares or ADSs do not, at
the time of the disposal, derive the greater part of their value from land, buildings, minerals, or
mineral rights or exploration rights in Ireland.
A gift or inheritance of ordinary shares will be or in the case of ADSs may be within the charge to
capital acquisitions tax, regardless of where the disponer or the donee/successor in relation to
the gift/inheritance is domiciled, resident or ordinarily resident. The capital acquisitions tax is
charged at a rate of 20% on the taxable value of the gift or inheritance above a tax-free
threshold. This tax-free threshold is determined by the amount of the current benefit and of
previous benefits, received within the group threshold since December 5, 1991, which are within the
charge to the capital acquisitions tax and the relationship between the former holder and the
successor. Gifts and inheritances between spouses are not subject to the capital acquisitions tax.
Gifts of up to 3,000 can be received each year from any given individual without triggering a
charge to capital acquisitions tax. Where a charge to Irish CGT and capital acquisitions tax arises
on the same event, capital acquisitions tax payable on the event can be reduced by the amount of
the CGT payable. There should be no clawback of the same event credit of CGT offset against capital
acquisitions tax provided the donee/successor does not dispose of the ordinary shares or ADRs
within two years from the date of gift/inheritance.
The Estate Tax Convention between Ireland and the United States generally provides for Irish
capital acquisitions tax paid on inheritances in Ireland to be credited, in whole or in part,
against tax payable in the United States, in the case where an inheritance of ordinary shares or
ADSs is subject to both Irish capital acquisitions tax and US federal estate tax. The Estate Tax
Convention does not apply to Irish capital acquisitions tax paid on gifts.
Irish stamp duty, which is a tax imposed on certain documents, is payable on all transfers of
ordinary shares of an Irish registered company (other than transfers made between spouses,
transfers made between 90% associated companies, or certain other exempt transfers) regardless of
where the document of transfer is executed. Irish stamp duty is also payable on electronic
transfers of ordinary shares. A transfer of ordinary shares made as part of a sale or gift will
generally be stampable at the ad valorem rate of 1% of the value of the consideration received for
the transfer, or, if higher, the market value of the shares transferred. A minimum stamp duty of
1.00 will apply to a transfer of ordinary shares. Where the consideration for a sale is
expressed in a currency other than euro, the duty will be charged on the euro equivalent calculated
at the rate of exchange prevailing at the date of the transfer.
Transfers of ordinary shares where no beneficial interest passes (e.g. a transfer of shares from a
beneficial owner to a nominee), will generally be exempt from stamp duty if the transfer form
contains an appropriate certification, otherwise a nominal stamp duty rate of 12.50 will apply.
Transfers of ADSs are exempt from Irish stamp duty as long as the ADSs are quoted on any recognised
stock exchange in the US or Canada.
Transfers of ordinary shares from the Depositary or the Depositarys custodian upon surrender of
ADSs for the purposes of withdrawing the underlying ordinary shares from the ADS system, and
transfers of ordinary shares to the Depositary or the Depositarys custodian for the purposes of
transferring ordinary shares onto the ADS system, will be stampable at the ad valorem rate of 1%
of the value of the shares transferred if the transfer relates to a sale or contemplated sale or
any other change in the beneficial ownership of ordinary shares. Such transfers will be exempt
from Irish stamp duty if the transfer does not relate to or involve any change in the beneficial
ownership in the underlying ordinary shares and the transfer form contains the appropriate
certification. In the absence of an appropriate certification, stamp duty will be applied at the
nominal rate of 12.50.
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The person accountable for the payment of stamp duty is the transferee or, in the case of a
transfer by way of gift or for consideration less than the market value, both parties to the
transfer. Stamp duty is normally payable within 30 days after the date of execution of the
transfer. Late or inadequate payment of stamp duty will result in liability for interest, penalties
and fines.
Dividend Policy
Since its inception Trinity Biotech has not declared or paid dividends on its A Ordinary Shares.
Trinity Biotech anticipates, for the foreseeable future, that it will retain any future earnings in
order to fund the business operations of the Group. Trinity Biotech does not, therefore,
anticipate paying any cash or share dividends on its A Ordinary Shares in the foreseeable future.
Any cash dividends or other distributions, if made, are expected to be made in US Dollars, as
provided for by the Articles of Association.
Documents on Display
This annual report and the exhibits thereto and any other document that we have to file pursuant to
the Exchange Act may be inspected without charge and copied at prescribed rates at the Securities
and Exchange Commission public reference room at 100 F Street, N.E., Room 1580, Washington, D.C.
20549; and on the Securities and Exchange Commission Internet site (http://www.sec.gov). You may
obtain information on the operation of the Securities and Exchange Commissions public reference
room in Washington, D.C. by calling the Securities and Exchange Commission at 1-800-SEC-0330 or by
visiting the Securities and Exchange Commissions website at http://www.sec.gov, and may obtain
copies of our filings from the public reference room by calling (202) 551-8090. The Exchange Act
file number for our Securities and Exchange Commission filings is 000-22320.
Item 11
Qualitative and Quantitative Disclosures about Market Risk
Qualitative information about Market Risk
Trinity Biotechs treasury policy is to manage financial risks arising in relation to or as a
result of underlying business needs. The activities of the treasury function, which does not
operate as a profit centre, are carried out in accordance with board approved policies and are
subject to regular internal review. These activities include the Group making use of spot and
forward foreign exchange markets.
Trinity Biotech uses a range of financial instruments (including cash, bank borrowings, convertible
notes, forward contracts, promissory notes and finance leases) to fund its operations. These
instruments are used to manage the liquidity of the Group in a cost effective, low-risk manner.
Working capital management is a key additional element in the effective management of overall
liquidity. Trinity Biotech does not trade in financial instruments or derivatives.
The main risks arising from the utilisation of these financial instruments are interest rate risk,
liquidity risk and foreign exchange risk.
Trinity Biotechs reported net income, net assets and gearing (net debt expressed as a percentage
of shareholders equity) are all affected by movements in foreign exchange rates.
The Group borrows in US dollars at floating and fixed rates of interest. At December 31, 2007
borrowings totalled US$42,133,000 (2006: US$45,294,000), (net of cash: US$33,433,000 (2006: net of
cash and restricted cash: US$26,973,000)), at interest rates ranging from 5% to 6.99% (2006: 3.0%
to 6.87%).
The total year-end borrowings consists of fixed rate debt of US$2,325,000 (2006: US$2,377,000) at
interest rates ranging from 5% to 6.32% (2006: 3% to 5%) and floating rate debt of US$39,808,000
(2006: US$42,917,000) at interest rates ranging from 6.49% to 6.99% (2006: 6.62% to 6.87%). In
broad terms, a one-percentage point increase in interest rates would increase interest income by
US$87,000 (2006: US$183,000) and increase the interest expense by US$401,000 (2006: US$433,000)
resulting in an increase in the net interest charge of US$314,000 (2006: increase by US$246,000).
Long-term borrowing requirements are met by funding in the US and Ireland. Short-term borrowing
requirements are primarily drawn under committed bank facilities. At the year-end, 39% of total
long term borrowings fell due for repayment within one year.
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The majority of the Groups activities are conducted in US Dollars. The primary foreign exchange
risk arises from the fluctuating value of the Groups euro denominated expenses as a result of the
movement in the exchange rate between the US Dollar and the euro. Arising from this, where
considered necessary, the Group pursues a treasury policy which aims to sell US Dollars forward to
match a portion of its uncovered euro expenses at exchange rates lower than budgeted exchange
rates. These forward contracts are primarily cashflow hedging instruments whose objective is to
cover a portion of these euro forecasted transactions. These forward contracts normally have
maturities of less than one year after the balance sheet date. The forward contracts in place at
December 31, 2007 have maturity dates of less than one year after the balance sheet date. Where
necessary, the forward contracts are rolled over at maturity. There were no forward contracts in
place at December 31, 2006.
With an increasing level of euro denominated sales, the Group anticipates that, over the next three
years, a higher proportion of its non-US Dollar expenses will be matched by non-US Dollar revenues.
The Group had foreign currency denominated cash balances equivalent to US$1,659,000 at December
31, 2007 (2006: US$952,000).
Quantitative information about Market Risk
Interest rate sensitivity
Trinity Biotech monitors its exposure to changes in interest and exchange rates by estimating the
impact of possible changes on reported profit before tax and net worth. The Group accepts
interest rate and currency risk as part of the overall risks of operating in different economies
and seeks to manage these risks by following the policies set above.
Trinity Biotech estimates that the maximum effect of a rise of one percentage point in one of the
principal interest rates to which the Group is exposed, without making any allowance for the
potential impact of such a rise on exchange rates, would be an increase in the loss before tax for
2007 by approximately 1%.
The table below provides information about the Groups long term debt obligations, including
variable rate debt obligation which are sensitive to changes in interest rates. The table presents
principal cash flows and related weighted average interest rates by expected maturity dates.
Weighted average variable rates are based on rates set at the balance sheet date. The information
is presented in US Dollars, which is Trinity Biotechs reporting currency.
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|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After |
|
|
|
|
|
|
Fair |
|
Before December 31 |
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
Total |
|
|
value |
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate US$000 |
|
|
15,146 |
|
|
|
8,183 |
|
|
|
8,221 |
|
|
|
8,258 |
|
|
|
|
|
|
|
|
|
|
|
39,808 |
|
|
|
39,808 |
|
Average interest rate |
|
|
6.74 |
% |
|
|
6.74 |
% |
|
|
6.74 |
% |
|
|
6.74 |
% |
|
|
|
|
|
|
|
|
|
|
6.74 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate US$000 |
|
|
674 |
|
|
|
464 |
|
|
|
438 |
|
|
|
460 |
|
|
|
289 |
|
|
|
|
|
|
|
2,325 |
|
|
|
2,318 |
|
Average interest rate |
|
|
5.88 |
% |
|
|
6.28 |
% |
|
|
6.14 |
% |
|
|
6.12 |
% |
|
|
6.12 |
% |
|
|
|
|
|
|
6.09 |
% |
|
|
|
|
Exchange rate sensitivity
At year-end 2007, approximately 6% of the Groups US$136,845,000 net worth (shareholders equity)
was denominated in currencies other than the US Dollar, principally the euro.
A strengthening or weakening of the US Dollar by 10% against all the other currencies in which the
Group operates would not materially reduce the Groups 2007 year-end net worth.
Item 12 Description of Securities Other than Equity Securities
Not applicable.
53
Part II
Item 13 Defaults, Dividend Arrearages and Delinquencies
Not applicable.
Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable.
Item 15 Control and Procedures
Evaluation of Disclosure Controls and Procedures
The Groups disclosure and control procedures are designed so that information required to be
disclosed in reports filed or submitted under the Securities Exchange Act 1934 is prepared and
reported on a timely basis and communicated to management, to allow timely decisions regarding
required disclosure. Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, have evaluated the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Rule 13a-15(d) of the Securities Exchange Act of
1934 as of the end of the period covered by this Form 20-F. The Chief Executive Officer and Chief
Financial Officer have concluded that disclosure controls and procedures were effective as of
December 31, 2007.
In designing and evaluating our disclosure controls and procedures, our management, with the
participation of the Chief Executive Officer and Chief Financial Officer, recognized that any
controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and our management necessarily was required
to apply its judgement in evaluating the cost-benefit relationship of possible controls and
procedures. Because of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud, if any, within the
Group have been detected.
Managements Annual Report on Internal Control over Financial Reporting
The management of Trinity Biotech are responsible for establishing and maintaining adequate
internal control over financial reporting. Trinity Biotechs internal control over financial
reporting is a process designed under the supervision and with the participation of the principal
executive and principal financial officers to provide reasonable assurance regarding the
reliability of financial reporting and preparation of Trinity Biotechs financial statements for
external reporting purposes in accordance with IFRS both as issued by the IASB and as subsequently
adopted by the EU.
Trinity Biotechs internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
transactions and dispositions of assets; provide reasonable assurances that transactions are
recorded as necessary to permit preparation of the financial statements in accordance with IFRS and
that receipts and expenditures are being made only in accordance with the authorization of
management and the directors of Trinity Biotech; and provide reasonable assurance regarding
prevention or timely detection of unauthorised acquisition, use or disposition of Trinity Biotechs
assets that could have a material effect on our financial statements. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect all misstatements.
Also, projections of any evaluation of the effectiveness of internal control to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, and that
the degree of compliance with the policies or procedures may deteriorate.
Management has assessed the effectiveness of internal control over financial reporting based on
criteria established in the Internal Control Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management
has concluded that the Groups internal control over financial reporting was effective as of
December 31, 2007.
Our independent auditor, KPMG, a registered public accounting firm, has issued an attestation
report on the Groups internal control over financial reporting as of December 31, 2007 (see Item
18).
54
Changes in Internal Controls over Financial Reporting
During the 2006 year end financial statement close process, a material weakness was identified in
relation to controls concerning revenue recognition from a cut off perspective. As a result of
this material weakness the Group reviewed internal controls, particularly over the area of revenue
cut off and remediated control weaknesses. Regarding the item specifically mentioned in the Form
20-F for 2006 the Group implemented controls to ensure that instructions provided to third party
logistics providers to ensure that all goods had been collected prior to raising an invoice are
followed and accordingly comply with Group policy.
Except for the matters referred to above, there were no changes to our internal control over
financial reporting that occurred during the period covered by this Form 20-F that have materially
affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Item 16
16A Audit Committee Financial Expert
Mr Peter Coyne is an independent director and a member of the Audit Committee.
Our board of directors has determined that Mr Peter Coyne meets the definition of an audit
committee financial expert, as defined in Item 401 of Regulation S-K.
This determination is made on the basis that Mr Coyne is a Fellow of the Institute of Chartered
Accountants in Ireland and was formerly a senior manager in Arthur Andersens Corporate Financial
Services practice. Mr Coyne is currently a director of AIB Corporate Finance, a subsidiary of AIB
Group plc, the Irish banking group and has extensive experience in advising public and private
groups on all aspects of corporate strategy.
16B Code of Ethics
Trinity Biotech has adopted a code of ethics that applies to the Chief Executive Officer, Chief
Financial Officer, Chief Accounting Officer and all organisation employees. Written copies of the
code of ethics are available free of charge upon request. If we make any substantive amendments to
the code of ethics or grant any waivers, including any implicit waiver, from a provision of these
codes to our Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer, we will
disclose the nature of such amendment or waiver on our website.
16C Principal Accounting fees and services
Fees Billed by Independent Public Accountants
The following table sets forth, for each of the years indicated, the fees billed by our
independent public accountants and the percentage of each of the fees out of the total amount
billed by the accountants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
Year ended December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
|
US$000 |
|
|
% |
|
|
US$000 |
|
|
% |
|
Audit |
|
|
997 |
|
|
|
93 |
% |
|
|
683 |
|
|
|
75 |
% |
Audit-related |
|
|
|
|
|
|
|
|
|
|
206 |
|
|
|
23 |
% |
Tax |
|
|
71 |
|
|
|
7 |
% |
|
|
20 |
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,068 |
|
|
|
|
|
|
|
909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit services include audit of our consolidated financial statements, as well as work only the
independent auditors can reasonably be expected to provide, including statutory audits. Audit
related services are for assurance and related services performed by the independent auditor,
including due diligence related to acquisitions and any special procedures required to meet certain
regulatory requirements. Tax fees consist of fees for professional services for tax compliance and
tax advice.
55
Pre-Approval Policies and Procedures
Our Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit
services rendered by our independent public accountants, KPMG. The policy generally pre-approves
certain specific services in the categories of audit services, audit-related services, and tax
services up to specified amounts, and sets requirements for specific case-by-case pre-approval of
discrete projects, those which may have a material effect on our operations or services over
certain amounts. Pre-approval may be given as part of the Audit Committees approval of the scope
of the engagement of our independent auditor or on an individual basis. The pre-approval of
services may be delegated to one or more of the Audit Committees members, but the decision must be
presented to the full Audit Committee at its next scheduled meeting. The policy prohibits
retention of the independent public accountants to perform the prohibited non-audit functions
defined in Section 201 of the Sarbanes-Oxley Act or the rules of the SEC, and also considers
whether proposed services are compatible with the independence of the public accountants.
Exemptions from the Listing Requirements and Standards for Audit Committee
Not applicable.
Purchase of equity securities by the issuer and affiliates and purchasers
The maximum number of shares that may yet be purchased under the Group share option plan by Trinity
Biotech or on the Groups behalf at December 31, 2007 was 7,465,330 (2006: 7,168,320). No shares
were purchased by Trinity Biotech or on our behalf or by any affiliated purchaser in 2007 and 2006.
No shares were purchased as part of a publicly announced repurchase plan or program in 2007 and
2006.
Part III
Item 17 Financial Statements
The registrant has responded to Item 18 in lieu of responding to this item.
Item 18 Financial Statements
56
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Trinity Biotech plc
We have audited Trinity Biotech plcs internal control over financial reporting as of December 31,
2007, based on criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Trinity Biotechs
management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Managements Annual Report on Internal Control Over Financial Reporting, appearing
under Item 15 in this Annual Report on Form 20-F. Our responsibility is to express an opinion on
Trinity Biotech plcs internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the companys assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Trinity Biotech maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2007, based on criteria established in Internal
Control Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Trinity Biotech plc and subsidiaries, as
of December 31, 2007 and 2006, and the related consolidated statements of operations, recognised
income and expense and cash flows for each of the years in the three-year period ended December 31,
2007 and our report dated April 2, 2008 expressed an unqualified opinion on those consolidated
financial statements.
KPMG
Dublin, Ireland
April 2, 2008
57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of Trinity Biotech plc
We have audited the accompanying consolidated balance sheets of Trinity Biotech plc and
subsidiaries (the Company) as of December 31, 2007 and 2006, and the related consolidated
statements of operations, recognised income and expense, and cash flows for each of the years in
the three-year period ended December 31, 2007. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Trinity Biotech plc and subsidiaries as of
December 31, 2007 and 2006, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 2007, in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board and as
adopted by the European Union.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of Trinity Biotech plcs internal control over financial
reporting as of December 31, 2007, based on criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
and our report dated April 2, 2008 expressed an unqualified opinion on the effective operation of
internal control over financial reporting.
KPMG
Dublin, Ireland
April 2, 2008
58
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December, 31 |
|
|
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
|
|
Total |
|
|
Total |
|
|
Total |
|
|
|
Notes |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
2 |
|
|
143,617 |
|
|
|
118,674 |
|
|
|
98,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
(75,643 |
) |
|
|
(62,090 |
) |
|
|
(51,378 |
) |
Cost of sales restructuring expenses |
|
3 |
|
|
(953 |
) |
|
|
|
|
|
|
|
|
Cost of sales inventory write off/ provision |
|
3, 2 |
|
|
(11,772 |
) |
|
|
(5,800 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales |
|
|
|
|
(88,368 |
) |
|
|
(67,890 |
) |
|
|
(51,378 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
55,249 |
|
|
|
50,784 |
|
|
|
47,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating income |
|
5 |
|
|
413 |
|
|
|
275 |
|
|
|
161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
|
|
(6,802 |
) |
|
|
(6,696 |
) |
|
|
(6,070 |
) |
Research and development restructuring expenses |
|
3 |
|
|
(6,907 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development expenses |
|
|
|
|
(13,709 |
) |
|
|
(6,696 |
) |
|
|
(6,070 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
|
|
(51,010 |
) |
|
|
(42,422 |
) |
|
|
(34,651 |
) |
Selling, general and administrative restructuring
expenses (including goodwill impairment of
US$19,156,000) |
|
3 |
|
|
(20,315 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling, general and administrative expenses |
|
|
|
|
(71,325 |
) |
|
|
(42,422 |
) |
|
|
(34,651 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)/ profit |
|
|
|
|
(29,372 |
) |
|
|
1,941 |
|
|
|
6,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income |
|
4 |
|
|
457 |
|
|
|
1,164 |
|
|
|
389 |
|
Financial expenses |
|
2, 4 |
|
|
(3,148 |
) |
|
|
(2,653 |
) |
|
|
(1,058 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net financing costs |
|
|
|
|
(2,691 |
) |
|
|
(1,489 |
) |
|
|
(669 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/ profit before tax |
|
6 |
|
|
(32,063 |
) |
|
|
452 |
|
|
|
5,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax (expense)/ credit |
|
2, 9 |
|
|
(3,309 |
) |
|
|
2,824 |
|
|
|
(673 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/ profit for the year (all attributable to equity
holders) |
|
2 |
|
|
(35,372 |
) |
|
|
3,276 |
|
|
|
5,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/ earnings per ordinary share (US Dollars) |
|
10 |
|
|
(0.47 |
) |
|
|
0.05 |
|
|
|
0.09 |
|
Diluted (loss)/ earnings per ordinary share (US Dollars) |
|
10 |
|
|
(0.47 |
) |
|
|
0.05 |
|
|
|
0.09 |
|
Basic (loss)/ earnings per ADS (US Dollars) |
|
10 |
|
|
(1.86 |
) |
|
|
0.19 |
|
|
|
0.36 |
|
Diluted (loss)/ earnings per ADS (US Dollars) |
|
10 |
|
|
(1.86 |
) |
|
|
0.19 |
|
|
|
0.35 |
|
59
CONSOLIDATED STATEMENTS OF RECOGNISED INCOME AND EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December, 31 |
|
|
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
Notes |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation differences |
|
19 |
|
|
1,072 |
|
|
|
1,347 |
|
|
|
(1,740 |
) |
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective portion of changes in fair value |
|
|
|
|
224 |
|
|
|
226 |
|
|
|
(295 |
) |
Deferred tax on income and expenses
recognised directly in equity |
|
|
|
|
(23 |
) |
|
|
4 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/ (expense) recognised directly in equity |
|
|
|
|
1,273 |
|
|
|
1,577 |
|
|
|
(1,994 |
) |
Cash flow hedge recycled
to the statement of operations |
|
|
|
|
|
|
|
|
(166 |
) |
|
|
(183 |
) |
(Loss)/ profit for the year |
|
2 |
|
|
(35,372 |
) |
|
|
3,276 |
|
|
|
5,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognised income
and expense (all attributable to equity holders) |
|
|
|
|
(34,099 |
) |
|
|
4,687 |
|
|
|
3,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
60
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2007 |
|
|
2006 |
|
|
|
Notes |
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
11 |
|
|
26,409 |
|
|
|
22,255 |
|
Goodwill and intangible assets |
|
12 |
|
|
104,928 |
|
|
|
121,768 |
|
Deferred tax assets |
|
13 |
|
|
3,937 |
|
|
|
7,656 |
|
Other assets |
|
14 |
|
|
896 |
|
|
|
515 |
|
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
|
|
136,170 |
|
|
|
152,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
Inventories |
|
15 |
|
|
44,420 |
|
|
|
45,572 |
|
Trade and other receivables |
|
16 |
|
|
25,683 |
|
|
|
32,676 |
|
Income tax receivable |
|
|
|
|
782 |
|
|
|
368 |
|
Derivative financial instruments |
|
30 |
|
|
224 |
|
|
|
|
|
Financial assets restricted cash |
|
17 |
|
|
|
|
|
|
15,500 |
|
Cash and cash equivalents |
|
18 |
|
|
8,700 |
|
|
|
2,821 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
79,809 |
|
|
|
96,937 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
2 |
|
|
215,979 |
|
|
|
249,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Equity attributable to the equity holders of the parent |
|
|
|
|
|
|
|
|
|
|
Share capital |
|
19 |
|
|
991 |
|
|
|
978 |
|
Share premium |
|
19 |
|
|
153,961 |
|
|
|
151,774 |
|
(Accumulated deficit)/ retained earnings |
|
19 |
|
|
(22,908 |
) |
|
|
10,818 |
|
Translation reserve |
|
19 |
|
|
797 |
|
|
|
(275 |
) |
Other reserves |
|
19 |
|
|
4,004 |
|
|
|
3,967 |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
|
|
136,845 |
|
|
|
167,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
21 |
|
|
15,821 |
|
|
|
10,382 |
|
Convertible notes-interest bearing |
|
22 |
|
|
|
|
|
|
1,836 |
|
Income tax payable |
|
|
|
|
86 |
|
|
|
44 |
|
Trade and other payables |
|
23 |
|
|
24,779 |
|
|
|
20,459 |
|
Other financial liabilities |
|
24 |
|
|
2,725 |
|
|
|
3,120 |
|
Provisions |
|
25 |
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
43,511 |
|
|
|
35,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
21 |
|
|
26,312 |
|
|
|
33,076 |
|
Other financial liabilities |
|
24 |
|
|
|
|
|
|
2,568 |
|
Other payables |
|
26 |
|
|
74 |
|
|
|
838 |
|
Deferred tax liabilities |
|
13 |
|
|
9,237 |
|
|
|
9,446 |
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
|
|
35,623 |
|
|
|
45,928 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
2 |
|
|
79,134 |
|
|
|
81,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
|
|
|
|
215,979 |
|
|
|
249,131 |
|
|
|
|
|
|
|
|
|
|
61
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
Notes |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/ profit for the year |
|
|
|
|
(35,372 |
) |
|
|
3,276 |
|
|
|
5,280 |
|
Adjustments to reconcile net profit to cash provided
by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
4,341 |
|
|
|
3,736 |
|
|
|
2,434 |
|
Amortisation |
|
|
|
|
3,418 |
|
|
|
2,687 |
|
|
|
1,803 |
|
Income tax expense/ (credit) |
|
|
|
|
3,309 |
|
|
|
(2,824 |
) |
|
|
673 |
|
Financial income |
|
|
|
|
(457 |
) |
|
|
(1,164 |
) |
|
|
(389 |
) |
Financial expense |
|
|
|
|
3,148 |
|
|
|
2,653 |
|
|
|
1,058 |
|
Share-based payments |
|
|
|
|
1,403 |
|
|
|
1,141 |
|
|
|
1,368 |
|
Foreign exchange losses on operating cash flows |
|
|
|
|
(26 |
) |
|
|
(100 |
) |
|
|
(292 |
) |
Loss/ (profit) on disposal / retirement of property,
plant and equipment |
|
|
|
|
17 |
|
|
|
(2 |
) |
|
|
469 |
|
Goodwill impairment |
|
3 |
|
|
19,156 |
|
|
|
|
|
|
|
|
|
Non- cash restructuring expenses |
|
3 |
|
|
18,573 |
|
|
|
|
|
|
|
|
|
Inventory write off |
|
|
|
|
|
|
|
|
5,800 |
|
|
|
|
|
Other non-cash items |
|
|
|
|
577 |
|
|
|
469 |
|
|
|
232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows before changes in working capital |
|
|
|
|
18,087 |
|
|
|
15,672 |
|
|
|
12,636 |
|
Decrease/ (increase) in trade and other receivables |
|
|
|
|
5,226 |
|
|
|
(9,962 |
) |
|
|
(8,034 |
) |
(Increase)/ decrease in inventories |
|
|
|
|
(7,101 |
) |
|
|
(5,434 |
) |
|
|
1,311 |
|
Increase in trade and other payables |
|
|
|
|
1,966 |
|
|
|
8,041 |
|
|
|
4,689 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations |
|
|
|
|
18,178 |
|
|
|
8,317 |
|
|
|
10,602 |
|
Interest paid |
|
|
|
|
(2,802 |
) |
|
|
(1,642 |
) |
|
|
(972 |
) |
Interest received |
|
|
|
|
429 |
|
|
|
839 |
|
|
|
371 |
|
Income taxes paid |
|
|
|
|
(456 |
) |
|
|
(146 |
) |
|
|
(792 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
15,349 |
|
|
|
7,368 |
|
|
|
9,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments to acquire subsidiaries and businesses |
|
27 |
|
|
(4,414 |
) |
|
|
(39,334 |
) |
|
|
(13,129 |
) |
Deferred consideration to acquire subsidiaries and
businesses |
|
|
|
|
(3,472 |
) |
|
|
(6,802 |
) |
|
|
|
|
Cash received with subsidiary |
|
|
|
|
|
|
|
|
|
|
|
|
127 |
|
Payments to acquire intangible assets |
|
|
|
|
(7,851 |
) |
|
|
(6,085 |
) |
|
|
(5,509 |
) |
Disposal/ (acquisition) of financial assets |
|
|
|
|
15,500 |
|
|
|
(6,500 |
) |
|
|
(1,852 |
) |
Proceeds from disposal of property, plant and equipment |
|
|
|
|
84 |
|
|
|
205 |
|
|
|
4 |
|
Acquisition of property, plant and equipment |
|
|
|
|
(8,262 |
) |
|
|
(4,751 |
) |
|
|
(4,039 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
|
|
(8,415 |
) |
|
|
(63,267 |
) |
|
|
(24,398 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of ordinary share capital |
|
|
|
|
454 |
|
|
|
25,265 |
|
|
|
4,755 |
|
Proceeds from borrowings, short-term debt |
|
|
|
|
5,000 |
|
|
|
6,000 |
|
|
|
1,800 |
|
Proceeds from borrowings, long-term debt |
|
|
|
|
|
|
|
|
24,000 |
|
|
|
7,200 |
|
Expenses paid in connection with share issue and debt
financing |
|
|
|
|
(70 |
) |
|
|
(1,526 |
) |
|
|
(195 |
) |
Repayment of long-term debt |
|
|
|
|
(8,285 |
) |
|
|
(1,276 |
) |
|
|
(1,217 |
) |
Proceeds from new finance leases |
|
|
|
|
2,087 |
|
|
|
78 |
|
|
|
154 |
|
Payment of finance lease liabilities |
|
|
|
|
(294 |
) |
|
|
(276 |
) |
|
|
(348 |
) |
Repayment of convertible debt |
|
|
|
|
|
|
|
|
(3,644 |
) |
|
|
(1,822 |
) |
Repayment of other financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
(648 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
|
|
|
(1,108 |
) |
|
|
48,621 |
|
|
|
9,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/ (decrease) in cash and cash equivalents |
|
|
|
|
5,826 |
|
|
|
(7,278 |
) |
|
|
(5,510 |
) |
Effects of exchange rate movements on cash held |
|
|
|
|
53 |
|
|
|
218 |
|
|
|
252 |
|
Cash and cash equivalents at beginning of year |
|
|
|
|
2,821 |
|
|
|
9,881 |
|
|
|
15,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
18 |
|
|
8,700 |
|
|
|
2,821 |
|
|
|
9,881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
62
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
The principal accounting policies adopted by Trinity Biotech plc and its subsidiaries, (the
Group), are as follows: |
|
a) |
|
Statement of compliance |
|
|
|
The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) both as issued by the International Accounting Standards
Board (IASB) and as subsequently adopted by the European Union (EU) (together IFRS). The
IFRS applied are those effective for accounting periods beginning on or after 1 January
2007. Consolidated financial statements are required by Irish law to comply with IFRS as adopted
by the EU which differ in certain respects from IFRS as issued by the IASB. These differences
predominantly relate to the timing of adoption of new standards by the EU. However, as none of
the differences are relevant in the context of Trinity Biotech, the consolidated financial
statements for the periods presented comply with IFRS both as issued by the IASB and as adopted
by the EU. |
|
b) |
|
Basis of preparation |
|
|
|
The consolidated financial statements have been prepared in United States Dollars (US$), rounded to
the nearest thousand, under the historical cost basis of accounting, except for derivative
financial instruments and share-based payments which are initially recorded at fair value.
Derivatives are also subsequently carried at fair value. |
|
|
|
The preparation of financial statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of policies and amounts reported
in the financial statements and accompanying notes. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements about the carrying
value of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates. |
|
|
|
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future periods if the revision affects both
current and future periods. |
|
|
|
Judgements made by management that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are discussed in note
31. |
|
|
|
Having considered the Groups current financial position, its cashflow projections, its existing
bank debt facility and other potential sources of funding available to the Group, the directors
believe that the Group will be able to continue in operational existence for at least the next 12
months from the date of approval of these consolidated financial statements and that it is
appropriate to continue to prepare the consolidated financial statements on a going concern basis. |
|
|
|
The accounting policies set out below have been applied consistently to all periods presented in
these consolidated financial statements. The accounting policies have been applied consistently by
all Group entities. |
|
|
|
Certain prior year amounts have been reclassified to conform to current presentation. |
|
c) |
|
Basis of consolidation |
|
|
|
Subsidiaries |
|
|
|
Subsidiaries are entities controlled by the Company. Control exists when the Company has the
power, directly or indirectly, to govern the financial and reporting policies of an entity so as to
obtain benefits from its activities. In assessing control, potential voting rights that presently
are exercisable or convertible are taken into account. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control commences until
the date that control ceases. |
|
|
|
Transactions eliminated on consolidation |
|
|
|
Intra-group balances and any unrealised gains or losses or income and expenses arising from
intra-group transactions are eliminated in preparing the consolidated financial statements. |
63
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
d) |
|
Property, plant and equipment |
|
|
|
Owned assets |
|
|
|
Items of property, plant and equipment are stated at cost less any accumulated depreciation and any
impairment losses (see note 1(h)). The cost of self-constructed assets includes the cost of
materials, direct labour and attributable overheads. It is not Group policy to revalue any items
of property, plant and equipment. |
|
|
|
Depreciation is charged to the statement of operations on a straight-line basis to write-off the
cost of the assets over their expected useful lives as follows: |
|
|
|
|
|
|
|
Leasehold improvements |
|
5-10 years |
|
|
Office equipment and fittings
|
|
10 years |
|
|
Buildings
|
|
50 years |
|
|
Computer equipment
|
|
3-5 years |
|
|
Plant and equipment
|
|
5-10 years |
|
|
Land is not depreciated. The residual values, if not insignificant, useful lives and depreciation
methods of property, plant and equipment are reviewed and adjusted if appropriate, at each balance
sheet date. |
|
|
|
Leased assets as lessee |
|
|
|
Leases under terms of which the Group assumes substantially all the risks and rewards of ownership
are classified as finance leases. Property, plant and equipment acquired by way of finance lease
is stated at an amount equal to the lower of its fair value and present value of the minimum lease
payments at inception of the lease, less accumulated depreciation and any impairment losses. |
|
|
|
Depreciation is calculated in order to write-off the amounts capitalised over the estimated useful
lives of the assets, or the lease term if shorter, by equal annual instalments. The excess of the
total rentals under a lease over the amount capitalised is treated as interest, which is charged to
the statement of operations in proportion to the amount outstanding under the lease. Leased assets
are reviewed for impairment (see note 1(h)). |
|
|
|
Leases other than finance leases are classified as operating leases, and the rentals thereunder
are charged to the statement of operations on a straight line basis over the period of the leases.
Lease incentives are recognised in the statement of operations on a straight-line basis over the
lease term. |
|
|
|
Leased assets as lessor |
|
|
|
Leases where the Group substantially transfers the risks and benefits of ownership of the asset to
the customer are classified as finance leases within finance lease receivables. The Group
recognises the amount receivable from assets leased under finance leases at an amount equal to the
net investment in the lease. Finance lease income is recognised as revenue in the statement of
operations reflecting a constant periodic rate of return on the Groups net investment in the
lease. |
|
|
|
Assets provided to customers under leases other than finance leases are classified as operating
leases and carried in property, plant and equipment at cost and are depreciated on a straight-line
basis over the useful life of the asset or the lease term, if shorter. |
|
|
|
Subsequent costs |
|
|
|
The Group recognises in the carrying amount of an item of property, plant and equipment the cost of
replacing part of such an item when that cost is incurred if it is probable that the future
economic benefits embodied within the item will flow to the Group and the cost of the replaced item
can be measured reliably. All other costs are recognised in the statement of operations as an
expense as incurred. |
64
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
e) |
|
Business combinations |
|
|
|
All business combinations are accounted for by applying the purchase method. |
|
|
|
The cost of a business combination is measured as the aggregate of the fair values at the date of
exchange of assets given, liabilities incurred or assumed and equity instruments issued in exchange
for control together with any directly attributable expenses. To the extent that settlement of all or
any part of a business combination is deferred for a period of 12 months or longer, the fair value
of the deferred component is determined through discounting the amounts payable to their present
value at the date of exchange. The discount component is unwound as an interest charge in the
statement of operations over the life of the obligation. |
|
|
|
Where a business combination agreement provides for an adjustment to the cost of the combination
contingent on future events, the estimated present value of the adjustment is included in the cost
at the acquisition date. Changes in these amounts subsequently are reflected in goodwill. |
|
|
|
When the initial accounting for a business combination is determined provisionally, any subsequent
adjustments to the provisional values allocated to the identifiable assets, liabilities and
contingent liabilities are made within twelve months of the acquisition date and treated
retrospectively as an adjustment to goodwill. |
|
f) |
|
Goodwill |
|
|
|
In respect of business combinations that have occurred since January 1, 2004 (being the transition
date to IFRS), goodwill represents the difference between the cost of the acquisition and the fair
value of the net identifiable assets acquired. |
|
|
|
In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed
cost, which represents the amount recorded under the old basis of accounting, Irish GAAP,
(Previous GAAP). Save for retrospective restatement of deferred tax as an adjustment to retained
earnings in accordance with IAS 12, Income Taxes, the classification and accounting treatment of
business combinations undertaken prior to the transition date were not reconsidered in preparing
the Groups opening IFRS balance sheet as at January 1, 2004. |
|
|
|
To the extent that the Groups interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities acquired exceeds the cost of a business combination, the
identification and measurement of the related assets, liabilities and contingent liabilities are
revisited accompanied by a reassessment of the cost of the transaction, and any remaining balance
is immediately recognised in the statement of operations. |
|
|
|
At the acquisition date, any goodwill is allocated to each of the cash generating units expected to
benefit from the combinations synergies. Following initial recognition, goodwill is stated at
cost less any accumulated impairment losses (see note 1(h)). |
|
g) |
|
Intangibles, including research and development (other than goodwill) |
|
|
|
An intangible asset, which is an identifiable non-monetary asset without physical substance, is
recognised to the extent that it is probable that the expected future economic benefits
attributable to the asset will flow to the Group and that its cost can be measured reliably. The
asset is deemed to be identifiable when it is separable (that is, capable of being divided from the
entity and sold, transferred, licensed, rented or exchanged, either individually or together with a
related contract, asset or liability) or when it arises from contractual or other legal rights,
regardless of whether those rights are transferable or separable from the Group or from other
rights and obligations. |
|
|
|
Intangible assets acquired as part of a business combination are capitalised separately from
goodwill if the intangible asset meets the definition of an asset and the fair value can be
reliably measured on initial recognition. Subsequent to initial recognition, these intangible
assets are carried at cost less any accumulated amortisation and any accumulated impairment losses
(note 1(h)). Definite lived intangible assets are reviewed for indicators of impairment annually
while indefinite lived assets and those not yet brought into use are tested for impairment
annually, either individually or at the cash generating unit level. |
65
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
Research and development |
|
|
|
Expenditure on research activities, undertaken with the prospect of gaining new scientific or
technical knowledge and understanding, is recognised in the statement of operations as an expense
as incurred. Expenditure on development activities, whereby research findings are applied to a
plan or design for the production of new or substantially improved products and processes, is
capitalised if the product or process is technically and commercially feasible and the Group has
sufficient resources to complete the development. The expenditure capitalised includes the cost of
materials, direct labour and attributable overheads and third party costs. Subsequent expenditure
on capitalised intangible assets is capitalised only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other development expenditure is expensed
as incurred. Subsequent to initial recognition, the capitalised development expenditure is carried
at cost less any accumulated amortisation and any accumulated impairment losses (note 1(h)). |
|
|
|
Expenditure on internally generated goodwill and brands is recognised in the statement of
operations as an expense as incurred. |
|
|
|
Amortisation |
|
|
|
Amortisation is charged to the statement of operations on a straight-line basis over the estimated
useful lives of intangible assets, unless such lives are indefinite. Intangible assets are
amortised from the date they are available for use. The estimated useful lives are as follows: |
|
|
|
|
|
|
|
Patents and licences
|
|
6-15 years |
|
|
Capitalised development costs |
|
15 years |
|
|
Other (including acquired customer and supplier lists)
|
|
6-15 years |
|
|
Certain trade names acquired are deemed to have an indefinite useful life. |
|
|
|
Where amortisation is charged on assets with finite lives, this expense is taken to the statement
of operations through the selling, general and administrative expenses line. |
|
|
|
Useful lives are examined on an annual basis and adjustments, where applicable, are made on a
prospective basis. |
|
h) |
|
Impairment |
|
|
|
The carrying amount of the Groups assets, other than inventories and deferred tax assets, are
reviewed at each balance sheet date to determine whether there is any indication of impairment. If
any such indication exists, the assets recoverable amount (being the greater of fair value less
costs to sell and value in use) is assessed at each balance sheet date. |
|
|
|
Fair value less costs to sell is defined as the amount obtainable from the sale of an asset or
cash-generating unit in an arms length transaction between knowledgeable and willing parties, less
the costs that would be incurred in disposal. Value in use is defined as the present value of the
future cash flows expected to be derived through the continued use of an asset or cash-generating
unit. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset for which the future cash flow estimates have not yet
been adjusted. The estimates of future cash flows exclude cash inflows or outflows attributable to
financing activities and income tax. For an asset that does not generate largely independent cash
flows, the recoverable amount is determined by reference to the cash generating unit to which the
asset belongs. |
|
|
|
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet
available for use, the recoverable amount is estimated at each balance sheet date at the cash
generating unit level. The goodwill and indefinite-lived assets were reviewed for impairment at
December 31, 2005, December 31, 2006 and December 2007. See note 12. |
|
|
|
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating
unit exceeds its recoverable amount. Impairment losses are recognised in the statement of
operations. |
|
|
|
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying
amount of other assets in the units on a pro-rata basis. |
66
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
An impairment loss is reversed only to the extent that the assets carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised. |
|
|
|
An impairment loss in respect of goodwill is not reversed. |
|
|
|
Following recognition of any impairment loss (and on recognition of an impairment loss reversal),
the depreciation or amortisation charge applicable to the asset or cash generating unit is adjusted
prospectively with the objective of systematically allocating the revised carrying amount, net of
any residual value, over the remaining useful life. |
|
i) |
|
Inventories |
|
|
|
Inventories are stated at the lower of cost and net realisable value. Cost is based on the
first-in, first-out principle and includes all expenditure which has been incurred in bringing the
products to their present location and condition, and includes an appropriate allocation of
manufacturing overhead based on the normal level of operating capacity. Net realisable value is
the estimated selling price of inventory on hand in the ordinary course of business less all
further costs to completion and costs expected to be incurred in selling these products. |
|
|
|
The Group provides for inventory, based on estimates of the expected realisability of the Groups
inventory. The estimated realisability is evaluated on a case-by-case basis and any inventory that
is approaching its use-by date and for which no further re-processing can be performed is written
off. Any reversal of an inventory provision is recognised in the statement of operations in the
year in which the reversal occurs. |
|
j) |
|
Trade and other receivables |
|
|
|
Trade and other receivables are stated at their amortised cost less impairment losses
incurred. Cost approximates fair value given the short dated nature of these assets. |
|
k) |
|
Trade and other payables |
|
|
|
Trade and other payables are stated at cost. Cost approximates fair value given the short
dated nature of these liabilities. |
|
l) |
|
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits with a maturity of three
months or less. The Group has no short-term bank overdraft facilities. Where restrictions are
imposed by third parties, such as lending institutions, on cash balances held by the Group these
are treated as financial assets in the financial statements. |
|
m) |
|
Interest-bearing loans and borrowings |
|
|
|
Loans and borrowings, including promissory notes |
|
|
|
Under IFRS interest-bearing loans, borrowings and promissory notes are recognised initially at
fair value less attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost, with any difference between cost and
redemption value being recognised in the statement of operations over the period of the
borrowings on an effective interest basis. |
|
|
|
Convertible notes |
|
|
|
Under IFRS convertible notes that can be converted into share capital at the option of the holder,
where the number of shares issued does not vary with changes in their fair value, are accounted for
as compound financial instruments. Transaction costs that relate to the issue of a compound
financial instrument are allocated to the liability and equity components in proportion to the
allocation of proceeds. The equity component of the convertible notes is calculated as the excess
of the issue proceeds over the present value of the future interest and principal payments,
discounted at the market rate of interest applicable to similar liabilities that do not have a
conversion option. The interest expense recognised in the statement of operations is calculated
using the effective interest rate method. |
|
n) |
|
Share-based payments |
|
|
|
For equity-settled share-based payments (share options), the Group measures the services received
and the corresponding increase in equity at fair value at the measurement date (which is the
grant date) using a trinomial model. Given that the share options granted do not vest until the
completion of a specified period of service, the fair value, which is assessed at the grant date,
is recognised on the basis that the services to be rendered by employees as consideration for the
granting of share options will be received over the vesting period. |
67
|
|
|
|
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
The share options issued by the Group are not subject to market-based vesting conditions as
defined in IFRS 2, Share-based Payments. Non-market vesting conditions are not taken into
account when estimating the fair value of share options as at the grant date; such conditions are
taken into account through adjusting the number of equity instruments included in the measurement
of the transaction amount so that, ultimately, the amount recognised equates to the number of
equity instruments that actually vest. The expense in the statement of operations in relation to
share options represents the product of the total number of options anticipated to vest and the
fair value of those options; this amount is allocated to accounting periods on a straight-line
basis over the vesting period. Given that the performance conditions underlying the Groups
share options are non-market in nature, the cumulative charge to the statement of operations is
only reversed where the performance condition is not met or where an employee in receipt of share
options relinquishes service prior to completion of the expected vesting period. Share based
payments, to the extent they relate to direct labour involved in development activities, are
capitalised, see 1(g). |
|
|
|
The proceeds received net of any directly attributable transaction costs are credited to share
capital (nominal value) and share premium when the options are exercised. The Group does not
operate any cash-settled share-based payment schemes or share-based payment transactions with
cash alternatives as defined in IFRS 2. |
|
o) |
|
Government grants |
|
|
|
Grants that compensate the Group for expenses incurred such as research and development,
employment and training are recognised as revenue or income in the statement of operations on a
systematic basis in the same periods in which the expenses are incurred. Grants that compensate
the Group for the cost of an asset are recognised in the statement of operations as other
operating income on a systematic basis over the useful life of the asset. |
|
p) |
|
Revenue recognition |
|
|
|
Goods sold and services rendered |
|
|
|
Revenue from the sale of goods is recognised in the statement of operations when the significant
risks and rewards of ownership have been transferred to the buyer. Revenue from products is
generally recorded as of the date of shipment. Revenue is recognised when the Group has satisfied
all of its obligations to the customer. Revenue, including any amounts invoiced for shipping and
handling costs, represents the value of goods supplied to external customers, net of discounts
and excluding sales taxes. |
|
|
|
Revenue from services rendered is recognised in the statement of operations in proportion to the
stage of completion of the transaction at the balance sheet date. |
|
|
|
Revenue is recognised to the extent that it is probable that economic benefit will flow to the
Group, that the risks and rewards of ownership have passed to the buyer and the revenue can be
measured. No revenue is recognised if there is uncertainty regarding recovery of the
consideration due at the outset of the transaction or the possible return of goods. |
|
|
|
The Group leases instruments under operating and finance leases as part of its business. In cases
where the risks and rewards of ownership of the instrument pass to the customer, the fair value of
the instrument is recognised as revenue at the commencement of the lease and is matched by the
related cost of sale. In the case of operating leases of instruments which typically involve
commitments by the customer to pay a fee per test run on the instruments, revenue is recognised on
the basis of customer usage of the instruments. See also note 1(d). |
|
|
|
Other operating income |
|
|
|
Rental income from sub-leasing premises under operating leases, where the risks and rewards of the
premises remain with the lessor, is recognised in the statement of operations as other operating
income on a straight-line basis over the term of the lease. |
|
q) |
|
Employee benefits |
|
|
|
Defined contribution plans |
|
|
|
The Group operates defined contribution schemes in various locations where its subsidiaries are
based. Contributions to the defined contribution schemes are recognised in the statement of
operations in the period in which the related service is received from the employee. |
68
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
Other long-term benefits |
|
|
|
Where employees participate in the Groups other long-term benefit schemes (such as permanent
health insurance schemes under which the scheme insures the employees), or where the Group
contributes to insurance schemes for employees, the Group pays an annual fee to a service provider,
and accordingly the Group expenses such payments as incurred. |
|
|
|
Termination benefits |
|
|
|
Termination benefits are recognised as an expense when the Group is demonstrably committed, without
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment
before normal retirement date, or to provide termination benefits as a result of an offer made to
encourage voluntary redundancy. |
|
r) |
|
Foreign currency
|
|
|
|
A majority of the revenue of the Group is generated in US Dollars. The Groups management has
determined that the US dollar is the primary currency of the economic environment in which the
Company and its subsidiaries (with the exception of the Groups subsidiaries in Germany and Sweden)
principally operate. Thus the functional currency of the Company and its subsidiaries (other than
those subsidiaries in Germany and Sweden) is the US Dollar. The functional currency of the German
and Swedish subsidiaries is the euro and the Swedish Kroner, respectively. The presentation currency
of the Company and Group is the US Dollar. Monetary assets and liabilities denominated in foreign
currencies are translated at the rates of exchange ruling at the balance sheet date. The resulting
gains and losses are included in the statement of operations. Non-monetary assets and liabilities
that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. |
|
|
|
Results and cash flows of subsidiary undertakings, which have a functional currency other than the
US Dollar, are translated into US Dollars at average exchange rates for the year, and the related
balance sheets have been translated at the rates of exchange ruling on the balance sheet date. Any
exchange differences arising from the translations are recognised in the currency translation
reserve via the statement of recognised income and expense. |
|
s) |
|
Derivative financial instruments |
|
|
|
The activities of the Group expose it primarily to changes in foreign exchange rates and interest
rates. The Group uses derivative financial instruments, when necessary, such as forward foreign
exchange contracts to hedge these exposures. |
|
|
|
The Group enters into forward contracts to sell US Dollars forward for euro. The principal exchange
risk identified by the Group is with respect to fluctuations in the euro as a substantial portion
of its expenses are denominated in euro but its revenues are primarily denominated in US Dollars.
Trinity Biotech monitors its exposure to foreign currency movements and may use these forward
contracts as cash flow hedging instruments whose objective is to cover a portion of this euro
expense. |
|
|
|
At the inception of a hedging transaction entailing the use of derivatives, the Group documents the
relationship between the hedged item and the hedging instrument together with its risk management
objective and the strategy underlying the proposed transaction. The Group also documents its
quarterly assessment of the effectiveness of the hedge in offsetting movements in the cash flows of
the hedged items. |
|
|
|
Derivative financial instruments are recognised at fair value. Where derivatives do not fulfil the
criteria for hedge accounting, they are classified as held-for-trading and changes in fair values
are reported in the statement of operations. The fair value of forward exchange contracts is
calculated by reference to current forward exchange rates for contracts with similar maturity
profiles and equates to the current market price at the balance sheet date. |
|
|
|
The portion of the gain or loss on a hedging instrument that is deemed to be an effective cash flow
hedge is recognised directly in the hedging reserve in equity and the ineffective portion is
recognised in the statement of operations. As the forward contracts are exercised the net
cumulative gain or loss recognised in the hedging reserve is transferred to the statement of
operations and reflected in the same line as the hedged item. |
69
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
t) |
|
Segment reporting |
|
|
|
A segment is a distinguishable component of the Group that is engaged either in providing products
or services (business segment), or in providing products or services within a particular economic
environment (geographical segment), which is subject to risks and returns different to those of
other segments. Stemming from the Groups internal organisational and management structure and its
system of internal financial reporting, segmentation by geographic location of assets is regarded
as being the predominant source and nature of the risks and returns facing the Group and is thus
the primary segment format under IAS 14, Segment Reporting. Business segmentation is therefore the
secondary segment format. |
|
u) |
|
Tax (current and deferred) |
|
|
|
Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is
recognised in the statement of operations except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity. |
|
|
|
Current tax represents the expected tax payable (or recoverable) on the taxable profit for the year
using tax rates enacted or substantively enacted at the balance sheet date and taking into account
any adjustments stemming from prior years. |
|
|
|
Deferred tax is provided on the basis of the balance sheet liability method on all temporary
differences at the balance sheet date which is defined as the difference between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets
and liabilities are not subject to discounting and are measured at the tax rates that are
anticipated to apply in the period in which the asset is realised or the liability is settled based
on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet
date. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities. |
|
|
|
Deferred tax assets and liabilities are recognised for all temporary differences (that is,
differences between the carrying amount of the asset or liability and its tax base) with the
exception of the following: |
|
i. |
|
Where the deferred tax liability arises from goodwill not deductible for tax purposes
or the initial recognition of an asset or a liability in a transaction that is not a
business combination and affects neither the accounting profit nor the taxable profit or
loss at the time of the transaction; and |
|
|
ii. |
|
Where, in respect of temporary differences associated with investments in subsidiary
undertakings, the timing of the reversal of the temporary difference is subject to control
and it is probable that the temporary difference will not reverse in the foreseeable
future. |
|
|
Where goodwill is tax deductible, a deferred tax liability is not recognised on initial recognition
of goodwill. It is recognised subsequently for the taxable temporary difference which arises when
the goodwill is amortised for tax with no corresponding adjustment to the carrying value of the
goodwill. |
|
|
|
The carrying amounts of deferred tax assets are subject to review at each balance sheet date and
are derecognised to the extent that future taxable profits are considered to be inadequate to allow
all or part of any deferred tax asset to be utilised. |
|
v) |
|
Provisions |
|
|
|
A provision is recognised in the balance sheet when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits
will be required to settle the obligation. |
|
w) |
|
Cost of sales |
|
|
|
Cost of sales comprises product cost including manufacturing and payroll costs, quality control,
shipping, handling, and packaging costs and the cost of services provided. |
|
x) |
|
Finance income and costs |
|
|
|
Financing expenses comprise costs payable on leases, loans and borrowings including promissory
notes. Interest payable on loans and borrowings, promissory notes and convertible notes is
calculated using the effective interest rate method. Interest payable on finance leases is
allocated to each period during the lease term so as to produce a constant periodic rate of
interest on the remaining balance of the liability. Financing expenses also includes the financing
element of long term liabilities which have been discounted. |
|
|
|
Finance income comprises interest income on deposits and is recognised in the statement of
operations as it accrues, using the effective interest method. |
70
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
y) |
|
Warrant reserve |
|
|
|
The Group calculates the fair value of warrants at the date of issue taking the amount directly to
equity. The fair value is calculated using a recognised valuation methodology for the valuation of
financial instruments (that is, the trinomial model). The fair value which is assessed at the
grant date is calculated on the basis of the contractual term of the warrants. |
|
z) |
|
New IFRS Standards and Interpretations not applied |
|
|
|
The IASB and IFRIC have issued additional standards and interpretations which are effective for
periods starting after January 1, 2007, some of which have not yet been adopted by the EU. The
following standards and interpretations have yet to be adopted by the Group: |
|
|
|
|
|
|
|
Effective date |
International Financial Reporting Standards (IFRS/IAS) |
|
|
IFRS 3 |
|
(Revised) Business Combinations
|
|
July 1, 2009 (adopted by the EU) |
IFRS 8 |
|
Operating Segments |
|
January 1, 2009 (adopted by the EU) |
IAS 1
(amendment) |
|
Presentation of Financial Statements |
|
January 1, 2009 (not adopted by the EU) |
IAS 23
(amendment) |
|
Borrowing Costs |
|
January 1, 2009 (not adopted by
the EU) |
IAS 27 |
|
Consolidated and Separate Financial Statements
|
|
July 1, 2009 (not adopted by
the EU) |
IAS 32/ IAS 1
(amendment) |
|
Puttable Instruments and Obligations arising
on Liquidation
|
|
January 1, 2009 (not adopted by the EU) |
IFRS Share- based Payments
|
|
Vesting Conditions and Cancellations
|
|
January 1, 2009 (not adopted by
the EU) |
|
International Financial Reporting Interpretations Committee (IFRIC) |
|
|
IFRIC 11
|
|
Group and Treasury Share Transactions |
|
January 1, 2008 (adopted by the
EU) |
IFRIC 12
|
|
Service Concession Arrangements
|
|
January 1, 2008 (not adopted by
the EU) |
IFRIC 13
|
|
Customer Loyalty Programmes
|
|
January 1, 2009 (not adopted by
the EU) |
IFRIC 14 |
|
The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
their Interaction |
|
January 1, 2008 (not adopted by
the EU) |
|
|
The Group does not anticipate that the adoption of these standards and interpretations will have a
material effect on its financial statements on initial adoption. Upon adoption of IFRS 8 and IAS 1,
the Group may be required to disclose additional information on its operating segments but this
will have no effect on reported income or net assets. |
|
2. |
|
SEGMENT INFORMATION |
|
|
|
Segment information is presented in respect of the Groups geographical and business segments. The
primary format, geographical segments, is based on the Groups management and internal reporting
structure. Sales of product between companies in the Group are made on commercial terms which
reflect the nature of the relationship between the relevant companies. Segment results, assets and
liabilities include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items comprise interest-bearing loans, borrowings and expenses
and corporate expenses. Segment capital expenditure is the total cost during the period to acquire
segment plant, property and equipment and intangible assets that are expected to be used for more
than one period, whether acquired on acquisition of a business combination or through acquisitions
as part of the current operations. |
|
|
|
Geographical segments |
|
|
|
The Group comprises two main geographical segments (i) the Americas and (ii) Rest of World. The
Groups geographical segments are determined by the location of the Groups assets and operations. |
|
|
|
The Group has also presented a geographical analysis of the segmental data for Ireland on the basis
of the aggregation thresholds contained in IAS 14. |
71
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
Business segments |
|
|
|
The Group operates in one business segment, the market for diagnostic tests for a range of diseases
and other medical conditions. In determining the nature of its segmentation, the Group has
considered the nature of the products, their risks and rewards, the nature of the production base,
the customer base and the nature of the regulatory environment. The Group acquires, manufactures
and markets a range of diagnostic products. The Groups products are sold to a similar customer
base and the main body whose regulation the Groups products must comply with is the Food and Drug
Administration (FDA) in the US. |
|
|
|
The following presents revenue and profit information and certain asset and liability information
regarding the Groups geographical segments. |
|
a) |
|
The distribution of revenue by geographical area based on location of assets was as
follows: |
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2007 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Revenue from external customers |
|
|
37,095 |
|
|
|
64,210 |
|
|
|
42,312 |
|
|
|
|
|
|
|
143,617 |
|
Inter-segment revenue |
|
|
24,815 |
|
|
|
27,196 |
|
|
|
10,134 |
|
|
|
(62,145 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
61,910 |
|
|
|
91,406 |
|
|
|
52,446 |
|
|
|
(62,145 |
) |
|
|
143,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2006 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Revenue from external customers |
|
|
33,247 |
|
|
|
55,665 |
|
|
|
29,762 |
|
|
|
|
|
|
|
118,674 |
|
Inter-segment revenue |
|
|
21,161 |
|
|
|
24,968 |
|
|
|
9,679 |
|
|
|
(55,808 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
54,408 |
|
|
|
80,633 |
|
|
|
39,441 |
|
|
|
(55,808 |
) |
|
|
118,674 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2005 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Revenue from external customers |
|
|
31,136 |
|
|
|
54,859 |
|
|
|
12,565 |
|
|
|
|
|
|
|
98,560 |
|
Inter-segment revenue |
|
|
22,197 |
|
|
|
14,402 |
|
|
|
6,594 |
|
|
|
(43,193 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
53,333 |
|
|
|
69,261 |
|
|
|
19,159 |
|
|
|
(43,193 |
) |
|
|
98,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b) |
|
The distribution of revenue by customers geographical area was as follows: |
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Americas |
|
|
68,481 |
|
|
|
60,748 |
|
|
|
50,627 |
|
Europe (including Ireland) * |
|
|
43,631 |
|
|
|
34,452 |
|
|
|
25,301 |
|
Asia / Africa |
|
|
31,505 |
|
|
|
23,474 |
|
|
|
22,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,617 |
|
|
|
118,674 |
|
|
|
98,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Revenue for customers in Ireland is not disclosed separately due to the immateriality of these revenues. |
72
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
c) |
|
The distribution of revenue by major product group was as follows: |
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Infectious diseases |
|
|
41,293 |
|
|
|
42,051 |
|
|
|
44,078 |
|
Haemostasis |
|
|
60,759 |
|
|
|
46,476 |
|
|
|
29,766 |
|
Point of care |
|
|
24,504 |
|
|
|
15,279 |
|
|
|
12,836 |
|
Clinical chemistry |
|
|
17,061 |
|
|
|
14,868 |
|
|
|
11,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
143,617 |
|
|
|
118,674 |
|
|
|
98,560 |
|
|
|
|
|
|
|
|
|
|
|
d) |
|
The distribution of segment results by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
Year ended December 31, 2007 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Result before goodwill
impairment and restructuring
expenses |
|
|
15 |
|
|
|
10,868 |
|
|
|
447 |
|
|
|
11,330 |
|
Goodwill impairment (note 3) |
|
|
|
|
|
|
(19,156 |
) |
|
|
|
|
|
|
(19,156 |
) |
Restructuring expenses (note 3) |
|
|
(6,215 |
) |
|
|
(11,961 |
) |
|
|
(2,615 |
) |
|
|
(20,791 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Result after goodwill
impairment and restructuring |
|
|
(6,200 |
) |
|
|
(20,249 |
) |
|
|
(2,168 |
) |
|
|
(28,617 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated expenses * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(755 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,372 |
) |
Net financing costs (note 4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,691 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(32,063 |
) |
Income tax expense (note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,309 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35,372 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
Year ended December 31, 2006 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Result |
|
|
(6,621 |
) |
|
|
10,790 |
|
|
|
(1,843 |
) |
|
|
2,326 |
|
Unallocated expenses * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(385 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,941 |
|
Net financing costs (note 4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,489 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
452 |
|
Income tax credit (note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
Year ended December 31, 2005 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Result |
|
|
(369 |
) |
|
|
10,339 |
|
|
|
(1,581 |
) |
|
|
8,389 |
|
Unallocated expenses * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,767 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,622 |
|
Net financing costs (note 4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(669 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,953 |
|
Income tax expense (note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(673 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Unallocated expenses represent head office general and administration costs of the Group which
cannot be allocated to the results of any specific geographical area. |
73
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
e) |
|
The distribution of segment assets and segment liabilities by geographical area was as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
As at December 31, 2007 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets before goodwill impairment and
restructuring |
|
|
61,551 |
|
|
|
154,285 |
|
|
|
24,090 |
|
|
|
239,926 |
|
Goodwill impairment (note 3) |
|
|
|
|
|
|
(19,156 |
) |
|
|
|
|
|
|
(19,156 |
) |
Impact of restructuring |
|
|
(5,469 |
) |
|
|
(10,626 |
) |
|
|
(2,115 |
) |
|
|
(18,210 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets after goodwill impairment and
restructuring |
|
|
56,082 |
|
|
|
124,503 |
|
|
|
21,975 |
|
|
|
202,560 |
|
Unallocated assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax assets (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,719 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets as reported in the Group balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215,979 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities before restructuring |
|
|
5,885 |
|
|
|
15,387 |
|
|
|
4,390 |
|
|
|
25,662 |
|
Impact of restructuring (note 23) |
|
|
808 |
|
|
|
691 |
|
|
|
517 |
|
|
|
2,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities after restructuring |
|
|
6,693 |
|
|
|
16,078 |
|
|
|
4,907 |
|
|
|
27,678 |
|
Unallocated liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax liabilities (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,323 |
|
Interest-bearing
loans and borrowings (current and non-current) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities as reported in the Group balance
sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
As at December 31, 2006 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
57,162 |
|
|
|
145,473 |
|
|
|
20,151 |
|
|
|
222,786 |
|
Unallocated assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax assets (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,024 |
|
Restricted cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,500 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets as reported in the Group balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
|
6,268 |
|
|
|
17,130 |
|
|
|
3,687 |
|
|
|
27,085 |
|
Unallocated liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax liabilities (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,490 |
|
Interest-bearing loans and borrowings and convertible notes (current and non-current) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,294 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities as reported in the Group balance
sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
f) |
|
The distribution of long-lived assets, which are property, plant and equipment, goodwill and
intangible assets and other non-current assets (excluding deferred tax assets), by
geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
95,675 |
|
|
|
110,936 |
|
Rest of World Other |
|
|
10,029 |
|
|
|
8,537 |
|
Americas |
|
|
26,529 |
|
|
|
25,065 |
|
|
|
|
|
|
|
|
|
|
|
132,233 |
|
|
|
144,538 |
|
|
|
|
|
|
|
|
g) |
|
The distribution of depreciation and amortisation by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Depreciation: |
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World Ireland |
|
|
1,450 |
|
|
|
1,336 |
|
|
|
1,118 |
|
Rest of World Other |
|
|
1,537 |
|
|
|
1,163 |
|
|
|
427 |
|
Americas |
|
|
1,354 |
|
|
|
1,237 |
|
|
|
889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,341 |
|
|
|
3,736 |
|
|
|
2,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation: |
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World Ireland |
|
|
2,971 |
|
|
|
2,298 |
|
|
|
1,569 |
|
Rest of World Other |
|
|
151 |
|
|
|
104 |
|
|
|
87 |
|
Americas |
|
|
296 |
|
|
|
285 |
|
|
|
147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,418 |
|
|
|
2,687 |
|
|
|
1,803 |
|
|
|
|
|
|
|
|
|
|
|
h) |
|
The distribution of share-based payment expense by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
1,146 |
|
|
|
922 |
|
|
|
1,174 |
|
Rest of World Other |
|
|
37 |
|
|
|
24 |
|
|
|
22 |
|
Americas |
|
|
220 |
|
|
|
195 |
|
|
|
172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,403 |
|
|
|
1,141 |
|
|
|
1,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
See note 20 for further information on share-based payments. |
|
i) |
|
The distribution of the goodwill impairment and restructuring expenses (see note 3) by
geographical area was as follows: |
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
US$000 |
|
Impairment: |
|
|
|
|
Rest of World Ireland |
|
|
19,156 |
|
Rest of World Other |
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
19,156 |
|
|
|
|
|
|
|
|
|
|
Restructuring expenses: |
|
|
|
|
Rest of World Ireland |
|
|
11,961 |
|
Rest of World Other |
|
|
6,215 |
|
Americas |
|
|
2,615 |
|
|
|
|
|
|
|
|
20,791 |
|
|
|
|
|
75
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
The total restructuring expenses above of US$20,791,000 includes an inventory write off of
US$11,772,000. In 2007, as part of the restructuring plan (see note 3), Trinity Biotech undertook
to reduce the number of products and instruments within the two key product lines of Haemostasis
and Infectious Diseases. As a result, the Group has recognised US$11,772,000 for inventory written
off relating to those Haemostasis and Infectious Diseases products and instruments being
rationalised for the year ended December 31, 2007. The write off was included as part of the total
restructuring expenses in cost of sales in the 2007 statement of operations. The distribution of
the inventory write off by geographical area was as follows: |
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
US$000 |
|
Inventory write off |
|
|
|
|
Rest of World Ireland |
|
|
4,146 |
|
Rest of World Other |
|
|
2,279 |
|
Americas |
|
|
5,347 |
|
|
|
|
|
|
|
|
11,772 |
|
|
|
|
|
|
|
In 2006, the Group undertook to write off inventory of US$5.8 million. Following the acquisition
of the haemostasis business of bioMerieux Inc (bioMerieux), Trinity Biotech sought to combine
the range of products acquired with the Groups existing product range. As part of this process
it was decided to discontinue various existing products and this resulted in a US$5.8 million
write-off of inventory. This write-off was disclosed as a separate line item in cost of sales in
the 2006 statement of operations. The distribution of the inventory provision recognised in 2006
by geographical area was as follows: |
|
|
|
|
|
|
|
December 31, 2006 |
|
|
|
US$000 |
|
Inventory provision |
|
|
|
|
Rest of World Ireland |
|
|
1,751 |
|
Rest of World Other |
|
|
2,362 |
|
Americas |
|
|
1,687 |
|
|
|
|
|
|
|
|
5,800 |
|
|
|
|
|
j) |
|
The distribution of interest expense by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
2,595 |
|
|
|
1,982 |
|
|
|
894 |
|
Rest of World Other |
|
|
15 |
|
|
|
12 |
|
|
|
8 |
|
Americas |
|
|
538 |
|
|
|
659 |
|
|
|
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,148 |
|
|
|
2,653 |
|
|
|
1,058 |
|
|
|
|
|
|
|
|
|
|
|
k) |
|
The distribution of taxation (expense)/ credit by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
531 |
|
|
|
(1,156 |
) |
|
|
(1,105 |
) |
Rest of World Other |
|
|
(662 |
) |
|
|
975 |
|
|
|
236 |
|
Americas |
|
|
(3,178 |
) |
|
|
3,005 |
|
|
|
196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,309 |
) |
|
|
2,824 |
|
|
|
(673 |
) |
|
|
|
|
|
|
|
|
|
|
l) |
|
During 2007, 2006 and 2005 there were no customers with 10% or more of total revenues. |
76
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
m) |
|
The distribution of capital expenditure, including expenditure on non-current assets in
business combinations, by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
14,742 |
|
|
|
38,716 |
|
Rest of World Other |
|
|
3,130 |
|
|
|
4,471 |
|
Americas |
|
|
3,199 |
|
|
|
2,789 |
|
|
|
|
|
|
|
|
|
|
|
21,071 |
|
|
|
45,976 |
|
|
|
|
|
|
|
|
3. |
|
RESTRUCTURING EXPENSES AND IMPAIRMENT |
|
|
|
In December 2007, the Board of Directors of Trinity Biotech announced a restructuring of the
business. This restructuring included the following elements: |
|
|
|
the rationalisation of the Haemostasis and Infectious Diseases reagent and
instrumentation product lines; |
|
|
|
|
the reorganisation of the US sales force; |
|
|
|
|
the closure of the Groups operation in Sweden; |
|
|
|
|
the streamlining of the Groups development activities and, |
|
|
|
|
a redundancy programme to reduce headcount across the Group. |
|
|
The impact of this restructuring resulted in an after tax charge to the statement of operations of
US$19,207,000 for the year ended December 31, 2007. |
|
|
|
In addition, in accordance with the provisions of IAS 36 Impairment of Assets, the Group also
recognised an impairment provision of US$19,156,000 against goodwill (see note 12). |
|
|
|
The impact of the above items on the statement of operations for the year ended December 31, 2007
is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring |
|
|
Impairment |
|
|
Total |
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory provision |
|
(a) (c) |
|
|
11,772 |
|
|
|
|
|
|
|
11,772 |
|
Termination payments |
|
(c) (d) |
|
|
953 |
|
|
|
|
|
|
|
953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,725 |
|
|
|
|
|
|
|
12,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research & development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Write-off of capitalised development
and license costs |
|
(b) |
|
|
6,667 |
|
|
|
|
|
|
|
6,667 |
|
Termination payments |
|
(c) (d) |
|
|
240 |
|
|
|
|
|
|
|
240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,907 |
|
|
|
|
|
|
|
6,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administration expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill (note 12) |
|
|
|
|
|
|
|
|
19,156 |
|
|
|
19,156 |
|
Termination payments |
|
(c) (d) |
|
|
842 |
|
|
|
|
|
|
|
842 |
|
Lease obligation provision |
|
(c) |
|
|
116 |
|
|
|
|
|
|
|
116 |
|
Other |
|
|
|
|
201 |
|
|
|
|
|
|
|
201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,159 |
|
|
|
19,156 |
|
|
|
20,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventory write off, restructuring
expenses and goodwill impairment before
tax |
|
|
|
|
20,791 |
|
|
|
19,156 |
|
|
|
39,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impact of inventory write off,
restructuring expenses and goodwill
impairment (note 9) |
|
|
|
|
(1,584 |
) |
|
|
|
|
|
|
(1,584 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total inventory write off, restructuring
expenses and goodwill impairment after
tax |
|
|
|
|
19,207 |
|
|
|
19,156 |
|
|
|
38,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
77
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
The total future claim on cash of the restructuring activities for the year ended December 31,
2007 amounted to US$2,218,000. This cash outflow primarily relates to US$2,035,000 payable in
connection with the termination payments. The non cash element of the restructuring expenses
amounted to US$18,573,000 and the goodwill impairment of US$19,156,000 also has no cash impact. |
|
(a) |
|
Under the restructuring plan, Trinity Biotech undertook to reduce the number of products and
instruments within the two key product lines of Haemostasis and Infectious Diseases. The
purpose of the rationalisation was to reduce complexity in the business, to improve selling
and operating efficiencies and to eliminate low revenue generating products. As a result, the
Group has recognised US$11,772,000, including US$147,000 in respect of the closure of the
Swedish operation (see note (c)), for inventory written off relating to those Haemostasis and
Infectious Diseases products and instruments being rationalised for the year ended December
31, 2007. |
|
(b) |
|
The Group has made a decision to terminate or suspend a number of product development
projects, which resulted in a write-off of capitalised development and license costs for the
year ended December 31, 2007 of US$6,667,000. |
|
|
|
Under IFRS the Group writes off research and development expenditure as incurred, with the
exception of expenditure on projects whose outcome has been assessed with reasonable certainty as
to technical feasibility, commercial viability and recovery of costs through future revenues. Such
expenditure is capitalised at cost within intangible assets as development costs. Factors which
impact our judgement to capitalise certain research and development expenditure include the degree
of regulatory approval for products and the results of any market research to determine the likely
future commercial success of products being developed. We review these factors each year to
determine whether our previous estimates as to feasibility, viability and recovery should be
changed. |
|
|
|
In December 2007, the Group announced its decision to focus on a smaller number of R&D projects,
with a particular focus on projects which will make the greatest contribution to the strategic
growth and development of the Group. Consequently, it was decided to terminate or suspend a number
of projects. As a result, US$5,134,000 of development costs were written off for the year ended
December 31, 2007. The write off of capitalised developments costs in 2007 relates to a number of
specific projects, the two most significant being the HIV over-the-counter (OTC) product and the
development of the HIV Western Blot confirmatory test which accounts for US$2,772,000 of the total
amount of capitalised development costs written off of US$5,134,000. The decision to suspend the
HIV OTC project is based on the latest assessment of expected market size for this product. The
Groups market assessment, carried out in 2007, has indicated that the market opportunity for this
product is significantly less than was originally envisaged. The Groups decision to suspend the
development of its HIV Western Blot confirmatory test is also due to changes in the marketplace.
The remaining development projects, which account for US$2,631,000 of the total capitalised development costs
being written off in 2007 have resulted from the strategic decision made by the Group in 2007 to
focus on a smaller number of R&D projects. |
|
|
|
Based on the decision to suspend a number of projects, US$439,000 was also written off for license
costs which were capitalised in prior years. These license costs related to projects which have
been written off in the current period. |
|
|
|
A further of US$1,094,000 was written off technology intangible assets acquired from bioMerieux.
This represents the portion of such assets which relate to instruments and reagents which are
being culled as part of the restructuring (see note 12). |
|
(c) |
|
As part of the restructuring, Trinity Biotech decided to close its manufacturing facility
located in Umea, Sweden. This facility manufactures a portion of the Groups Haemostasis
products and was acquired as part of the Biopool AB acquisition in 2001. These products will
be transferred to Trinitys Irish and US facilities in 2008. As part of the closure of this
facility, the Group recognised an inventory write off of US$147,000 and a write down of
property, plant and equipment of US$42,000. A total of US$448,000 has been accrued at
December 31, 2007 which consists of termination payments of US$332,000, and lease obligations
of US$116,000. |
|
(d) |
|
The reduction in the number of products, the more focused R&D approach and the closure of
the Swedish operation have enabled the Group to reduce its workforce and consequently total
redundancy costs of US$1,470,000 have been accrued for at December 31, 2007 (see note 23). |
78
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
4. |
|
FINANCIAL INCOME AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
Note |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Financial income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
457 |
|
|
|
1,164 |
|
|
|
389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease interest |
|
|
|
|
(65 |
) |
|
|
(27 |
) |
|
|
(33 |
) |
Interest payable on
interest bearing loans
and borrowings |
|
21 |
|
|
(2,834 |
) |
|
|
(2,167 |
) |
|
|
(312 |
) |
Convertible note interest |
|
22 |
|
|
|
|
|
|
(278 |
) |
|
|
(713 |
) |
Other interest expense |
|
|
|
|
(249 |
) |
|
|
(181 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,148 |
) |
|
|
(2,653 |
) |
|
|
(1,058 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,691 |
) |
|
|
(1,489 |
) |
|
|
(669 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest expense recognised in 2007 and 2006 comprises an interest expense arising from the
discounting of the deferred consideration payable to bioMerieux, resulting from the acquisition of
the haemostasis business during 2006, to reflect the present value of this additional
consideration, see note 24. |
|
5. |
|
OTHER OPERATING INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rental income from premises |
|
|
233 |
|
|
|
204 |
|
|
|
161 |
|
Employment/ training grants |
|
|
180 |
|
|
|
71 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
413 |
|
|
|
275 |
|
|
|
161 |
|
|
|
|
|
|
|
|
|
|
|
6. |
|
(LOSS)/PROFIT BEFORE TAX |
|
|
|
The following amounts were charged/ (credited) to the statement of operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Directors emoluments
(including non- executive
directors): |
|
|
|
|
|
|
|
|
|
|
|
|
Remuneration |
|
|
2,370 |
|
|
|
2,213 |
|
|
|
1,752 |
|
Pension |
|
|
147 |
|
|
|
119 |
|
|
|
131 |
|
Share based payments |
|
|
920 |
|
|
|
732 |
|
|
|
828 |
|
Auditors remuneration |
|
|
|
|
|
|
|
|
|
|
|
|
Audit fees |
|
|
1,544 |
|
|
|
629 |
|
|
|
688 |
|
Non audit fees |
|
|
77 |
|
|
|
50 |
|
|
|
164 |
|
Depreciation leased assets |
|
|
260 |
|
|
|
120 |
|
|
|
92 |
|
Depreciation owned assets |
|
|
4,081 |
|
|
|
3,616 |
|
|
|
2,342 |
|
Amortisation |
|
|
3,418 |
|
|
|
2,687 |
|
|
|
1,803 |
|
Loss/ (profit) on the disposal
of property, plant and
equipment |
|
|
16 |
|
|
|
(2 |
) |
|
|
469 |
|
Net foreign exchange differences |
|
|
68 |
|
|
|
(240 |
) |
|
|
(295 |
) |
Operating lease rentals: |
|
|
|
|
|
|
|
|
|
|
|
|
Plant and machinery |
|
|
38 |
|
|
|
85 |
|
|
|
17 |
|
Land and buildings |
|
|
3,798 |
|
|
|
2,838 |
|
|
|
1,800 |
|
Other equipment |
|
|
407 |
|
|
|
240 |
|
|
|
125 |
|
79
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
7. |
|
PERSONNEL EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Wages and salaries |
|
|
48,385 |
|
|
|
42,113 |
|
|
|
35,595 |
|
Social welfare costs |
|
|
5,118 |
|
|
|
4,407 |
|
|
|
3,613 |
|
Pension costs |
|
|
1,388 |
|
|
|
987 |
|
|
|
761 |
|
Share-based payments |
|
|
1,403 |
|
|
|
1,141 |
|
|
|
1,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,294 |
|
|
|
48,648 |
|
|
|
41,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel expenses are shown net of capitalisations. Total personnel expenses (wages and salaries,
social welfare costs and pension costs), inclusive of amounts capitalised, for the year ended
December 31, 2007 amounted to US$60,502,000 (2006: US$49,647,000) (2005: US$42,088,000). Total
share based payments, inclusive of amounts capitalised in the balance sheet, amounted to
US$1,482,000 for the year ended December 31, 2007 (2006: US$1,262,000) (2005: US$1,368,000).
See note 20. |
|
|
|
Included in personnel expenses for the year ended December 31, 2007 is US$2,035,000 which relates
to termination payments resulting from the restructuring announced in December 2007 (see note 3). |
|
|
|
The average number of persons employed by the Group in the financial year was 802 (2006: 794)
(2005: 703) and is analysed into the following categories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Research and development |
|
|
51 |
|
|
|
44 |
|
|
|
42 |
|
Administration and sales |
|
|
268 |
|
|
|
246 |
|
|
|
207 |
|
Manufacturing and quality |
|
|
483 |
|
|
|
504 |
|
|
|
454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
802 |
|
|
|
794 |
|
|
|
703 |
|
|
|
|
|
|
|
|
|
|
|
8. |
|
PENSION SCHEME |
|
|
|
The Group operates defined contribution pension schemes for certain of its full time employees. The
benefits under these schemes are financed by both Group and employee contributions. Total
contributions made by the Group in the financial year and charged against income amounted to
US$1,388,000 (2006: US$987,000) (2005: US$761,000) (note 7). This represents the total cost paid
and due by the Group to the pension schemes for the financial year and as such it was not necessary
to accrue or prepay pension contributions at the year end. |
80
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
9. |
|
INCOME TAX EXPENSE / (CREDIT) |
|
(a) |
|
The charge for tax based on the profit comprises: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Current tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
Corporation tax at 12.5% |
|
|
60 |
|
|
|
519 |
|
|
|
361 |
|
Manufacturing relief |
|
|
|
|
|
|
(49 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60 |
|
|
|
470 |
|
|
|
361 |
|
Overseas tax * |
|
|
114 |
|
|
|
25 |
|
|
|
(172 |
) |
Adjustment in respect of prior years ** |
|
|
(67 |
) |
|
|
(290 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current tax expense |
|
|
107 |
|
|
|
205 |
|
|
|
189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax expense / (credit) *** |
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of temporary
differences (see note 13) |
|
|
(1,042 |
) |
|
|
(107 |
) |
|
|
926 |
|
Origination and reversal of net
operating losses (see note 13) |
|
|
4,244 |
|
|
|
(2,922 |
) |
|
|
(442 |
) |
|
|
|
|
|
|
|
|
|
|
Total deferred tax expense / (credit) |
|
|
3,202 |
|
|
|
(3,029 |
) |
|
|
484 |
|
|
|
|
|
|
|
|
|
|
|
Total income tax charge / (credit) in
the statement of operations **** |
|
|
3,309 |
|
|
|
(2,824 |
) |
|
|
673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
The overseas tax charge in 2007 relates primarily to US State Taxes. The overseas tax charge in
2006 relates primarily to US State Taxes. The credit in 2005 of US$172,000 relates primarily to a
current year trading loss in Sweden which the Group was able to offset against its deferred
corporation tax liabilities in Sweden from previous years. No similar credits arose in 2007 or
2006. |
|
** |
|
The credit in 2007 principally arises in respect of the finalisation of a claim for Irish
Research and Development Tax Credits (R&D tax credits) in respect of the year ended December 31,
2006. The credit in 2006 of US$290,000 relates primarily to the release of US$200,000 that had
been provided at
December 31, 2005 which was not considered to be required at December 31, 2006. The remaining
US$90,000 principally arises in respect of the finalisation of a claim for R&D tax credits in
respect of the year ended December 31, 2005. |
|
*** |
|
In 2007 there was a deferred tax credit of US$538,000 (2006: US$741,000 expense) recognised in
respect of Ireland. In 2007, there was a deferred tax expense of US$3,740,000 (2006: US$3,770,000
credit) recognised in respect of overseas tax jurisdictions. |
|
**** |
|
The income tax charge in 2007 includes a tax credit of US$1,584,000 relating to the
restructuring (see note 3). It also includes a tax expense of US$3,780,000 relating to the
derecognition of deferred tax assets previously recognised, which primarily arose on tax losses
carried forward in the Groups US operations. The derecognition of these deferred tax assets was
considered appropriate in light of the increased tax losses caused by the restructuring and
uncertainty over the timing of the utilisation of the tax losses. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
Effective tax rate |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
(Loss)/ profit before taxation |
|
|
(32,063 |
) |
|
|
452 |
|
|
|
5,953 |
|
As a percentage of (loss)/ profit before tax: |
|
|
|
|
|
|
|
|
|
|
|
|
Current tax |
|
|
(0.34 |
%) |
|
|
46.32 |
% |
|
|
3.17 |
% |
Total (current and deferred) |
|
|
(10.32 |
%) |
|
|
(625.44 |
)% |
|
|
11.31 |
% |
81
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
The following table reconciles the applicable Republic of Ireland statutory tax rate to the
effective total tax rate for the Group: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
Irish corporation tax |
|
|
12.50 |
% |
|
|
12.50 |
% |
|
|
12.50 |
% |
Manufacturing relief |
|
|
|
|
|
|
(10.76 |
%) |
|
|
|
|
Adjustments in respect of prior years |
|
|
0.21 |
% |
|
|
(64.15 |
%) |
|
|
|
|
Effect of tax rates on overseas earnings |
|
|
5.08 |
% |
|
|
(529.98 |
%) |
|
|
(5.10 |
%) |
Effect of non deductible expenses |
|
|
(8.24 |
%) |
|
|
43.90 |
% |
|
|
3.91 |
% |
Effect of current year net operating
losses and temporary differences for
which no deferred tax asset was
recognised |
|
|
(9.00 |
%) |
|
|
|
|
|
|
|
|
Effect of derecognition of deferred tax
assets relating to loss carryforwards
and temporary differences at the start
of the period |
|
|
(11.79 |
%) |
|
|
|
|
|
|
|
|
Effect of benefit of loss carryforwards |
|
|
|
|
|
|
(25.18 |
%) |
|
|
|
|
Effect of
Irish income taxable at higher tax rate |
|
|
(0.13 |
%) |
|
|
2.44 |
% |
|
|
|
|
R&D tax credit |
|
|
1.05 |
% |
|
|
(54.21 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
|
(10.32 |
%) |
|
|
(625.44 |
%) |
|
|
11.31 |
% |
|
|
Deferred tax recognised directly in equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Relating to forward
contracts as hedged
instruments |
|
|
23 |
|
|
|
4 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
|
|
|
4 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
(b) |
|
The distribution of profit before taxes by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
(23,143 |
) |
|
|
9,585 |
|
|
|
7,873 |
|
Rest of World Other |
|
|
(2,182 |
) |
|
|
(1,855 |
) |
|
|
(1,567 |
) |
Americas |
|
|
(6,738 |
) |
|
|
(7,278 |
) |
|
|
(353 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(32,063 |
) |
|
|
452 |
|
|
|
5,953 |
|
|
|
|
|
|
|
|
|
|
|
|
(c) |
|
At December 31, 2007, the Group had unutilised net operating losses as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
December 31, 2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
US |
|
|
9,158 |
|
|
|
8,138 |
|
|
|
3,331 |
|
France |
|
|
1,085 |
|
|
|
264 |
|
|
|
|
|
Germany |
|
|
3,540 |
|
|
|
2,320 |
|
|
|
668 |
|
Ireland |
|
|
290 |
|
|
|
290 |
|
|
|
|
|
UK |
|
|
160 |
|
|
|
580 |
|
|
|
244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,233 |
|
|
|
11,592 |
|
|
|
4,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The utilisation of these net operating loss carryforwards is limited to future profitable
operations in the US, France, Germany, Ireland and the UK. The US net operating loss has a maximum
carryforward of 20 years. US$3,043,000 of the net operating losses in the US will expire by
December 31, 2024, US$5,095,000 will expire by December 31, 2026, and US$1,020,000 will expire by
December 31, 2027. The French, German, Irish and UK losses can be carried forward indefinitely. |
|
|
|
At December 31, 2007, the Group recognised a deferred tax asset of US$203,000 in respect of net
operating loss carryforwards in Germany, UK and France, as there are sufficient taxable temporary
differences relating to the same taxation authority and the same taxable entity which will result
in taxable amounts against which the unused tax losses can be utilised before they expire. The
utilisation of these net operating loss carryforwards is limited to future profitable operations in
Germany, UK and France. |
82
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
At December 31, 2007, the Group had unrecognised deferred tax assets in respect of unused tax
losses, unused tax credits and deductible temporary differences as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December |
|
|
December |
|
|
December |
|
|
December |
|
|
|
31,2007 |
|
|
31,2006 |
|
|
31,2005 |
|
|
31,2004 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
US unused tax losses |
|
|
3,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany unused tax losses |
|
|
945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
France unused tax losses |
|
|
290 |
|
|
|
87 |
|
|
|
|
|
|
|
|
|
Ireland unused tax losses |
|
|
73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
US unused tax credits |
|
|
314 |
|
|
|
185 |
|
|
|
316 |
|
|
|
302 |
|
US deductible temporary differences |
|
|
1,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognised Deferred Tax Asset |
|
|
6,939 |
|
|
|
272 |
|
|
|
316 |
|
|
|
302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A deferred tax asset of US$3,717,000 (2006: US$Nil) in respect of net operating losses in the US,
US$945,000 (2006: US$Nil) in respect of net operating losses in Germany, US$290,000 (2006:
US$87,000) in respect of net operating losses in France and US$73,000 (2006: US$Nil) in respect of
net operating losses in Ireland were not recognised at December 31, 2007 due to uncertainties
regarding full utilisation of these losses in the related tax jurisdiction in future periods (see
note 13). The Group has US state credit carryforwards of US$314,000 at December 31, 2007 (2006:
US$326,000). A deferred tax asset of US$314,000 (2006: US$185,000) in respect of US state credit
carryforwards was not recognised in 2007 due to uncertainties regarding future full utilisation of
these state credit carryforwards in the related tax jurisdiction in future periods. Excepting
state credit carryforwards of US$11,000 which expire by December 31, 2008 and US$5,000 which expire
by December 31, 2009, the balance of the state credits carry forward indefinitely. |
|
(d) |
|
There are no income tax consequences for the Company attaching to the payment of dividends by
Trinity Biotech plc to shareholders of the Company. |
10. |
|
(LOSS)/ EARNINGS PER SHARE |
|
|
|
Basic (loss)/ earnings per ordinary share |
|
|
|
Basic (loss)/ earnings per ordinary share for the Group is computed by dividing the loss after
taxation of US$35,372,000 (2006: profit after tax of US$3,276,000) (2005: profit after tax of
US$5,280,000) for the financial year by the weighted average number of A ordinary and B
ordinary shares in issue of 76,036,579 (2006: 70,693,753) (2005: 58,890,084). 1,400,000 of the
total weighted average shares used as the EPS denominator relate to the 700,000 B ordinary
shares in issue. In all respects these shares are treated the same as A ordinary shares except
for the fact that they have two voting rights per share, rights to participate in any liquidation
or sale of the Group and to receive dividends as if each Class B ordinary share were two Class
A ordinary shares. Hence the (loss)/ earnings per share for a B ordinary share is exactly
twice the (loss)/ earnings per share of an A ordinary share. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
A ordinary shares |
|
|
74,636,579 |
|
|
|
69,293,753 |
|
|
|
57,490,084 |
|
B ordinary shares |
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/ earnings per share denominator |
|
|
76,036,579 |
|
|
|
70,693,753 |
|
|
|
58,890,084 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to weighted average earnings per
share denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Number of A ordinary shares at January 1 (note 19) |
|
|
73,601,497 |
|
|
|
60,041,521 |
|
|
|
54,904,318 |
|
Number of B ordinary shares at January 1
(multiplied by 2) |
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
|
1,400,000 |
|
Weighted average number of shares issued during
the year |
|
|
1,035,082 |
|
|
|
9,252,232 |
|
|
|
2,585,766 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/ earnings per share denominator |
|
|
76,036,579 |
|
|
|
70,693,753 |
|
|
|
58,890,084 |
|
|
|
|
|
|
|
|
|
|
|
83
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
The weighted average number of shares issued during the year is calculated by taking the number of
shares issued by the number of days in the year each share is in issue divided by 365 days. |
|
|
|
Diluted (loss)/ earnings per ordinary share |
|
|
|
Diluted (loss)/ earnings per ordinary share is computed by dividing the loss after tax of
US$35,372,000 (2006: profit after tax of US$3,276,000) (2005: profit after tax of US$5,280,000)
for the financial year, adjusted for the after tax effect of the interest saving on convertible
notes of US$nil (2006: US$nil) (2005: US$535,000) by the diluted weighted average number of
ordinary shares in issue of 76,036,579 (2006: 72,125,740) (2005: 67,032,382). |
|
|
|
The basic weighted average number of shares for the Group may be reconciled to the number used in
the diluted (loss)/ earnings per ordinary share calculation as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Basic (loss)/ earnings per share denominator
(see above) |
|
|
76,036,579 |
|
|
|
70,693,753 |
|
|
|
58,890,084 |
|
Issuable on exercise of options and warrants |
|
|
|
|
|
|
1,431,987 |
|
|
|
2,168,545 |
|
Issuable on conversion of convertible notes |
|
|
|
|
|
|
|
|
|
|
5,973,753 |
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)/ earnings per share denominator * |
|
|
76,036,579 |
|
|
|
72,125,740 |
|
|
|
67,032,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
At December 31, 2007, the number of shares issuable on the exercise of options and warrants is
anti-dilutive and hence the diluted (loss)/ earnings per share has been calculated excluding the
number of shares issuable on the exercise of options and warrants. If the number of shares
issuable on the exercise of options and warrants had not been anti-dilutive, 1,854,825 shares
issuable on the exercise of options and warrants would have been included in the diluted (loss)/
earnings per share denominator in 2007. The after tax effect of the interest saving on convertible
notes is nil in 2007 as the final interest payment on the convertibles notes was paid on January
2, 2007. |
|
|
The after tax effect of the interest saving on convertible notes for 2006 was anti-dilutive and
hence the diluted earnings per share has been calculated excluding the after tax effect of the
interest saving on the convertible notes of US$208,000 in 2006. If the after tax effect on
interest saving on convertible notes had not been anti-dilutive, 2,209,506 shares issuable on the
conversion of convertible notes would have been included in the diluted earnings per share
denominator in 2006. |
|
|
|
The after tax effect of the interest saving on convertible notes for 2005 was not anti-dilutive
and therefore 2,168,545 shares issuable on the exercise of options and 5,973,753 shares issuable
on the conversion of convertible notes have been included in the diluted earnings per share
denominator for 2005. |
|
|
|
Earnings per ADS |
|
|
|
In June 2005, Trinity Biotech adjusted its ADS ratio from 1 ADS: 1 Ordinary Share to 1 ADS: 4
Ordinary Shares. Earnings per ADS for all periods presented have been restated to reflect this
exchange ratio. |
|
|
|
Basic (loss)/ earnings per ADS for the Group is computed by dividing the loss after taxation of
US$35,372,000 (2006: profit after tax of US$3,276,000) (2005: profit after tax of US$5,280,000)
for the financial year by the weighted average number of ADS in issue of 19,009,144 (2006:
17,673,438) (2005:14,722,521). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
A ordinary shares ADS |
|
|
18,659,144 |
|
|
|
17,323,438 |
|
|
|
14,372,521 |
|
B ordinary shares ADS |
|
|
350,000 |
|
|
|
350,000 |
|
|
|
350,000 |
|
|
|
|
|
|
|
|
|
|
|
Basic (loss)/ earnings per share denominator |
|
|
19,009,144 |
|
|
|
17,673,438 |
|
|
|
14,722,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)/ earnings per ADS for the Group is computed by dividing the loss after taxation of
US$35,372,000 (2006: profit after tax of US$3,276,000) (2005: profit after tax of US$5,280,000)
for the financial year, adjusted for the after tax effect of interest saving on convertible notes
of US$nil (2006: US$nil) (2005: US$535,000) by the diluted weighted average number of ADS in
issue of 19,009,144 (2006: 18,031,435) (2005: 16,758,095). |
84
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
The basic weighted average number of ADS shares for the Group only may be reconciled to the number
used in the diluted earnings per ADS share calculation as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
Basic (loss)/ earnings per share denominator
(see above) |
|
|
19,009,144 |
|
|
|
17,673,438 |
|
|
|
14,722,521 |
|
Issuable on exercise of options and warrants |
|
|
|
|
|
|
357,997 |
|
|
|
542,136 |
|
Issuable on conversion of convertible notes |
|
|
|
|
|
|
|
|
|
|
1,493,438 |
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)/ earnings per share denominator * |
|
|
19,009,144 |
|
|
|
18,031,435 |
|
|
|
16,758,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
At December 31, 2007, the number of ADSs issuable on the exercise of options and warrants is
anti-dilutive and hence the diluted (loss)/ earnings per share has been calculated excluding the
number of ADSs issuable on the exercise of options and warrants. If the number of ADSs issuable on
the exercise of options and warrants had not been anti-dilutive, 463,706 ADSs issuable on the
exercise of options and warrants would have been included in the diluted (loss)/ earnings per ADS
denominator in 2007. |
|
|
The after tax effect of the interest saving on convertible notes is nil in 2007 as the final
interest payment on the convertibles notes was paid on January 2, 2007. The after tax effect of
the interest saving on convertible notes for 2006 was anti-dilutive and hence the diluted earnings
per ADS share has been stated excluding the after tax effect of the interest saving on the
convertible notes of US$208,000 in 2006. If the after tax effect on interest saving on convertible
notes had not been anti-dilutive, 552,377 ADSs issuable on the conversion of convertible notes
would have been included in the diluted earnings per ADS denominator in 2006. The after tax effect
of the interest saving on convertible notes for 2005 was not anti-dilutive and therefore 542,136
ADSs issuable on the exercise of options and 1,493,438 ADSs issuable on the conversion of
convertible notes have been included in the diluted earnings per ADS denominator for 2005. |
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
11. |
|
PROPERTY, PLANT AND EQUIPMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers, |
|
|
|
|
|
|
|
|
|
Freehold land |
|
|
Leasehold |
|
|
fixtures and |
|
|
Plant and |
|
|
|
|
|
|
and buildings |
|
|
improvements |
|
|
fittings |
|
|
equipment |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2006 |
|
|
5,064 |
|
|
|
3,025 |
|
|
|
3,975 |
|
|
|
17,198 |
|
|
|
29,262 |
|
Acquisitions through
business combinations
(note 27) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,418 |
|
|
|
2,418 |
|
Other additions |
|
|
18 |
|
|
|
370 |
|
|
|
1,023 |
|
|
|
2,935 |
|
|
|
4,346 |
|
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(629 |
) |
|
|
(629 |
) |
Exchange adjustments |
|
|
357 |
|
|
|
12 |
|
|
|
24 |
|
|
|
526 |
|
|
|
919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 |
|
|
5,439 |
|
|
|
3,407 |
|
|
|
5,022 |
|
|
|
22,448 |
|
|
|
36,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007 |
|
|
5,439 |
|
|
|
3,407 |
|
|
|
5,022 |
|
|
|
22,448 |
|
|
|
36,316 |
|
Acquisitions through
business combinations
(note 27) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
|
|
|
23 |
|
Other additions |
|
|
15 |
|
|
|
266 |
|
|
|
549 |
|
|
|
7,856 |
|
|
|
8,686 |
|
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
(52 |
) |
|
|
(1,107 |
) |
|
|
(1,159 |
) |
Exchange adjustments |
|
|
382 |
|
|
|
2 |
|
|
|
9 |
|
|
|
446 |
|
|
|
839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 |
|
|
5,836 |
|
|
|
3,675 |
|
|
|
5,528 |
|
|
|
29,666 |
|
|
|
44,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2006 |
|
|
(682 |
) |
|
|
(987 |
) |
|
|
(1,987 |
) |
|
|
(6,404 |
) |
|
|
(10,060 |
) |
Charge for the year |
|
|
(112 |
) |
|
|
(318 |
) |
|
|
(609 |
) |
|
|
(2,697 |
) |
|
|
(3,736 |
) |
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120 |
|
|
|
120 |
|
Exchange adjustments |
|
|
(24 |
) |
|
|
(12 |
) |
|
|
(18 |
) |
|
|
(331 |
) |
|
|
(385 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 |
|
|
(818 |
) |
|
|
(1,317 |
) |
|
|
(2,614 |
) |
|
|
(9,312 |
) |
|
|
(14,061 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007 |
|
|
(818 |
) |
|
|
(1,317 |
) |
|
|
(2,614 |
) |
|
|
(9,312 |
) |
|
|
(14,061 |
) |
Charge for the year |
|
|
(119 |
) |
|
|
(347 |
) |
|
|
(799 |
) |
|
|
(3,076 |
) |
|
|
(4,341 |
) |
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
52 |
|
|
|
430 |
|
|
|
482 |
|
Restructuring write off |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(133 |
) |
|
|
(133 |
) |
Exchange adjustments |
|
|
(33 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(207 |
) |
|
|
(243 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 |
|
|
(970 |
) |
|
|
(1,666 |
) |
|
|
(3,362 |
) |
|
|
(12,298 |
) |
|
|
(18,296 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 |
|
|
4,866 |
|
|
|
2,009 |
|
|
|
2,166 |
|
|
|
17,368 |
|
|
|
26,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 |
|
|
4,621 |
|
|
|
2,090 |
|
|
|
2,408 |
|
|
|
13,136 |
|
|
|
22,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apart from the impact of the restructuring reflected above, there were no other indications in the
current year that the above carrying value may not be recoverable.
Assets held under operating leases (where the Company is the lessor)
Included in the carrying amount of property, plant and equipment are a number of assets included
in plant and equipment which generate operating lease revenue for the Group. The net book value
of these assets as at December 31, 2007 is US$3,913,000 (2006: US$3,753,000). Depreciation
charged on these assets in 2007 amounted to US$1,527,000
(2006: US$1,281,000).
Included in disposals/ retirements in 2007 is US$550,000 (2006: US$302,000) relating to the net
book value of leased instruments reclassified as inventory on return from customers.
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
Assets held under finance leases
Included in the carrying amount of property, plant and equipment is an amount for capitalised
leased assets of US$2,913,000 (2006: US$654,000). The leased equipment secures the lease
obligations (note 28). The depreciation charge in respect of capitalised leased assets for the
year ended December 31, 2007 was US$260,000 (2006: US$120,000). This is split as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freehold |
|
|
|
|
|
|
Computers, |
|
|
|
|
|
|
|
|
|
land and |
|
|
Leasehold |
|
|
fixtures and |
|
|
Plant and |
|
|
|
|
|
|
buildings |
|
|
improvements |
|
|
fittings |
|
|
equipment |
|
|
Total |
|
At December 31, 2007 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Depreciation charge |
|
|
|
|
|
|
43 |
|
|
|
46 |
|
|
|
171 |
|
|
|
260 |
|
Carrying value |
At December 31, 2007 |
|
|
|
|
|
|
244 |
|
|
|
382 |
|
|
|
2,287 |
|
|
|
2,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freehold |
|
|
|
|
|
|
Computers, |
|
|
|
|
|
|
|
|
|
land and |
|
|
Leasehold |
|
|
fixtures and |
|
|
Plant and |
|
|
|
|
|
|
buildings |
|
|
improvements |
|
|
fittings |
|
|
equipment |
|
|
Total |
|
At December 31, 2006 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Depreciation charge |
|
|
|
|
|
|
39 |
|
|
|
46 |
|
|
|
35 |
|
|
|
120 |
|
Carrying value |
At December 31, 2006 |
|
|
|
|
|
|
271 |
|
|
|
185 |
|
|
|
198 |
|
|
|
654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment under construction
Included in plant and equipment at December 31, 2007 is an amount of US$92,000 (2006:
US$121,000) relating to assets in the course of construction. During the year, plant and
equipment of US$118,000 which was under construction in 2006 was completed and depreciation was
charged on these assets in 2007. A further US$89,000 was included as assets under construction
in 2007, relating
to plant and equipment which were not fully completed by December 31, 2007. These assets were
not depreciated in 2007.
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
12. |
|
GOODWILL AND INTANGIBLE ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development |
|
|
Patents and |
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
costs |
|
|
licences |
|
|
Other |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2006 |
|
|
54,938 |
|
|
|
12,317 |
|
|
|
5,143 |
|
|
|
16,992 |
|
|
|
89,390 |
|
Acquisitions, through business
combinations (note 27) |
|
|
21,679 |
|
|
|
|
|
|
|
4,950 |
|
|
|
6,435 |
|
|
|
33,064 |
|
Other additions |
|
|
|
|
|
|
5,862 |
|
|
|
|
|
|
|
286 |
|
|
|
6,148 |
|
Exchange adjustments |
|
|
|
|
|
|
61 |
|
|
|
|
|
|
|
6 |
|
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 |
|
|
76,617 |
|
|
|
18,240 |
|
|
|
10,093 |
|
|
|
23,719 |
|
|
|
128,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007 |
|
|
76,617 |
|
|
|
18,240 |
|
|
|
10,093 |
|
|
|
23,719 |
|
|
|
128,669 |
|
Acquisitions, through business
combinations (note 27) |
|
|
2,982 |
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
|
4,482 |
|
Other additions |
|
|
|
|
|
|
7,508 |
|
|
|
|
|
|
|
372 |
|
|
|
7,880 |
|
Exchange adjustments |
|
|
|
|
|
|
64 |
|
|
|
|
|
|
|
11 |
|
|
|
75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 |
|
|
79,599 |
|
|
|
25,812 |
|
|
|
10,093 |
|
|
|
25,602 |
|
|
|
141,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2006 |
|
|
|
|
|
|
(464 |
) |
|
|
(1,512 |
) |
|
|
(2,217 |
) |
|
|
(4,193 |
) |
Charge for the year |
|
|
|
|
|
|
(468 |
) |
|
|
(611 |
) |
|
|
(1,608 |
) |
|
|
(2,687 |
) |
Exchange adjustments |
|
|
|
|
|
|
(18 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
(21 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 |
|
|
|
|
|
|
(950 |
) |
|
|
(2,123 |
) |
|
|
(3,828 |
) |
|
|
(6,901 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2007 |
|
|
|
|
|
|
(950 |
) |
|
|
(2,123 |
) |
|
|
(3,828 |
) |
|
|
(6,901 |
) |
Charge for the year |
|
|
|
|
|
|
(547 |
) |
|
|
(797 |
) |
|
|
(2,074 |
) |
|
|
(3,418 |
) |
Goodwill impairment |
|
|
(19,156 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,156 |
) |
Restructuring write off (note 3) |
|
|
|
|
|
|
(5,134 |
) |
|
|
(1,533 |
) |
|
|
|
|
|
|
(6,667 |
) |
Exchange adjustments |
|
|
|
|
|
|
(31 |
) |
|
|
|
|
|
|
(5 |
) |
|
|
(36 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 |
|
|
(19,156 |
) |
|
|
(6,662 |
) |
|
|
(4,453 |
) |
|
|
(5,907 |
) |
|
|
(36,178 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 |
|
|
60,443 |
|
|
|
19,150 |
|
|
|
5,640 |
|
|
|
19,695 |
|
|
|
104,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 |
|
|
76,617 |
|
|
|
17,290 |
|
|
|
7,970 |
|
|
|
19,891 |
|
|
|
121,768 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within development costs are costs of US$12,333,000 which were not amortised in 2007
(2006: US$11,282,000). These development costs are not being amortised as the projects to which the
costs relate were not fully complete at December 31, 2007 or at December 31, 2006. As at December
31, 2007 these projects are expected to be completed during the period from January 1, 2008 to
December 31, 2009 at an expected approximate further cost of US$5.7 million.
Other intangible assets consist primarily of acquired customer and supplier lists, trade
names, website and software costs.
Amortisation is charged to the statement of operations through the selling, general and
administrative expenses line.
Included in other intangibles are the following indefinite lived assets:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Fitzgerald trade name |
|
|
970 |
|
|
|
970 |
|
RDI trade name |
|
|
560 |
|
|
|
560 |
|
Primus trade name |
|
|
1,870 |
|
|
|
1,870 |
|
|
|
|
|
|
|
|
|
|
|
3,400 |
|
|
|
3,400 |
|
|
|
|
|
|
|
|
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
No trade names were purchased as part of the 2007 or 2006 acquisitions (note 27). The trade name
assets purchased as part of the acquisition of Primus and RDI in 2005 and Fitzgerald in 2004 were
valued by an external valuer using the relief from royalty method and based on factors such as (1)
the market and competitive trends and (2) the expected usage of the name. It was considered that
these trade names will generate net cash inflows for the Group for an indefinite period.
Impairment testing for intangibles including goodwill and indefinite lived assets
Goodwill and the above other intangibles with indefinite lives are tested annually for impairment
at each balance sheet date at a cash-generating unit (CGU) level, i.e. the individual legal
entities. For the purpose of these annual impairment reviews goodwill is allocated to the relevant
CGU.
Significant carrying amounts of goodwill acquired through business combinations and intangible
assets with indefinite useful lives have been allocated to the following cash-generating units:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Trinity Biotech Manufacturing Limited |
|
|
20,042 |
|
|
|
39,156 |
|
Benen Trading Limited |
|
|
14,121 |
|
|
|
12,086 |
|
Primus Corporation |
|
|
9,558 |
|
|
|
9,558 |
|
Biopool US Inc |
|
|
5,821 |
|
|
|
5,821 |
|
MarDx Diagnostics Inc |
|
|
3,571 |
|
|
|
3,571 |
|
Trinity Biotech UK (Sales) Limited |
|
|
4,233 |
|
|
|
3,328 |
|
Clark Laboratories Inc |
|
|
2,994 |
|
|
|
2,994 |
|
Trinity Biotech GmbH |
|
|
1,830 |
|
|
|
1,830 |
|
Trinity Biotech France SARL |
|
|
1,673 |
|
|
|
1,673 |
|
|
|
|
|
|
|
|
|
|
|
63,843 |
|
|
|
80,017 |
|
|
|
|
|
|
|
|
The recoverable amount of goodwill and intangible assets contained in each of the Groups CGUs is
determined based on the greater of the fair value less cost to sell and value in use calculations.
The Group operates in one business segment and accordingly the key assumptions are similar for all
CGUs. The value in use calculations use cash flow projections based on the 2008 budget and
projections for a further four years using a 10 year projected growth rate of 7% and a cost growth
rate of 3%. The revenue growth rate is based on the expected growth rate within the diagnostics
industry and the cost growth rate is based on expected cost inflation in the economies in which the
Group operates. At the end of the five year forecast period, terminal values for each CGU, based on
a long term growth rate of 4%, are used in the value in use calculations. The cashflows and
terminal values for the CGUs are discounted using pre-tax discount rates which range from 14.8% to
27.7%.
Impairment loss arising on annual impairment review
Arising from the 2007 impairment review, an impairment loss of US$19,156,000 has been recognised in
the financial statements for the year ended December 31, 2007, representing the excess of the
carrying value over the discounted future cashflows. This impairment loss arose in Trinity Biotech
Manufacturing Limited, one of the Groups CGUs. Trinity Biotech Manufacturing Limited
manufactures haemostasis, infectious diseases, point of care and clinical chemistry products at its
plant in Bray, Ireland, which are then sold to third party distributors and other selling entities
within the Group. The impairment loss has been allocated entirely to goodwill and in particular to
goodwill arising on the following acquisitions:
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
US$000 |
|
Bartels |
|
|
7,340 |
|
Cambridge |
|
|
3,005 |
|
Ortho |
|
|
783 |
|
Dade |
|
|
8,028 |
|
|
|
|
|
|
|
|
19,156 |
|
|
|
|
|
This impairment loss has been allocated to the goodwill arising on the abovementioned acquisitions
as sales of the products associated with each of these acquisitions are now static or declining.
Following the recognition of this impairment loss, the carrying value of the assets of Trinity
Biotech Manufacturing Limited is now consistent with the value in use calculations as outlined
above.
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
Impairment loss on bioMerieux technology asset
In December 2007, the Group announced a restructuring of its activities (see note 3). As part this
restructuring, the Group decided to rationalise its three existing haemostasis product lines with a
view to creating a single product line consisting of the best products from each line. As a direct
consequence, a number of the Groups haemostasis products were identified for culling, including a
number of products acquired from bioMerieux in 2006. As a result, the Group has recognised a
specific impairment loss of US$1,094,000 against the carrying value of the technology assets
acquired from bioMerieux. The impairment loss represents 25% of the carrying value of the
technology assets at the date of the group restructuring, as the products being culled represent
approximately 25% of sales of those products acquired from bioMerieux. The remaining useful
economic life of the remaining 75% of the carrying value of the technology asset is unaffected and
was amortised on a straight line basis, through December 31, 2007. No other assets were impaired
as a direct result of the product rationalisation.
The value in use calculation and the impairment charge arising therefrom are subject to significant
estimation, uncertainty and accounting judgements and are particularly sensitive in the following
areas. In the event that there was a variation of 10% in the assumed level of future growth in
revenues, which would represent a reasonably likely range of outcomes, there would be the following
impact on the level of the goodwill impairment loss recorded at December 31, 2007:
|
|
|
An increase in goodwill impairment of US$23.5 million in the event of a 10% decrease in
the growth in revenues. |
|
|
|
|
A decrease in goodwill impairment of US$18.6 million in the event of a 10% increase in
the growth in revenues. |
Similarly if there was a 10% variation in the discount rate used to calculate the potential
goodwill impairment of the carrying values, which would represent a reasonably likely range of
outcomes, there
would be the following impact on the level of the goodwill impairment loss recorded at December 31,
2007:
|
|
|
An increase in goodwill impairment of US$18.0 million in the event of a 10% increase in
the discount rate. |
|
|
|
|
A decrease in goodwill impairment of US$16.3 million in the event of a 10% decrease in
the discount rate. |
The impairment reviews carried out at December 31, 2006 and December 31 2005 did not result in any
impairment of intangible assets, non-current assets or related goodwill. A 10% variation in the
discount rate or growth in revenues used to calculate the potential impairment of the carrying
values would not have resulted in an impairment of assets at December 31, 2006 or December 31,
2005.
13. |
|
DEFERRED TAX ASSETS AND LIABILITIES |
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities of the Group are attributable to the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
Liabilities |
|
|
Net |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
15 |
|
|
|
29 |
|
|
|
(1,618 |
) |
|
|
(1,752 |
) |
|
|
(1,603 |
) |
|
|
(1,723 |
) |
Intangible assets |
|
|
|
|
|
|
|
|
|
|
(6,998 |
) |
|
|
(6,285 |
) |
|
|
(6,998 |
) |
|
|
(6,285 |
) |
Inventories |
|
|
1,733 |
|
|
|
1,886 |
|
|
|
|
|
|
|
|
|
|
|
1,733 |
|
|
|
1,886 |
|
Provisions |
|
|
1,520 |
|
|
|
1,055 |
|
|
|
|
|
|
|
|
|
|
|
1,520 |
|
|
|
1,055 |
|
Other items |
|
|
466 |
|
|
|
239 |
|
|
|
(621 |
) |
|
|
(1,409 |
) |
|
|
(155 |
) |
|
|
(1,170 |
) |
Tax value of loss carryforwards
recognised |
|
|
203 |
|
|
|
4,447 |
|
|
|
|
|
|
|
|
|
|
|
203 |
|
|
|
4,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets/(liabilities) |
|
|
3,937 |
|
|
|
7,656 |
|
|
|
(9,237 |
) |
|
|
(9,446 |
) |
|
|
(5,300 |
) |
|
|
(1,790 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred tax asset in 2007 is due mainly to deductible temporary differences and the
elimination of unrealised intercompany inventory profit. The deferred tax asset decreased in 2007
due principally to the derecognition of deferred tax assets previously recognised of US$3,780,000.
The derecognition of these deferred tax assets was considered appropriate in light of the increased
tax losses caused by the restructuring and uncertainty over the timing of the utilisation of the
tax losses.
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
The deferred tax asset in 2006 is due mainly to deductible temporary differences created by net
operating losses and US state credit carryforwards, and the elimination of unrealised intercompany
inventory profit. The deferred tax asset increased in 2006 due principally to the increase in net
operating losses available for offset against future profits.
At December 31, 2007, the Group recognised a deferred tax asset of US$203,000 in respect of net
operating loss carryforwards in Germany, UK and France, as there are sufficient taxable temporary
differences relating to the same taxation authority and the same taxable entity which will result
in
taxable amounts against which the unused tax losses can be utilised before they expire. The
utilisation of these net operating loss carryforwards is limited to future profitable operations in
Germany, UK and France.
At December 31, 2006, the Group recognised a deferred tax asset of US$4,447,000 in respect of net
operating loss carryforwards in the USA, Germany, UK and Ireland. The utilisation of these net
operating loss carryforwards is limited to future profitable operations in the USA, Germany, UK and
Ireland. Included within this deferred tax asset is US$142,000 (2007: US$Nil) which was recognised
in respect of US state credit carryforwards.
The deferred tax liability is caused by the net book value of non current assets being greater than
the tax written down value of non current assets, temporary differences due to the acceleration of
the recognition of certain charges in calculating taxable income permitted in Ireland, the USA and
Germany, and deferred tax recognised on fair value asset uplifts in connection with business
combinations. The deferred tax liability decreased in 2007 as the excess of the net book value of
non current assets over the tax written down value decreased. This decrease was partially offset
by the recognition of deferred tax liabilities on the fair value of the intangible assets acquired
in business combinations of US$285,000 (2006: US$1,370,000), see note 27.
Deferred tax assets and liabilities are only offset when the entity has a legally enforceable right
to set off current tax assets against current tax liabilities and where the intention is to settle
current tax liabilities and assets on a net basis or to realise the assets and settle the
liabilities simultaneously. At December 31, 2007 and December 31, 2006, no deferred tax assets and
liabilities are offset as it is not certain as to whether there is a legally enforceable right to
set off current tax assets against current tax liabilities and it is also uncertain as to what
current tax assets may be set off against current tax liabilities and in what periods.
Unrecognised deferred tax assets
Deferred tax assets have not been recognised by the Group in respect of the following items:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Deductible temporary differences |
|
|
3,944 |
|
|
|
|
|
Capital losses |
|
|
6,138 |
|
|
|
6,138 |
|
US state credit carryforwards |
|
|
314 |
|
|
|
185 |
|
Net operating losses |
|
|
13,560 |
|
|
|
264 |
|
|
|
|
|
|
|
|
|
|
|
23,956 |
|
|
|
6,587 |
|
|
|
|
|
|
|
|
No deferred tax asset is recognised in respect of a capital loss of US$6,138,000 in Ireland in 2007
or 2006 as it was not probable that there will be future capital gains against which to offset
these capital losses.
A deferred tax asset of US$3,717,000 in respect of net operating losses of US$9,158,000 in the US
was not recognised due to uncertainties regarding the timing of the utilisation of these losses in
the related tax jurisdiction in future periods. A deferred tax asset of US$1,600,000 in respect of
deductible
temporary differences of US$3,944,000 in the US was not recognised due to uncertainties regarding
the timing of the utilisation of these temporary differences in the related tax jurisdiction in
future periods.
A deferred tax asset of US$314,000 (2006: US$185,000) in respect of US state credit carryforwards
was not recognised due to uncertainties regarding the timing of the utilisation of these state
credit carryforwards in the related tax jurisdiction in future periods.
A deferred tax asset of US$945,000 in respect of net operating losses of US$3,232,000 in Germany
was not recognised due to uncertainties regarding the timing of the utilisation of these losses in
the related tax jurisdiction in future periods.
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
A deferred tax asset of US$73,000 in respect of net operating losses of US$290,000 in Ireland was
not recognised due to uncertainties regarding the timing of the utilisation of these losses in the
related tax jurisdiction in future periods.
A deferred tax asset of US$290,000 (2006: US$87,000) in respect of net operating losses of
US$880,000 (2006: US$264,000) in France was not recognised due to uncertainties regarding the
timing of the utilisation of these losses in the related tax jurisdiction in future periods.
Unrecognised deferred tax liabilities
At December 31, 2007 and 2006, there was no recognised or unrecognised deferred tax liability for
taxes that would be payable on the unremitted earnings of certain of the Groups subsidiaries. The
Company is able to control the timing of the reversal of the temporary differences of its
subsidiaries and it is probable that these temporary differences will not reverse in the
foreseeable future
Movement in temporary differences during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
January 1, |
|
|
Recognised in |
|
|
Recognised on |
|
|
Recognised |
|
|
December 31, |
|
|
|
2007 |
|
|
income |
|
|
acquisitions |
|
|
in equity |
|
|
2007 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
(1,723 |
) |
|
|
120 |
|
|
|
|
|
|
|
|
|
|
|
(1,603 |
) |
Intangible assets |
|
|
(6,285 |
) |
|
|
(428 |
) |
|
|
(285 |
) |
|
|
|
|
|
|
(6,998 |
) |
Inventories |
|
|
1,886 |
|
|
|
(153 |
) |
|
|
|
|
|
|
|
|
|
|
1,733 |
|
Provisions |
|
|
1,055 |
|
|
|
465 |
|
|
|
|
|
|
|
|
|
|
|
1,520 |
|
Other items |
|
|
(1,170 |
) |
|
|
1,038 |
|
|
|
|
|
|
|
(23 |
) |
|
|
(155 |
) |
Tax value of loss
carryforwards recognised |
|
|
4,447 |
|
|
|
(4,244 |
) |
|
|
|
|
|
|
|
|
|
|
203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,790 |
) |
|
|
(3,202 |
) |
|
|
(285 |
) |
|
|
(23 |
) |
|
|
(5,300 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
January 1, |
|
|
Recognised in |
|
|
Recognised on |
|
|
Recognised |
|
|
December 31, |
|
|
|
2006 |
|
|
income |
|
|
acquisitions |
|
|
in equity |
|
|
2006 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
(1,650 |
) |
|
|
(73 |
) |
|
|
|
|
|
|
|
|
|
|
(1,723 |
) |
Intangible assets |
|
|
(4,492 |
) |
|
|
(422 |
) |
|
|
(1,371 |
) |
|
|
|
|
|
|
(6,285 |
) |
Inventories |
|
|
981 |
|
|
|
906 |
|
|
|
|
|
|
|
|
|
|
|
1,886 |
|
Provisions |
|
|
640 |
|
|
|
415 |
|
|
|
|
|
|
|
|
|
|
|
1,055 |
|
Other items |
|
|
(455 |
) |
|
|
(719 |
) |
|
|
|
|
|
|
4 |
|
|
|
(1,170 |
) |
Tax value of loss
carryforwards recognised |
|
|
1,525 |
|
|
|
2,922 |
|
|
|
|
|
|
|
|
|
|
|
4,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,451 |
) |
|
|
3,029 |
|
|
|
(1,371 |
) |
|
|
4 |
|
|
|
(1,790 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Finance lease receivables (see note 16) |
|
|
773 |
|
|
|
439 |
|
Other assets |
|
|
123 |
|
|
|
76 |
|
|
|
|
|
|
|
|
|
|
|
896 |
|
|
|
515 |
|
|
|
|
|
|
|
|
The Group leases instruments as part of its business. In 2007, the Group reclassified future
minimum finance lease receivables with non-cancellable terms between one and five years of
US$773,000 (2006: US$439,000) from trade and other receivables to other assets (see note 16).
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Raw materials and consumables |
|
|
10,849 |
|
|
|
10,598 |
|
Work-in-progress |
|
|
9,243 |
|
|
|
10,167 |
|
Finished goods |
|
|
24,328 |
|
|
|
24,807 |
|
|
|
|
|
|
|
|
|
|
|
44,420 |
|
|
|
45,572 |
|
|
|
|
|
|
|
|
All inventories are stated at the lower of cost or net realisable value. Total inventories for the
Group are shown net of provisions of US$18,234,000 (2006: US$7,284,000). Included in the total
provision at December 31, 2007 is US$9,602,000 arising from the rationalisation of the Groups
haemostasis and infectious diseases product lines (see note 3(a)).
In 2007, raw materials, consumables and changes in finished goods and work in progress recognised
as cost of sales amounted to US$76,168,000 (2006: US$59,895,000). In 2007, the write off of
inventories to net realisable value amounted to US$578,000 (2006: US$466,000). The reversal of write offs
in 2007 amounted to US$583,000.
Included in the total provision at December 31, 2006 is US$5,800,000 resulting from the acquisition
of the haemostasis business of bioMerieux in 2006. This arose from the process of combining the
acquired bioMerieux range of products with the Groups existing product range. As part of this
process it was decided to discontinue various existing products, resulting in a US$5,800,000
inventory provision at December 31, 2006. During 2007, an amount of US$280,000 was released which
was part of US$5.8 million inventory write-off for the year ended December 31, 2006.
The movement on the inventory provision for the three year period to December 31, 2007 is as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
US$000 |
|
US$000 |
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Opening provision at January 1 |
|
|
7,284 |
|
|
|
3,654 |
|
|
|
3,798 |
|
Charged during the year |
|
|
13,856 |
|
|
|
6,280 |
|
|
|
823 |
|
Utilised during the year |
|
|
(2,323 |
) |
|
|
(2,511 |
) |
|
|
(967 |
) |
Released during the year |
|
|
(583 |
) |
|
|
(139 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing provision at December 31 |
|
|
18,234 |
|
|
|
7,284 |
|
|
|
3,654 |
|
|
|
|
|
|
|
|
|
|
|
16. |
|
TRADE AND OTHER RECEIVABLES |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Trade receivables, net of impairment losses |
|
|
23,104 |
|
|
|
28,359 |
|
Prepayments |
|
|
1,665 |
|
|
|
3,492 |
|
Value added tax |
|
|
108 |
|
|
|
422 |
|
Finance lease receivables |
|
|
388 |
|
|
|
268 |
|
Other receivables |
|
|
418 |
|
|
|
135 |
|
|
|
|
|
|
|
|
|
|
|
25,683 |
|
|
|
32,676 |
|
|
|
|
|
|
|
|
Trade receivables for the Group are shown net of an impairment losses provision of US$657,000
(2006: US$1,074,000) (see note 30).
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
Leases as lessor
(i) Finance lease commitments Group as lessor
The Group leases instruments as part of its business. Future minimum finance lease receivables with
non-cancellable terms are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
Minimum |
|
|
|
Gross |
|
|
Unearned |
|
|
payments |
|
|
|
investment |
|
|
income |
|
|
receivable |
|
Less than one year |
|
|
673 |
|
|
|
285 |
|
|
|
388 |
|
Between one and five years (note 14) |
|
|
1,448 |
|
|
|
675 |
|
|
|
773 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,121 |
|
|
|
960 |
|
|
|
1,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
Minimum |
|
|
|
Gross |
|
|
Unearned |
|
|
payments |
|
|
|
investment |
|
|
income |
|
|
receivable |
|
Less than one year |
|
|
429 |
|
|
|
161 |
|
|
|
268 |
|
Between one and five years (note 14) |
|
|
887 |
|
|
|
448 |
|
|
|
439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,316 |
|
|
|
609 |
|
|
|
707 |
|
|
|
|
|
|
|
|
|
|
|
In 2007, the Group classified future minimum lease receivables between one and five years of
US$773,000 (2006: US$439,000) to Other Assets, see note 14. Under the terms of the lease
arrangements, no contingent rents are receivable.
(ii) Operating lease commitments Group as lessor
The Group has leased a facility consisting of 9,000 square feet in Dublin, Ireland. This property
has been sub-let by the Group. The lease contains a clause to enable upward revision of the rent
charge on a periodic basis. The Group also leases instruments under operating leases as part of
its business.
Future minimum rentals receivable under non-cancellable operating leases are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
US$000 |
|
|
|
Land and |
|
|
|
|
|
|
|
|
|
buildings |
|
|
Instruments |
|
|
Total |
|
Less than one year |
|
|
232 |
|
|
|
2,198 |
|
|
|
2,430 |
|
Between one and five years |
|
|
929 |
|
|
|
3,566 |
|
|
|
4,495 |
|
More than five years |
|
|
871 |
|
|
|
|
|
|
|
871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,032 |
|
|
|
5,764 |
|
|
|
7,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
|
Land and |
|
|
|
|
|
|
|
|
|
buildings |
|
|
Instruments |
|
|
Total |
|
Less than one year |
|
|
171 |
|
|
|
948 |
|
|
|
1,119 |
|
Between one and five years |
|
|
684 |
|
|
|
1,513 |
|
|
|
2,197 |
|
More than five years |
|
|
812 |
|
|
|
|
|
|
|
812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667 |
|
|
|
2,461 |
|
|
|
4,128 |
|
|
|
|
|
|
|
|
|
|
|
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Restricted cash |
|
|
|
|
|
|
15,500 |
|
|
|
|
|
|
|
|
At December 31, 2006, as part security for the Groups banking facility (note 21), the Group had
US$15,500,000 which was required to be held on interest-bearing deposit. As a result, this cash of
US$15,500,000 was shown as a financial asset at December 31, 2006. This requirement to hold a
certain amount of cash on interest bearing deposit was removed by the Groups banks in March 2007.
18. |
|
CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Cash at bank and in hand |
|
|
4,193 |
|
|
|
2,579 |
|
Short-term deposits |
|
|
4,507 |
|
|
|
242 |
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statements of cash flows |
|
|
8,700 |
|
|
|
2,821 |
|
|
|
|
|
|
|
|
Cash relates to all cash balances which are readily available at year end. Cash equivalents relate
to all cash balances on deposit, with a maturity of less than three months, which are not
restricted. See note 28 (c).
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007
19. CAPITAL AND RESERVES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
capital |
|
|
capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible |
|
|
(Accumulated |
|
|
|
|
|
|
A |
|
|
B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
notes |
|
|
deficit)/ |
|
|
|
|
|
|
ordinary |
|
|
ordinary |
|
|
Share |
|
|
Translation |
|
|
Warrant |
|
|
Owned |
|
|
Hedging |
|
|
equity |
|
|
retained |
|
|
|
|
|
|
shares |
|
|
shares |
|
|
premium |
|
|
reserve |
|
|
reserve |
|
|
shares |
|
|
reserves |
|
|
component |
|
|
earnings |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Balance at January 1, 2005 |
|
|
764 |
|
|
|
12 |
|
|
|
116,665 |
|
|
|
118 |
|
|
|
3,803 |
|
|
|
(2,373 |
) |
|
|
373 |
|
|
|
164 |
|
|
|
(368 |
) |
|
|
119,158 |
|
Total recognised income and expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,740 |
) |
|
|
|
|
|
|
|
|
|
|
(437 |
) |
|
|
|
|
|
|
5,280 |
|
|
|
3,103 |
|
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,368 |
|
|
|
1,368 |
|
Options and warrants exercised |
|
|
27 |
|
|
|
|
|
|
|
2,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,491 |
|
Class A shares issued on conversion of
convertible notes |
|
|
27 |
|
|
|
|
|
|
|
5,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,466 |
|
Share issue expenses |
|
|
|
|
|
|
|
|
|
|
(341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(341 |
) |
Own shares sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,373 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005 |
|
|
818 |
|
|
|
12 |
|
|
|
124,227 |
|
|
|
(1,622 |
) |
|
|
3,803 |
|
|
|
|
|
|
|
(64 |
) |
|
|
164 |
|
|
|
6,280 |
|
|
|
133,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2006 |
|
|
818 |
|
|
|
12 |
|
|
|
124,227 |
|
|
|
(1,622 |
) |
|
|
3,803 |
|
|
|
|
|
|
|
(64 |
) |
|
|
164 |
|
|
|
6,280 |
|
|
|
133,618 |
|
Total recognised income and expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,347 |
|
|
|
|
|
|
|
|
|
|
|
64 |
|
|
|
|
|
|
|
3,276 |
|
|
|
4,687 |
|
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,262 |
|
|
|
1,262 |
|
Options exercised |
|
|
2 |
|
|
|
|
|
|
|
212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
214 |
|
Class A shares issued on conversion of
convertible notes |
|
|
20 |
|
|
|
|
|
|
|
3,624 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,644 |
|
Class A shares issued in private placement |
|
|
126 |
|
|
|
|
|
|
|
24,879 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,005 |
|
Share issue expenses |
|
|
|
|
|
|
|
|
|
|
(1,168 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,168 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006 |
|
|
966 |
|
|
|
12 |
|
|
|
151,774 |
|
|
|
(275 |
) |
|
|
3,803 |
|
|
|
|
|
|
|
|
|
|
|
164 |
|
|
|
10,818 |
|
|
|
167,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2007 |
|
|
966 |
|
|
|
12 |
|
|
|
151,774 |
|
|
|
(275 |
) |
|
|
3,803 |
|
|
|
|
|
|
|
|
|
|
|
164 |
|
|
|
10,818 |
|
|
|
167,262 |
|
Total recognised income and expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,072 |
|
|
|
|
|
|
|
|
|
|
|
201 |
|
|
|
|
|
|
|
(35,372 |
) |
|
|
(34,099 |
) |
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,482 |
|
|
|
1,482 |
|
Options exercised |
|
|
4 |
|
|
|
|
|
|
|
450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
454 |
|
Class A shares issued on conversion of
convertible notes |
|
|
9 |
|
|
|
|
|
|
|
1,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,822 |
|
Convertible notes transfer to retained
earnings on maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(164 |
) |
|
|
164 |
|
|
|
|
|
Share issue expenses |
|
|
|
|
|
|
|
|
|
|
(76 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(76 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007 |
|
|
979 |
|
|
|
12 |
|
|
|
153,961 |
|
|
|
797 |
|
|
|
3,803 |
|
|
|
|
|
|
|
201 |
|
|
|
|
|
|
|
(22,908 |
) |
|
|
136,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
|
|
|
|
|
|
|
|
Class A Ordinary shares |
|
|
Class A Ordinary shares |
|
In thousands of shares |
|
2007 |
|
|
2006 |
|
In issue at January 1 |
|
|
73,602 |
|
|
|
60,041 |
|
Issued for cash |
|
|
285 |
|
|
|
11,739 |
|
Issued for non cash (note 22) |
|
|
870 |
|
|
|
1,822 |
|
|
|
|
|
|
|
|
In issue at December 31 |
|
|
74,757 |
|
|
|
73,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Ordinary shares |
|
|
Class B Ordinary shares |
|
In thousands of shares |
|
2007 |
|
|
2006 |
|
In issue at January 1 |
|
|
700 |
|
|
|
700 |
|
Issued for cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In issue at December 31 |
|
|
700 |
|
|
|
700 |
|
|
|
|
|
|
|
|
|
|
The Group had authorised share capital of 200,000,000 A ordinary shares of US$0.0109 each (2006:
100,000,000 A ordinary shares of US$0.0109 each) and 700,000 B ordinary shares of US$0.0109 each
(2006: 700,000 B ordinary shares of US$0.0109 each) as at December 31, 2007. |
(a) |
|
During 2007, the Group issued 285,216 A Ordinary shares from the exercise of warrants and
employee options for a consideration of US$454,000, settled in cash. A further 870,052 shares
(equivalent to US$1,821,000) were issued on a non cash basis as the Group made its final
convertible debt repayment by way of shares during the year, which resulting in the release of
the carrying amount of the convertible notes liability on the balance sheet (see note 22). In
2007, the Group incurred costs of US$76,000 (2006: US$1,168,000) (2005: US$317,000) in connection
with the issue of shares. |
|
(b) |
|
In April 2006, Trinity Biotech completed a US$25,005,000 private placement of 11,593,840 of
Class A Ordinary Shares of the Group. The Group issued a further 145,156 shares from the
exercise of employee options for a consideration of US$214,000. Transactions costs relating to
the private placement and the exercise of employee options amounted to US$1,168,000. 1,821,980
shares (equivalent to US$3,644,000) were issued on a non cash basis as the Group made part of
its convertible debt repayments by way of shares (see note 22). |
|
(c) |
|
Since its incorporation the Group has not declared or paid dividends on its A Ordinary
Shares or B Ordinary Shares. The Group anticipates, for the foreseeable future, that it
will retain any future earnings in order to fund its business operations. The Group does
not, therefore, anticipate paying any cash or share dividends on its A Ordinary or B
Ordinary shares in the foreseeable future. As provided in the Articles of Association of the
Company, dividends or other distributions will be declared and paid in US Dollars. |
|
(d) |
|
The Class B Ordinary Shares have two votes per share and the rights to participate in any
liquidation or sale of the Group and to receive dividends as if each Class B Ordinary Share
were two Class A Ordinary Shares. In all other respects they rank pari passu with the A
ordinary shares. |
|
|
Currency translation reserve |
|
|
|
The currency translation reserve comprises all foreign exchange differences arising from the
translation of the financial statements of foreign currency denominated operations of the Group
since January 1, 2004. |
|
|
|
Warrant reserve |
|
|
|
The warrant reserve comprises the equity component of share warrants issued by the Group for the
purpose of fundraising. The Group calculates the fair value of warrants at the date of issue
taking the amount directly to a separate reserve within equity. The fair value is calculated using
the trinomial model. The fair value which is assessed at the grant date is calculated on the basis
of the contractual term of the warrants. In accordance IFRS 2, 1,258,824 warrants with a fair
value of US$3,803,000 (2006: 1,258,824 warrants with a fair value of US$3,803,000) have been classified
as a separate reserve. A further 58,500 warrants were issued by the Group in 2001 and consequently
they do not fall within scope of IFRS 2 and hence have not been fair valued. There were no new
warrants issued by the Group in 2007 or 2006. |
97
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
The following input assumptions were made to fair value the warrants: |
|
|
|
|
|
Fair value at date of measurement |
|
|
US$3.02 |
|
|
|
|
|
|
|
|
|
|
Share price |
|
|
US$4.78 |
|
Exercise price |
|
|
US$5.25 |
|
Expected volatility |
|
|
78.31 |
% |
Contractual life |
|
|
5 years |
|
Risk free rate |
|
|
3.26 |
% |
Expected dividend yield |
|
|
|
|
|
|
Owned shares |
|
|
|
In April 2004, the Group completed the acquisition of the assets of Fitzgerald Industries
International Inc (Fitzgerald) for US$16,000,000 in cash (before contingent consideration and costs).
The acquisition was partly funded by the issue of 2,783,984 A Ordinary Shares of the Group. As
at December 31, 2004, the Group funded the in substance repurchase of 817,470 shares with a value
of US$2,373,000. All of these shares were resold in the market in 2005. |
|
|
Hedging reserve |
|
|
|
The hedging reserve comprises the effective portion of the cumulative net change in the fair value
of cash flow hedging instruments related to hedged transactions entered into but not yet
crystallised. |
|
|
Convertible notes equity component |
|
|
|
Under IAS 32, the equity and liability elements of the convertible notes are recorded separately,
with the equity component of the convertible notes being calculated as the excess of the issue
proceeds over the present value of the future interest and principal repayments, discounted at the
market rate of interest applicable to similar liabilities that do not have a conversion option.
Transaction costs are allocated to the liability and equity components in proportion to the
allocation of proceeds. On January 2, 2007, the maturity date of the convertible notes, the amount
classified as equity of US$164,000 was reclassified from equity to retained earnings. |
20. |
|
SHARE OPTIONS AND SHARE WARRANTS |
|
|
Warrants |
|
|
|
The Company granted warrants to purchase 940,405 Class A Ordinary Shares in the Company to agents
of the Company who were involved in the Companys private placements in 1994 and 1995 and the
debenture issues in 1997, 1999 and 2002. A further warrant to purchase 100,000 Class A Ordinary
Shares was also granted to a consultant of the Company. At December 31, 2007 there were no
warrants outstanding under these awards. In January 2004, the Company completed a private placement
of 5,294,118 Class A Ordinary Shares of the Company at a price of US$4.25 per A Ordinary share.
The investors were granted five year warrants (vesting immediately) to purchase an aggregate of
1,058,824 Class A Ordinary Shares in the Company at an exercise price of US$5.25 per share. The
Company granted further warrants (vesting immediately) to purchase 200,000 Class A Ordinary
Shares in the Company to agents of the Company who were involved in this private placement in
January 2004 at an exercise price of US$5.25. These warrants also have a term of five years. At
December 31, 2007 there were warrants to purchase 1,258,824 A Ordinary shares in the Company
outstanding under this award. |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
Outstanding at beginning of year |
|
|
1,317,324 |
|
|
|
1,317,324 |
|
Granted |
|
|
|
|
|
|
|
|
Exercised |
|
|
(10,000 |
) |
|
|
|
|
Forfeited |
|
|
(48,500 |
) |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year |
|
|
1,258,824 |
|
|
|
1,317,324 |
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
Under the terms of the Companys Employee Share Option Plan, options to purchase 7,809,295
(excluding warrants of 1,258,824) A Ordinary Shares were outstanding at December 31, 2007. Under
the plan, options are granted to officers, employees and consultants of the Group at the discretion
of the Compensation Committee (designated by the board of directors), under the terms outlined
below. |
98
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
The terms and conditions of the grants are as follows, whereby all options are settled by physical
delivery of shares: |
|
|
Vesting conditions |
|
|
|
The options vest following a period of service by the officer or employee. The required period of
service is determined by the Compensation Committee at the date of grant of the options (usually
the date of approval by the Compensation Committee) and it is generally over a four year period.
There are no market conditions associated with the share option grants. |
|
|
Contractual life |
|
|
|
The term of an option will be determined by the Compensation Committee, provided that the term may
not exceed seven years from the date of grant (some of the Groups earlier plans had a ten year
life). All options will terminate 90 days after termination of the option holders employment,
service or consultancy with the Group (or one year after such termination because of death or
disability) except where a longer period is approved by the Board of Directors. Under certain
circumstances involving a change in control of the Group, the Compensation Committee may accelerate
the exercisability and termination of the options up to a maximum of one year. |
|
|
The number and weighted average exercise price of share options and warrants per ordinary share is
as follows (as required by IFRS 2, this information relates to all grants of share options and
warrants by the Group): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
|
Options and |
|
|
exercise price |
|
|
Range |
|
|
|
warrants |
|
|
US$ |
|
|
US$ |
|
Outstanding January 1, 2005 |
|
|
9,946,341 |
|
|
|
2.10 |
|
|
|
0.81-5.25 |
|
Granted |
|
|
1,670,000 |
|
|
|
1.69 |
|
|
|
1.59-3.00 |
|
Exercised |
|
|
(2,615,376 |
) |
|
|
1.00 |
|
|
|
0.81-1.75 |
|
Forfeited |
|
|
(152,508 |
) |
|
|
1.99 |
|
|
|
0.98-4.00 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of period |
|
|
8,848,457 |
|
|
|
2.35 |
|
|
|
0.81-5.25 |
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year |
|
|
4,589,342 |
|
|
|
US$2.69 |
|
|
|
0.81-5.25 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2006 |
|
|
8,848,457 |
|
|
|
2.35 |
|
|
|
0.81-5.25 |
|
Granted |
|
|
1,617,000 |
|
|
|
2.02 |
|
|
|
1.35-2.30 |
|
Exercised |
|
|
(145,155 |
) |
|
|
1.47 |
|
|
|
0.98-1.75 |
|
Forfeited |
|
|
(708,235 |
) |
|
|
2.15 |
|
|
|
0.81-5.00 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of period |
|
|
9,612,067 |
|
|
|
US$2.32 |
|
|
|
0.98-5.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year |
|
|
5,605,469 |
|
|
|
US$2.50 |
|
|
|
0.98-5.25 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2007 |
|
|
9,612,067 |
|
|
|
US$2.32 |
|
|
|
0.98-5.25 |
|
Granted |
|
|
364,667 |
|
|
|
2.24 |
|
|
|
1.35-2.80 |
|
Exercised |
|
|
(285,210 |
) |
|
|
1.59 |
|
|
|
0.98-2.72 |
|
Forfeited |
|
|
(623,405 |
) |
|
|
2.07 |
|
|
|
0.98-4.00 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of period |
|
|
9,068,119 |
|
|
|
US$2.36 |
|
|
|
0.98-5.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year |
|
|
6,417,223 |
|
|
|
US$2.48 |
|
|
|
0.98-5.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average share price per A Ordinary share at the date of exercise for options
exercised in 2007 is US$2.59 (2006: US$2.19) (2005: US$2.09). |
|
|
The opening share price per A Ordinary share at the start of the financial year was US$2.14 (2006
US$2.04) (2005: US$2.93) and the closing share price at December 31, 2007 was US$1.70 (2006: US$2.14)
(2005: US$2.04). The average share price for the year ended December 31, 2007 was US$2.47. |
99
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
A summary of the range of prices for the Companys stock options and warrants for the year ended
December 31, 2007 follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
Exercisable |
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
Weighted |
|
|
life |
|
|
|
|
|
|
Weighted |
|
|
life |
|
Exercise price |
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
range |
|
options |
|
|
price |
|
|
(years) |
|
|
options |
|
|
price |
|
|
(years) |
|
US$0.81-US$0.99 |
|
|
1,218,834 |
|
|
|
US$0.98 |
|
|
|
1.44 |
|
|
|
1,218,834 |
|
|
|
US$0.98 |
|
|
|
1.44 |
|
US$1.00-US$2.05 |
|
|
3,033,711 |
|
|
|
US$1.60 |
|
|
|
3.32 |
|
|
|
2,005,868 |
|
|
|
US$1.55 |
|
|
|
2.48 |
|
US$2.06-US$2.99 |
|
|
3,250,750 |
|
|
|
US$2.37 |
|
|
|
4.66 |
|
|
|
1,660,364 |
|
|
|
US$2.49 |
|
|
|
3.90 |
|
US$3.00-US$5.25 |
|
|
1,564,824 |
|
|
|
US$4.89 |
|
|
|
1.37 |
|
|
|
1,532,157 |
|
|
|
US$4.92 |
|
|
|
1.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,068,119 |
|
|
|
|
|
|
|
|
|
|
|
6,417,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average remaining contractual life of options outstanding at December 31, 2007 was
3.21 years (2006: 4.00 years). The information above also includes outstanding warrants. |
|
|
A summary of the range of prices for the Companys stock options and warrants for the year ended
December 31, 2006 follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
Exercisable |
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
Weighted |
|
|
life |
|
|
|
|
|
|
Weighted |
|
|
life |
|
Exercise price |
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
range |
|
options |
|
|
price |
|
|
(years) |
|
|
options |
|
|
price |
|
|
(years) |
|
US$0.81-US$0.99 |
|
|
1,233,834 |
|
|
|
US$0.98 |
|
|
|
2.43 |
|
|
|
1,233,834 |
|
|
|
US$0.98 |
|
|
|
2.43 |
|
US$1.00-US$2.05 |
|
|
3,635,210 |
|
|
|
US$1.60 |
|
|
|
4.12 |
|
|
|
1,868,542 |
|
|
|
US$1.52 |
|
|
|
2.60 |
|
US$2.06-US$2.99 |
|
|
3,153,366 |
|
|
|
US$2.39 |
|
|
|
5.29 |
|
|
|
1,038,772 |
|
|
|
US$2.57 |
|
|
|
4.01 |
|
US$3.00-US$5.25 |
|
|
1,589,657 |
|
|
|
US$4.87 |
|
|
|
2.39 |
|
|
|
1,464,321 |
|
|
|
US$5.01 |
|
|
|
2.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,612,067 |
|
|
|
|
|
|
|
|
|
|
|
5,605,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The recognition and measurement principles of IFRS 2 have been applied to share options granted
under the Companys share options plans since November 7, 2002 which have not vested by January 1,
2005 in accordance with IFRS 2. |
100
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Charge for the year under IFRS 2 |
|
|
The charge for the year is calculated based on the fair value of the options granted which have not
yet vested. |
|
|
The fair value of the options is expensed over the vesting period of the option. US$1,403,000 was
charged to the statement of operations in 2007, (2006: US$1,141,000) (2005: US$1,368,000) split as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Share-based payments cost of sales |
|
|
71 |
|
|
|
89 |
|
|
|
110 |
|
Share-based payments research and development |
|
|
108 |
|
|
|
36 |
|
|
|
210 |
|
Share-based payments selling, general and administrative |
|
|
1,224 |
|
|
|
1,016 |
|
|
|
1,048 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,403 |
|
|
|
1,141 |
|
|
|
1,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The total share based payments charge for the year was US$1,482,000. However, a total of US$79,000
(2006: US$121,000) (2005: US$nil) of research and development share based payments was capitalised in
intangible assets during the year. |
|
|
The fair value of services received in return for share options granted are measured by reference
to the fair value of share options granted. The estimate of the fair value of services received is
measured based on a trinomial model. The following are the input assumptions used in determining
the fair value of share options granted in 2007, 2006 and 2005: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key |
|
|
|
|
|
|
Key |
|
|
|
|
|
|
Key |
|
|
|
|
|
|
management |
|
|
Other |
|
|
management |
|
|
Other |
|
|
management |
|
|
Other |
|
|
|
personnel |
|
|
employees |
|
|
personnel |
|
|
employees |
|
|
personnel |
|
|
employees |
|
|
|
2007 |
|
|
2007 |
|
|
2006 |
|
|
2006 |
|
|
2005 |
|
|
2005 |
|
Weighted average
fair value at
measurement date |
|
|
|
|
|
|
US$0.96 |
|
|
|
US$1.17 |
|
|
|
US$0.97 |
|
|
|
US$0.95 |
|
|
|
US$0.75 |
|
Total share options
granted |
|
|
|
|
|
|
364,667 |
|
|
|
860,000 |
|
|
|
757,000 |
|
|
|
650,000 |
|
|
|
1,019,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
share price |
|
|
|
|
|
|
US$2.28 |
|
|
|
US$2.09 |
|
|
|
US$1.95 |
|
|
|
US$1.67 |
|
|
|
US$1.69 |
|
Weighted average
exercise price |
|
|
|
|
|
|
US$2.28 |
|
|
|
US$2.09 |
|
|
|
US$1.95 |
|
|
|
US$1.67 |
|
|
|
US$1.71 |
|
Weighted average
expected volatility |
|
|
|
|
|
|
47.41 |
% |
|
|
56.11 |
% |
|
|
54.88 |
% |
|
|
60.3 |
% |
|
|
59.72 |
% |
Weighted average
expected life |
|
|
|
|
|
4.18 years |
|
5.73 years |
|
4.47 years |
|
5.33 years |
|
3.28 years |
Weighted average
risk free interest
rate |
|
|
|
|
|
|
4.35 |
% |
|
|
4.55 |
% |
|
|
4.83 |
% |
|
|
4.51 |
% |
|
|
4.01 |
% |
Expected dividend
yield |
|
|
|
|
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
No options were granted to the key management during 2007. |
|
|
The expected life of the options is based on historical data and is not necessarily indicative of
exercise patterns that may occur. The expected volatility is based on the historic volatility
(calculated based on the expected life of the options). The Group has considered how future
experience may affect historical volatility. The profile and activities of the Group are not
expected to change in the immediate future and therefore Trinity Biotech would expect estimated
volatility to be consistent with historical volatility. |
101
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
21. |
|
INTEREST-BEARING LOANS AND BORROWINGS |
|
|
This note provides information about the contractual terms of the Groups interest-bearing loans
and borrowings. For more information about the Groups exposure to interest rate and foreign
currency risk, see note 30. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
Note |
|
|
US$000 |
|
|
US$000 |
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease liabilities |
|
|
|
|
|
|
657 |
|
|
|
256 |
|
Bank loans, secured |
|
|
28 (c) |
|
|
|
|
|
|
|
|
|
- Repayable by instalment |
|
|
|
|
|
|
8,220 |
|
|
|
8,157 |
|
- Repayable not by instalment |
|
|
|
|
|
|
6,944 |
|
|
|
1,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,821 |
|
|
|
10,382 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease liabilities |
|
|
|
|
|
|
1,648 |
|
|
|
248 |
|
Bank loans, secured |
|
|
28 (c) |
|
|
|
|
|
|
|
|
|
- Repayable by instalment |
|
|
|
|
|
|
24,664 |
|
|
|
32,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,312 |
|
|
|
33,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans |
|
|
|
Trinity Biotech has a US$48,340,000 club banking facility with Allied Irish Bank plc and Bank of
Scotland (Ireland) Limited (the banks). The facility consists of a five year US Dollar floating
interest rate term loan of US$41,340,000 and a one year revolver of US$7,000,000. The facility was
amended in October 2007, increasing the revolver loan element of the facility from US$2,000,000 to
US$7,000,000. The term loan is repayable in ten equal biannual instalments which commenced in January
2007. Two principal repayments of US$4,134,000 each were paid in January and July 2007. This facility
is secured on the assets of the Group (see note 28 (c)).Various covenants apply to the Groups bank
borrowings. At December 31, 2007, the total amount outstanding under the facility amounted to
US$39,808,000. The debt is stated net of unamortised funding costs of US$264,000 |
|
|
Since December, 31 2007, the Group has agreed new covenants with the banks under revised terms and
conditions for the facility. In addition the Group has agreed a revised repayment schedule for the
outstanding debt, which will result in an extension to the repayment period and will reduce the
level of repayments in the 12 months after December 31, 2007 (see note 30). |
|
|
Finance lease liabilities |
|
|
Finance lease liabilities are payable as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
US$000 |
|
|
|
Minimum |
|
|
|
|
|
|
|
|
|
lease |
|
|
|
|
|
|
|
|
|
|
payments |
|
|
Interest |
|
|
Principal |
|
Less than one year |
|
|
779 |
|
|
|
122 |
|
|
|
657 |
|
In more than one year, but not more than two |
|
|
550 |
|
|
|
89 |
|
|
|
461 |
|
In more than two years but not more than five |
|
|
1,287 |
|
|
|
100 |
|
|
|
1,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,616 |
|
|
|
311 |
|
|
|
2,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
|
Minimum |
|
|
|
|
|
|
|
|
|
lease |
|
|
|
|
|
|
|
|
|
|
payments |
|
|
Interest |
|
|
Principal |
|
Less than one year |
|
|
278 |
|
|
|
22 |
|
|
|
256 |
|
In more than one year, but not more than two |
|
|
234 |
|
|
|
8 |
|
|
|
226 |
|
In more than two years but not more than five |
|
|
23 |
|
|
|
1 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
535 |
|
|
|
31 |
|
|
|
504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Under the terms of the lease arrangements, no contingent rents are payable. |
102
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Promissory notes |
|
|
|
During 2006, the Group issued a promissory note for the payment of deferred consideration to
bioMerieux as part of the acquisition of their haemostasis business. However, these notes are
non-interest bearing and are included under Other Financial Liabilities at December 31, 2007 and
December 31, 2006 (see note 24). |
|
|
Terms and debt repayment schedule
The terms and conditions of outstanding interest bearing loans and borrowings at December 31, 2007
are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal |
|
|
|
|
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
|
|
|
|
|
interest |
|
|
Year of |
|
|
Value |
|
|
Value |
|
|
Value |
|
|
Value |
|
Facility |
|
Currency |
|
|
rate |
|
|
maturity |
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
Fixed bank loans |
|
USD |
|
|
5.00 |
% |
|
|
2009 |
|
|
|
19 |
|
|
|
20 |
|
|
|
36 |
|
|
|
37 |
|
Floating (LIBOR) bank
loans |
|
USD |
|
|
6.74 |
% |
|
|
2009 -2011 |
|
|
|
39,808 |
|
|
|
39,808 |
|
|
|
42,916 |
|
|
|
42,917 |
|
Finance lease liabilities |
|
Euro |
|
|
5.43 |
% |
|
|
2007 -2012 |
|
|
|
2,153 |
|
|
|
2,142 |
|
|
|
322 |
|
|
|
324 |
|
Finance lease liabilities |
|
GBP |
|
|
6.82 |
% |
|
|
2008 -2010 |
|
|
|
145 |
|
|
|
163 |
|
|
|
179 |
|
|
|
180 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing
loans and borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,125 |
|
|
|
42,133 |
|
|
|
43,453 |
|
|
|
43,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22. |
|
CONVERTIBLE NOTES INTEREST BEARING |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Convertible notes |
|
|
|
|
|
|
|
|
Due within one year |
|
|
|
|
|
|
1,836 |
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
1,836 |
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 the balance outstanding on the convertible notes, resulting from the private
placement of US$20,000,000 in July 2003 and a further US$5,000,000 in January 2004 was US$nil. The final
principal repayment of US$1,822,000 was made by way of shares in January 2007. The final interest
payment of US$14,000 was made in cash on the same date. |
|
|
Under IAS 32, the equity and liability elements of the convertible notes were recorded separately,
with the equity component of the convertible notes being calculated as the excess of the issue
proceeds over the present value of the future interest and principal repayments, discounted at the
market rate of interest applicable to similar liabilities that do not have a conversion option.
Transaction costs were allocated to the liability and equity components in proportion to the
allocation of proceeds. The corresponding interest expense recognised in the statement of
operations is calculated using the effective interest rate method. The effective interest rate is
the normal coupon rate of 3% adjusted for the effect of transaction costs and the amount classified
as equity. |
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Proceeds from issue of convertible notes |
|
|
25,000 |
|
|
|
25,000 |
|
Transaction costs |
|
|
(1,307 |
) |
|
|
(1,307 |
) |
|
|
|
|
|
|
|
Net |
|
|
23,693 |
|
|
|
23,693 |
|
Converted to shares |
|
|
(17,355 |
) |
|
|
(15,533 |
) |
Cash repayments |
|
|
(7,288 |
) |
|
|
(7,288 |
) |
Amount classified as equity |
|
|
(297 |
) |
|
|
(297 |
) |
Accreted interest capitalised |
|
|
1,247 |
|
|
|
1,261 |
|
|
|
|
|
|
|
|
Carrying amount of liability at December 31 |
|
|
|
|
|
|
1,836 |
|
|
|
|
|
|
|
|
103
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
The amount of the convertible notes classified as equity on January 1, 2005 of US$297,000 is net of
attributable transaction costs of US$16,000. Of the US$297,000, US$71,000 has been reclassified from
equity to share capital and share premium following the share conversions in December 2003 and
January 2004. On January 2, 2007, the maturity date of the convertible notes, the amount
classified as equity of US$226,000 was stated net of the related deferred tax asset of US$62,000 and
carried at US$164,000. The net balance of US$164,000 classified as equity at the date of maturity was
reclassified from equity to retained earnings on maturity. |
23. |
|
TRADE AND OTHER PAYABLES |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Trade payables |
|
|
8,454 |
|
|
|
7,752 |
|
Payroll taxes |
|
|
514 |
|
|
|
415 |
|
Employee related social insurance |
|
|
520 |
|
|
|
438 |
|
Accrued restructuring expenses |
|
|
2,016 |
|
|
|
|
|
Accrued liabilities |
|
|
11,821 |
|
|
|
8,983 |
|
Deferred income |
|
|
1,454 |
|
|
|
2,871 |
|
|
|
|
|
|
|
|
|
|
|
24,779 |
|
|
|
20,459 |
|
|
|
|
|
|
|
|
|
|
Accrued restructuring expenses |
|
|
|
Following the announcement of the restructuring in December 2007 (see note 3), the Group
recognised an accrual of US$2,016,000 for expected restructuring costs. Of the total restructuring
accrual of US$2,016,000, US$1,470,000 related to cost accrued for contract termination costs and
employee termination benefits and includes US$332,000 for termination payments accrued as part of
the closure of the Swedish operation. Estimated costs for termination benefits are based on
agreements between management and individual employees. Estimated costs for contract terminations
are based on the terms of the relevant contracts. US$116,000 relates to a building lease and other
non-redundancy obligations arising from the closure of the Swedish manufacturing operation. In
December 2006, the Group renewed its non-cancellable lease for a manufacturing facility in Umea,
Sweden. Resulting from the planned closure of the Swedish manufacturing operation in 2008, the
Group will cease to use this manufacturing facility from March 2008. The lease on the building
expires in December 2008. The obligation for the future lease payments during the period in which
the building will not be used was been accrued for at December 31, 2007. |
24. |
|
OTHER FINANCIAL LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Consideration |
|
|
|
|
|
|
|
|
Due within 1 year |
|
|
2,725 |
|
|
|
3,120 |
|
Due greater than 1 year |
|
|
|
|
|
|
2,568 |
|
|
|
|
|
|
|
|
|
|
|
2,725 |
|
|
|
5,688 |
|
|
|
|
|
|
|
|
|
|
Consideration |
|
|
|
In June 2006, the Group acquired the haemostasis business of bioMerieux for a cash consideration
of US$38.2 million. In addition bioMerieux was entitled to deferred consideration up to a maximum
of US$6.2 million, payable in June 2007 and up to an additional US$5.3 million, payable in June 2008,
depending on the performance of the business during 2006. At December 31, 2006, it was determined
that the deferred consideration of US$3.2 million and US$2.8 million would be payable in July 2007 and
July 2008 respectively. Deferred consideration of US$3,208,000 was paid in July 2007. In accordance
with the Groups policy these deferred consideration amounts have been discounted to reflect their
fair value at the date of acquisition. At December 31, 2007, the fair value of the deferred
consideration still outstanding amounted to US$2,725,000 (2006: US$5,688,000). |
|
|
The Group has issued a promissory note for the payment of the deferred consideration. According to
the terms of this promissory note, there are certain events of default which may cause the deferred
consideration to become payable immediately. In this instance the payment may, at the election of
the holder of the promissory note, be payable in shares in Trinity Biotech, at a price of 90% of
the average trading price for the preceding 20 days. As at December 31, 2007 the Group was not in
default of the terms of the promissory note and hence the deferred consideration has been
classified according to the payment terms as outlined above. |
104
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Provisions |
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
Movement on provisions during the year is as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Balance at January 1 |
|
|
100 |
|
|
|
199 |
|
Provisions made during the year |
|
|
|
|
|
|
100 |
|
Provisions released during the year |
|
|
|
|
|
|
(199 |
) |
|
|
|
|
|
|
|
Balance at December 31 |
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
During 2007 the Group experienced no significant product warranty claims. However, the Group
believes that it is appropriate to retain a product warranty provision to cover any future claims.
The provision at December 31, 2007 represents the estimated cost of product warranties, the exact
amount which cannot be determined. US$100,000 represents managements best estimates of these
obligations at December 31, 2007. |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Other payables |
|
|
74 |
|
|
|
838 |
|
|
|
|
|
|
|
|
27. |
|
BUSINESS COMBINATIONS |
|
|
2007 Acquisitions |
|
|
|
In September 2007, the Group acquired the immuno technology business of Cortex Biochem Inc
(Cortex) for a total cash consideration of US$2,925,000, consisting of cash consideration of
US$2,887,000 and acquisition expenses of US$38,000. |
|
|
|
In October 2007, the Group acquired certain components relating to the distribution business of
Sterilab Services UK (Sterilab), a distributor of Infectious Diseases products, for a total of
US$1,489,000, consisting of cash consideration of US$1,480,000 and acquisition expenses of US$9,000. |
105
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
The results for both acquisitions in 2007 are incorporated from the date of acquisition in the
consolidated statement of operations for the year ended December 31, 2007. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cortex |
|
|
Sterilab |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
|
|
|
|
23 |
|
|
|
23 |
|
Inventories |
|
|
41 |
|
|
|
88 |
|
|
|
129 |
|
Trade and other receivables |
|
|
152 |
|
|
|
|
|
|
|
152 |
|
Intangible assets |
|
|
844 |
|
|
|
656 |
|
|
|
1,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,037 |
|
|
|
767 |
|
|
|
1,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability (see note 13) |
|
|
102 |
|
|
|
183 |
|
|
|
285 |
|
Trade and other payables |
|
|
45 |
|
|
|
|
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
147 |
|
|
|
183 |
|
|
|
330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of net assets |
|
|
890 |
|
|
|
584 |
|
|
|
1,474 |
|
Goodwill arising on acquisition |
|
|
2,035 |
|
|
|
905 |
|
|
|
2,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,925 |
|
|
|
1,489 |
|
|
|
4,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments |
|
|
2,887 |
|
|
|
1,480 |
|
|
|
4,367 |
|
Costs associated with the acquisition |
|
|
38 |
|
|
|
9 |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,925 |
|
|
|
1,489 |
|
|
|
4,414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill capitalised during 2007 in respect of the Cortex and Sterilab acquisitions amounted to
US$2,940,000 and comprised: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value |
|
|
|
|
|
|
|
|
|
|
|
|
Book values |
|
|
adjustments |
|
|
Fair value |
|
|
Consideration |
|
|
Goodwill |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cortex |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
152 |
|
|
|
|
|
|
|
152 |
|
|
|
|
|
|
|
|
|
Inventories |
|
|
218 |
|
|
|
(177 |
) |
|
|
41 |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
|
|
|
844 |
|
|
|
844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
370 |
|
|
|
667 |
|
|
|
1,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
|
|
|
|
102 |
|
|
|
102 |
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
45 |
|
|
|
|
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
325 |
|
|
|
565 |
|
|
|
890 |
|
|
|
2,925 |
|
|
|
2,035 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sterilab |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
23 |
|
|
|
|
|
|
|
23 |
|
|
|
|
|
|
|
|
|
Inventories |
|
|
99 |
|
|
|
(11 |
) |
|
|
88 |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
|
|
|
656 |
|
|
|
656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122 |
|
|
|
645 |
|
|
|
767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
|
|
|
|
183 |
|
|
|
183 |
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122 |
|
|
|
462 |
|
|
|
584 |
|
|
|
1,489 |
|
|
|
905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of the acquisition
on the statement of operations and
cashflow
Due to their size, the impact of the acquisition of Cortex and Sterilab does not have a significant
impact on the statement of operations and cashflow in 2007. |
106
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
The following represents the increases to goodwill which took place in 2007. |
|
|
|
|
|
|
|
US$000 |
|
Goodwill recognised with respect to 2007 acquisitions |
|
|
|
|
- Cortex |
|
|
2,035 |
|
- Sterilab |
|
|
905 |
|
Goodwill recognised with respect to 2006 acquisitions |
|
|
|
|
- bioMerieux |
|
|
42 |
|
|
|
|
|
Total goodwill movement in 2007 |
|
|
2,982 |
|
|
|
|
|
|
|
2006 Acquisitions |
|
|
|
In June 2006, Trinity Biotech acquired the haemostasis business of bioMerieux Inc. (bioMerieux)
for a total consideration of US$44.4 million, consisting of cash consideration of US$38.2 million,
deferred consideration of US$5.5 million (net of discounting) and acquisition expenses of
US$0.7 million. At December 31, 2006, Trinity Biotech had accrued US$5,688,000 for the deferred
consideration to be paid in June 2007 and June 2008 (see note 24). Deferred consideration of
US$3,208,000 (US$3,120,000 net of discounting) was paid to bioMerieux in June 2008. At December 31,
2007, the Group has accrued deferred consideration US$2,725,000 to be paid in June 2008. A further
US$5.5 million of consideration was contingent on the performance of the product line during 2006.
However, the Group had determined that this contingent element is not payable as certain milestones
concerning the performance of the business line were not met during 2006. |
|
|
In October, 2006, Trinity Biotech acquired the French distribution business of Laboratoires
Nephrotek SARL (Nephrotek) for a total consideration of US$1,175,000, consisting of cash
consideration of US$1,060,000 and acquisition expenses of US$115,000. |
|
|
The results of these acquisitions for 2006 are incorporated from the date of acquisition in the
consolidated statement of operations for the year ended December 31, 2006. The fair value of the
identifiable assets and liabilities were as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
bioMerieux |
|
|
Nephrotek |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
2,354 |
|
|
|
64 |
|
|
|
2,418 |
|
Inventories |
|
|
12,529 |
|
|
|
345 |
|
|
|
12,874 |
|
Intangible assets |
|
|
11,150 |
|
|
|
235 |
|
|
|
11,385 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,033 |
|
|
|
644 |
|
|
|
26,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability (see note 13) |
|
|
1,293 |
|
|
|
77 |
|
|
|
1,370 |
|
Trade and other payables |
|
|
1,319 |
|
|
|
69 |
|
|
|
1,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,612 |
|
|
|
146 |
|
|
|
2,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of net assets |
|
|
23,421 |
|
|
|
498 |
|
|
|
23,919 |
|
Goodwill arising on acquisition |
|
|
21,002 |
|
|
|
677 |
|
|
|
21,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,423 |
|
|
|
1,175 |
|
|
|
45,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments |
|
|
38,157 |
|
|
|
821 |
|
|
|
38,978 |
|
Deferred consideration |
|
|
5,511 |
|
|
|
239 |
|
|
|
5,750 |
|
Costs associated with the acquisition |
|
|
755 |
|
|
|
115 |
|
|
|
870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,423 |
|
|
|
1,175 |
|
|
|
45,598 |
|
|
|
|
|
|
|
|
|
|
|
107
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Goodwill capitalised during 2006 in respect of the acquired haemostasis business from bioMerieux
and the acquired distribution business from Nephrotek amounted to US$21,679,000 and comprises: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value |
|
|
|
|
|
|
|
|
|
|
|
|
Book values |
|
|
adjustments |
|
|
Fair value |
|
|
Consideration |
|
|
Goodwill |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
bioMerieux |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
2,659 |
|
|
|
(305 |
) |
|
|
2,354 |
|
|
|
|
|
|
|
|
|
Inventories
(including prepayments) |
|
|
12,848 |
|
|
|
(319 |
) |
|
|
12,529 |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
|
|
|
11,150 |
|
|
|
11,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,507 |
|
|
|
10,526 |
|
|
|
26,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
|
|
|
|
1,293 |
|
|
|
1,293 |
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
1,219 |
|
|
|
100 |
|
|
|
1,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,288 |
|
|
|
9,133 |
|
|
|
23,421 |
|
|
|
44,423 |
|
|
|
21,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nephrotek |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
96 |
|
|
|
(32 |
) |
|
|
64 |
|
|
|
|
|
|
|
|
|
Inventories |
|
|
394 |
|
|
|
(49 |
) |
|
|
345 |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
|
|
|
235 |
|
|
|
235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
490 |
|
|
|
154 |
|
|
|
644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
|
|
|
|
77 |
|
|
|
77 |
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
40 |
|
|
|
29 |
|
|
|
69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
450 |
|
|
|
48 |
|
|
|
498 |
|
|
|
1,175 |
|
|
|
677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the period, following the acquisition, fair value adjustments were made to recognise
intangible assets acquired in 2006. The inventory acquired under the acquisition of the
haemostasis business of bioMerieux was provided to Trinity Biotech on a phased basis over the 12
month period after the acquisition date. Consequently, at December 31, 2006, the fair valuation
of inventory had been assessed on a provisional basis and the fair value exercise was completed in
2007. The final fair valuation of inventory resulted in a write down during 2007 of inventory
acquired of US$42,000. The fair value of all other assets and liabilities was complete at December
31, 2006. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisional |
|
|
Adjustments |
|
|
Adjustments |
|
|
Final |
|
|
|
fair value |
|
|
to net assets |
|
|
to costs |
|
|
fair value |
|
|
|
2006 |
|
|
2007 |
|
|
2007 |
|
|
2007 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
bioMerieux |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
11,150 |
|
|
|
|
|
|
|
|
|
|
|
11,150 |
|
Working capital |
|
|
14,883 |
|
|
|
(42 |
) |
|
|
|
|
|
|
14,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,033 |
|
|
|
(42 |
) |
|
|
|
|
|
|
25,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
1,293 |
|
|
|
|
|
|
|
|
|
|
|
1,293 |
|
Trade and other
payables |
|
|
1,319 |
|
|
|
|
|
|
|
|
|
|
|
1,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,421 |
|
|
|
(42 |
) |
|
|
|
|
|
|
23,379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration and costs |
|
|
44,423 |
|
|
|
|
|
|
|
|
|
|
|
42,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
In March 2005, Trinity Biotech completed the acquisition of the assets of Research Diagnostics Inc
(RDI), a provider of immunodiagnostic products for US$4,200,000 in cash. Acquisition expenses
amounted to US$105,000. In July 2005, Trinity Biotech completed the acquisition of 100% of the
equity in Primus Corporation (Primus), a leader in the field of in-vitro diagnostic testing for
haemoglobin A1c and haemoglobin variants for US$14,503,000 consisting of a cash consideration of
US$8,587,000 and a one year promissory note of US$3,000,000. Acquisition expenses amounted to US$211,000.
Under the terms of the purchase agreement, the shareholders of Primus were also entitled to an
additional consideration based on the growth of the Group during the remainder of 2005. At December
31, 2005, the Group has accrued US$2,705,000 for this additional consideration which was paid in
2006. |
|
|
The results of these acquisitions for 2005 are incorporated from the date of acquisition in the
consolidated statement of income for the year ended December 31, 2005. The fair value of the
identifiable assets and liabilities were as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primus |
|
|
RDI |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
2,395 |
|
|
|
|
|
|
|
2,395 |
|
Trade and other receivables |
|
|
1,848 |
|
|
|
|
|
|
|
1,848 |
|
Inventories |
|
|
1,304 |
|
|
|
113 |
|
|
|
1,417 |
|
Intangible assets |
|
|
4,615 |
|
|
|
1,790 |
|
|
|
6,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,162 |
|
|
|
1,903 |
|
|
|
12,065 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability (see note 12) |
|
|
1,825 |
|
|
|
216 |
|
|
|
2,041 |
|
Trade and other payables |
|
|
1,649 |
|
|
|
|
|
|
|
1,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,474 |
|
|
|
216 |
|
|
|
3,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of net assets |
|
|
6,688 |
|
|
|
1,687 |
|
|
|
8,375 |
|
Goodwill arising on acquisition |
|
|
7,688 |
|
|
|
2,618 |
|
|
|
10,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,376 |
|
|
|
4,305 |
|
|
|
18,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consideration: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments |
|
|
8,587 |
|
|
|
4,200 |
|
|
|
12,787 |
|
Less cash transferred with subsidiary |
|
|
(127 |
) |
|
|
|
|
|
|
(127 |
) |
Deferred consideration |
|
|
3,000 |
|
|
|
|
|
|
|
3,000 |
|
Other consideration (see note 23) |
|
|
2,705 |
|
|
|
|
|
|
|
2,705 |
|
Costs associated with the acquisition |
|
|
211 |
|
|
|
105 |
|
|
|
316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,376 |
|
|
|
4,305 |
|
|
|
18,681 |
|
|
|
|
|
|
|
|
|
|
|
109
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Goodwill capitalised during 2005 in respect of acquired businesses amounted to US$10,306,000 and
comprises: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value |
|
|
|
|
|
|
|
|
|
|
|
|
Book values |
|
|
adjustments |
|
|
Fair value |
|
|
Consideration |
|
|
Goodwill |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Primus |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
2,371 |
|
|
|
24 |
|
|
|
2,395 |
|
|
|
|
|
|
|
|
|
Trade and other receivables |
|
|
1,848 |
|
|
|
|
|
|
|
1,848 |
|
|
|
|
|
|
|
|
|
Inventories |
|
|
1,858 |
|
|
|
(554 |
) |
|
|
1,304 |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
330 |
|
|
|
4,285 |
|
|
|
4,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,407 |
|
|
|
3,755 |
|
|
|
10,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
|
|
|
|
1,825 |
|
|
|
1,825 |
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
1,566 |
|
|
|
(33 |
) |
|
|
1,533 |
|
|
|
|
|
|
|
|
|
Creditors greater than one year |
|
|
116 |
|
|
|
|
|
|
|
116 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,725 |
|
|
|
1,963 |
|
|
|
6,688 |
|
|
|
14,376 |
|
|
|
7,688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RDI |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
10 |
|
|
|
(10 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
146 |
|
|
|
(33 |
) |
|
|
113 |
|
|
|
|
|
|
|
|
|
Intangible assets |
|
|
|
|
|
|
1,790 |
|
|
|
1,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156 |
|
|
|
1,747 |
|
|
|
1,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
|
|
|
|
216 |
|
|
|
216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156 |
|
|
|
1,531 |
|
|
|
1,687 |
|
|
|
4,305 |
|
|
|
2,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28. |
|
COMMITMENTS AND CONTINGENCIES |
|
(a) |
|
Capital Commitments |
|
|
|
|
The Group has no capital commitments authorised and contracted for as at December 31, 2007 (2006:
US$1,731,000). The capital commitments authorised and contracted for at December 31, 2006 related to
additional plant and equipment required for the Groups premises in Bray, Ireland as part of the
integration of the bioMerieux acquisition. All plant and equipment required as part of the
integration of the bioMerieux acquisition was acquired during 2007. |
|
|
(b) |
|
Leasing Commitments |
|
|
|
|
The Group leases a number of premises under operating leases. The leases typically run for
periods up to 25 years. Lease payments are reviewed periodically (typically on a 5 year basis) to
reflect market rentals. Operating lease commitments payable during the next 12 months amount to
US$4,943,000 (2006: US$3,650,000) payable on leases of buildings at Dublin and Bray, Ireland,
Berkshire, UK, Paris, France, Umea, Sweden, Jamestown, New York, Kansas City, Missouri, New
Jersey, Concord, Massachusetts and Carlsbad, California and motor vehicles and equipment in
Sweden, UK and Germany. US$170,000 (2006: US$475,000) of these operating lease commitments relates to
leases whose remaining term will expire within one year, US$1,084,000 (2006: US$194,000) relates to
leases whose remaining term expires between one and two years, US$574,000 (2006: US$937,000) between
two and five years and the balance of US$3,115,000 (2006: US$2,044,000) relates to leases which expire
after more than five years. See note 29 for related party leasing arrangements. |
110
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Future minimum operating lease commitments with non-cancellable terms in excess of one year are as follows: |
|
|
|
|
|
|
|
Year ended |
|
|
|
2007 |
|
|
|
Operating leases |
|
|
|
US$000 |
|
|
|
|
|
|
2008 |
|
|
4,943 |
|
2009 |
|
|
4,370 |
|
2010 |
|
|
3,680 |
|
2011 |
|
|
3,298 |
|
2012 |
|
|
3,138 |
|
Later years |
|
|
43,122 |
|
|
|
|
|
|
|
|
|
|
Total lease obligations |
|
|
62,551 |
|
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
2006 |
|
|
|
Operating leases |
|
|
|
US$000 |
|
|
|
|
|
|
2007 |
|
|
3,650 |
|
2008 |
|
|
3,859 |
|
2009 |
|
|
3,342 |
|
2010 |
|
|
2,797 |
|
2011 |
|
|
2,556 |
|
Later years |
|
|
32,062 |
|
|
|
|
|
|
|
|
|
|
Total lease obligations |
|
|
48,266 |
|
|
|
|
|
|
|
|
For future minimum finance lease commitments, in respect of which the lessor has a charge over the
related assets, see note 21. |
|
|
(c) |
|
Bank Security |
|
|
|
|
The Groups bank borrowings (note 21) are secured by a fixed and floating charge over the assets of
Group entities, including specific charges over the shares in the subsidiaries and the Groups
patents. Various covenants apply to the Groups bank borrowings with respect to profitability,
interest cover, capital expenditure, working capital and location of assets. As at December 31,
2007 the Group was in breach of a number of these covenants which had been waived by the banks.
The covenants which were breached concerned the level of earnings before taxation, depreciation and
amortisation for the year end December 31, 2007 (see note 30). |
|
|
|
|
At December 31, 2006, the Group was required to maintain US$15,500,000 on deposit with its lending
banks. Resulting from the restrictions on this cash, US$15,500,000 was shown as a financial asset at
December 31, 2006. See note 17. During 2007, the Groups banks agreed to remove this restriction
and at December 31, 2007, the amounts shown as a financial asset is nil at December 31, 2007 (see
note 18). |
|
|
(d) |
|
Section 17 Guarantees |
|
|
|
|
Pursuant to the provisions of Section 17, Irish Companies (Amendment) Act, 1986, the Company has
guaranteed the liabilities of Trinity Biotech Manufacturing Limited, Trinity Biotech Manufacturing
Services Limited, Trinity Research Limited, Benen Trading Limited, Trinity Biotech Financial
Services Limited and Trinity Biotech Sales Limited, subsidiary undertakings in the Republic of
Ireland, for the financial year to December 31, 2007 and, as a result, these subsidiary
undertakings have been exempted from the filing provisions of Section 17, Irish Companies
(Amendment) Act, 1986. Where the Company enters into these guarantees of the indebtedness of other
companies within its Group, the Company considers these to be insurance arrangements and accounts
for them as such. The Company treats the guarantee contract as a contingent liability until such
time as it becomes probable that the company will be required to make a payment under the
guarantee. The Company does not enter into financial guarantee with third parties. |
111
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
(e) |
|
Government Grant Contingencies |
|
|
|
|
The Group has received training and employment grant income from Irish development agencies.
Subject to existence of certain conditions specified in the grant agreements, this income may
become repayable. No such conditions existed as at December 31, 2007. However if the income were
to become repayable, the maximum amounts repayable as at December 31, 2007 would amount to US$644,000
(2006: US$581,000). |
29. |
|
RELATED PARTY TRANSACTIONS |
|
|
The Group has related party relationships with its subsidiaries, and with its directors and
executive officers. |
|
|
Leasing arrangements with related parties |
|
|
|
The Group has entered into various arrangements with JRJ Investments (JRJ), a partnership owned
by Mr OCaoimh and Dr Walsh, directors of the Company, to provide for current and potential future
needs to extend its premises at IDA Business Park, Bray, Co. Wicklow, Ireland. |
|
|
In July 2000, Trinity Biotech entered into an agreement with JRJ pursuant to which the Group took a
lease of a 25,000 square foot premises adjacent to the existing facility for a term of 20 years at
a rent of 7.62 per square foot for an annual rent of
190,000 (US$260,000). During 2006, the rent
on this property was reviewed and increased to 11.00 per square foot, resulting in an annual rent
of 275,000 (US$377,000). |
|
|
In November 2002, the Group entered into an agreement for a 25 year lease with JRJ for offices that
have been constructed adjacent to its premises at IDA Business Park, Bray, Co. Wicklow, Ireland.
The annual rent of 381,000 (US$522,000) is payable from January 1, 2004. |
|
|
In December 2007, the Group entered into an agreement with Mr. OCaoimh and Dr Walsh pursuant to
which the Group took a lease on an additional 43,860 square foot manufacturing facility in Bray,
Ireland at a rate of 17.94 per square foot (including fit out) giving a total annual rent of
787,000 (US$1,158,000). |
|
|
Trinity Biotech and its directors (excepting Mr OCaoimh and Dr Walsh who express no opinion on
this point) believe that the arrangements entered into represent a fair and reasonable basis on
which the Group can meet its ongoing requirements for premises. |
Compensation of key management personnel of the Group
|
|
At December 31, 2007, the key management personnel of the Group is made up of five key personnel,
the four executive directors and the Chief Financial Officer/Company Secretary. On November 1,
2007, Mr Kevin Tansley became an executive officer on his appointment to Chief Financial Officer
and Company Secretary. |
|
|
In 2006, the key management personnel of the Group was made up of the four executive directors in
that year. |
|
|
Compensation for the year ended December 31, 2007 of these personnel is detailed below: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Short-term employee benefits |
|
|
2,293 |
|
|
|
2,113 |
|
Post-employment benefits |
|
|
149 |
|
|
|
119 |
|
Equity compensation benefits |
|
|
853 |
|
|
|
665 |
|
|
|
|
|
|
|
|
|
|
|
3,295 |
|
|
|
2,897 |
|
|
|
|
|
|
|
|
|
|
Total director emoluments included in note 6 includes non executive directors fees of US$130,000
(2006: US$100,000) and equity compensation benefits of US$67,000 (2006: US$67,000) and excludes the
compensation costs of the Chief Financial Officer of US$55,000. Total directors remuneration is also
included in personnel expenses (note 7). |
112
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Directors and executive officers interests in the Companys shares and share option plan |
|
|
|
|
|
|
|
|
|
|
|
A Ordinary Shares |
|
|
Share options |
|
At January 1, 2007 |
|
|
5,881,205 |
|
|
|
4,812,083 |
|
Exercised |
|
|
|
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
Additions * |
|
|
|
|
|
|
165,000 |
|
Shares sold |
|
|
|
|
|
|
|
|
Shares purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 |
|
|
5,881,205 |
|
|
|
4,977,083 |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Includes 75,000 options granted to Mr. Kevin Tansley prior to his appointment as Chief
Financial Officer and Company Secretary on 1 November 2007. |
|
|
|
|
|
|
|
|
|
|
|
A Ordinary Shares |
|
|
Share options |
|
At January 1, 2006 |
|
|
5,881,205 |
|
|
|
4,211,666 |
|
Exercised |
|
|
|
|
|
|
|
|
Granted |
|
|
|
|
|
|
860,000 |
|
Shares sold |
|
|
|
|
|
|
(259,583 |
) |
Shares purchased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006 |
|
|
5,881,205 |
|
|
|
4,812,083 |
|
|
|
|
|
|
|
|
|
|
Rayville Limited, an Irish registered company, which is wholly owned by the four executive
directors and certain other executives of the Group, owns all of the B non-voting Ordinary Shares
in Trinity Research Limited, one of the Groups subsidiaries. The B shares do not entitle the
holders thereof to receive any assets of the company on a winding up. All of the A voting
ordinary shares in Trinity Research Limited are held by the Group. Trinity Research Limited may,
from time to time, declare dividends to Rayville Limited and Rayville Limited may declare dividends
to its shareholders out of those amounts. Any such dividends paid by Trinity Research Limited are
ordinarily treated as a compensation expense by the Group in the consolidated financial statements
prepared in accordance with IFRS, notwithstanding their legal form of dividends to minority
interests, as this best represents the substance of the transactions. |
|
|
In December 2006, the Remuneration Committee of the Board approved the payment of a dividend of
US$5,331,000 by Trinity Research Limited to Rayville Limited on the B shares held by it. This
amount was then lent back by Rayville to Trinity Research Limited. This loan was partially used to
fund executive compensation in 2007 and will fund future executive compensation over the next
number of years under the arrangement described above, with the amount of such funding being
reflected in compensation expense over the corresponding period. As the dividend payment is
matched by a loan from Rayville Limited to Trinity Research Limited which is repayable solely at
the discretion of the Remuneration Committee of the Board and is unsecured and interest free, the
Group netted the dividend paid to Rayville Limited against the corresponding loan from Rayville
Limited in the 2007 and 2006 consolidated financial statements. |
|
|
The amount of payments to Rayville included in compensation expense was US$1,410,000, US$1,911,000 and
US$2,061,000 for 2005, 2006 and 2007 respectively, of which US$1,333,000, US$1,779,000 and US$1,867,000
respectively related to the key management personnel of the Group. There were no dividends payable
to Rayville Limited as of December 31, 2005, 2006 or 2007. Of the US$2,061,000 of payments made to
Rayville Limited in 2007, US$955,000 represented repayments of the loan to Trinity Research Limited
referred to above. |
|
30. |
|
DERIVATIVES AND FINANCIAL INSTRUMENTS |
|
|
The Group uses a range of financial instruments (including cash, bank borrowings, convertible
notes, promissory notes, finance leases, receivables, payables and derivatives) to fund its
operations. These instruments are used to manage the liquidity of the Group in a cost effective,
low-risk manner. Working capital management is a key additional element in the effective management
of overall liquidity. The Group does not trade in financial instruments or derivatives. The main
risks arising from the utilisation of these financial instruments are interest rate risk, liquidity
risk and credit risk. |
113
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Effective interest rate and repricing analysis |
|
|
|
The following table sets out all interest-earning financial assets and interest bearing financial
liabilities held by the Group at December 31, indicating their effective interest rates and the
period in which they re-price: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
|
|
|
Effective |
|
|
Total |
|
|
6 mths or less |
|
|
6-12 mths |
|
|
1-2 years |
|
|
2-5 years |
|
US$000 |
|
Note |
|
|
interest rate |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cash and cash
equivalents |
|
|
18 |
|
|
|
4.54 |
% |
|
|
8,700 |
|
|
|
8,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
floating |
|
|
21 |
|
|
|
6.99 |
% |
|
|
(39,808 |
) |
|
|
(39,808 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
fixed |
|
|
21 |
|
|
|
5 |
% |
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
(20 |
) |
|
|
|
|
Finance lease
liabilities fixed |
|
|
21 |
|
|
|
6.32 |
% |
|
|
(2,305 |
) |
|
|
(6 |
) |
|
|
(39 |
) |
|
|
(221 |
) |
|
|
(2,039 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
(33,433 |
) |
|
|
(31,114 |
) |
|
|
(39 |
) |
|
|
(241 |
) |
|
|
(2,039 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
|
|
|
|
Effective |
|
|
Total |
|
|
6 mths or less |
|
|
6-12 mths |
|
|
1-2 years |
|
|
2-5 years |
|
US$000 |
|
Note |
|
|
interest rate |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cash and cash
equivalents |
|
|
18 |
|
|
|
5.22 |
% |
|
|
2,821 |
|
|
|
2,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial asset
restricted cash |
|
|
17 |
|
|
|
5.22 |
% |
|
|
15,500 |
|
|
|
15,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
floating |
|
|
21 |
|
|
|
6.87 |
% |
|
|
(42,917 |
) |
|
|
(42,917 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
fixed |
|
|
21 |
|
|
|
5 |
% |
|
|
(37 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37 |
) |
Convertible notes -
fixed |
|
|
22 |
|
|
|
6.23 |
% |
|
|
(1,836 |
) |
|
|
(1,836 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
liabilities fixed |
|
|
21 |
|
|
|
5.91 |
% |
|
|
(504 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
(104 |
) |
|
|
(395 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
(26,973 |
) |
|
|
(26,437 |
) |
|
|
|
|
|
|
(104 |
) |
|
|
(432 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effective interest rate for the convertible notes is the normal coupon rate of 3% adjusted for
the effect of transaction costs and the equity portion of the convertible notes. The effective
interest rate on all other loans and borrowings is the same as the actual interest rates. |
|
|
Interest rate risk |
|
|
|
The Group borrows in US dollars at floating and fixed rates of interest. Year-end borrowings
totalled US$42,133,000 (2006: US$45,294,000), (net of cash and restricted cash: US$33,433,000 (2006:
US$26,973,000)), at interest rates ranging from 5% to 6.99% (2006: 3.0% to 6.87%). |
|
|
The total year-end borrowings consists of fixed rate debt of US$2,325,000 (2006: US$2,377,000) at
interest rates ranging from 5% to 6.32% (2006: 3% to 5%) and floating rate debt of US$39,808,000
(US$42,917,000) at interest rates ranging from 6.49% to 6.99% (2006: 6.62% to 6.87%). In broad terms,
a one-percentage point increase in interest rates would increase interest income by US$87,000 (2006:
US$183,000) and increase the interest expense by US$401,000 (2006: US$433,000) resulting in an increase
in the net interest charge of US$314,000 (2006: increase by US$246,000). |
114
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
Interest rate profile of financial liabilities |
|
|
|
The interest rate profile of financial liabilities of the Group was as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$ 000 |
|
|
US$ 000 |
|
Fixed rate instruments |
|
|
|
|
|
|
|
|
Fixed rate financial liabilities |
|
|
(2,325 |
) |
|
|
(2,377 |
) |
|
|
|
|
|
|
|
|
|
Variable rate instruments |
|
|
|
|
|
|
|
|
Financial assets |
|
|
8,700 |
|
|
|
18,321 |
|
Floating rate financial liabilities |
|
|
(39,808 |
) |
|
|
(42,917 |
) |
|
|
|
|
|
|
|
|
|
|
(33,433 |
) |
|
|
(26,973 |
) |
|
|
|
|
|
|
|
|
|
Fixed rate instrument comprise fixed rate borrowings and finance lease obligations. The weighted
average interest rate and weighted average period for which the rate is fixed is as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
Fixed rate financial liabilities |
|
|
|
|
|
|
|
|
Weighted average interest rate |
|
|
6.09 |
% |
|
|
3.55 |
% |
Weighted average period for which rate is fixed |
|
4.44 years |
|
0.46 years
|
|
|
Financial assets comprise of cash and cash equivalents at December 31, 2007 and cash and cash
equivalents and restricted cash at December 31, 2006. (see notes 17 and 18). |
|
|
|
Floating rate financial liabilities comprise other borrowings that bear interest at rates of
between 6.49% and 6.99%. These borrowings are provided by lenders at margins ranging from 1.25% to
1.75% over inter-bank rates. |
|
|
|
Fair value sensitivity analysis for fixed rate instruments |
|
|
|
The Group does not account for any fixed rate financial liabilities at fair value through the
statement of operations. Therefore a change in interest rates at December 31, 2007 would not affect
profit or loss. |
|
|
|
Cash flow sensitivity analysis for variable rate instruments |
|
|
|
A change of 100 basis points in interest rates at the reporting date would have no effect on profit
or loss for the period. This assumes that all other variables, in particular foreign currency
rates, remain constant. |
|
|
|
Fair Values |
|
|
|
The table below sets out the Groups classification of each class of financial assets and
liabilities and their fair values: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow |
|
|
Liabilities at |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Loans and |
|
|
hedge |
|
|
amortised |
|
|
carrying |
|
|
Fair |
|
|
|
Note |
|
|
receivables |
|
|
derivatives |
|
|
cost |
|
|
amount |
|
|
Value |
|
December 31, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables |
|
|
16 |
|
|
|
23,104 |
|
|
|
|
|
|
|
|
|
|
|
23,104 |
|
|
|
23,104 |
|
Cash and cash equivalents |
|
|
18 |
|
|
|
8,700 |
|
|
|
|
|
|
|
|
|
|
|
8,700 |
|
|
|
8,700 |
|
Finance lease receivable |
|
|
13, 16 |
|
|
|
1,161 |
|
|
|
|
|
|
|
|
|
|
|
1,161 |
|
|
|
1,161 |
|
Forward contracts used for
hedging |
|
|
|
|
|
|
|
|
|
|
224 |
|
|
|
|
|
|
|
224 |
|
|
|
224 |
|
Grant income receivable |
|
|
|
|
|
|
285 |
|
|
|
|
|
|
|
|
|
|
|
285 |
|
|
|
285 |
|
Secured bank loans |
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
(39,828 |
) |
|
|
(39,828 |
) |
|
|
(39,827 |
) |
Finance lease liabilities |
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
(2,305 |
) |
|
|
(2,305 |
) |
|
|
(2,298 |
) |
Trade and other payables
(excluding deferred
revenue) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23,327 |
) |
|
|
(23,327 |
) |
|
|
(23,327 |
) |
Other financial liabilities |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
(2,725 |
) |
|
|
(2,725 |
) |
|
|
(2,725 |
) |
Other payables |
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
(74 |
) |
|
|
(74 |
) |
|
|
(74 |
) |
Provisions |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
(100 |
) |
|
|
(100 |
) |
|
|
(100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,250 |
|
|
|
224 |
|
|
|
(68,359 |
) |
|
|
(34,885 |
) |
|
|
(34,877 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow |
|
|
Liabilities at |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Loans and |
|
|
hedge |
|
|
amortised |
|
|
carrying |
|
|
Fair |
|
|
|
Note |
|
|
receivables |
|
|
derivatives |
|
|
cost |
|
|
amount |
|
|
Value |
|
December 31, 2006 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables |
|
|
16 |
|
|
|
28,359 |
|
|
|
|
|
|
|
|
|
|
|
28,359 |
|
|
|
28,359 |
|
Financial assets
restricted cash |
|
|
17 |
|
|
|
15,500 |
|
|
|
|
|
|
|
|
|
|
|
15,500 |
|
|
|
15,500 |
|
Cash and cash equivalents |
|
|
18 |
|
|
|
2,821 |
|
|
|
|
|
|
|
|
|
|
|
2,821 |
|
|
|
2,821 |
|
Finance lease income
receivable |
|
|
13, 16 |
|
|
|
707 |
|
|
|
|
|
|
|
|
|
|
|
707 |
|
|
|
707 |
|
Grant income receivable |
|
|
|
|
|
|
105 |
|
|
|
|
|
|
|
|
|
|
|
105 |
|
|
|
105 |
|
Secured bank loans |
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
(42,954 |
) |
|
|
(42,954 |
) |
|
|
(42,953 |
) |
Convertible notes |
|
|
22 |
|
|
|
|
|
|
|
(1,836 |
) |
|
|
|
|
|
|
(1,836 |
) |
|
|
(1,836 |
) |
Finance lease liabilities |
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
(504 |
) |
|
|
(504 |
) |
|
|
(501 |
) |
Trade and other payables
(excluding deferred
revenue) |
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
(17,588 |
) |
|
|
(17,588 |
) |
|
|
(17,588 |
) |
Other financial liabilities |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
(5,688 |
) |
|
|
(5,688 |
) |
|
|
(5,688 |
) |
Other payables |
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
(838 |
) |
|
|
(838 |
) |
|
|
(838 |
) |
Provisions |
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
(100 |
) |
|
|
(100 |
) |
|
|
(100 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,492 |
|
|
|
(1,836 |
) |
|
|
(67,672 |
) |
|
|
(22,016 |
) |
|
|
(22,012 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rates used for determining fair value |
|
|
|
The interest rates used to discount estimated cash flows, where applicable, based on observable
market rates plus a premium which reflects the risk profile of the Group at the reporting date,
were as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
Loans and borrowings |
|
|
6.74% - 6.99 |
% |
|
|
6.63% - 6.87 |
% |
Leases |
|
|
5.84% - 7.20 |
% |
|
|
5.67% - 6.00 |
% |
|
|
There was no significant difference between the fair value and carrying value of the Groups trade
receivables and trade and other payables at December 31, 2007 and December, 31 2006 as all fell due
within 6 months. |
|
|
|
Liquidity risk |
|
|
|
The Groups operations are cash generating. Short-term flexibility is achieved through the
management of the groups short-term deposits and through the use of a US$7,000,000 revolver loan
facility. |
|
|
|
The following are the contractual maturities of financial liabilities, including estimated interest
payments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying |
|
|
Contractual |
|
|
6 mths or |
|
|
6 mths - |
|
|
|
|
|
|
|
As at December 31, 2007 |
|
amount |
|
|
cash flows |
|
|
less |
|
|
12 mths |
|
|
1-2 years |
|
|
2-5 years |
|
US$000 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
floating |
|
|
39,808 |
|
|
|
44,309 |
|
|
|
12,537 |
|
|
|
4,942 |
|
|
|
9,484 |
|
|
|
17,346 |
|
Secured bank loans fixed |
|
|
20 |
|
|
|
21 |
|
|
|
9 |
|
|
|
9 |
|
|
|
3 |
|
|
|
|
|
Finance lease liabilities
fixed |
|
|
2,305 |
|
|
|
2,616 |
|
|
|
408 |
|
|
|
371 |
|
|
|
550 |
|
|
|
1,287 |
|
Trade & other payables |
|
|
24,779 |
|
|
|
24,779 |
|
|
|
24,779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,912 |
|
|
|
71,725 |
|
|
|
37,733 |
|
|
|
5,322 |
|
|
|
10,037 |
|
|
|
18,633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
|
Trinity Biotech has a US$48,340,000 club banking facility with AIB plc and Bank of Scotland (Ireland)
Limited (the banks). The facility consists of a five year term loan of US$41,340,000 and a one
year revolver of US$7,000,000. At December 31, 2007, the total amount outstanding under the facility
amounted to US$39,808,000. Various covenants apply to these borrowings. In the event that the Group
breaches these covenants, this may result in the borrowings becoming payable immediately. As at
December 31, 2007, the Group was in breach of a number of these covenants which had been waived by
the banks. The covenants which were breached concerned the level of earnings before taxation,
depreciation and amortisation for the year end December 31, 2007 and the level of the Groups net
debt and net assets excluding intangible assets at December 31, 2007. Following these breaches the
Group has agreed new covenants with the banks under revised terms and conditions for the facility.
These covenants have been calculated based on the expected future results and cash flows of the
Group. In addition to agreeing to revised covenants, since December 31, 2007 the Group has agreed a
revised repayment schedule for the outstanding debt, which will result in an extension to the
repayment period of 12 months and will reduce the level of repayments in the 12 months after
December 31, 2007 by US$3,062,000. In addition, the margin applied to this facility has been
increased to 2.25% above LIBOR. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying |
|
|
Contractual |
|
|
6 mths or |
|
|
6 mths - |
|
|
|
|
|
|
|
As at December 31, 2006 |
|
amount |
|
|
cash flows |
|
|
less |
|
|
12 mths |
|
|
1-2 years |
|
|
2-5 years |
|
US$000 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
floating |
|
|
42,917 |
|
|
|
46,306 |
|
|
|
6,554 |
|
|
|
4,417 |
|
|
|
8,834 |
|
|
|
26,501 |
|
Secured bank loans fixed |
|
|
37 |
|
|
|
39 |
|
|
|
9 |
|
|
|
9 |
|
|
|
18 |
|
|
|
3 |
|
Finance lease liabilities
fixed |
|
|
504 |
|
|
|
535 |
|
|
|
141 |
|
|
|
137 |
|
|
|
234 |
|
|
|
23 |
|
Convertible notes |
|
|
1,836 |
|
|
|
1,836 |
|
|
|
1,836 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade & other payables |
|
|
20,459 |
|
|
|
20,459 |
|
|
|
20,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,753 |
|
|
|
69,175 |
|
|
|
28,999 |
|
|
|
4,563 |
|
|
|
9,086 |
|
|
|
26,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange risk |
|
|
|
The majority of the Groups activities are conducted in US Dollars. The primary foreign exchange
risk arises from the fluctuating value of the Groups euro denominated expenses as a result of the
movement in the exchange rate between the US Dollar and the euro. Arising from this, where
considered necessary, the Group pursues a treasury policy which aims to sell US Dollars forward to
match a portion of its uncovered euro expenses at exchange rates lower than budgeted exchange
rates. These forward contracts are primarily cashflow hedging instruments whose objective is to
cover a portion of these euro forecasted transactions. All of the forward contracts normally have
maturities of less than one year after the balance sheet date. The forward contract in place at
December 31, 2007 has a maturity of less than one year after the balance sheet date. Where
necessary, the forward contracts are rolled over at maturity. There were no forward contracts in
place at December 31, 2006. |
|
|
|
With an increasing level of euro denominated sales, the Group anticipates that, over the next three
years, a higher proportion of its non-US Dollar expenses will be matched by non-US Dollar revenues.
The Group had foreign currency denominated cash balances equivalent to US$1,659,000 at December 31,
2007 (2006: US$952,000). |
|
|
|
The Group states its forward exchange contracts at fair value in the balance sheet. The Group
classifies its forward exchange contracts as hedging forecasted transactions and thus accounts for
them as cash flow hedges. During 2007 and 2006, changes in the fair value of these contracts were
recognized in equity and then in the case of contracts which were exercised during 2007 and 2006,
the cumulative gain or losses were transferred to the statement of operations. |
|
|
|
At December 31, 2007 the fair value of the forward exchange contract in place amounted to an
asset of US$224,000. There were no forward exchange contracts in place at December 31, 2006. |
117
|
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
The following are the contractual maturities of the forward contract used for hedging in place at
December 31, 2007, which crystallizes in December 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying |
|
|
Contractual cash |
|
|
6 mths or |
|
|
6 mths - 12 |
|
|
|
As at December 31, 2007 |
|
amount |
|
|
flows |
|
|
less |
|
|
mths |
|
US$000 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Forward contract used for hedging: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outflow |
|
|
|
|
|
|
(8,250 |
) |
|
|
(5,250 |
) |
|
|
(3,000 |
) |
Inflow |
|
|
224 |
|
|
|
8,253 |
|
|
|
5,248 |
|
|
|
3,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
224 |
|
|
|
3 |
|
|
|
(2 |
) |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivity analysis |
|
|
|
A 10% strengthening of the US dollar against the following currencies at December 31, 2007 would
have increased/ (decreased) profit or loss and other equity by the amounts shown below. This
analysis assumes that all other variables, in particular interest rates, remain constant. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other equity |
|
|
|
Profit or loss |
|
|
movements |
|
|
|
US$000 |
|
|
US$000 |
|
December 31, 2007 |
|
|
|
|
|
|
|
|
Euro |
|
|
1,991 |
|
|
|
(20 |
) |
Pound Sterling |
|
|
(580 |
) |
|
|
|
|
Swedish Kroner |
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2006 |
|
|
|
|
|
|
|
|
Euro |
|
|
1,836 |
|
|
|
(6 |
) |
Pound Sterling |
|
|
(413 |
) |
|
|
|
|
Swedish Kroner |
|
|
8 |
|
|
|
|
|
|
|
A 10% weakening of the US dollar against the above currencies at December 31, 2007 and December 31,
2006 would have the equal but opposite effect on the above currencies to the amounts shown above,
on the basis that all other variables remain constant. |
|
|
|
Credit Risk |
|
|
|
The Group has no significant concentrations of credit risk. Exposure to credit risk is monitored
on an ongoing basis. The Group maintains specific provisions for potential credit losses. To date
such losses have been within managements expectations. Due to the large number of customers and
the geographical dispersion of these customers, the Group has no significant concentrations of
accounts receivable. |
|
|
|
With respect to credit risk arising from the other financial assets of the Group, which comprise
cash and cash equivalents and forward contracts, the Groups exposure to credit risk arises from
default of the counter-party, with a maximum exposure equal to the carrying amount of these
instruments. |
|
|
|
The Group maintains cash and cash equivalents and enters forward contract, when necessary, with
various financial institutions. These financial institutions are located in a number of countries
and Group policy is designed to limit exposure to any one institution. The Group performs periodic
evaluations of the relative credit standing of those financial institutions. The carrying amount
reported in the balance sheet for cash and cash equivalents (including restricted cash for the year
ended December 31, 2006) and forward contracts approximate their fair value. |
118
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
Exposure to credit risk |
|
|
The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk is as follows: |
|
|
|
|
|
|
|
|
|
|
|
Carrying Value |
|
|
Carrying Value |
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
Third party trade receivables |
|
|
23,104 |
|
|
|
28,359 |
|
Finance lease income receivable |
|
|
1,161 |
|
|
|
707 |
|
Financial asset restricted cash |
|
|
|
|
|
|
15,500 |
|
Cash & cash equivalents |
|
|
8,700 |
|
|
|
2,821 |
|
Grant income receivable |
|
|
285 |
|
|
|
105 |
|
Forward exchange contracts used for hedging |
|
|
224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,474 |
|
|
|
47,492 |
|
|
|
|
|
|
|
|
|
The maximum exposure to credit risk for trade receivables and finance lease income receivable by
geographic location is as follows: |
|
|
|
|
|
|
|
|
|
|
|
Carrying Value |
|
|
Carrying Value |
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
United States |
|
|
11,137 |
|
|
|
12,436 |
|
Euro-zone countries |
|
|
3,969 |
|
|
|
5,002 |
|
UK |
|
|
1,749 |
|
|
|
2,428 |
|
Other European countries |
|
|
583 |
|
|
|
458 |
|
Other regions |
|
|
6,827 |
|
|
|
8,742 |
|
|
|
|
|
|
|
|
|
|
|
24,265 |
|
|
|
29,066 |
|
|
|
|
|
|
|
|
|
The maximum exposure to credit risk for trade receivables and finance lease income receivable by
type of customer is as follows: |
|
|
|
|
|
|
|
|
|
|
|
Carrying Value |
|
|
Carrying Value |
|
|
|
December 31, 2007 |
|
|
December 31, 2006 |
|
|
|
US$000 |
|
|
US$000 |
|
End-user customers |
|
|
11,974 |
|
|
|
13,638 |
|
Distributors |
|
|
11,723 |
|
|
|
13,765 |
|
Non-governmental organisations |
|
|
568 |
|
|
|
1,663 |
|
|
|
|
|
|
|
|
|
|
|
24,265 |
|
|
|
29,066 |
|
|
|
|
|
|
|
|
|
Due to the large number of customers and the geographical dispersion of these customers, the Group
has no significant concentrations of accounts receivable. |
|
|
Impairment Losses |
|
|
The ageing of trade receivables at December 31, 2007 is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
Impairment |
|
|
Gross |
|
|
Impairment |
|
In thousands of US$ |
|
2007 |
|
|
2007 |
|
|
2006 |
|
|
2006 |
|
Not past due |
|
|
14,288 |
|
|
|
151 |
|
|
|
17,458 |
|
|
|
29 |
|
Past due 0-30 days |
|
|
5,208 |
|
|
|
65 |
|
|
|
5,051 |
|
|
|
13 |
|
Past due 31-120 days |
|
|
3,365 |
|
|
|
35 |
|
|
|
3,600 |
|
|
|
345 |
|
Greater than 120 days |
|
|
900 |
|
|
|
406 |
|
|
|
3,324 |
|
|
|
687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,761 |
|
|
|
657 |
|
|
|
29,433 |
|
|
|
1,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
|
The movement in the allowance for impairment in respect of trade receivables during the year was as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of US$ |
|
2007 |
|
|
2006 |
|
|
2005 |
|
Balance at January 1 |
|
|
1,074 |
|
|
|
587 |
|
|
|
462 |
|
Charged to costs and expenses |
|
|
578 |
|
|
|
896 |
|
|
|
279 |
|
Amounts recovered during the year |
|
|
(190 |
) |
|
|
(100 |
) |
|
|
(36 |
) |
Amounts written off during the year |
|
|
(805 |
) |
|
|
(309 |
) |
|
|
(118 |
) |
|
|
|
|
|
|
|
|
|
|
Balance at December 31 |
|
|
657 |
|
|
|
1,074 |
|
|
|
587 |
|
|
|
|
|
|
|
|
|
|
|
|
The allowance for impairment in respect of trade receivables are used to record impairment losses
unless the Group is satisfied that no recovery of the account owing is possible. At this point the
amount is considered irrecoverable and is written off against the financial asset directly. |
|
|
Capital Management |
|
|
The Groups policy is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. The Board of Directors
monitors earnings per share as a measure of performance, which the Group defines as profit after
tax divided by the weighted average number of shares in issue. |
|
|
The Board of Directors have a policy to maintain a capital structure consisting of both debt and
equity and constantly monitors the mix of long term debt to equity. This approach is of
particular importance with respect to the acquisition strategy of the Group whereby the Group has
funded recent acquisitions using both equity and long term debt depending on the size of the
acquisition and the capital structure in place at the time of the acquisition. |
|
|
The Group has a long term lending facility with a number of lending banks (see note 21) and
Trinity Biotech is listed on the NASDAQ which allows the Group to raise funds through equity
financing where necessary. |
|
|
The Board of Directors is authorised to purchase its own shares on the market on the following
conditions; |
|
|
|
the aggregate the aggregate nominal value of the Shares authorised to be acquired shall not
exceed 10% of the aggregate nominal value of the issued share capital of the Company at
the close of business on the date of the passing of the resolution: |
|
|
|
|
the minimum price (exclusive of taxes and expenses) which may be paid for a Share shall be
the nominal value of that Share: |
|
|
|
|
the maximum price (exclusive of taxes and expenses) which may be paid for a Share shall not
be more than the average of the closing bid price on NASDAQ in respect of the ten business
days immediately preceding the day on which the Share is purchased. |
|
There were no changes to the Groups approach to capital management during the year. |
|
|
Neither the Company nor any of its subsidiaries are subject to externally imposed capital
requirements. |
31. |
|
ACCOUNTING ESTIMATES AND JUDGEMENTS |
|
The preparation of these financial statements requires the Group to make estimates and judgements
that affect the reported amount of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. |
|
|
On an on-going basis, the Group evaluates these estimates, including those related to intangible
assets, contingencies and litigation. The estimates are based on historical experience and on
various other assumptions that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgements about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions. |
|
|
Key sources of estimation uncertainty |
|
|
Note 12 contains information about the assumptions and the risk factors relating to goodwill
impairment. Note 20 outlines information regarding the valuation of share options and warrants.
In note 30, detailed analysis is given about the interest rate risk, credit risk, liquidity risk
and foreign exchange risk of the Group. |
120
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
Critical accounting judgements in applying the Groups accounting policies
|
|
|
Certain critical accounting judgements in applying the groups accounting policies are described
below: |
|
|
Research and development expenditure |
|
|
Under IFRS as adopted by the EU, we write-off research and development expenditure as incurred,
with the exception of expenditure on projects whose outcome has been assessed with reasonable
certainty as to technical feasibility, commercial viability and recovery of costs through future
revenues. Such expenditure is capitalised at cost within intangible assets and amortised over its
expected useful life of 15 years, which commences when commercial production starts. |
|
|
Factors which impact our judgement to capitalise certain research and development expenditure
include the degree of regulatory approval for products and the results of any market research to
determine the likely future commercial success of products being developed. We review these
factors each year to determine whether our previous estimates as to feasibility, viability and
recovery should be changed. |
|
|
Impairment of intangible assets and goodwill |
|
|
Definite lived intangible assets are reviewed for indicators of impairment annually while goodwill
and indefinite lived assets are tested for impairment annually, individually or at the cash
generating unit level. |
|
|
Factors considered important, as part of an impairment review, include the following: |
|
|
|
Significant underperformance relative to expected historical or projected future operating results; |
|
|
|
|
Significant changes in the manner of our use of the acquired assets or the strategy for our overall business; |
|
|
|
|
Obsolescence of products; |
|
|
|
|
Significant decline in our stock price for a sustained period; and our market capitalisation relative to net
book value. |
|
When we determine that the carrying value of intangibles, non-current assets and related goodwill
may not be recoverable based upon the existence of one or more of the above indicators of
impairment, any impairment is measured based on our estimates of projected net discounted cash
flows expected to result from that asset, including eventual disposition. Our estimated impairment
could prove insufficient if our analysis overestimated the cash flows or conditions change in the
future. |
|
|
Allowance for slow-moving and obsolete inventory |
|
|
We evaluate the realisability of our inventory on a case-by-case basis and make adjustments to our
inventory provision based on our estimates of expected losses. We write-off any inventory that is
approaching its use-by date and for which no further re-processing can be performed. We also
consider recent trends in revenues for various inventory items and instances where the realisable
value of inventory is likely to be less than its carrying value. |
|
|
Allowance for impairment of receivables |
|
|
We make judgements as to our ability to collect outstanding receivables and where necessary make
allowances for impairment. Such impairments are made based upon a specific review of all
significant outstanding receivables. In determining the allowance, we analyse our historical
collection experience and current economic trends. If the historical data we use to calculate the
allowance for impairment of receivables does not reflect the future ability to collect outstanding
receivables, additional allowances for impairment of receivables may be needed and the future
results of operations could be materially affected. |
121
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 |
|
Accounting for income taxes |
|
|
Significant judgement is required in determining our worldwide income tax expense provision. In the
ordinary course of a global business, there are many transactions and calculations where the
ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue
sharing and cost reimbursement arrangements among related entities, the process of identifying
items of revenue and expense that qualify for preferential tax treatment and segregation of foreign
and domestic income and expense to avoid double taxation. In addition, we operate within multiple
taxing jurisdictions and are subject to audits in these jurisdictions. These audits can involve
complex issues that may require an extended period of time for resolution. Although we believe
that our estimates are reasonable, no assurance can be given that the final tax outcome of these
matters will not be different than that which is reflected in our historical income tax provisions
and accruals. Such differences could have a material effect on our income tax provision and profit
in the period in which such determination is made. In managements opinion, adequate provisions
for income taxes have been made. |
|
|
Deferred tax assets and liabilities are determined for the effects of net operating losses and
temporary differences between the book and tax bases of assets and liabilities, using tax rates
projected to be in effect for the year in which the differences are expected to reverse. While we
have considered future taxable income and ongoing prudent and feasible tax planning strategies in
assessing whether deferred tax assets can be recognised, there is no assurance that these deferred
tax assets may be realisable. The extent to which recognised deferred tax assets are not realisable
could have a material adverse impact on our income tax provision and net income in the period in
which such determination is made. |
|
|
Item 18, note 13 to the consolidated financial statements outlines the basis for the deferred tax
assets and liabilities and includes details of the unrecognized deferred tax assets at year end.
The Group derecognized deferred tax assets arising on unused tax losses except to the extent that
there are sufficient taxable temporary differences relating to the same taxation authority and the
same taxable entity which will result in taxable amounts against which the unused tax losses can be
utilised before they expire. The derecognition of these deferred tax assets was considered
appropriate in light of the increased tax losses caused by the restructuring and uncertainty over
the timing of the utilisation of the tax losses. Except for the derecognition of deferred tax
assets there were no material changes in estimates used to calculate the income tax expense
provision during 2007, 2006 or 2005. |
|
32. |
GROUP UNDERTAKINGS |
|
|
The consolidated financial statements include the financial statements of Trinity Biotech plc and
the following principal subsidiary undertakings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Country of |
|
|
|
|
|
|
|
|
incorporation and |
|
|
|
|
Name and registered office |
|
Principal activity |
|
operation |
|
|
Group % holding |
|
Trinity Biotech plc
|
|
Investment and holding |
|
Ireland |
|
Holding company |
IDA Business Park, Bray,
|
|
company |
|
|
|
|
|
|
|
|
Co. Wicklow, Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech Manufacturing |
|
Manufacture and sale of |
|
Ireland |
|
|
100 |
% |
Limited
|
|
diagnostic test kits |
|
|
|
|
|
|
|
|
IDA Business Park, Bray,
Wicklow, Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Research Limited
|
|
Research and development |
|
Ireland |
|
|
100 |
% |
IDA Business Park, Bray,
Co. Wicklow, Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benen Trading Limited
|
|
Trading |
|
Ireland |
|
|
100 |
% |
IDA Business Park, Bray,
Co. Wicklow, Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech Manufacturing |
|
Engineering services |
|
Ireland |
|
|
100 |
% |
Services Limited
IDA Business Park, Bray,
Co. Wicklow, Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Country of |
|
|
|
|
|
|
|
|
incorporation and |
|
|
|
|
Name and registered office |
|
Principal activity |
|
operation |
|
|
Group % holding |
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech Financial |
|
Provision of financial |
|
Ireland |
|
|
100 |
% |
Services Limited
|
|
services |
|
|
|
|
|
|
|
|
IDA Business Park, Bray,
Co Wicklow, Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech Inc
|
|
Holding Company |
|
|
U.S.A. |
|
|
|
100 |
% |
Girts Road,
Jamestown, |
|
|
|
|
|
|
|
|
|
|
NY 14702, USA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clark Laboratories Inc
|
|
Manufacture and sale of |
|
|
U.S.A. |
|
|
|
100 |
% |
Trading as Trinity Biotech (USA)
|
|
diagnostic test kits |
|
|
|
|
|
|
|
|
Girts Road, Jamestown
NY14702, USA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mardx Diagnostics Inc
|
|
Manufacture and sale of |
|
|
U.S.A. |
|
|
|
100 |
% |
5919 Farnsworth Court |
|
diagnostic test kits |
|
|
|
|
|
|
|
|
Carlsbad
CA 92008, USA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fitzgerald Industries
|
|
Management services company |
|
|
U.S.A. |
|
|
|
100 |
% |
International, Inc
2711 Centerville Road, Suite 400
Wilmington, New Castle
Delaware, 19808, USA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopool US Inc (trading as
|
|
Sale of diagnostic test kits |
|
|
U.S.A. |
|
|
|
100 |
% |
Trinity Biotech Distribution)
Girts Road, Jamestown
NY14702, USA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primus Corporation
|
|
Manufacture and sale of |
|
|
U.S.A. |
|
|
|
100 |
% |
4231 E 75th Terrace
|
|
diagnostic test kits and |
|
|
|
|
|
|
|
|
Kansas City,
|
|
instrumentation |
|
|
|
|
|
|
|
|
MO 64132, USA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech (UK Sales) Limited
|
|
Sale of diagnostic test kits |
|
UK |
|
|
100 |
% |
54 Queens Road
Reading RG1 4A2, England |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech GmbH
|
|
Manufacture of diagnostic |
|
Germany |
|
|
100 |
% |
Lehbrinksweg 59,
|
|
instrumentation and |
|
|
|
|
|
|
|
|
32657 Lemgo, Germany |
|
sale of diagnostic test kits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Biopool AB
|
|
Manufacture and |
|
Sweden |
|
|
100 |
% |
S-903 47 Umea |
|
sale of diagnostic test kits |
|
|
|
|
|
|
|
|
Sweden |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech France SARL
|
|
Sale of diagnostic test kits |
|
France |
|
|
100 |
% |
300A Rue Marcel Paul
21 Des Grands Godets
93 500 Champigny sur marne
France |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123
Signatures
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and
that it has duly caused and authorised the undersigned to sign this annual report on its behalf.
|
|
|
|
|
|
TRINITY BIOTECH PLC
|
|
|
By: |
BRENDAN FARRELL
|
|
|
|
Mr Brendan Farrell |
|
|
|
Director/
Chief Executive Officer
|
|
|
|
|
|
|
Date: April 2, 2008 |
|
|
|
|
|
|
By: |
KEVIN TANSLEY
|
|
|
|
Mr Kevin Tansley |
|
|
|
Company secretary/
Chief Financial Officer
|
|
|
|
|
|
|
Date: April 2, 2008 |
124
Item 19
Exhibits
|
|
|
|
|
Exhibit No. |
|
Description of Exhibit |
|
|
|
|
|
|
12.1 |
|
|
Certification by Chief Executive Officer Pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002. |
|
|
|
|
|
|
12.2 |
|
|
Certification by Chief Financial Officer Pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002. |
|
|
|
|
|
|
13.1 |
|
|
Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
13.2 |
|
|
Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
15.1 |
|
|
Consent of Independent Registered Public Accounting Firm (KPMG) |
125