Form 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March, 2017

 

 

TRINITY BIOTECH PLC

(Name of Registrant)

 

 

IDA Business Park

Bray, Co. Wicklow

Ireland

(Address of Principal Executive Office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F               Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes               No  

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

 

 

 


LOGO

 

Press Release dated March 14, 2017
Contact:    Trinity Biotech plc    Lytham Partners LLC
   Kevin Tansley    Joe Diaz, Joe Dorame & Robert Blum
   (353)-1-2769800    602-889-9700
   E-mail: kevin.tansley@trinitybiotech.com   

Trinity Biotech announces Quarter 4 and Fiscal Year 2016 Financial Results

DUBLIN, Ireland (March 14, 2017)…. Trinity Biotech plc (Nasdaq: TRIB), a leading developer and manufacturer of diagnostic products for the point-of-care and clinical laboratory markets, today announced results for the quarter ended December 31, 2016 and fiscal year 2016.

Fiscal Year 2016 Results

Total revenues for fiscal year 2016 were $99.6m versus $100.2m in 2015, a decrease of 0.6% year on year.

 

    

Full Year

2015

    

Full Year

2016

    

Full Year

2016 vs 2015

 
     US$’000      US$’000      %  

Point-of-Care

     18,810        16,908        (10.1 %) 

Clinical Laboratory

     81,385        82,703        1.6

Total

     100,195        99,611        (0.6 %) 

Point-of-Care revenues decreased from $18.8m in 2015 to $16.9m in 2016, which represents a decrease of 10.1%. This was due to lower HIV sales in Africa where, due to the nature of the market, sales tend to fluctuate significantly quarter on quarter. Critically, during 2016, the Company maintained its position as the designated supplier of confirmatory tests in all of the markets in which it operates.

Meanwhile, Clinical Laboratory revenues were $82.7m, an increase of 1.6% versus 2015. This level of increase would have been higher but for the impact of foreign exchange movements. The impact of the strengthening of the US Dollar against the Brazilian Real, Canadian Dollar and Sterling, all of which represent the non-dollar currencies in which the Company invoices sales, resulted in a reduction in our US Dollar denominated revenues. In addition, in markets where we invoice in dollars but where the local currency has weakened, we have been required to reduce our pricing in order to preserve our competiveness. The primary drivers of Clinical Laboratory growth during 2016 continued to be sales of Diabetes and Autoimmune products, though this growth was partly offset by lower infectious diseases revenues.

Gross margin for the year was 43.3% compared to 46.2% in 2015. This decrease was due to adverse sales mix (lower sales of higher margin point-of-care products) and foreign exchange factors, including the impact of exchange rates on distributor pricing.


Operating profit for the year decreased from $13.5m to $7.5m in 2016. This decrease was attributable to a reduction in gross margin combined with higher Selling General and Administrative (SG&A) expenses. The increase in SG&A expenses was due to higher amortisation charges and the impact of favourable non-cash foreign exchange rate movements last year, principally in Q4, 2015.

Profit after tax (before the impact of once-off items) was $5.2m which compares to $21.8m in 2015. However, these amounts include non-cash financial income recognised in relation to the Company’s Exchangeable Loan Notes. Excluding such movements, profit after tax would have been $3.6m compared with $9.3m in 2015. This reduction is due to the lower operating profit but is also impacted by the full year effect of financing expenses associated with the Exchangeable Notes which were issued in early Q2, 2015.

Basic EPS (excluding once-off charges) for the year was 22.4 cents. However, excluding the impact of non-cash financial income this would have been 15.7 cents versus 40.2 cents in 2015. Meanwhile, unconstrained diluted EPS was 29.0 cents compared to 46.2 cents in 2015.

Earnings before interest, tax, depreciation, amortisation and share option expense for the year was $15.0m compared with $20.7m in 2015.

The above measures exclude the impact of once-off charges amounting to $105.8m, more details of which are provided below.

Quarter 4 Results

Total revenues for Q4, 2016 were $23.7m which compares to $24.9m in Q4, 2015, a decrease of $1.2m.

Point-of-Care revenues for Q4, 2016 decreased from $5.4m to $4.0m when compared to Q4, 2015, a decline of 27.3%. This is due to the normal fluctuation patterns which impact HIV sales in Africa.

Clinical Laboratory revenues increased to $19.7m, which represents an increase of 1.2% compared to Q4, 2015. As in the case of the annual revenues, this increase would have been higher but for the impact of exchange rate movements.

Revenues for Q4, 2016 were as follows:

 

    

2015

Quarter 4

    

2016

Quarter 4

    

Increase/

(decrease)

 
     US$’000      US$’000      %  

Point-of-Care

     5,436        3,950        (27.3 %) 

Clinical Laboratory

     19,501        19,731        1.2

Total

     24,937        23,681        (5.0 %) 

Gross profit for Q4, 2016 amounted to $9.5m representing a gross margin of 40%, which is lower than the 43.2% achieved in Q4, 2015. This decrease is largely due to lower sales of higher margin point-of-care products and the impact of currency movements on distributor pricing. It has also been impacted by lower production levels during the quarter in line with the lower revenues experienced.

Research and Development expenses of $1.3m are slightly lower than the equivalent quarter last year. However, Selling, General and Administrative (SG&A) expenses at $7.2m are $1.2m higher than Q4, 2015. Last year’s SG&A expenses of $6.0m were unusually low due to the benefit from some once-off foreign exchange gains. This quarter’s expense was actually slightly lower than the average for the preceding three quarters of $7.4m.


Operating profit for the quarter was $0.6m, which is lower than the $3.1m achieved in Q4, 2015. This is due to the combination of the lower revenues and gross margin, and higher indirect costs.

The profit after tax, but before once-off charges, for the quarter was $4.9m, though this was largely impacted by non-cash income related to the Exchangeable Notes. Excluding these non-cash items, the profit after tax, before once-off charges, for the quarter was $0.1m.

The basic EPS (excluding once-off charges) for the quarter was 21.6 cents. However, excluding non-cash financial income, principally a gain of $5.0m on the fair value of the embedded derivatives of the Exchangeable Notes, the EPS would have been 0.2 cents versus 8.0 cents in Q4, 2015. Diluted EPS for the quarter amounted to 4.3 cents, which compares to 10.5 cents in the equivalent quarter in 2015.

Cash generated from operations during the quarter was $4.6m, though this was largely offset by capital expenditure of $4.2m and resulted in free cash inflows for the quarter of $0.4m. This was offset by shares bought back of $3.3m, Exchangeable Note interest of $2.3m and payments of $2.4m incurred in relation to the closure of our facility in Sweden. Overall, this resulted in a cash balance at the end of the quarter of $77.1m.

Earnings before interest, tax, depreciation, amortisation and share option expense for the quarter was $2.6m compared to $4.8m in Q4, 2015.

Once-off Charges

During the period the Company recognised once-off charges amounting to $105.8m net of tax which is broken down in the table below.

 

     $m  

Meritas

  

- Impairment of Assets

     56.7  

- Closure costs

     5.8  

- Foreign currency translation reserve

     3.8  

Total Meritas

     66.3  

Impairment Charges

     43.4  

Product Cull Provision

     4.8  

Tax Impact

     (8.7

Total

     105.8  

The Meritas impairment of $56.7m followed the Company’s decision to withdraw its Meritas Troponin submission from the FDA in October, 2016. The impairment charge represents the write-off of all capitalised development costs, tangible fixed assets, inventories and other assets associated with the Meritas project. In addition, a further $5.8m was recognised in relation to closure costs of the Swedish facility. This principally consisted of employee redundancy costs and other contractual obligations associated with terminating premises and supplier contracts. A further charge of $3.8m was recognised in relation to foreign translation reserves which had been recognised in previous periods as a reserve movement, but which under accounting rules is now required to be recognised through the income statement.

The Company is also recognising an impairment charge of $43.4m in relation to non-Meritas assets. This was largely driven by the provisions of accounting standards, whereby companies are required to carry out annual impairment reviews of asset valuations contained on their balance sheet. In


determining whether a potential asset impairment exists, companies are required to consider a range of internal and external factors. One such factor is the relationship between a company’s market valuation and the book value of its net assets. The fall in the Company’s share price after our Meritas announcement resulted in the Company trading at a significant discount to the book value of its net assets. In such circumstances, given the accounting standard requirements, the Company felt it was prudent to recognise an impairment provision. By its nature this adjustment has no cash implications for the Company.

Finally, the company has recognised a product cull charge of $4.8m. This is in relation to a number of products which have been discontinued. This mainly represents our Bartels and Microtrak product lines which we acquired over 15 years ago. Sales of these products have been declining significantly over the last number of years and have now reached the end of their economic life, especially given the level of technical support required to keep older products of this nature on the market. The revenue impact of this decision will be a reduction of approximately $3.0m per annum.

The tax impact of the above mentioned items was a tax credit of $8.7m, which is mainly the reversal of deferred tax liabilities recognised in previous quarters.

Share Buyback

During the quarter the company bought back 572,000 shares at an average price of $6.84 and a total value of $3.9m, of which $3.3m was paid out during the quarter. This brings the total buyback for the year to over 1.1 million shares at an average price of $8.95 and a total value of $9.9m. A further 143,000 shares at a price of $6.92 were bought back during the period to date in Q1, 2017.

Comments

Commenting on the results Kevin Tansley, Chief Financial Officer said “Profitability for the quarter was adversely impacted by a number of factors. Lower revenues due to HIV fluctuations and compressed margins attributable to exchange rate and sales mix factors have resulted in an operating profit for the quarter of $0.6m and a reduction in diluted EPS to 4 cents per ADR. During the quarter we recognised once-off charges totalling $105.8m. Of this, $66.3m was due to our withdrawal of our Meritas Troponin submission to the FDA and had previously been flagged, whilst a further non-cash impairment charge of $43.4m was recognised on non-Meritas assets, though this was largely driven by the recent fall in the Company’s share price.

Meanwhile, for the year as a whole the Company made an operating profit of $7.5m and a profit after tax of $3.6m (excluding non-cash financing items and once-off charges) which equates to an unconstrained diluted EPS of 29 cents for the year. This is lower than earned in 2015 due to the impact of exchange rate movements and higher SG&A expenses.”

Commenting, Ronan O’Caoimh, Chief Executive Officer stated “The latter part of 2016 was particularly challenging for Trinity Biotech. We withdrew our Troponin submission to the FDA and this was followed shortly thereafter by our decision to close our plant in Sweden and move the Meritas technology to another group facility.

Since then we have also reviewed our product portfolio and have decided to cull a number of older products which have been declining for a number of years. These products which would have continued to decrease were becoming economically inefficient and no longer merited the level of investment and resources required.

On a more positive note, the remainder of the business remains strong, particularly with regard to Premier and Autoimmunity, but also in the case of HIV notwithstanding the fluctuating nature of its sales. By carrying out a targeted cull we have removed a number of declining products from our


portfolio which have been depressing revenue growth in the Company. Furthermore, with the closure of our Swedish facility, we have meaningfully changed the cash generative ability of the Company, such that going forward we will operate at close to a free cash flow break even position. This provides us with the financial flexibility to continue our share buyback program, which in our opinion represents the best deployment of capital at current share price levels.”

Conference Call Dial-in Details

The conference call to discuss the results released today will be held at 11:00am ET (3:00pm GMT – not 4:00pm GMT as previously released).

Interested parties can access the call by dialing:

 

  USA:   1-844-861-5499
  International:   1-412-317-6581
  Conference ID #:   10102284

A simultaneous webcast of the call can be accessed at:

https://www.webcaster4.com/Webcast/Page/1135/19990

Forward-looking statements in this release are made pursuant to the “safe harbor” provision of the Private Securities

Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, the results of research and development efforts, the effect of regulation by the United States Food and Drug Administration and other agencies, the impact of competitive products, product development commercialisation and technological difficulties, and other risks detailed in the Company’s periodic reports filed with the Securities and Exchange Commission.

Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information please see the Company’s website: www.trinitybiotech.com.


Trinity Biotech plc

Consolidated Income Statements

 

(US$000’s except share data)   

Three Months

Ended

Dec 31,

2016

(unaudited)

   

Three Months

Ended

Dec 31,

2015

(unaudited)

   

Year

Ended

Dec 31,

2016

(unaudited)

   

Year

Ended

Dec 31,

2015

(unaudited)

 

Revenues

     23,681       24,937       99,611       100,195  

Cost of sales

     (14,202     (14,170     (56,518     (53,950
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     9,479       10,767       43,093       46,245  

Gross profit %

     40.0     43.2     43.3     46.2

Other operating income

     28       65       239       288  

Research & development expenses

     (1,330     (1,508     (5,041     (5,068

Selling, general and administrative expenses

     (7,206     (6,009     (29,451     (26,475

Indirect share based payments

     (378     (184     (1,349     (1,541
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     593       3,131       7,491       13,449  

Financial income

     221       132       877       431  

Financial expenses

     (1,182     (1,189     (4,726     (3,483

Non-cash financial income

     4,860       975       1,552       12,480  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net financing income / (expense)

     3,899       (82     (2,297     9,428  
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit before tax & once-off items

     4,492       3,049       5,194       22,877  

Income tax credit / (expense)

     421       (223     (41     (1,081
  

 

 

   

 

 

   

 

 

   

 

 

 

Profit before once-off items

Once-off charges (net of tax)

    

4,913

(105,779

 

   

2,826

—  

 

 

   

5,153

(105,779

 

   

21,796

—  

 

 

  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) / profit after tax and once-off items

     (100,866     2,826       (100,626     21,796  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) / earnings per ADR (US cents)

     (443.1     12.1       (438.2     94.1  

Earnings per ADR (US cents)**

     21.6       12.1       22.4       94.1  

Earnings per ADR excluding non-cash financial income (US cents)**

     0.2       8.0       15.7       40.2  

Diluted (loss) / earnings per ADR (US cents)

     (373.1     10.5       (344.8 )*      46.2  

Diluted earnings per ADR (US cents)**

     4.3       10.5       29.0     46.2  

Weighted average no. of ADRs used in computing basic earnings per ADR

     22,761,641       23,259,669       22,964,703       23,161,773  

Weighted average no. of ADRs used in computing diluted earnings per ADR

     28,031,122       28,690,599       28,299,399       27,407,793  

 

* Under IAS 33 Earnings per Share, diluted earnings per share cannot be anti-dilutive. Therefore, diluted earnings per ADR in accordance with IFRS would be 22.4 cents for the year (i.e. equal to basic earnings per ADR).
** Excluding once-off charges

The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting). Once-off charges is a non-GAAP accounting presentation.


Trinity Biotech plc

Consolidated Balance Sheets

 

    

Dec 31,

2016

US$ ‘000

(unaudited)

   

Sept 30,

2016

US$ ‘000

(unaudited)

   

June 30,

2016

US$ ‘000

(unaudited)

   

Dec 31,

2015

US$ ‘000

(unaudited)

 

ASSETS

        

Non-current assets

        

Property, plant and equipment

     13,403       21,495       21,760       20,659  

Goodwill and intangible assets

     87,275       173,240       169,049       161,324  

Deferred tax assets

     14,556       13,531       13,312       12,792  

Other assets

     870       849       932       954  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current assets

     116,104       209,115       205,053       195,729  
  

 

 

   

 

 

   

 

 

   

 

 

 

Current assets

        

Inventories

     32,589       39,989       39,253       35,125  

Trade and other receivables

     22,586       25,802       27,832       25,602  

Income tax receivable

     1,205       811       712       550  

Cash and cash equivalents

     77,108       84,751       84,920       101,953  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     133,488       151,353       152,717       163,230  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

     249,592       360,468       357,770       358,959  
  

 

 

   

 

 

   

 

 

   

 

 

 

EQUITY AND LIABILITIES

        

Equity attributable to the equity holders of the parent

        

Share capital

     1,224       1,222       1,221       1,220  

Share premium

     16,187       15,801       15,575       15,526  

Accumulated surplus

     93,004       197,379       197,588       201,951  

Other reserves

     (1,688     (4,002     (3,721     (4,809
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     108,727       210,400       210,663       213,888  
  

 

 

   

 

 

   

 

 

   

 

 

 

Current liabilities

        

Income tax payable

     175       772       657       1,163  

Trade and other payables

     25,028       19,976       19,384       18,874  

Provisions

     75       75       75       75  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     25,278       20,823       20,116       20,112  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities

        

Exchangeable senior note payable

     96,491       101,351       99,232       98,044  

Other payables

     735       1,939       1,986       2,096  

Deferred tax liabilities

     18,361       25,955       25,773       24,819  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current liabilities

     115,587       129,245       126,991       124,959  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

     140,865       150,068       147,107       145,071  
  

 

 

   

 

 

   

 

 

   

 

 

 

TOTAL EQUITY AND LIABILITIES

     249,592       360,468       357,770       358,959  
  

 

 

   

 

 

   

 

 

   

 

 

 

The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting).


Trinity Biotech plc

Consolidated Statement of Cash Flows

 

(US$000’s)   

Three Months

Ended

Dec 31,

2016

(unaudited)

   

Three Months

Ended

Dec 31,

2015

(unaudited)

   

Year

Ended

Dec 31,

2016

(unaudited)

   

Year

Ended

Dec 31,

2015
(unaudited)

 

Cash and cash equivalents at beginning of period

     84,751       104,289       101,953       9,102  

Operating cash flows before changes in working capital

     3,294       5,574       16,245       19,853  

Changes in working capital

     1,325       234       (2,147     (7,157
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash generated from operations

     4,619       5,808       14,098       12,696  

Net Interest and Income taxes received/(paid)

     (64     79       (327     (361

Capital Expenditure & Financing (net)

     (4,185     (5,980     (21,165     (21,604
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

     370       (93     (7,394     (9,269

Payment of HIV-2 licence fee

     —         —         (1,112     (1,112

Share buyback

     (3,296     —         (9,322     —    

Once-off items

     (2,417     —         (2,417     —    

30 year Exchangeable Note proceeds, net of fees

     —         (45     —         110,529  

30 year Exchangeable Note interest payment

     (2,300     (2,198     (4,600     (2,198

Dividend payment

     —         —         —         (5,099
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

     77,108       101,953       77,108       101,953  
  

 

 

   

 

 

   

 

 

   

 

 

 

The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

TRINITY BIOTECH PLC

  (Registrant)
By:  

/s/ Kevin Tansley

  Kevin Tansley
  Chief Financial Officer

Date: 14 March 2017