Form 20-F
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, 2010
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)
Kevin Tansley
Chief Financial Officer
Tel: +353 1276 9800
Fax: +353 1276 9888
IDA
Business Park, Bray, Co. Wicklow, Ireland
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
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 US$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:
84,116,865 Class A Ordinary Shares and 700,000 Class B Shares
(as of December 31, 2010)
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):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o |
Indicate by check mark which basis of accounting the registrant has used to
prepare the financial statements included in this filing:
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U.S. GAAP o
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International Financial
Reporting Standards as issued by
the International Accounting
Standards Board þ
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Other o |
If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow:
Item 17 o Item 18 o
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 S-8 File No. 33-76384, 333-220, 333-5532, 333-7762, 333-124384 and 333-166590.
General
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 2010.
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.
Forward-Looking Statements
This Annual Report on Form 20-F contains forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking
statements accompanied by meaningful cautionary statements. Except for historical information, this
report contains forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, which may be
identified by words such as estimates, anticipates, projects, plans, seeks, may,
will, expects, intends, believes, should and similar expressions or the negative versions
thereof and which also may be identified by their context. Such statements, whether expressed or
implied, are based upon current expectations of the Company and speak only as of the date made. The
Company assumes no obligation to publicly update or revise any forward-looking statements even if
experience or future changes make it clear that any projected results expressed or implied therein
will not be realized. These statements are subject to various risks, uncertainties and other
factors please refer to the risk factors in Item 3 for a more comprehensive outline of these
risks and the threats which they pose to the Company and its results.
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, 2010 and
2009 and for each of the years ended December 31, 2010, 2009 and 2008 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, 2008, 2007 and 2006 and for the years ended December 31, 2007 and December 31, 2006
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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2010 |
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2009 |
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2008 |
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2007 |
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2006 |
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Total |
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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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US$000 |
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Revenues |
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89,635 |
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125,907 |
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140,139 |
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143,617 |
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118,674 |
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Cost of sales |
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(45,690 |
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(68,891 |
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(77,645 |
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(75,643 |
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(62,090 |
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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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(45,690 |
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(68,891 |
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(77,645 |
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(88,368 |
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(67,890 |
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Gross profit |
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43,945 |
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57,016 |
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62,494 |
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55,249 |
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50,784 |
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Other operating income |
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1,616 |
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437 |
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1,173 |
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413 |
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275 |
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Research and development expenses |
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(4,603 |
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(7,341 |
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(7,544 |
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(6,802 |
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(6,696 |
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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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(4,603 |
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(7,341 |
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(7,544 |
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(13,709 |
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(6,696 |
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Selling, general and administrative expenses |
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(26,929 |
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(36,013 |
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(47,816 |
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(51,010 |
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(42,422 |
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Selling, general and administrative impairment charges and
restructuring expenses |
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(87,882 |
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(20,315 |
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Total selling, general and administrative expenses |
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(26,929 |
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(36,013 |
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(135,698 |
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(71,325 |
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(42,422 |
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Net gain on divestment of business and restructuring expenses |
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46,474 |
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Operating profit/(loss) |
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60,503 |
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14,099 |
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(79,575 |
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(29,372 |
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1,941 |
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Financial income |
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1,352 |
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8 |
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65 |
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457 |
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1,164 |
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Financial expenses |
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(495 |
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(1,192 |
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(2,160 |
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(3,148 |
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(2,653 |
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Net financing income/(costs) |
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857 |
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(1,184 |
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(2,095 |
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(2,691 |
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(1,489 |
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Profit/(loss) before tax |
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61,360 |
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12,915 |
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(81,670 |
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(32,063 |
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452 |
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Income tax (expense)/ credit |
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(942 |
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(1,091 |
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3,892 |
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(3,309 |
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2,824 |
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Profit/(loss) for the year (all attributable to owners of the parent) |
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60,418 |
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11,824 |
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(77,778 |
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(35,372 |
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3,276 |
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Basic earnings/(loss) per A ordinary share (US Dollars) |
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0.71 |
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0.14 |
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(0.96 |
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(0.47 |
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0.05 |
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Basic earnings/(loss) per B ordinary share (US Dollars) |
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1.43 |
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0.28 |
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(1.91 |
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(0.94 |
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0.10 |
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Diluted earnings/(loss) per A ordinary share (US Dollars) |
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0.70 |
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0.14 |
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(0.96 |
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(0.47 |
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0.05 |
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Diluted earnings/(loss) per B ordinary share (US Dollars) |
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1.39 |
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0.28 |
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(1.91 |
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(0.94 |
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0.10 |
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Basic earnings/(loss) per ADS (US Dollars) |
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2.85 |
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0.57 |
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(3.82 |
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(1.86 |
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0.19 |
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Diluted earnings/(loss) per ADS (US Dollars) |
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2.79 |
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0.57 |
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(3.82 |
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(1.86 |
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0.19 |
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Weighted average number of shares used in computing basic EPS |
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84,734,378 |
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83,737,884 |
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81,394,075 |
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76,036,579 |
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70,693,753 |
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Weighted average number of shares used in computing diluted EPS |
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86,661,535 |
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83,772,094 |
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81,394,075 |
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76,036,579 |
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72,125,740 |
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2
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December |
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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, 2010 |
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31, 2009 |
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31, 2008 |
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31, 2007 |
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31, 2006 |
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Consolidated Balance Sheet Data |
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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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US$000 |
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Net current assets (current
assets less current
liabilities) |
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89,068 |
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42,835 |
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39,494 |
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36,298 |
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60,996 |
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Non-current liabilities |
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(7,331 |
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(27,500 |
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(27,897 |
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(35,623 |
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(45,928 |
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Total assets |
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160,874 |
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132,445 |
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129,509 |
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215,979 |
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249,131 |
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Capital stock |
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1,092 |
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1,080 |
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1,070 |
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991 |
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978 |
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Shareholders equity |
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141,287 |
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79,344 |
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65,905 |
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136,845 |
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167,262 |
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No dividends were declared in any of the periods from December 31, 2006 to December 31,
2009. The Board have proposed a final dividend of 10 cent per ADR in respect of 2010 and
this proposal will be submitted to shareholders for their approval at the next Annual General
Meeting of the Company. As provided in the Articles of Association of the Company, dividends
or other distributions are declared and paid in US Dollars.
Risk Factors
You should carefully consider all of the information set forth in this Form 20-F, including the
following risk factors, when investing in our securities. The risks described below are not the
only ones that we face. Additional risks not currently known to us or that we presently deem
immaterial may also impair our business operations. We could be materially adversely affected by
any of these risks.
Our long-term success depends upon the successful development and commercialization of new
products.
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Our long-term viability and growth will depend upon the successful discovery, development
and commercialization of other products from our research and development (R&D) activities.
We are committed to significant expenditure on R&D. However, there is no certainty that this
investment in research and development will yield technically feasible or commercially viable
products. Development of new diagnostic tests 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. |
Technological advances in the industry could render our products obsolete.
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We have invested in research and development 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 Siemens (Immulite, Enzygnost®),
Inverness Medical Innovations, Inc. (Determine, Wampole, Athena), Diasorin Inc. (Liasion,
ETIMAX), Abbott Diagnostics (AxSYM, IMx), Bio-Rad (ELISA, WB, Bioplex & A1c), Roche
Diagnostics (COBAS AMPLICOR, Ampliscreen, Accutrend) and OraSure Technologies, Inc
(OraQuick ®). |
We may be unable to protect or obtain proprietary rights that we utilize or intend to utilize.
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In developing and manufacturing our products, we employ a variety of proprietary and
patented technologies. In addition, we have licensed, and expect to continue to license,
various complementary technologies and methods from academic institutions and public and
private companies. We cannot provide any assurance that the technologies that we own or
license provide protection from competitive threats or from challenges to our intellectual
property. In addition, we cannot provide any assurances that we will be successful in
obtaining licenses or proprietary or patented technologies in the future. |
3
Our 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. |
Our business could be adversely affected by changing market conditions.
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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. |
Future acquisitions 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. |
Our revenues are highly dependent on a network of distributors worldwide.
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Trinity Biotech currently distributes its product portfolio through distributors in
approximately 75 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. |
Our 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 6 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 5 additional non-US patents with expiration dates varying between the years 2011
and 2023. |
4
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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 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$8,679,000) for any one accident, limited to a maximum of 6,500,000 (US$8,679,000) 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. |
Significant interruptions in production at our principal manufacturing facilities and/or
third-party manufacturing facilities would adversely affect our business and operating results.
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Products manufactured at our facilities in Bray, Ireland, Jamestown, New York, Kansas
City Missouri and Carlsbad, California comprised approximately 76% of revenues in 2010. Our
global supply of these products and services is dependent on the uninterrupted and
efficient operation of these facilities. In addition, we currently rely on a small number
of third-party manufacturers to produce certain of our diagnostic products and product
components. The operations of our facilities or these third-party manufacturing facilities
could be adversely affected by fire, power failures, natural or other disasters, such as
earthquakes, floods, or terrorist threats. Although we carry insurance to protect against
certain business interruptions at our facilities, there can be no assurance that such
coverage will be adequate or that such coverage will continue to remain available on
acceptable terms, if at all. Any significant interruption in the Groups or third-party
manufacturing capabilities could materially and adversely affect our operating results. |
We are highly dependent on our senior management team and other key employees, and the loss of one
or more of these employees could adversely affect our operations.
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Trinity Biotechs success is dependent on certain key management personnel. Our key
employees at December 31, 2010 were Ronan OCaoimh, our CEO and Chairman, Rory Nealon, our
COO, Jim Walsh, our Chief Scientific Officer and Kevin Tansley, our CFO/Company Secretary.
If such key employees were to leave and we were unable to obtain adequate replacements, our
operating results could be adversely affected. |
We are dependent on 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
We could be adversely affected by healthcare reform legislation.
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Changes in government policy could have a significant impact on our business by
increasing the cost of doing business, affecting our ability to sell our products and
negatively impacting our profitability. The newly enacted Patient Protection and Affordable
Care Act imposes a new 2.3% excise tax on medical device makers beginning in 2013, which
could have a material negative impact on our results of operations and our cash flows. At
present, given the infancy of the enacted reform, we are unable to predict what effect the
legislation might ultimately have on reimbursement rates for our products. If reimbursement
amounts for diagnostic testing services are decreased in the future, such decreases may
reduce the amount that will be reimbursed to hospitals or physicians for such services and
consequently could place constraints on the levels of overall pricing, which could have a
material effect on our sales and/or results of operations. Other elements of this
legislation could meaningfully change the way healthcare is developed and delivered, and
may materially impact numerous aspects of our business. |
Global economic conditions may have a material adverse impact on our results.
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We currently generate significant operating cash flows, which combined with access to
the credit markets provides us with discretionary funding capacity for research and
development and other strategic activities. Current uncertainty in global economic
conditions poses a risk to the overall economy that could impact demand for our products,
as well as our ability to manage normal commercial relationships with our customers,
suppliers and creditors, including financial institutions. If global economic conditions
deteriorate significantly, our business could be negatively impacted, including such areas
as reduced demand for our products from a slow-down in the general economy, supplier or
customer disruptions resulting from tighter credit markets and/or temporary interruptions
in our ability to conduct day-to-day transactions through our financial intermediaries
involving the payment to or collection of funds from our customers, vendors and suppliers. |
Our sales and operations are subject to the risks of fluctuations in currency exchange rates.
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A substantial portion of our operations are in Ireland and Europe is one of our main
sales territories. As a result, changes in the exchange rate between the U.S. dollar and
the euro can have significant effects on our results of operations. |
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 2008 and 2010 and the total share options exercisable at December
2010, as described in Item 18, note 19 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 5,226,413 A Ordinary shares (1,306,603 ADSs) exercisable at December 31, 2010
be exercised, Trinity Biotech would have to issue 5,226,413 additional A ordinary shares
(1,306,603 ADSs). On the basis of 84,116,865 A ordinary shares outstanding at December 31,
2010, this would effectively dilute the ownership interest of the existing shareholders by
approximately 6%. |
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 recognize the United States judgement. The originating court
must have been a court of competent jurisdiction, the judgement may not be recognized 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 liver and intestine. The Group is also a significant provider of raw
materials to the life sciences industry. The Group sells worldwide in over 75 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 offices 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 approximately 345 people worldwide
and markets its portfolio of over 350 products to customers in 75 countries around the world.
Trinity Biotech markets its products in the US through a direct sales force and in the rest of the
world through a combination of direct selling and a network of national and international
distributors. Trinity Biotech has manufacturing facilities in Bray, Ireland, in Jamestown, New
York, Carlsbad, California and Kansas City, Missouri in the USA.
In May 2010, the Group sold its worldwide Coagulation business to Diagnostica Stago for US$90
million. Diagnostica Stago purchased the share capital of Trinity Biotech (UK Sales) Limited,
Trinity Biotech GmbH and Trinity Biotech S.à r.l., along with Coagulation assets of
Biopool US Inc. and Trinity Biotech Manufacturing Limited. Included in the sale are Trinitys
lists of coagulation customers and suppliers, all coagulation inventory, intellectual property and
developed technology. In total, 321 Trinity employees transferred their employment to Diagnostica
Stago following the sale.
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.
Principal Markets
The primary market for Trinity Biotechs tests remains the USA. During fiscal year 2010, the Group
sold 60% (US$54.0 million) (2009: 54% or US$68.1 million) (2008: 50% or US$69.9 million) of product
in the USA. Sales to non-US (principally European and Asian/ African) countries represented 40%
(US$35.6 million) for fiscal year 2010 (2009: 46% or US$57.8 million) (2008: 50% or US$70.2
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.
7
Principal Products
Trinity Biotech develops, acquires, manufactures and markets a wide range of clinical in-vitro
diagnostic products. This product portfolio, firstly split by point of use, is then subdivided on
the basis of application.
Product portfolio sub-division with associated established brand names:
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Clinical Laboratory |
Point-Of-Care |
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Infectious Disease |
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HbA1c + Hb Variant |
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Clinical Chemistry |
UniGold |
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Bartels® |
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Primus |
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EZ |
Recombigen® |
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Captia |
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MarDx® |
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MarBlot® |
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MicroTrak |
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Trinity Biotech also sells raw materials to the life sciences industry and research institutes
globally through the Company subsidiary, Fitzgerald Industries.
Trinity Biotech products are sold through our direct sales organisations in USA and through our
network of principal distributor partners into approximately 75 countries in the rest of the world.
Point of Care (POC)
Point of Care refers to diagnostic tests which are carried out in the presence of the patient.
UniGold HIV
Trinity Biotech makes a very significant contribution to the global effort to meet the challenge of
HIV. The Groups principal product is UniGold HIV.
In Africa, UniGold HIV has been used for several years in voluntary counselling and testing
centres (VCTs) in the sub-Saharan region where they provide a cornerstone to early detection and
treatment intervention. The UniGold HIV brand is recognized for its quality and reliability. These
same factors are the springboard in some countries for national testing algorithm changes in favour
of wider usage of UniGold HIV.
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.
The Future of Point-Of-Care at Trinity Biotech
Point-Of-Care is strategically key to the growth of Trinity Biotech in the future. The company has
already invested in establishing 3 new product development teams in the US and Ireland to provide a
product pipeline for future growth. In phase one, the areas of development focus include rapid
tests for:
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Sexually transmitted diseases: Building on the existing success with HIV, the products
will include rapid tests for Syphilis, Herpes simplex (HSV) 1 & 2 and HIV combination assay
(1 & 2 + Antigen) |
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Enteric pathogens: Separate products for Clostridium toxin A&B, Giardia and
Cryptosporidium |
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Respiratory pathogens: Flu A&B, Streptococcus pneumoniae, |
Clinical Laboratory
Trinity Biotech supplies the clinical laboratory segment of the in-vitro diagnostic market with a
range of diagnostic tests and instrumentation which detect:
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Infectious diseases: bacterial and viral diseases and autoimmune disorders. |
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HbA1c and Hb Variant: Diabetes and Haemoglobin disorders. |
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Clinical Chemistry: Liver & kidney disease and haemolytic anaemia. |
8
Infectious Diseases
Trinity Biotech manufactures products for niche/specialised applications in Infectious Disease and
Autoimmune disorders. The products are used with patient samples and the results generated help
physicians to guide diagnosis for a broad range of infectious diseases. The key niche/specialist
disease areas served by the Trinity Biotech products include: (1) Lyme disease, (2) Sexually
transmitted diseases: Syphilis, Chlamydia and Herpes simplex, (3) Respiratory infections:
Legionella, Flu A&B, (4) Epstein Barr Virus, (5) other viral pathogens, e.g. Measles, Mumps,
Rubella and Varicella, (6) Autoimmune disorders (e.g. lupus, celiac and rheumatoid arthritis).
The vast majority of the infectious diseases product line is FDA cleared for sale in the USA and CE
marked in Europe. Products are sold in over 75 countries, with the focus on North America, Europe
and Asia.
HbA1c and Hb Variants
The Primus Corporation, a Trinity Biotech company, focuses on products for the in-vitro diagnostic
testing for haemoglobin A1c (HbA1c) used in the monitoring of diabetes. Primus manufactures a range
of instrumentation using patented HPLC (high pressure liquid chromatography) technology.
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HbA1c : These products are the most accurate and precise methods available for detection
and monitoring the patient status and overall diabetic control. |
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Haemoglobin Variants: The Primus Ultra2 instrument is the most accurate and
precise method for detection of haemoglobin variants which is important for screening
populations for genetic abnormalities that can lead to conditions such as Sickle Cell
Anaemia and Thalassemia. |
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Neonatal Haemoglobin: The most recent addition, the GeneSys system, designed for assay
and detection of Haemoglobin variants in neo-natal screening, addresses the largest segment
of this niche area, i.e. the reference laboratories (responsible for state-wide screening
of newborns). |
The current Primus products are sold through the Trinity Biotech sales and marketing organization
to clinical and reference laboratories directly in the USA and via distribution in other countries.
In preparation for the planned 2011 launch of a new high throughput HbA1c instrument, the Premier
Hb 9210 (formerly known as Pdx), Trinity Biotech has entered into a distribution agreement with
Menarini Diagnostics, for Europe. The US launch is expected later in 2011. This new instrument will
also give access to markets not previously open to Trinity Biotech due to instrument price and test
capability.
Clinical Chemistry
The Trinity Biotech speciality clinical chemistry business includes reagent products such as ACE,
Bile Acids, Lactate, Oxalate and Glucose-6-Phosphate Dehydrogenase (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.
Sales and Marketing
Trinity Biotech sells its product through its own direct sales-force in the United States. Our
sales team in the United States is responsible for marketing and selling the Trinity Biotech range
of clinical chemistry, point of care, infectious disease, Primus and clinical chemistry products.
Through its sales and marketing organisation in Ireland, Trinity Biotech sells:
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Its Clinical Chemistry product range directly to hospitals and laboratories in Germany
and France; |
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All products directly to hospitals and laboratories in the UK; and |
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All product lines through independent distributors and strategic partners in a further
75 countries. |
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. Innovation in the market is
rare but significant advantage can be made with the introduction of new disease markers or
innovative techniques with patent protection. The Groups competition includes several large
companies such as, but not limited to, Roche, Abbott, Johnson & Johnson, Siemens (from the combined
acquisitions of Bayer Diagnostics, Dade-Behring and DPC), Beckman Coulter, Inverness Medical
Innovations, Inc., Bio-Rad and Thermo Fisher.
Patents and Licences
Patents
Many of 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.
Each of the key licensing arrangements terminates on the expiry of the last of the particular
licensed patents covered by the respective agreement, except in the case of one of the agreements
which expires in 2015. Each licensor has the right to terminate the arrangement in the event of
non-performance by Trinity Biotech. The key licensing arrangements requires the Group to pay a
royalty to the license holder which is based on sales of the products which utilize the relevant
technology being licensed. The royalty rates vary from 2% to 8.5% of sales. The total amount paid
by Trinity Biotech under key licensing arrangements in 2010 was US$1,233,000 (2009: US$899,000).
10
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
60% of Trinity Biotechs 2010 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.
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, labeling, storage, pre-market 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 known as 510(k)) clearance or
pre-market 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 2010 is
in the region of US$200,000.
510(k) Clearance Pathway. To obtain 510(k) clearance, Trinity Biotech must submit a pre-market
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. As noted above,
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) pre-market 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.
11
Post-market 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.
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
authorization 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.
12
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 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 Jamestown, New York State respectively. The Groups distributor of raw materials for the life
sciences industry, Fitzgerald Industries, is based in Acton, Massachusetts and Bray, Co. Wicklow,
Ireland.
For a more comprehensive schedule of the subsidiary undertakings of the Group please refer to Item
18, note 31 to the consolidated financial statements.
Property, Plant and Equipment
Trinity Biotech has four manufacturing sites worldwide, three in the US (Jamestown, NY, Kansas
City, MO and Carlsbad, CA) and one in Bray, Co. Wicklow, Ireland. 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.
Until the divestiture of our Coagulation business in May 2010, our facilities and offices in
Ireland were located in four buildings at IDA Business Park, Bray, Co. Wicklow. Following the
divestiture, the lease on one of these buildings was assigned to Diagnostica Stago and the lease on
another of the buildings is currently in the process of being assigned to Diagnostica Stago. Upon
completion of this assignment, the Company will have leases on the remaining two buildings at IDA
Business Park, Bray, Co. Wicklow. The lease to be transferred to Diagnostica Stago in 2011 relates
to the manufacturing and research and development facility consisting of approximately 45,000
square feet. This facility is ISO 9001 approved and was purchased in December 1997. The facility
includes offices, research and development laboratories, production laboratories, cold storage and
drying rooms and warehouse space. The annualised rent on this facility is 479,000(US$639,000).
Diagnostica Stago has been reimbursing the Company for the payments made on this lease since the
divestiture of the Coagulation business in May 2010.
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 OCaoimh 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$367,000). As described above, this was the lease which was assigned to Diagnostica Stago
during 2010.
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$509,000), 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$1,051,000). 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$133,000.
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 2009, at an annual rental cost of
US$255,978. The second adjacent facility comprises 14,500 square feet and is the subject of a
three year lease, amended in 2009, at an annual rental cost of US$172,356.
13
Trinity Biotech sold its facility located in Lemgo, Germany during 2010 as part of the Sale of its
Coagulation business see Item 18, note 3 for further information.
The Group also had leases on premises in the UK and France which were transferred to Diagnostica
Stago in May 2010, following the sale of the Coagulation business. These consisted of two units in
Berkshire, UK, at an annual rent of £91,000 (US$141,000) and a lease for a 5,750 square foot
premises in Paris, France, at an annual rent of 46,000 (US$61,000).
Additional office space is leased by the Group in Ireland, Kansas City, Missouri and Acton,
Massachusetts at an annual cost of 115,000(US$154,000), US$100,000 and US$86,000 respectively.
At present we have sufficient productive capacity to cover demand for our product range. We
continue to review our level of capacity in the context of future revenue forecasts. In the event
that these forecasts indicate capacity constraints, we will either obtain new facilities or expand
our existing facilities.
We do not currently have any plans to expand or materially improve our facilities.
In relation to products produced at our facilities these are as follows:
Bray, Ireland Point of Care/HIV, Immunoflourescence and Clinical Chemistry products are
manufactured at this site.
Jamestown, New York this site specializes in the production of Microtitre Plate EIA products for
infectious diseases and auto-immunity.
Carlsbad, California this facility specializes in the development and manufacture of products
utilizing Western Blot technology. Our Lyme suite of products is manufactured at this facility.
Kansas City, Missouri this site is responsible for the manufacture of the Groups A1c range of
products.
We are fully in compliance with all environmental legislation applicable in each jurisdiction in
which we operate.
Capital expenditures and divestitures
Please refer to Item 18, note 29 with regard to the acquisition of Phoenix Bio-tech Corp. in 2011
and to Item 18, note 3 concerning the divestiture of the Coagulation business during 2010.
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, 2010, December 31, 2009 and December 31, 2008, 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). 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.
14
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, 2010 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 350 different diagnostic products in approximately 75
countries. In addition, the Group manufactures its own and distributes third party infectious
disease 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, 2010, 2009, 2008, 2007
and 2006 have been impacted by acquisitions made by the Group in two of the five years and by the
divestiture of the Coagulation business in 2010. There were no acquisitions made in 2010, 2009 or
2008. 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 coagulation business of
bioMerieux (subsequently divested) and a direct selling entity in France.
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.
Revenue Recognition
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, consistent with our typical ex-works shipment terms.
Where the shipment terms do not permit revenue to be recognised as of the date of shipment, revenue
is recognised when the Group has satisfied all of its obligations to the customer in accordance
with the shipping terms. 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.
15
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.
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.
At December 31, 2010 the carrying value of capitalised development costs was US$10,073,000 (2009:
US$12,785,000) (see Item 18, note 12 to the consolidated financial statements). The decrease in
2010 was as a result of development costs of US$5,887,000 being capitalised in 2010 which were more
than offset by amortisation of US$297,000 and reductions associated with the divestment of the
Coagulation business; which had a net book value of US$8,289,000.
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:
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Significant underperformance relative to expected, historical or projected future operating results; |
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Significant changes in the manner of our use of the acquired assets or the strategy for our overall
business; |
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Obsolescence of products; |
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Significant decline in our stock price for a sustained period; and |
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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.
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 market sector (namely diagnostics) and accordingly the key assumptions
are similar for all CGUs. The value in use calculations use cash flow projections based on the
2011 budget and projections for a further four years using projected revenue and cost growth rates
of between 3% and 5%. At the end of the five year forecast period, terminal values for each CGU,
based on a long term growth rate 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 18% to
32%.
16
The value in use calculation is 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, the
following impairment loss/write back would be recorded at December 31, 2010:
|
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No impairment loss or reversal of impairment in the event of a 10% increase in the
growth in revenues. |
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No impairment loss or reversal of impairment in the event of a 10% decrease in the
growth in revenues. |
Similarly if there was a 10% variation in the discount rate used to calculate the potential
impairment of the carrying values, which would represent a reasonably likely range of outcomes,
there would be the following impairment loss/write back would be recorded at December 31, 2010:
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No impairment loss or reversal of impairment in the event of a 10% decrease in the
discount rate |
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No impairment loss or reversal of impairment in the event of a 10% increase in the
discount rate |
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 2008, 2009 or 2010 which would have an impact on the
carrying values of inventory during those periods, except as discussed below.
At December 31, 2010 our allowance for slow moving and obsolete inventory was US$6,400,000 which
represents approximately 26.7% of gross inventory value. This compares with US$12,566,000, or
approximately 24.3% of gross inventory value, at December 31, 2009 (see Item 18, note 15 to the
consolidated financial statements) and US$16,461,000, or approximately 28.0% of gross inventory
value, at December 31, 2008. There has been a small increase in the estimated allowance
for slow moving and obsolete inventory as a percentage of gross inventory between 2010 and 2009.
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. 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$480,000 at December 31, 2010 (2009: US$1,035,000) (2008:
US$1,176,000) would result.
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 2010 or 2009 which
would have an impact on the carrying values of receivables in these periods. At December 31, 2010,
the allowance was US$1,443,000 which represents approximately 1.6% of Group revenues. This compares
with US$855,000 at December 31, 2009 which represents approximately 0.7% of Group revenues (see
Item 18, note 16 to the consolidated financial statements) and to US$619,000 at December 31, 2008,
which represents approximately 0.4% 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$359,000 at December 31, 2010 (2009: US$504,000)
(2008: US$561,000) 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
substantively enacted tax rates for the effects of net operating losses and temporary differences
between the book and tax bases of assets and liabilities.
17
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 does not recognize 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.
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.
The share options issued by the Group are not subject to market-based vesting conditions as
defined in IFRS 2, Share-based Payment. 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.
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.
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 2010. 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 2010, 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).
18
Subsequent Events
Acquisition of Phoenix Bio-tech Corp.
On January 4, 2011, the Group purchased 100% of the common stock of Phoenix Bio-tech Corporation
for US$2.5 million. Phoenix Bio-tech manufactures and sells products for the detection of syphilis.
This acquisition has not been reflected in the financial statements for the year ended December
31, 2010 as it was completed subsequent to the financial year end. The fair values of the acquired
assets and liabilities have not been established yet.
Phoenix Bio-tech was founded in 1992 and is based in Toronto, Canada. It sells its products under
the TrepSure and TrepCheck labels. Phoenixs annual revenues are approximately US$1.25 million.
Prior to the acquisition, Trinity Biotech distributed Phoenix Bio-techs syphilis products on a
non-exclusive basis in the USA.
The key terms of the acquisition are as follows:
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Consideration of US$2,500,000. US$1,000,000 was payable on closing and the
remaining US$1,500,000 is payable in four instalments in the period April 2011 to
January 2012. |
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The consideration of US$2,500,000 includes acquired net working capital of
approximately US$500,000. |
As the initial accounting and fair value assessment for the business combination is
incomplete at the time that these financial statements were authorised for issue the
following disclosures cannot be made but will be reported if relevant in the Form 20-F for
the period ended December 31, 2011:
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A qualitative description of the factors that make up the goodwill to be recognised, |
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Details of the indemnification assets, |
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Details of acquired receivables, |
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The amounts recognised as of the acquisition date for each major class of asset
acquired and liability assumed, |
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Details of contingent liabilities recognised; and |
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The total amount of goodwill that is expected to be deductible for tax purposes. |
Dividend
In 2011 the Company announced that it intended to commence a dividend policy, to be paid once a
year. In this regard, the Board of Directors has proposed a final dividend of 10 cent per ADR in
respect of 2010 and this proposal will be submitted to shareholders for their approval at the next
Annual General Meeting of the Company. As provided in the Articles of Association of the Company,
dividends or other distributions are declared and paid in US Dollars.
19
Results of Operations
Year ended December 31, 2010 compared to the year ended December 31, 2009
The following compares our results in the year ended December 31, 2010 to those of the year ended
December 31, 2009 under IFRS. Our analysis is divided as follows:
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3. |
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Operating Profit |
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4. |
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Profit for the year |
1. Overview
In 2010, Trinity Biotech divested its coagulation business and this was the main reason for the
US$36.3 million decline in revenues compared to 2009. Excluding coagulation revenues, the decrease
was US$4.8 million, representing a reduction of 6% compared to 2009. In 2010, point-of-care
revenues declined by 11%, largely due to the companys decision not to ship to a major HIV customer
beginning in the second half of 2009 and continuing into 2010 due to credit related issues. Lower
levels of public expenditure on testing in the US market also caused the reduction in point-of-care
revenues. Clinical laboratory revenues (excluding coagulation) declined by just under 5%.
The gross margin is 49% for 2010, which is 3.7% higher than the gross margin for 2009. The
increase in gross margin this year is primarily attributable to the divestiture of the coagulation
business. Due to the costly instrument servicing requirements in the coagulation business, it was
the Groups least profitable product line.
The divestiture of the coagulation business resulted in a once-off gain of US$46.8 million.
The table hereunder compares the profit before tax for year ended December, 2010 to the previous
financial year.
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Year ended December 31, |
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2010 |
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2009 |
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|
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|
US$000 |
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|
US$000 |
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%Change |
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Profit before Tax |
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61,360 |
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12,915 |
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Profit before Tax (2010
figure shown before net gain
on divestment of business and
restructuring expenses) |
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14,886 |
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12,915 |
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15.3 |
% |
The profit before tax is US$61.4 million for the year ended December 31, 2010 which compares to a
profit before tax of US$12.9 million for the year ended December 31, 2009. Excluding the gain on
the divestiture of the coagulation business and the impact of restructuring expenses in 2010, the
profit before tax would have been US$14.9 million in 2010. On a like-for-like basis, there was
therefore an increase in profit before tax of 15.3% in 2010. The US$2.0 million increase in profit
before tax was primarily due to the elimination of bank debt, causing the net interest expense of
US$1.2m in 2009 to become net interest income of US$0.9m in 2010.
The profit for the year ended December 31, 2010 was US$60.4 million which compares to a profit for
the year ended December 31, 2009 of US$11.8 million. Excluding the gain on the divestiture of the
coagulation business and the impact of restructuring expenses in 2010, the profit for 2010 would
have been US$13.6 million.
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 from 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.
20
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 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 located at customer premises.
Revenues by Product Line
Trinity Biotechs revenues for the year ended December 31, 2010 were US$89,635,000 compared to
revenues of US$125,907,000 for the year ended December 31, 2009, which represents a decrease of
US$36,272,000 or 29%. The following table sets forth selected sales data for each of the periods
indicated.
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Year ended December 31, |
|
|
|
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|
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2010 |
|
|
2009 |
|
|
|
|
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US$000 |
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|
US$000 |
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% Change |
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Revenues |
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Clinical Laboratory |
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73,553 |
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107,778 |
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(31.8 |
%) |
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Point of Care |
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16,082 |
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18,129 |
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(11.3 |
%) |
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Total |
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89,635 |
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125,907 |
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(28.8 |
%) |
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|
Clinical Laboratory
In 2010 Clinical Laboratory revenues decreased by US$34,225,000 which equates to a 32% decline. The
decrease was largely due to the divestiture of the coagulation product line in May 2010. Excluding
coagulation, clinical laboratory revenues decreased by US$2.8 million when compared to 2009. This
represents a decrease of 4.5%.
The decrease was caused by four main factors:
|
|
|
a slower lyme season due to weather conditions in the USA; |
|
|
|
lower sales of antibodies and antigens by our Fitzgerald business due to the fact that
2009 sales of antibodies and antigens benefitted from the incidence of H1N1; |
|
|
|
the move from selling direct in France and Germany to a distribution selling model; and |
|
|
|
changes in exchange rates, principally the strengthening of the US Dollar against the
Euro. |
These decreases were partially offset by a growth in sales of our clinical chemistry product line.
21
Point of Care
Our principal Point of Care product is Unigold, which tests for the presence of HIV antibodies.
Our two main markets for Point of Care tests are USA and Africa. Point of Care revenues decreased
by US$2,047,000, which represents a decline of 11%.
Point of Care revenues in the USA decreased by 10% mainly due to lower levels of public expenditure
on testing in the US market. In Africa, revenues decreased by 7% largely due to the companys
decision not to ship to a major HIV customer due to credit related issues beginning in the second
half of 2009 and continuing into 2010.
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, |
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
53,993 |
|
|
|
68,130 |
|
|
|
(21 |
%) |
Europe |
|
|
15,890 |
|
|
|
32,389 |
|
|
|
(51 |
%) |
Asia/Africa |
|
|
19,752 |
|
|
|
25,388 |
|
|
|
(22 |
%) |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
89,635 |
|
|
|
125,907 |
|
|
|
(29 |
%) |
|
|
|
|
|
|
|
|
|
|
In the Americas, the 21% decrease amounting to US$14,137,000 is primarily attributable to a
reduction in coagulation revenue due to the divestiture of this business in May 2010. The other
main factor was a slower lyme season due to weather conditions in the USA.
Revenues in Europe decreased by US$16,499,000, or 51% compared to 2009. The decrease was mainly due
to the divestiture of the coagulation product line and the move to a distributor selling model for
non-coagulation products in Germany and France in the post-divestiture period. Part of the
decrease was due to the weakening of the Euro against the US Dollar.
Asia/Africa revenues experienced a decline of 22%, or US$5,636,000 compared to 2009. There were two
main reasons for the decrease in Asia/Africa revenues. Firstly, coagulation sales ceased in April
2010 as a result of the divestiture of the coagulation product line. Secondly, there were lower
sales of Trinitys Unigold rapid HIV tests following Trinitys decision not to ship to a major
customer in Africa due to the credit related issues.
For further information about the Groups principal products, principal markets and competition
please refer to Item 4, Information on the Company.
22
3. Operating Profit
The following table sets forth the Groups operating profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
%Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
89,635 |
|
|
|
125,907 |
|
|
|
(29 |
%) |
Cost of sales |
|
|
(45,690 |
) |
|
|
(68,891 |
) |
|
|
(34 |
%) |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
43,945 |
|
|
|
57,016 |
|
|
|
(23 |
%) |
Other operating income |
|
|
1,616 |
|
|
|
437 |
|
|
|
270 |
% |
Research & development |
|
|
(4,603 |
) |
|
|
(7,341 |
) |
|
|
(37 |
%) |
SG&A expenses |
|
|
(26,929 |
) |
|
|
(36,013 |
) |
|
|
(25 |
%) |
Net gain on divestment of
business and restructuring
expenses |
|
|
46,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
60,503 |
|
|
|
14,099 |
|
|
|
329 |
% |
|
|
|
|
|
|
|
|
|
|
Cost of sales
Total cost of sales decreased by US$23,201,000 from US$68,891,000 for the year ended December 31,
2009 to US$45,690,000, for the year ended December 31, 2010, a decrease of 34%. The main reasons
for the decrease in cost of sales in 2010 were the lower revenues following the divestiture of the
coagulation business and the transfer of approximately 190 coagulation production employees to
Diagnostica Stago in May 2010.
Gross margin
The gross margin of 49.0% in 2010 compares to a gross margin of 45.3% in 2009. The increase in
gross margin in 2010 is attributable to the divestiture of the coagulation business, which was the
product line with the lowest gross margin.
Other operating income
Other operating income comprises income from the provision of services to Diagnostica Stago under a
Transition Services Agreement (TSA) and rental income from sublet properties. TSA income commenced
in May 2010 and it accounts for the increase of US$1,179,000 compared to the year ended December
31, 2009. A variety of services were provided to Stago including accounting, information technology
and logistics support and warehousing services.
Research and development expenses
Research and development (R&D) expenditure reduced from US$7,341,000 in 2009 to US$4,603,000 in
2010. The decrease was caused by the transfer of approximately 46 coagulation specialists to
Diagnostica Stago in May 2010. For details of the Companys various R&D projects see Research and
Products under Development in Item 5 below.
Selling, General & Administrative expenses (SG&A)
Total SG&A expenses decreased by US$9,084,000 from US$36,013,000 for the year ended December 31,
2009 to US$26,929,000 for the year ended December 31, 2010. The decrease is primarily due to the
transfer of approximately 85 coagulation employees and the transfer of our UK, German and French
premises to Diagnostica Stago.
Net gain on divestment of business and restructuring expenses
This comprises the gain on the sale of the worldwide coagulation business of US$46.8 million and a
charge for restructuring expenses of US$0.3 million. There were no equivalent gains or expenses in
2009. The gain comprised consideration of US$89.9 million less US$43.1 million for coagulation net
assets and other attributable costs such as professional fees. For further information on the
divestiture, refer to Item 18, note 3.
The restructuring expenses related to a re-organisation of the Groups HIV manufacturing activities
and comprised termination payments of US$0.3 million for employees located in Ireland.
23
The following table outlines the breakdown of SG&A expenses in 2010 compared to 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
(Decrease) |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
SG&A (excl.
share-based payments
and amortisation) |
|
|
24,260 |
|
|
|
33,567 |
|
|
|
(9,307 |
) |
|
|
(28 |
%) |
Share-based payments |
|
|
1,080 |
|
|
|
487 |
|
|
|
593 |
|
|
|
122 |
% |
Amortisation |
|
|
1,589 |
|
|
|
1,959 |
|
|
|
(370 |
) |
|
|
(19 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
26,929 |
|
|
|
36,013 |
|
|
|
(9,084 |
) |
|
|
(25 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling General & Administrative Expenditure (excluding share-based payments and amortisation)
SG&A expenses excluding share-based payments and amortisation decreased from US$33,567,000 for the
year ended December 31, 2009 to US$24,260,000 for the year ended December 31, 2009, which
represents a decrease of 28%.
The decrease this year of US$9,307,000 is mainly due to the transfer of approximately 48% of the
Groups selling, general and administrative employees to Diagnostica Stago in May, 2010. Stago
purchased Trinitys UK, German and French operations employing 43 selling, general and
administrative employees. A further 42 selling, general and administrative employees in Ireland and
USA were transferred to Stago.
SG&A costs also reduced in 2010 due to the full year effect of the cost reduction measures
implemented during 2009 (for a summary of these measures please refer to last years analysis of
the results of operations), including the rationalisation of the Groups US finance function and
overhead savings in communications, utilities and professional fees. The Group continued its cost
reduction program in 2010 with the notable initiatives being the introduction of remote working
arrangements for all US sales staff which allowed the closure of a sales office in New Jersey and
the rationalisation of the customer service function in the US.
Share-based payments
The expense represents the fair 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, the option price and the risk free rate.
The Group recorded a total share-based payments charge of US$1,109,000 (2009 : US$521,000). The
increase of US$588,000 in the total share-based payments expense is due to the granting of new
share options to employees and directors during 2009 and 2010. The total charge is shown in the
following expense headings in the statement of operations: US$29,000 (2009:US$19,000) was charged
against cost of sales, US$31,000 (2009: US$15,000) was charged against research and development
expenses and US$1,049,000 (2009 : US$487,000) was charged against selling, general and
administrative expenses.
For further details refer to Item 18, note 19 to the consolidated financial statements.
Amortisation
Amortisation reduced from US$1,959,000 for the year ended December 31, 2009 to US$1,589,000 for the
year ended December 31, 2010. The decrease of US$370,000 is mainly due to the divestiture of all
coagulation intangible assets, including the Destiny range of instruments, to Diagnostica Stago as
part of the divestiture of the coagulation business.
24
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, |
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
%Change |
|
Operating profit |
|
|
60,503 |
|
|
|
14,099 |
|
|
|
329 |
% |
Net financing income/(costs) |
|
|
857 |
|
|
|
(1,184 |
) |
|
|
172 |
% |
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
61,360 |
|
|
|
12,915 |
|
|
|
375 |
% |
Income tax expense |
|
|
(942 |
) |
|
|
(1,091 |
) |
|
|
(14 |
%) |
|
|
|
|
|
|
|
|
|
|
Profit of the year |
|
|
60,418 |
|
|
|
11,824 |
|
|
|
411 |
% |
|
|
|
|
|
|
|
|
|
|
Net Financing income/(costs)
Net financing income is US$857,000 for year end December 31, 2010 compared to a net financing cost
of US$1,184,000 in 2009. Financial expenses decreased from US$1,192,000 for year end December 31,
2009 to US$495,000 in 2010. The decrease is due to the repayment of all bank loans from the
proceeds of sale of the coagulation business. Financial income increased from US$8,000 for year end
December 31, 2009 to US$1,352,000 in 2010 due to higher balances on deposit and due to the interest
income earned on the deferred consideration. The deposit balances totalled US$55.6 million at
December 31, 2010 compared to US$1.4 million at December 31, 2009.
Taxation
The Group recorded a tax charge of US$942,000 for the year ended December 31, 2010 compared to
US$1,091,000 for the year ended December 31, 2009. The decrease is due to a lower deferred tax
charge in respect of temporary differences as a result of the sale of the Groups coagulation
property, plant, equipment and intangible assets. This decrease was partially offset by an increase
in current year taxable profits in the Groups Irish operations. The 2010 tax charge comprises
US$847,000 of current tax and US$95,000 of deferred tax. For further details on the Groups tax
charge please refer to Item 18, note 9 and note 13 to the consolidated financial statements.
Profit for the year
The profit for the year amounted to US$60,418,000 which represents an increase of US$48,594,000
when compared to US$11,824,000 in 2009. Excluding the after tax impact of the gain on the sale of
the coagulation business of US$47,129,000 and the restructuring expenses of US$301,000, the 2010
profit for the year would be US$13,590,000. The increase in profits in 2010 of US$1,766,000
compared to 2009, excluding once-off gains and expenses, represents an increase of 14.9%.
25
Results of Operations
Year ended December 31, 2009 compared to the year ended December 31, 2008
The following compares our results in the year ended December 31, 2009 to those of the year ended
December 31, 2008 under IFRS. Our analysis is divided as follows:
|
7. |
|
Operating Profit/(loss) |
|
8. |
|
Profit/(loss) for the year |
1. Overview
Group revenues declined by US$14.2 million to US$125.9 million, representing a decrease of 10%
compared to 2008. The decrease was mainly due to an 11% decrease in Clinical Laboratory revenues.
The main reason for the decrease in Clinical Laboratory revenues was a decrease in coagulation
revenues, caused by a reduction in the number of installed instruments and by the strengthening of
the US Dollar against both the Euro and Sterling. Point of Care revenues decreased by 5%, largely
due to the companys decision not to ship to a major HIV customer due to credit related issues in
the second half of 2009.
The gross margin for the year ended December 31, 2009 is 45.3%, which is 0.7% higher than the gross
margin for 2008. The increase in gross margin this year is primarily attributable to a reduction
in overheads and payroll costs following a cost reduction program, lower depreciation charges and
the more favourable Euro exchange rate compared to the previous financial year.
In 2008, Trinity Biotech recognised an impairment charge of US$85.8 million relating to the
carrying value of goodwill and other intangible assets, property, plant and equipment and
prepayments, in the statement of operations. Additionally in 2008, restructuring expenses of
US$2.1 million were recognised. The total effect of these once-off charges on the 2008 results was
a reduction in profit before tax of US$87.9 million and a reduction of US$83.1m in profit after
tax.
The table hereunder compares the operating profit/(loss) and profit after tax for year ended
December, 2009 to the previous financial year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
%Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit/(loss) |
|
|
14,099 |
|
|
|
(79,575 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Profit (2008 figure
shown before impairment and
restructuring charges) |
|
|
14,099 |
|
|
|
8,307 |
|
|
|
70 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) after Tax |
|
|
11,824 |
|
|
|
(77,778 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit after Tax (2008 figure
shown before impairment and
restructuring charges) |
|
|
11,824 |
|
|
|
5,353 |
|
|
|
121 |
% |
The operating profit is US$14.1 million for the year ended December 31, 2009 which compares to an
operating loss of US$79.6 million for the year ended December 31, 2008. Excluding the impact of
impairment charges and restructuring expenses in 2008, the operating profit would have been US$8.3
million in 2008. On a like-for-like basis, there was therefore an increase in operating profit of
70% in 2009. The increase in operating profit was due to the impact of significant cost reduction
measures more than offsetting the negative effect of a 10% fall in revenues. The profitability in
2009 was also helped by a reduction in depreciation and amortisation charges and by more favourable
Euro versus US Dollar exchange rates.
26
The profit for the year ended December 31, 2009 was US$11.8 million which compares to a loss for
the year ended December 31, 2008 of US$77.8 million. Excluding the after tax impact of the
restructuring expenses and goodwill impairment, the profit for 2008 would have been US$5.4 million.
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 from 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 coagulation
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 coagulation instrumentation located at
customer premises.
Revenues by Product Line
Trinity Biotechs revenues for the year ended December 31, 2009 were US$125,907,000 compared to
revenues of US$140,139,000 for the year ended December 31, 2008, which represents a decrease of
US$14,232,000 or 10%. The following table sets forth selected sales data for each of the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Clinical Laboratory |
|
|
107,778 |
|
|
|
121,143 |
|
|
|
(11 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Point of Care |
|
|
18,129 |
|
|
|
18,996 |
|
|
|
(5 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
125,907 |
|
|
|
140,139 |
|
|
|
(10 |
%) |
|
|
|
|
|
|
|
|
|
|
Clinical Laboratory
In 2009 Clinical Laboratory revenues decreased by US$13,365,000 which equates to an 11% decline.
The decrease was mainly due to a decline in sales of coagulation products in advance of the
worldwide launch of the Destiny Max instrument.
The decrease in coagulation revenues was caused by a reduction in the installed customer base and
by movements in foreign exchange rates. The installed base of MDA instruments in the US and UK
declined in advance of the launch of the newly developed Destiny Max instrument. The Destiny Max
was launched in all markets by July 2009 and is the designated replacement for the MDA. 5% of the
overall decrease was caused by changes in exchange rates, principally the strengthening of the US
Dollar against the Euro.
27
Point of Care
Our principal Point of Care product is Unigold, which tests for the presence of HIV antibodies.
Sales of Point of Care tests decreased by US$867,000, which equates to a 5% decline.
Our two main markets for Point of Care tests are Africa and USA. Sales of HIV tests in Africa
decreased by 18% largely due to the companys decision not to ship to a major HIV customer due to
credit related issues in the second half of 2009. Point of Care revenues continued to show strong
growth in the USA with an increase this year of 17% compared to 2008. Outside of our two main Point
of Care markets, revenues increased by 4% in 2009, with most of this increase coming from Latin
America.
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, |
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
68,130 |
|
|
|
69,915 |
|
|
|
(3 |
%) |
Europe |
|
|
32,389 |
|
|
|
43,481 |
|
|
|
(26 |
%) |
Asia/Africa |
|
|
25,388 |
|
|
|
26,743 |
|
|
|
(5 |
%) |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
125,907 |
|
|
|
140,139 |
|
|
|
(10 |
%) |
|
|
|
|
|
|
|
|
|
|
The 3% decrease in the Americas amounting to US$1,785,000 is primarily attributable to a reduction
in coagulation revenue arising from an erosion of the MDA customer base. This reduction was largely
offset by growth in the sales of the Unigold rapid HIV test, higher sales of infectious diseases
tests mainly Lyme disease and higher revenues for diabetes related tests.
European revenues experienced a decline of US$11,092,000, or 26% compared to 2008. 9% of the
decrease was due to the weakening of both Euro and Sterling against the US Dollar. The remaining
17% decrease was mainly due to a reduction in coagulation revenues arising from an erosion of the
installed customer base of medium and high throughput analyzers, particularly in UK and Germany.
A US$1,355,000 decrease in Asia/Africa revenues is largely due to lower sales of Trinitys Unigold
rapid HIV tests following Trinitys decision not to ship to a major customer in Africa due to the
credit related issues.
For further information about the Groups principal products, principal markets and competition
please refer to Item 4, Information on the Company.
28
3. Operating Profit/(loss)
The following table sets forth the Groups operating profit/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
%Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
125,907 |
|
|
|
140,139 |
|
|
|
(10 |
%) |
Cost of sales |
|
|
(68,891 |
) |
|
|
(77,645 |
) |
|
|
(11 |
%) |
Gross profit |
|
|
57,016 |
|
|
|
62,494 |
|
|
|
(9 |
%) |
Other operating income |
|
|
437 |
|
|
|
1,173 |
|
|
|
(63 |
%) |
Research & development |
|
|
(7,341 |
) |
|
|
(7,544 |
) |
|
|
(3 |
%) |
SG&A expenses |
|
|
(36,013 |
) |
|
|
(47,816 |
) |
|
|
(25 |
%) |
SG&A expenses impairment
charges and restructuring
expenses |
|
|
|
|
|
|
(87,882 |
) |
|
|
(100 |
%) |
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) |
|
|
14,099 |
|
|
|
(79,575 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
Total cost of sales decreased by US$8,754,000 from US$77,645,000 for the year ended December 31,
2008 to US$68,891,000, for the year ended December 31, 2009, a decrease of 11%. The main reasons
for the decrease in cost of sales in 2009 were the lower revenues, the savings achieved by a cost
reduction program and the change in the Euro exchange rate compared to the previous financial year.
The cost reduction program succeeded in reducing a wide range of direct costs including wages and
salaries, utilities and freight costs. Depreciation charges decreased also in 2009.
A significant proportion of the Groups Cost of Sales is denominated in Euro. During 2009 the
average Euro versus US Dollar exchange rate was 6% lower than in 2008 and this had the effect of
reducing Cost of Sales.
Gross margin
The gross margin of 45.3% in 2009 compares to a gross margin of 44.6% in 2008. The increase in
gross margin in 2009 is primarily attributable to a reduction in overheads and payroll costs
following the cost reduction program, lower depreciation charges and the slightly more favourable
Euro exchange rate compared to the previous financial year.
Other operating income
Other operating income comprises government grants and rental income from sublet properties. The
63% reduction in 2009 is mainly due to lower government grants following the completion of the
related grant-aided activity.
Research and development expenses
Research and development (R&D) expenditure reduced from US$7,544,000 in 2008 to US$7,341,000 in
2009. The main reason for the decrease was the change in the US Dollar to Euro exchange rate, which
caused research and development costs incurred in our Irish and German operations to decrease by
approximately 6%. This decrease was partly offset by an increase in average R&D headcount from 57
in 2008 to 61 in 2009. For details of the Companys various R&D projects see Research and
Products under Development in Item 5 below.
Selling, General & Administrative expenses (SG&A)
Total SG&A expenses decreased by US$99,685,000 from US$135,698,000 for the year ended December 31,
2008 to US$36,013,000 for the year ended December 31, 2009. The decrease is primarily due to the
impairment charges and restructuring expenses of US$87,882,000 incurred in 2008.
29
The following table outlines the breakdown of SG&A expenses in 2009 compared to 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
(Decrease) |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
% Change |
|
SG&A (excl.
share-based payments
and amortisation) |
|
|
33,567 |
|
|
|
43,314 |
|
|
|
(9,747 |
) |
|
|
(23 |
%) |
SG&A impairment
charges and
restructuring
expenses |
|
|
|
|
|
|
87,882 |
|
|
|
(87,882 |
) |
|
|
(100 |
%) |
Share-based payments |
|
|
487 |
|
|
|
886 |
|
|
|
(399 |
) |
|
|
(45 |
%) |
Amortisation |
|
|
1,959 |
|
|
|
3,616 |
|
|
|
(1,657 |
) |
|
|
(46 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
36,013 |
|
|
|
135,698 |
|
|
|
(99,685 |
) |
|
|
(73 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling General & Administrative Expenditure (excluding share-based payments and amortisation)
SG&A expenses excluding share-based payments and amortisation decreased from US$43,314,000 for the
year ended December 31, 2008 to US$33,567,000 for the year ended December 31, 2009, which
represents a decrease of 23%.
The decrease this year of US$9,747,000 is mainly attributable to cost reductions as follows:
|
|
|
a cost reduction program involving a headcount reduction was announced in December 2008,
which delivered payroll cost savings in SG&A of approximately US$5,100,000 in 2009. The
headcount reduction also had the effect of reducing travel and other employee expenses by
almost US$1,000,000. |
|
|
|
other headcount reductions implemented in 2009 contributed to a further reduction in SG&A
payroll costs of US$700,000. These headcount reductions mainly involved the rationalisation
of the French sales and US finance functions. |
|
|
|
a salary reduction for directors and senior managers was implemented in early 2009 and
resulted in a cost saving of approximately US$700,000. |
|
|
|
a significant proportion of the Groups SG&A expenses are denominated in Euro. During 2009
the average US dollar versus Euro exchange rate was 6% lower compared to 2008 and this had
the effect of reducing SG&A expenses by about US$1,100,000. The US dollar also strengthened
versus Sterling in 2009 and this had the effect of reducing the reported SG&A costs for our
UK selling entity by just over US$350,000. |
|
|
|
through strict cost control the Group succeeded in reducing its selling overheads and
administrative expenses by about US$750,000 in 2009. A wide range of overhead savings were
achieved, including communications, utilities, travel costs, legal and professional fees and
recruitment fees. |
SG&A impairment charges and restructuring expenses
No impairment charges or restructuring expenses were recorded in 2009. In 2008, an impairment
charge of US$85,793,000 was recognized arising from the annual impairment review of the asset
valuations included on the balance sheet. The Company recognized an impairment loss against
goodwill and other intangible assets (US$71,684,000), property, plant and equipment
(US$13,095,000) and prepayments (US$1,014,000).
Restructuring expenses of US$2,089,000 were recorded in SG&A in year ended December 31, 2008. This
was made up of US$1,465,000 arising from the resignation of the Companys former Chief Executive
and US$589,000 in relation to costs associated with the implementation of headcount reductions.
Other restructuring costs amounted to US$35,000.
Share-based payments
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 Group recorded a total share-based payments charge of US$521,000 (2008: US$1,166,000). The
total charge is shown in the following expense headings in the statement of operations: US$19,000
(2008: US$51,000) was charged against cost of sales, US$15,000 (2008: US$48,000) was charged
against research and development expenses and US$487,000 (2008: US$886,000) was charged against
selling, general and administrative expenses. In 2008 a further share option charge of US$181,000
was included within the selling, general and administrative expenses restructuring charge relating
to the share option cost associated with the resignation of the former Chief Executive Officer.
30
The decrease of US$645,000 in the total share-based payments expense is primarily because share
option holders ended their employment with the company and thereby forfeited their share options.
For further details refer to Item 18, note 19 to the consolidated financial statements.
Amortisation
Amortisation reduced from US$3,616,000 for the year ended December 31, 2008 to US$1,959,000 for the
year ended December 31, 2009. The decrease of US$1,657,000 is partially due to the reduction
resulting from the prior year write down of the carrying value of intangible assets following the
annual impairment review carried out at December 31, 2008.
4. Profit/(loss) for the year
The following table sets forth selected statement of operations data for each of the periods
indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
%Change |
|
Operating profit/(loss) |
|
|
14,099 |
|
|
|
(79,575 |
) |
|
|
118 |
% |
Net financing costs |
|
|
(1,184 |
) |
|
|
(2,095 |
) |
|
|
(43 |
%) |
|
|
|
|
|
|
|
|
|
|
Profit/(Loss) before tax |
|
|
12,915 |
|
|
|
(81,670 |
) |
|
|
116 |
% |
Income tax (expense)/credit |
|
|
(1,091 |
) |
|
|
3,892 |
|
|
|
128 |
% |
|
|
|
|
|
|
|
|
|
|
Profit/(Loss) of the year |
|
|
11,824 |
|
|
|
(77,778 |
) |
|
|
115 |
% |
|
|
|
|
|
|
|
|
|
|
Net Financing Costs
Net financing costs decreased by US$911,000 from US$2,095,000 in 2008 to US$1,184,000 in 2009. The
decrease is primarily due to a combination of lower interest bearing loan balances outstanding and
lower interest rates. The interest bearing loan balances at December 31, 2008 were US$36,121,000
compared to US$31,856,000 at December 31, 2009. The interest rate for the majority of the Groups
borrowings is based on LIBOR rates, which reduced significantly during 2009. The deposit interest
earned during the year reduced from US$65,000 to US$8,000 due to lower cash balances and lower
interest rates.
Taxation
The Group recorded a tax charge of US$1,091,000 for the year ended December 31, 2009 compared to a
net tax credit of US$3,892,000 for the year ended December 31, 2008. The 2009 tax charge comprises
US$1,000 of current tax and US$1,090,000 of deferred tax. In 2008, the net tax credit was primarily
attributable to the impairment of goodwill and other intangible assets, property, plant and
equipment. For further details on the impairment please refer to Item 18, note 28 and for further
details on the Groups tax charge please refer to Item 18, note 9 and note 13 to the consolidated
financial statements.
Profit/(loss) for the year
The profit for the year amounted to US$11,824,000 which represents an increase of US$89,602,000
when compared to the loss for the year of US$77,778,000 in 2008. Excluding the after tax impact of
the restructuring expenses and impairment loss of US$83,131,000, the 2008 profit for the year would
have been US$5,353,000. The increase in profits in 2009 of US$6,471,000 compared to 2008, excluding
once-off charges, represents an increase of 121%.
31
Liquidity and Capital Resources
Financing
During 2010 the Group repaid in full the outstanding portion of its US$48,340,000 club banking
facility with Allied Irish Bank plc and Bank of Scotland (Ireland) Limited (the banks) using the
proceeds from the divestiture of the coagulation business. The facility consisted of a US Dollar
floating interest rate term loan of US$41,340,000 and a one year revolver of US$7,000,000. This
facility had been secured on the assets of the Group (see Item 18, note 25(c)).
The balance on this facility at December 31, 2010 was therefore US$NIL (December 31,
2009:US$29,327,000, net of unamortised funding costs of US$180,000).
During 2008, the Group issued 7,260,816 A Ordinary shares as part of a private placement. These
shares were issued for a consideration of US$7,115,600, settled in cash. The Group incurred costs
of US$438,000 in connection with the issue of these shares.
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 by utilising existing cash resources and cash generated
from operations.
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. |
The Group has some finance lease obligations outstanding at December 31, 2010 and the expected
maturity dates of these are set out in more detail in Item 11.
Cash management
As at December 31, 2010, Trinity Biotechs consolidated cash and cash equivalents were
US$58,002,000. This compares to cash and cash equivalents of US$6,078,000 at December 31, 2009.
Cash generated from operations for the year ended December 31, 2010 amounted to US$22,973,000
(2009: US$15,533,000), an increase of US$7,440,000. The increase in cash generated from operations
of US$7,440,000 is attributable to an increase in operating cash flows before changes in working
capital of US$1,433,000 and favourable working capital movements of US$6,007,000. The increase in
operating cash flows before changes in working capital of US$1,433,000 is primarily due to higher
net profits arising in 2010 from improved gross margin following the divestiture of the
coagulation business. The favourable working capital movements are primarily due to the effect of
the substantial cash inflow from trade and other payables of US$11,983,000 being partially offset
by the increase in cash outflows for trade and other receivables of US$778,000 and inventory of
US$5,198,000. The cash generated from operations was attributable to a profit before interest,
taxation and gain on divestiture of business of US$13,728,000 (2009: US$14,099,000), as adjusted
for non cash items of US$7,403,000 (2009: US$5,599,000) plus cash inflows due to changes in
working capital of US$1,842,000 (2009: cash outflows of US$4,165,000).
The increase in other non cash charges from US$5,599,000 for the year ended December 31, 2009 to
US$7,403,000 for the year ended December 31, 2010 is mainly attributable to the movement in items
including inventory provisions and the share option expense.
The net cash inflows in 2010 due to changes in working capital of US$1,842,000 are due to the
following:
|
|
|
A decrease in accounts receivable of US$3,094,000 due to a decrease in debtors days in
the year as a result of better collections; |
|
|
|
An increase in inventory of US$2,826,000 due to the strategic build up of certain stock
items during the course of the year; and |
|
|
|
An increase in trade and other payables of US$1,574,000 due mainly to the timing of
payments to suppliers. |
32
Net interest received amounted to US$339,000 (2009: net interest paid of US$871,000). This
consisted of interest received of US$842,000 (2009: US$12,000) on the Groups cash deposits and
interest payments of US$503,000 (2009: US$883,000) on the Groups interest bearing debt; including
bank loans and finance leases. The movement from a net interest payment amount in 2009 to a net
interest received amount in 2010 was brought about by the elimination of bank debt in 2010 and the
placing of funds on deposit following the sale of the coagulation business.
Net cash inflows from investing activities for the year ended December 31, 2010 amounted to
US$56,885,000 (2009: net cash outflows of US$10,335,000) which were principally made up as follows:
|
|
|
Proceeds from the divestiture of the coagulation business, net of associated costs, of
US$65,886,000 |
|
|
|
Payments to acquire intangible assets of US$6,233,000 (2009: US$8,103,000), 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$2,784,000 (2009: US$2,481,000)
incurred as part of the Groups investment programme for its manufacturing and distribution
activities; |
|
|
|
Proceeds from the disposal of property, plant and equipment of US$16,000 (2009:
US$249,000). |
Net cash outflows from financing activities for the year ended December 31, 2010 amounted to
US$27,984,000 (2009: US$3,512,000). The main driver of the cash outflow in 2010 was the repayment
of long-term debt of US$29,775,000 (2009: US$5,400,000). This payment in 2010 has resulted in all
bank debt being eliminated from the Group balance sheet as at December 31, 2010. Other cash
outflows included expenses paid in connection with share issues and debt financing of US$74,000
(2009: US$68,000) and payments in respect of finance lease liabilities of US$638,000 (2009:
US$546,000). These outflows were partially offset by the receipt of US$1,023,000 from the issue of
ordinary shares in 2010 (2009: US$897,000). Ordinary shares issued in 2010 and 2009 are as a
result of share options and warrants exercised during the course of the year. The Group also
received US$1,480,000 from the proceeds of new finance leases (2009: US$1,298,000). The Group did
not receive any proceeds from long-term debt in 2010 (2009: US$307,000).
The majority of the Groups transactions 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, 2010, total interest-bearing debt, consisting entirely of leases, was US$273,000
(2009: US$31,856,000 consisting of bank loans and leases) and cash and cash equivalents were
US$58,002,000 (2009: US$6,078,000). For a more comprehensive discussion of the Groups level of
borrowings at the end of 2010, 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, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital (finance) lease
obligations |
|
|
285 |
|
|
|
172 |
|
|
|
113 |
|
|
|
|
|
|
|
|
|
Operating lease obligations |
|
|
36,556 |
|
|
|
2,411 |
|
|
|
4,527 |
|
|
|
4,320 |
|
|
|
25,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
36,841 |
|
|
|
2,583 |
|
|
|
4,640 |
|
|
|
4,320 |
|
|
|
25,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the past, Trinity Biotech incurred debt and raised equity to pursue its policy of growth
through acquisition. However, since the divestiture of the coagulation business in 2010, the
Group has now eliminated bank debt and has considerable cash resources. The Group intends to grow
organically for the foreseeable future and Trinity Biotech believes that it will have sufficient
funds to meet its capital commitments and continue existing operations in to the future, in excess
of 12 months. 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.
33
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 reduce the mismatch in this regard 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.
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 26 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.
In 2005 a software development company based in France was contracted to develop and enhance the
software in the Destiny Max instrument. Under the terms of the contract, all software developed by
the software development company is the property of Trinity Biotech. Fees were agreed for each
separate software development task and payment was made once a specific project milestone had been
achieved. A total of 271,000 (US$362,000) was paid to this software development company in 2010.
Additionally, a number of individuals acted as third party consultants working principally on the
Destiny Max, Premier Hb9210 and Tristat instruments. The total amount paid to R&D consultants in
2010 was US$960,000.
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 point-of-care
(POC) 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. There were no significant
development projects in their research phase during 2010.
Centres of Excellence
Trinity Biotech has research and development groups focusing separately on Western Blot products,
Clinical Chemistry products and Point-of-Care products. These groups are located in Ireland 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.
34
Principal Development Projects
The following table sets forth for each of the main development projects, the costs incurred during
each period presented and the cumulative costs incurred as at 31 December 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total project |
|
|
|
|
|
|
|
|
|
|
|
costs to |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
Product Name |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Premier Hb 9210 Instrument for
Haemoglobin A1c testing |
|
|
2,569 |
|
|
|
1,023 |
|
|
|
4,381 |
|
Destiny Max coagulation instrument* |
|
|
956 |
|
|
|
3,234 |
|
|
|
14,686 |
|
Bordetella Pertussis Western Blot test |
|
|
337 |
|
|
|
156 |
|
|
|
493 |
|
Tristat point of care instrument |
|
|
318 |
|
|
|
1,072 |
|
|
|
4,094 |
|
HIV Ag-Ab rapid test |
|
|
247 |
|
|
|
|
|
|
|
247 |
|
Syphilis Rapid point-of-care test |
|
|
185 |
|
|
|
|
|
|
|
185 |
|
Unigold Recombigen HIV Rapid enhancement |
|
|
142 |
|
|
|
456 |
|
|
|
2,157 |
|
|
|
|
* |
|
Note that this and other coagulation projects ceased in May 2010 following the
divestiture of the Coagulation Business see Item 18, note 3. |
The costs in the foregoing table mainly comprise the cost of internal resources, such as the
payroll costs for the development teams and attributable overheads. The remainder mainly comprises
materials, consumables and third party consultants costs.
The following table sets forth the estimated cost to complete each of the main development projects
which were underway in 2010. The total estimated completion costs are anticipated to be incurred
evenly up to the completion date of the relevant project.
|
|
|
|
|
|
|
|
|
|
|
Total costs to |
|
|
Estimated date |
|
|
|
complete |
|
|
for completion |
|
Product Name |
|
US$000 |
|
|
US$000 |
|
Various point-of-care rapid tests |
|
|
1,400 |
|
|
|
2012 |
|
Premier Hb 9210 Instrument for
Haemoglobin A1c testing |
|
|
1,172 |
|
|
|
2011 |
|
HIV Ag-Ab rapid test |
|
|
1,000 |
|
|
|
2013 |
|
Syphilis Rapid point-of-care test |
|
|
750 |
|
|
|
2012 |
|
Unigold Recombigen HIV Rapid enhancement |
|
|
500 |
|
|
|
2011 |
|
IgM CAPITA |
|
|
400 |
|
|
|
2012 |
|
Tristat point of care instrument |
|
|
330 |
|
|
|
2011 |
|
There are inherent risks and uncertainties associated with completing development projects on
schedule. In our experience the main risks to the achievement of a projects planned completion
date occur primarily during the products verification and validation phase. During this phase the
product must attain successful results from in-house product testing and from third party clinical
trials. Obtaining regulatory approval on a timely basis is another variable in achieving a
projects planned completion date.
We acknowledge that some aspects of a new product development are to an extent outside of the
control of the Group. Notwithstanding the uncertainty surrounding these external factors, we
believe the planned completion dates of these projects are realistic and achievable. If major
development projects were severely delayed, in our opinion it would not impact significantly on
Trinity Biotechs financial position or on the capitalization criteria. As the manufacturing lead
time for these new products is relatively short, it is anticipated that material cash inflows will
commence shortly after each of the projects planned completion date.
35
The following is a description of the principal projects which are currently being undertaken by
the R&D groups within Trinity Biotech:
Point-of-Care (POC) Development Group
During 2010, the company commissioned and staffed a new POC product development unit at its
Carlsbad, CA facility. This facility has been equipped with state of the art POC assay development
equipment and the Group has commenced development of a portfolio of Point-of-Care/ lateral flow
infectious disease tests. Initial tests include an enteric panel of assays for the detection of
Giardia and Cryptosporidium antigens in human stool samples. We have also commenced development of
a test for the detection of treponemal and nontreponemal Syphilis antibodies in human whole blood.
It is envisaged some tests will reach clinical trial stage and be submitted to the FDA for 510k
approval later in 2011.
In response to the increased incidence of the new strain of HIV called HIV-2, we are developing a
new assay for the simultaneous detection of p24 HIV Antigen (Ag) and Antibodies (Ab) to HIV-1 and
HIV-2 in human serum, plasma or whole blood. The test is intended as an aid to detect p24 HIV
antigen and antibodies to HIV-1/HIV-2 from infected individuals.
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.
Pertussis Western Blot
During 2010, a project was undertaken to further develop the Bordetella pertussis Western Blot
product by adding an additional stripe for Adenylate Cyclase per assay kit. This work finished in
2010 when the newly developed product was transferred into production and launched onto the
European market.
Clinical Chemistry Development Group
Premier Hb 9210 Instrument for Haemoglobin A1c Testing
This project entails the development of a new High Performance Liquid Chromotography (HPLC)
instrument for testing haemoglobin A1c. This is a measure of a patients average blood sugar
control over the last two to three months. 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 late 2007, continued through 2010 and is expected to launch
initially in the non-US market in the first half of 2011.
HbA1c testing is one of the fastest growing markets in the diagnostics industry. Diabetes is the
fourth leading cause of death by disease in the world and the number of diabetic patients is
expected to reach 370 million in 2030. In the U.S. alone some 20.8 million Americans (7 percent of
the population) have the disease with a full 54 million Americans considered to be pre-diabetic.
The total laboratory HbA1c market worldwide is expected to reach $272 million by 2012.
The Premier Hb9210 analyser is a best in class instrument with the following key advantages:
|
|
|
Patented boronate affinity technology, therefore eliminating interference from
haemoglobin variants, |
|
|
|
Results available in 1 minute enabling fastest patient result turnaround times, |
|
|
|
State of the art software using touch screen technology to facilitate ease of use with
operators, |
|
|
|
Modular instrument which will significantly reduce the cost of on-site maintenance. |
36
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.
Item 6
Directors and Senior Management
Directors
|
|
|
|
|
|
|
Name |
|
Age |
|
|
Title |
|
|
|
|
|
|
|
Ronan OCaoimh
|
|
55 |
|
|
Chairman and Chief Executive Officer |
|
|
|
|
|
|
|
Rory Nealon
|
|
43 |
|
|
Director, Chief Operations Officer |
|
|
|
|
|
|
|
Jim Walsh, PhD
|
|
52 |
|
|
Director, Chief Scientific Officer |
|
|
|
|
|
|
|
Denis R. Burger, PhD
|
|
67 |
|
|
Non Executive Director |
|
|
|
|
|
|
|
Peter Coyne
|
|
51 |
|
|
Non Executive Director |
|
|
|
|
|
|
|
Clint Severson
|
|
62 |
|
|
Non Executive Director |
|
|
|
|
|
|
|
James D. Merselis
|
|
57 |
|
|
Non Executive Director |
|
|
|
|
|
|
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Tansley
|
|
40 |
|
|
Chief Financial Officer & Company Secretary |
Board of Directors & Executive Officers
Ronan OCaoimh, Chairman and Chief Executive Officer, 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. In October
2008, following the resignation of the Chief Executive Officer, Mr. OCaoimh resumed the role of
Chief Executive Officer and 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. On March 30, 2011, the service agreement with Ronan OCaoimh as
Chief Executive Officer was terminated and replaced by an agreement with Darnick Limited.
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.
37
Jim Walsh, PhD, Executive Director, initially joined Trinity Biotech in October 1995 as Chief
Operations Officer. Dr. Walsh resigned from the role of Chief Operations Officer in 2007 to become
a Non Executive Director of the Company. In October, 2010 Dr. Walsh rejoined the company as Chief
Scientific Officer. Prior to joining 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 holds a PhD in Chemistry from
University College Galway.
Denis R. Burger, PhD, Non-executive director, co-founded Trinity Biotech in June 1992 and was
Chairman from June 1992 to May 1995. He is currently Chairman of BioCurex, Inc, a cancer
diagnostics, OTC:BB listed company and is also non-executive Chairman of Lorus Therapeutics, Inc, a
cancer therapeutics, TSX listed company. Until March 2007, Dr Burger was the Chairman and Chief
Executive Officer of AVI Biopharma Inc, a NASDAQ listed biotechnology 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 and 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 and has extensive
experience in advising public and private groups on all aspects of corporate strategy. 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.
Clint Severson, Non-executive director, joined the board of Trinity Biotech in November 2008 as a
non-executive director. Mr Severson is currently Chairman, President and CEO of Abaxis Inc., a
NASDAQ traded diagnostics company based in Union City, California. Since November 2006, Mr.
Severson has also served on the Board of Directors of CytoCore, Inc. From February 1989 to May
1996, Mr. Severson served as President and Chief Executive Officer of MAST Immunosystems, Inc., a
privately-held medical diagnostic company and to date he has accumulated over 30 years experience
in the medical diagnostics industry.
James D. Merselis, Non-executive director, joined the board of Trinity Biotech in February 2009.
Mr. Merselis is currently President and CEO of ITC Nexus Dx Holding Company, Inc, a privately held,
New Jersey-based diagnostics company working to improve patient care by providing rapid and
reliable point of care (POC) medical test information. Prior to this Mr. Merselis served as
President and CEO of Alverix, Inc., a privately held company developing portable medical diagnostic
instruments , HemoSense, Inc. (NASDAQ: HEM), a point-of-care diagnostics company and Micronics,
Inc., a microfluidics company. Over twenty-two years, Mr. Merselis held a series of increasingly
responsible executive positions with Boehringer Mannheim Diagnostics (now Roche Diagnostics).
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.
38
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, Mr Clint Severson and
Mr James Merselis. 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, 2010 amounted to US$2,082,000. The pension charge for the year amounted to US$127,000.
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 |
|
|
2010 |
|
|
2009 |
|
Executive Director |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Ronan OCaoimh |
|
|
560 |
|
|
|
450 |
|
|
|
82 |
|
|
|
1,092 |
|
|
|
644 |
|
Rory Nealon |
|
|
377 |
|
|
|
300 |
|
|
|
37 |
|
|
|
714 |
|
|
|
419 |
|
Jim Walsh* |
|
|
77 |
|
|
|
|
|
|
|
8 |
|
|
|
85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,014 |
|
|
|
750 |
|
|
|
127 |
|
|
|
1,891 |
|
|
|
1,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Total |
|
|
|
Fees |
|
|
Other |
|
|
2010 |
|
|
2009 |
|
Non-executive director |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Denis R. Burger |
|
|
73 |
|
|
|
|
|
|
|
73 |
|
|
|
70 |
|
Peter Coyne |
|
|
73 |
|
|
|
|
|
|
|
73 |
|
|
|
70 |
|
James Merselis |
|
|
63 |
|
|
|
|
|
|
|
63 |
|
|
|
53 |
|
Clint Severson |
|
|
63 |
|
|
|
|
|
|
|
63 |
|
|
|
60 |
|
Jim Walsh* |
|
|
46 |
|
|
|
39 |
|
|
|
85 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
318 |
|
|
|
39 |
|
|
|
357 |
|
|
|
313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Dr. Jim Walsh is included as a non-executive director of the Company up until his appointment as
Chief Scientific Officer in October 2010 and accordingly his remuneration after that point has been
categorised with the two other executive directors. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined |
|
|
|
|
|
|
|
|
|
Salary/ |
|
|
Performance |
|
|
contribution |
|
|
Total |
|
|
Total |
|
Chief Financial |
|
Benefits |
|
|
related bonus |
|
|
pension |
|
|
2010 |
|
|
2009 |
|
Officer
& Company Secretary |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Kevin Tansley |
|
|
285 |
|
|
|
300 |
|
|
|
28 |
|
|
|
613 |
|
|
|
317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, 2010 an amount of $58,000 was accrued by a Company subsidiary to provide
pension, retirement or similar benefits for the directors.
The total share-based compensation expense recognised in the consolidated statement of operations
in 2010 in respect of options granted to both executive and non executive directors and the Company
Secretary amounted to US$814,000. See Item 18, note 6 to the consolidated financial statements.
39
The directors and Company Secretary were granted 2,500,000 share options during 2010 and were
granted 2,220,000 share options during 2009 the terms of which are as follows:
2010 Share Options Granted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options |
|
|
Exercise Price of |
|
|
Date of Option |
|
Director/Executive Officer |
|
Granted |
|
|
Options Granted |
|
|
Grant* |
|
Ronan OCaoimh |
|
800,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
Rory Nealon |
|
500,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
Denis Burger |
|
60,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
Peter Coyne |
|
60,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
Jim Walsh |
|
60,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
Clint Severson |
|
60,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
James Merselis |
|
60,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
Jim Walsh |
|
400,000 A shares |
|
US$ |
1.57 per A share |
|
|
4 October 2010 |
Kevin Tansley |
|
500,000 A shares |
|
US$ |
1.52 per A share |
|
|
21 May 2010 |
|
|
|
* |
|
All options issued are subject to a 7 year life from date of grant. |
2009 Share Options Granted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options |
|
|
Exercise Price of |
|
|
Date of Option |
|
Director/Executive Officer |
|
Granted |
|
|
Options Granted |
|
|
Grant* |
|
Ronan OCaoimh |
|
800,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
Rory Nealon |
|
500,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
Denis Burger |
|
60,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
Peter Coyne |
|
60,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
Jim Walsh |
|
60,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
Clint Severson |
|
120,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
James Merselis |
|
120,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
Kevin Tansley |
|
500,000 A shares |
|
US$ |
0.66 per A share |
|
|
8 May 2009 |
|
|
|
* |
|
All options issued are subject to a 7 year life from date of grant. |
In addition, see Item 7 Major Shareholders and Related Party Transactions for further
information on the compensation of Directors and Officers.
Directors Service Contracts
The Company has entered into service contracts with its Executive Directors and Officers. These
contracts contain certain termination provisions which are summarised below.
On March 30, 2011, the service agreement with Ronan OCaoimh as Chief Executive Officer was
terminated and replaced by an agreement with Darnick Limited, a company wholly-owned by members of
Mr. OCaoimhs immediate family. Pursuant to the agreement, Darnick Limited will provide the
Company with the services of Mr. OCaoimh as Chief Executive Officer. The agreement contains
certain non-competition and confidentiality provisions. The term of the agreement will continue
until such time as it is terminated by either party, subject to the Company providing one years
notice. Where termination occurs within 12 months of a change of control of the Company two years
notice will apply. Darnick Limited may terminate the agreement on six months notice. Mr.
OCaoimh will remain as Chairman of the Board of Directors.
40
Under the terms of his service contract Rory Nealon, Chief Operations Officer, is entitled to 12
months salary and benefits in the event of termination by the Company. Where termination arises
within 12 months of a change in control of the Company, Mr. Nealon is entitled to 18 months salary
and benefits.
Under the terms of his service contract Kevin Tansley, Chief Financial Officer, is entitled to 12
months salary and benefits in the event of termination by the Company. Where termination arises
within 12 months of a change in control of the Company, Mr. Tansley is entitled to 18 months salary
and benefits.
Under the terms of his service contract, entered into in October 2010, Jim Walsh, Chief Scientific
Officer, is entitled to 12 months salary and benefits in the event of termination by the Company.
Where termination arises within 12 months of a change in control of the Company, Dr. Walsh is
entitled to 18 months salary and benefits.
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.
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
two of the four independent non-executive directors of the Group, Mr Peter Coyne (Committee
Chairman) and Mr James Merselis. The Compensation Committee currently comprises Mr Ronan OCaoimh
(Committee Chairman) 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 5600 as they apply to U.S. domestic
companies. The Groups corporate governance measures differ in the following significant way; the
Group has not appointed an independent nominations committee or adopted a board resolution
addressing the nominations process.
Employees
As of December 31, 2010, Trinity Biotech had 343 employees (2009: 658) consisting of 29 research
scientists and technicians, 210 manufacturing and quality assurance employees, and 104 finance,
administration, sales and marketing staff (2009: 60 research scientists and technicians, 422
manufacturing and quality assurance employees, and 176 finance, administration, sales 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: 121 in Bray, Co. Wicklow, Ireland
and 222 in its US operations.
Stock Option Plans
The Board of Directors have adopted the Employee Share Option Plans (the Plans), with the most
recently adopted Share Option Plan being the 2006 Plan. The purpose of these Plans 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. These Plans are
administered by a Compensation Committee designated by the board of directors. Options under the
Plans may be awarded only to employees, officers, directors and consultants of Trinity Biotech.
41
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 28, 2011,
7,352,086 of the options outstanding were held by the directors and Company Secretary of Trinity
Biotech as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options |
|
|
Exercise Price |
|
|
|
Director/Company Secretary |
|
(A Shares) |
|
|
(Per A Share) |
|
|
Expiration Date of Options |
Ronan OCaoimh |
|
|
450,000 |
|
|
US$ |
2.56 |
|
|
26 August 2011 |
|
|
|
250,000 |
|
|
US$ |
1.67 |
|
|
2 November 2012 |
|
|
|
350,000 |
|
|
US$ |
2.09 |
|
|
13 December 2013 |
|
|
|
175,000 |
|
|
US$ |
1.07 |
|
|
18 March 2015 |
|
|
|
66,666 |
|
|
US$ |
0.74 |
|
|
16 September 2015 |
|
|
|
533,334 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
800,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
Rory Nealon |
|
|
175,000 |
|
|
US$ |
2.56 |
|
|
26 August 2011 |
|
|
|
100,000 |
|
|
US$ |
1.67 |
|
|
2 November 2012 |
|
|
|
150,000 |
|
|
US$ |
2.09 |
|
|
13 December 2013 |
|
|
|
200,000 |
|
|
US$ |
1.07 |
|
|
18 March 2015 |
|
|
|
240,000 |
|
|
US$ |
0.74 |
|
|
16 September 2015 |
|
|
|
500,000 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
500,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
Denis Burger |
|
|
60,000 |
|
|
US$ |
2.56 |
|
|
26 August 2011 |
|
|
|
25,000 |
|
|
US$ |
1.67 |
|
|
2 November 2012 |
|
|
|
25,000 |
|
|
US$ |
2.09 |
|
|
13 December 2013 |
|
|
|
60,000 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
60,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
Jim Walsh |
|
|
168,750 |
|
|
US$ |
2.56 |
|
|
26 August 2011 |
|
|
|
50,000 |
|
|
US$ |
1.67 |
|
|
2 November 2012 |
|
|
|
25,000 |
|
|
US$ |
2.09 |
|
|
13 December 2013 |
|
|
|
60,000 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
60,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
|
|
|
400,000 |
|
|
US$ |
1.57 |
|
|
4 October 2017 |
Peter Coyne |
|
|
60,000 |
|
|
US$ |
2.56 |
|
|
26 August 2011 |
|
|
|
25,000 |
|
|
US$ |
1.67 |
|
|
2 November 2012 |
|
|
|
25,000 |
|
|
US$ |
2.09 |
|
|
13 December 2013 |
|
|
|
60,000 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
60,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
Clint Severson |
|
|
120,000 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
60,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
James Merselis |
|
|
120,000 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
60,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
Kevin Tansley |
|
|
20,000 |
|
|
US$ |
2.79 |
|
|
19 May 2011 |
|
|
|
20,000 |
|
|
US$ |
1.59 |
|
|
16 August 2012 |
|
|
|
30,000 |
|
|
US$ |
1.78 |
|
|
26 July 2013 |
|
|
|
75,000 |
|
|
US$ |
2.24 |
|
|
07 March 2014 |
|
|
|
150,000 |
|
|
US$ |
1.07 |
|
|
18 March 2015 |
|
|
|
150,000 |
|
|
US$ |
0.74 |
|
|
16 September 2015 |
|
|
|
333,336 |
|
|
US$ |
0.66 |
|
|
8 May 2016 |
|
|
|
500,000 |
|
|
US$ |
1.52 |
|
|
21 May 2017 |
42
As of February 28, 2011 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 |
|
|
9,266,102 |
|
|
US$ |
0.66-US$4.00 |
|
|
US$ |
2.63-US$16.00 |
|
In April 2010, the Company granted warrants to purchase 40,000 Class A Ordinary Shares (vesting
immediately). These warrants were issued at an exercise price of US$1.50 per ordinary share and
have a term of seven years. As of February 28, 2011 there were warrants to purchase 1,672,244 A
Ordinary Shares in the Company outstanding.
43
Item 7
Major Shareholders and
Related Party Transactions
As of February 28, 2011 Trinity Biotech has outstanding 84,252,189 A Ordinary shares and 700,000
B Ordinary shares. Such totals exclude 10,938,346 shares issuable upon the exercise of
outstanding options and warrants.
The following table sets forth, as of February 28, 2011, 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 the Company Secretary of
Trinity Biotech, and (iii) all directors and the Company Secretary 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
William Blair & Company Investment Management |
|
|
11,763,664 |
|
|
|
14.0 |
% |
|
|
|
|
|
|
|
|
|
|
13.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goldman Capital Management, Inc. |
|
|
6,714,000 |
|
|
|
8.0 |
% |
|
|
|
|
|
|
|
|
|
|
7.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heartland Advisors, Inc. |
|
|
5,888,000 |
|
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
6.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronan OCaoimh |
|
|
4,974,995 |
(1) |
|
|
5.8 |
% |
|
|
|
|
|
|
|
|
|
|
5.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rory Nealon |
|
|
1,051,666 |
(2) |
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim Walsh |
|
|
1,657,362 |
(3) |
|
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denis R. Burger |
|
|
130,000 |
(4) |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Coyne |
|
|
130,000 |
(5) |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clint Severson |
|
|
88,000 |
(6) |
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Merselis |
|
|
40,000 |
(7) |
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Tansley |
|
|
353,252 |
(8) |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potenza Investments Inc. |
|
|
|
|
|
|
|
|
|
|
500,000 |
(9) |
|
|
71.4 |
% |
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors & Co. Secretary as a group (8 persons) |
|
|
8,425,275 |
(1)(2)(3)(4)(5)(6)(7)(8) |
|
|
9.7 |
% |
|
|
|
|
|
|
|
|
|
|
9.5 |
% |
|
|
|
(1) |
|
Includes 1,137,499 shares issuable upon exercise of options. |
|
(2) |
|
Includes 851,666 shares issuable upon exercise of options. |
|
(3) |
|
Includes 263,750 shares issuable upon exercise of options. |
|
(4) |
|
Includes 130,000 shares issuable upon exercise of options. |
|
(5) |
|
Includes 130,000 shares issuable upon exercise of options. |
|
(6) |
|
Includes 40,000 shares issuable upon exercise of options. |
|
(7) |
|
Includes 40,000 shares issuable upon exercise of options. |
|
(8) |
|
Includes 301,252 shares issuable upon exercise of options. |
|
(9) |
|
These B shares have two votes per share. |
44
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$254,000). 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$367,000). The lease on this property was assigned to Diagnostica Stago in May,
2010 following the divestiture of the coagulation business.
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$509,000) is payable from January 1, 2004. There was a rent review
performed on this premises in 2009 and further to this review, there was no change to the annual
rental charge.
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$1,051,000).
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.
There were no director loans advanced during 2010 and there were no loan balances payable to or
receivable from directors at January 1, 2010 and at December 31, 2010.
In June 2009, the Board approved the payment of a dividend of $2,830,000 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. 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 2009 & 2010
consolidated financial statements.
The amount of payments to Rayville included in compensation expense was US$1,866,000, US$1,071,000
and US$2,149,000 for 2008, 2009 and 2010 respectively, of which US$1,610,000, US$887,000 and
US$1,431,000 respectively related to the key management personnel of the Group. There were no
dividends payable to Rayville Limited as of December 31, 2010 or 2009. Dividends payable to
Rayville at December 31, 2008 amounted to US$60,000. Of the US$2,149,000 of payments made to
Rayville Limited in 2010, US$565,000 represented repayments of the loan to Trinity Research Limited
referred to above.
45
Item 8
Financial Information
Legal Proceedings
In 2008 Trinity Biotech filed a civil suit with a New York court against the former shareholders of
Primus Corporation. Trinity Biotech claimed that the defendants unjustly received an overpayment
of US$512,000 based on the fraudulent and wrongful calculation of the earnout payable to the
shareholders of Primus Corporation. Trinity Biotech also alleged that one of the former
shareholders, Mr Thomas Reidy, failed to return stock certificates and collateral pledged by
Trinity Biotech as security for the payment of a US$3 million promissory note given to the
defendants by Trinity Biotech as part of compensation under the share purchase agreement for
acquiring Primus. During 2009, all of the defendants with the exception of Mr. Reidy settled the
legal action. The US District Court, Southern District of New York granted a judgment against Mr.
Reidy ordering him to pay Trinity damages of US$200,000 plus interest and to return stock
certificates and collateral pledged by Trinity Biotech as security for the payment of the US$3
million promissory note. Mr Reidy has not yet paid any damages or interest due to Trinity Biotech.
In 2010, Laboratoires Nephrotek, formerly a distributor for Trinity Biotech, took a legal action in
France against the Group, claiming damages of US$0.8 million. They claim that certain instruments
supplied by Trinity Biotech did not operate properly in the field. No court hearings have occurred
in relation to this case yet. Trinity Biotech will be defending the claim.
There are also a small number of legal cases being brought against the Group by certain of its
former employees in the previously owned French subsidiary, Trinity Biotech France S.à r.l.
The ultimate resolution of the aforementioned proceedings is not expected to have a material
adverse effect on our financial position, results of operations or cash flows.
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
Shares (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.
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 Mellon. On February 28, 2011, the reported
closing sale price of the ADSs was US$8.89 per ADS. The following tables set forth the range of
quoted high and low sale prices of Trinity Biotechs ADSs for (a) the years ended December 31,
2006, 2007, 2008, 2009 and 2010; (b) the quarters ended March 31, June 30, September 30 and
December 31, 2009; March 31, June 30, September 30 and December 31, 2010; and (c) the months of
March, April, May, June, July, August, September, October, November and December 2010 and January
and February 2011 as reported on NASDAQ. These quotes reflect inter-dealer prices without retail
mark-up, mark-down or commission and may not necessarily represent actual transactions.
ADSs
|
|
|
|
|
|
|
|
|
Year Ended December 31 |
|
High |
|
|
Low |
|
2006 |
|
US$ |
9.54 |
|
|
US$ |
7.09 |
|
2007 |
|
US$ |
11.75 |
|
|
US$ |
5.72 |
|
2008 |
|
US$ |
6.95 |
|
|
US$ |
1.25 |
|
2009 |
|
US$ |
5.70 |
|
|
US$ |
1.05 |
|
2010 |
|
US$ |
8.93 |
|
|
US$ |
3.76 |
|
46
ADSs
|
|
|
|
|
|
|
|
|
2009 |
|
High |
|
|
Low |
|
Quarter ended March 31 |
|
US$ |
2.35 |
|
|
US$ |
1.05 |
|
Quarter ended June 30 |
|
US$ |
4.84 |
|
|
US$ |
1.50 |
|
Quarter ended September 30 |
|
US$ |
5.70 |
|
|
US$ |
3.06 |
|
Quarter ended December 31 |
|
US$ |
4.43 |
|
|
US$ |
3.33 |
|
ADSs
|
|
|
|
|
|
|
|
|
2010 |
|
High |
|
|
Low |
|
Quarter ended March 31 |
|
US$ |
6.24 |
|
|
US$ |
3.76 |
|
Quarter ended June 30 |
|
US$ |
6.67 |
|
|
US$ |
5.26 |
|
Quarter ended September 30 |
|
US$ |
6.67 |
|
|
US$ |
5.71 |
|
Quarter ended December 31 |
|
US$ |
8.93 |
|
|
US$ |
6.15 |
|
ADSs
|
|
|
|
|
|
|
|
|
Month Ended |
|
High |
|
|
Low |
|
March 31, 2010 |
|
US$ |
6.24 |
|
|
US$ |
4.71 |
|
April 30, 2010 |
|
US$ |
6.24 |
|
|
US$ |
5.47 |
|
May 31, 2010 |
|
US$ |
6.67 |
|
|
US$ |
5.26 |
|
June 30, 2010 |
|
US$ |
6.60 |
|
|
US$ |
5.81 |
|
July 31, 2010 |
|
US$ |
6.42 |
|
|
US$ |
5.79 |
|
August 31, 2010 |
|
US$ |
6.45 |
|
|
US$ |
5.71 |
|
September 30, 2010 |
|
US$ |
6.67 |
|
|
US$ |
5.90 |
|
October 31, 2010 |
|
US$ |
7.16 |
|
|
US$ |
6.15 |
|
November 30, 2010 |
|
US$ |
8.69 |
|
|
US$ |
7.04 |
|
December 31, 2010 |
|
US$ |
8.93 |
|
|
US$ |
7.60 |
|
January 31, 2011 |
|
US$ |
8.83 |
|
|
US$ |
8.00 |
|
February 28, 2011 |
|
US$ |
9.19 |
|
|
US$ |
8.03 |
|
The number of record holders of Trinity Biotechs ADSs as at February 28, 2011 amounts to 693,
inclusive of those brokerage firms and/or clearing houses holding Trinity Biotechs securities for
their clients (with each such brokerage house and/or clearing house being considered as one
holder).
47
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.
48
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 2009 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 2009 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 2009 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.
49
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.
50
Material Contracts
Other than contracts entered into in the ordinary course of business, the following represents the
material contracts entered into by the Group:
Divestiture of Coagulation business to Diagnostica Stago SAS
In May 2010, the Group sold its worldwide Coagulation business to Diagnostica Stago for US$89.9
million. The gain on the divestiture was US$46.8m (see Item 18, note 3). Diagnostica Stago
purchased the share capital of Trinity Biotech (UK Sales) Limited, Trinity Biotech GmbH and Trinity
Biotech S.à r.l., along with Coagulation assets of Biopool US Inc. and Trinity Biotech
Manufacturing Limited. As part of the sale, the Group also assigned leasing arrangements on a
facility in Bray, Ireland to Diagnostica Stago. Included in the sale are Trinitys lists of
coagulation customers and suppliers, all coagulation inventory, intellectual property and developed
technology. In total, 321 Trinity employees transferred their employment to Diagnostica Stago as
part of the divestiture of the Coagulation business.
The Group received consideration of US$67.4 million and interest on deferred consideration of
US$1.0 million in 2010. A further US$11.25 million will be received from Diagnostica Stago in May
2011 and the remaining US$11.25 million will be received in May 2012. No conditions or earnout
provisions will apply to this deferred element of the consideration, which is supported by a bank
guarantee.
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.
The main terms and conditions in the Cortex purchase agreement were as follows:
|
1. |
|
Trinity Biotech acquired Cortexs lists of customers and suppliers, inventory of immuno
reagents, certain accounts receivable and accounts payable balances and the Cortex Biochem
website. |
|
2. |
|
The vendor undertook not to compete directly with the Cortex business for a period of
three years after the sale of the business to Trinity |
|
3. |
|
All of the purchase consideration was payable on signing of the contract. |
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.
The main terms and conditions in the Sterilab purchase agreement were as follows:
|
1. |
|
Trinity Biotech acquired a list of customers, inventory of infectious diseases and
autoimmune products and all diagnostic instruments placed with Sterilabs customers. |
|
2. |
|
The vendor undertook not to compete directly with Trinitys infectious disease business
in the United Kingdom for a period of one year after the sale of the Sterilab business to
Trinity. |
|
3. |
|
All of the purchase consideration was payable on signing of the contract. |
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 Ireland dealing in domestic
securities, which includes shares or depositary receipts of Irish companies such as Trinity
Biotech. Except as indicated below, dividends and redemption proceeds also continue to be freely
transferable to non-resident holders of such securities. The Financial Transfers Act, 1992 gives
power to the Minister for Finance of Ireland to make provision for the restriction of financial
transfers between Ireland and other countries and persons. Financial transfers are broadly defined
and include all transfers that would be movements of capital or payments within the meaning of the
treaties governing the member states of the European Union. The acquisition or disposal of ADSs or
ADRs representing shares issued by an Irish incorporated company and associated payments falls
within this definition. In addition, dividends or payments on redemption or purchase of shares and
payments on a liquidation of an Irish incorporated company would fall within this definition.
51
At present the Financial Transfers Act, 1992 prohibits financial transfers involving the late
Slobodan Milosevic and associated persons, Burma (Myanmar), Belarus, certain persons indicted by
the International Criminal Tribunal for the former Yugoslavia, Usama bin Laden, Al-Qaida, the
Taliban of Afghanistan, Democratic Republic of Congo, Democratic Peoples Republic of Korea (North
Korea), Iran, Iraq, Côte dIvoire, Lebanon, Liberia, Zimbabwe, Uzbekistan, Sudan, Somalia, Republic
of Guinea, certain known terrorists and terrorist groups, and countries that harbor certain
terrorist groups, without the prior permission of the Central Bank of Ireland.
Any transfer of, or payment in respect of, an ADS involving the government of any country that is
currently the subject of United Nations sanctions, any person or body controlled by any of the
foregoing, or by any person acting on behalf of the foregoing, may be subject to restrictions
pursuant to such sanctions as implemented into Irish law. We do not anticipate that orders under
the Financial Transfers Act, 1992 or United Nations sanctions implemented into Irish law will have
a material effect on our business.
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.
US Federal Income Tax Consequences to US Holders
The following is a summary of certain 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.
52
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. The partners in a
partnership which owns ADSs 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.
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, 2012 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.
53
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.
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. The PFIC must provide certain information to the IRS in
order to qualify as a Qualified Electing Fund. US Holders should contact their tax advisor for
further information on this area.
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.
54
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.
55
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.
Since its incorporation the Group has not declared or paid dividends on its A Ordinary Shares or
B Ordinary Shares. The Board has, however, decided that it is now an appropriate time to
commence a dividend policy, to be paid once a year. In this regard, the Board have proposed a
final dividend of 10 cent per ADR in respect of 2010 and this proposal will be submitted to
shareholders for their approval at the next Annual General Meeting of the Company. The payment of
a dividend 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 income
tax (currently either 20% or 41% depending on the individuals circumstances excluding PRSI and
other levies). 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 Universal Social Charge of up to 10% and Pay Related
Social Insurance contribution of up to 4% in respect of their dividend income.
Under the Irish Taxes Consolidation Act 1997, dividends paid by Trinity Biotech to non-Irish
shareholders will, unless exempted, be subject to DWT. 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 the principal class of whose 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. |
In order to avail of the above exemption, certain declarations must be made in advance to the
paying company.
A self-assessment system applies to a company resident in a treaty jurisdiction receiving dividends
under which a non-resident company will provide a declaration and certain information to the
dividend paying company or intermediary to claim the exemption.
56
Special DWT arrangements are available in the case of shares held by US resident holders in Irish
companies through American depository banks using ADSs where such banks enter into intermediary
agreements with the Irish Revenue Commissioners and 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 (see
above).
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 25% and
this applies to disposals made on or after 8 April 2009. Indexation of the base cost of the
ordinary shares or ADSs will only be available up to 31 December 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.
Irish Holders that realise a loss on the disposal 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 who live together 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.
57
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. Capital acquisitions tax is
levied at a rate of 25% on the taxable value of the gift or inheritance above certain tax-free
thresholds. 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 ADSs
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. Any instrument executed
on or after 24 December 2008 which transfers stock or marketable securities on sale where the
amount or value of the consideration is 1,000 or less may be exempt from stamp duty. To avail of
the exemption the instrument must be certified in accordance with Revenue guidelines. 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.
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.
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.
58
Dividend Policy
Since its incorporation the Group has not declared or paid dividends on its A Ordinary Shares or
B Ordinary Shares. In 2011 the Company announced that it intended to commence a dividend policy,
to be paid once a year. In this regard, the Board of Directors has proposed a final dividend of 10
cent per ADR in respect of 2010 and this proposal will be submitted to shareholders for their
approval at the next Annual General Meeting of the Company.
As provided in the Articles of Association of the Company, dividends or other distributions are
declared and paid in US Dollars.
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 December 31, 2010 Group borrowings were at fixed rates of
interest. At December 31, 2009 Group borrowings were at both fixed and floating rates of interest.
Year-end borrowings totalled US$273,000 (2009: US$31,856,000), (net of cash: surplus of
US$57,729,000), (2009: deficit of US$25,778,000), at interest rates ranging from 5.02% to 5.29%
(2009: 2.53% to 6.61%) see Item 18, note 27.
Year-end borrowings consist entirely of fixed rate debt of US$273,000 (2009: US$2,529,000) at
interest rates ranging from 5.02% to 5.29% (2009: 6% to 6.61%). There was no floating rate debt at
December 31, 2010 (2009: US$29,327,000 at an interest rate of 2.53%). In broad terms, a
one-percentage point increase in interest rates would increase interest income by US$580,000 (2009:
US$61,000) and would not affect the interest expense in 2010 (2009: US$295,000) resulting in an
increase in interest income of US$580,000 (2009: increase in the charge of US$234,000).
Long-term borrowing requirements are met by funding in the US and Ireland. Short-term borrowing
requirements are primarily drawn under committed bank facilities.
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. There were
no forward contracts in place at December 31,2010.
59
The Group had foreign currency denominated cash balances equivalent to US$215,000 at December 31,
2010 (2009: US$518,000).
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 profit before tax
for 2010 by approximately 0.9%.
The table below provides information about the Groups long term debt obligations. 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 |
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Maturity |
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After |
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Fair |
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Before December 31 |
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2011 |
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2012 |
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2013 |
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2014 |
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2015 |
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2015 |
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Total |
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value |
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Long-term debt |
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Variable rate
US$000 |
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Average interest rate |
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Fixed rate US$000 |
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162 |
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111 |
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273 |
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273 |
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Average interest rate |
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5.09 |
% |
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5.06 |
% |
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5.08 |
% |
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5.08 |
% |
Exchange rate sensitivity
At year-end 2010, approximately 0.5% of the Groups US$141,287,000 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 have the approximate effect of reducing or increasing the Groups 2010
year-end net worth by US$71,000.
Item 12
Description of Securities Other than Equity Securities
Not applicable.
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.
60
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, 2010.
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, 2010.
Our independent auditor, Grant Thornton, a registered public accounting firm, has issued an
attestation report on the Groups internal control over financial reporting as of December 31, 2010
(see Item 18).
Changes in Internal Controls over Financial Reporting
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.
61
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.
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Year ended December 31, |
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Year ended December 31, |
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2010 |
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2009 |
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US$000 |
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% |
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US$000 |
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Audit |
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694 |
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95 |
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625 |
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89 |
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Audit-related |
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8 |
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1 |
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6 |
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1 |
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Tax |
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32 |
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4 |
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70 |
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10 |
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|
|
|
|
|
|
|
|
|
|
Total |
|
|
734 |
|
|
|
|
|
|
|
701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
Pre-Approval Policies and Procedures
Our Audit Committee has adopted policies and procedures for the pre-approval of audit and non-audit
services rendered by our independent public accountants, Grant Thornton. 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.
16D Exemptions from the Listing Requirements and Standards for Audit Committee
Not applicable.
62
16 E Purchase of Equity Securities by the Issuer and Affiliated 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, 2010 was 8,301,453 (2009: 8,201,758). No shares
were purchased by Trinity Biotech or on our behalf or by any affiliated purchaser in 2010 or 2009.
No shares were purchased as part of a publicly announced repurchase plan or program in 2010 or
2009.
Part III
Item 17
Financial Statements
The registrant has responded to Item 18 in lieu of responding to this item.
Item 18
Financial Statements
63
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,
2010, 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, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk
and 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, 2010, 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, 2010 and 2009, and the related consolidated statements of operations and cash flows
for each of the years in the three year period ended December 31, 2010 and our report dated April
14, 2011 expressed an unqualified opinion on those consolidated financial statements.
Grant Thornton
Dublin, Ireland
April 14, 2011
64
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, 2010 and 2009 and the related consolidated statements
of operations, comprehensive income, changes in equity and cash flows for each of the years in the
three year period ended December 31, 2010. 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 an 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, 2010 and 2009 and the results of their operations and cash flows for each of the years in the
three year period ended December 31, 2010, 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), Trinity Biotech plcs internal control over financial reporting as
of December 31, 2010, 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 14, 2011 expressed an unqualified opinion on the effective operation of internal
control over financial reporting.
Grant Thornton
Dublin, Ireland
April 14, 2011
65
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December, 31 |
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
Total |
|
|
Total |
|
|
Total |
|
|
|
Notes |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
2 |
|
|
89,635 |
|
|
|
125,907 |
|
|
|
140,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
(45,690 |
) |
|
|
(68,891 |
) |
|
|
(77,645 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
43,945 |
|
|
|
57,016 |
|
|
|
62,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating income |
|
5 |
|
|
1,616 |
|
|
|
437 |
|
|
|
1,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
|
|
(4,603 |
) |
|
|
(7,341 |
) |
|
|
(7,544 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
|
|
(26,929 |
) |
|
|
(36,013 |
) |
|
|
(47,816 |
) |
Selling, general and administrative impairment
charges and restructuring expenses |
|
28 |
|
|
|
|
|
|
|
|
|
|
(87,882 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total selling, general and administrative expenses |
|
|
|
|
(26,929 |
) |
|
|
(36,013 |
) |
|
|
(135,698 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain on divestment of business and restructuring
expenses |
|
3 |
|
|
46,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss) |
|
|
|
|
60,503 |
|
|
|
14,099 |
|
|
|
(79,575 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income |
|
2, 4 |
|
|
1,352 |
|
|
|
8 |
|
|
|
65 |
|
Financial expenses |
|
2, 4 |
|
|
(495 |
) |
|
|
(1,192 |
) |
|
|
(2,160 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net financing income/(costs) |
|
|
|
|
857 |
|
|
|
(1,184 |
) |
|
|
(2,095 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) before tax |
|
6 |
|
|
61,360 |
|
|
|
12,915 |
|
|
|
(81,670 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax (expense)/credit |
|
2, 9 |
|
|
(942 |
) |
|
|
(1,091 |
) |
|
|
3,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year (all attributable to
owners of the parent) |
|
2 |
|
|
60,418 |
|
|
|
11,824 |
|
|
|
(77,778 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/(loss) per ordinary share (US Dollars) |
|
10 |
|
|
0.71 |
|
|
|
0.14 |
|
|
|
(0.96 |
) |
Basic earnings/(loss) per B ordinary share (US
Dollars) |
|
10 |
|
|
1.43 |
|
|
|
0.28 |
|
|
|
(1.91 |
) |
Diluted earnings/(loss) per ordinary share (US
Dollars) |
|
10 |
|
|
0.70 |
|
|
|
0.14 |
|
|
|
(0.96 |
) |
Diluted earnings/(loss) per B ordinary share (US
Dollars) |
|
10 |
|
|
1.39 |
|
|
|
0.28 |
|
|
|
(1.91 |
) |
Basic earnings/(loss) per ADS (US Dollars) |
|
10 |
|
|
2.85 |
|
|
|
0.57 |
|
|
|
(3.82 |
) |
Diluted earnings/(loss) per ADS (US Dollars) |
|
10 |
|
|
2.79 |
|
|
|
0.57 |
|
|
|
(3.82 |
) |
66
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
Notes |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year |
|
|
2 |
|
|
|
60,418 |
|
|
|
11,824 |
|
|
|
(77,778 |
) |
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange translation differences |
|
|
|
|
|
|
(750 |
) |
|
|
215 |
|
|
|
(806 |
) |
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective portion of changes in fair value |
|
|
|
|
|
|
70 |
|
|
|
(31 |
) |
|
|
(252 |
) |
Deferred tax on income and expenses
recognised directly in equity |
|
|
|
|
|
|
6 |
|
|
|
3 |
|
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
(674 |
) |
|
|
187 |
|
|
|
(1,032 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive Income (all
attributable to owners of the parent) |
|
|
|
|
|
|
59,744 |
|
|
|
12,011 |
|
|
|
(78,810 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
|
2010 |
|
|
2009 |
|
|
|
Notes |
|
US$000 |
|
|
US$000 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
11 |
|
|
5,999 |
|
|
|
12,174 |
|
Goodwill and intangible assets |
|
12 |
|
|
37,248 |
|
|
|
44,822 |
|
Deferred tax assets |
|
13 |
|
|
4,680 |
|
|
|
5,801 |
|
Other assets |
|
14 |
|
|
11,623 |
|
|
|
1,212 |
|
|
|
|
|
|
|
|
|
|
Total non-current assets |
|
|
|
|
59,550 |
|
|
|
64,009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
Inventories |
|
15 |
|
|
17,576 |
|
|
|
39,198 |
|
Trade and other receivables |
|
16 |
|
|
25,529 |
|
|
|
22,931 |
|
Income tax receivable |
|
|
|
|
217 |
|
|
|
229 |
|
Cash and cash equivalents |
|
17 |
|
|
58,002 |
|
|
|
6,078 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
101,324 |
|
|
|
68,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
2 |
|
|
160,874 |
|
|
|
132,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Equity attributable to the equity holders of the parent |
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
|
1,092 |
|
|
|
1,080 |
|
Share premium |
|
|
|
|
161,599 |
|
|
|
160,683 |
|
Accumulated deficit |
|
|
|
|
(25,412 |
) |
|
|
(87,070 |
) |
Translation reserve |
|
|
|
|
(544 |
) |
|
|
206 |
|
Other reserves |
|
|
|
|
4,552 |
|
|
|
4,445 |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
|
|
141,287 |
|
|
|
79,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
20 |
|
|
162 |
|
|
|
12,625 |
|
Derivative financial instruments |
|
27 |
|
|
|
|
|
|
58 |
|
Income tax payable |
|
|
|
|
597 |
|
|
|
24 |
|
Trade and other payables |
|
21 |
|
|
11,447 |
|
|
|
12,844 |
|
Provisions |
|
22 |
|
|
50 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
12,256 |
|
|
|
25,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
Interest-bearing loans and borrowings |
|
20 |
|
|
111 |
|
|
|
19,231 |
|
Other payables |
|
23 |
|
|
30 |
|
|
|
59 |
|
Deferred tax liabilities |
|
13 |
|
|
7,190 |
|
|
|
8,210 |
|
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
|
|
|
7,331 |
|
|
|
27,500 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
2 |
|
|
19,587 |
|
|
|
53,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
|
|
|
|
160,874 |
|
|
|
132,445 |
|
|
|
|
|
|
|
|
|
|
68
STATEMENT OF CHANGES IN EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
capital |
|
|
capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Accumulated |
|
|
|
|
|
|
A |
|
|
B |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deficit)/ |
|
|
|
|
|
|
ordinary |
|
|
ordinary |
|
|
Share |
|
|
Translation |
|
|
Warrant |
|
|
Hedging |
|
|
retained |
|
|
|
|
|
|
shares |
|
|
shares |
|
|
premium |
|
|
reserve |
|
|
reserve |
|
|
reserves |
|
|
earnings |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2008 |
|
|
979 |
|
|
|
12 |
|
|
|
153,961 |
|
|
|
797 |
|
|
|
3,803 |
|
|
|
201 |
|
|
|
(22,908 |
) |
|
|
136,845 |
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(806 |
) |
|
|
|
|
|
|
(226 |
) |
|
|
(77,778 |
) |
|
|
(78,810 |
) |
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,193 |
|
|
|
1,193 |
|
Options exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A shares issued in private placement |
|
|
79 |
|
|
|
|
|
|
|
7,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,116 |
|
Share issue expenses |
|
|
|
|
|
|
|
|
|
|
(439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(439 |
) |
Fair Value of Warrants issued during the year |
|
|
|
|
|
|
|
|
|
|
(695 |
) |
|
|
|
|
|
|
695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008 |
|
|
1,058 |
|
|
|
12 |
|
|
|
159,864 |
|
|
|
(9 |
) |
|
|
4,498 |
|
|
|
(25 |
) |
|
|
(99,493 |
) |
|
|
65,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2009 |
|
|
1,058 |
|
|
|
12 |
|
|
|
159,864 |
|
|
|
(9 |
) |
|
|
4,498 |
|
|
|
(25 |
) |
|
|
(99,493 |
) |
|
|
65,905 |
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
215 |
|
|
|
|
|
|
|
(28 |
) |
|
|
11,824 |
|
|
|
12,011 |
|
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
599 |
|
|
|
599 |
|
Options exercised |
|
|
10 |
|
|
|
|
|
|
|
887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
897 |
|
Share issue expenses |
|
|
|
|
|
|
|
|
|
|
(68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009 |
|
|
1,068 |
|
|
|
12 |
|
|
|
160,683 |
|
|
|
206 |
|
|
|
4,498 |
|
|
|
(53 |
) |
|
|
(87,070 |
) |
|
|
79,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2010 |
|
|
1,068 |
|
|
|
12 |
|
|
|
160,683 |
|
|
|
206 |
|
|
|
4,498 |
|
|
|
(53 |
) |
|
|
(87,070 |
) |
|
|
79,344 |
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(750 |
) |
|
|
|
|
|
|
76 |
|
|
|
60,418 |
|
|
|
59,744 |
|
Share-based payments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,240 |
|
|
|
1,240 |
|
Options exercised |
|
|
12 |
|
|
|
|
|
|
|
1,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,023 |
|
Share issue expenses |
|
|
|
|
|
|
|
|
|
|
(64 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(64 |
) |
Fair Value of Warrants issued during the year |
|
|
|
|
|
|
|
|
|
|
(31 |
) |
|
|
|
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2010 |
|
|
1,080 |
|
|
|
12 |
|
|
|
161,599 |
|
|
|
(544 |
) |
|
|
4,529 |
|
|
|
23 |
|
|
|
(25,412 |
) |
|
|
141,287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
Notes |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit/(loss) for the year |
|
|
|
|
60,418 |
|
|
|
11,824 |
|
|
|
(77,778 |
) |
Adjustments to reconcile net profit to cash provided
by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
1,230 |
|
|
|
1,786 |
|
|
|
4,425 |
|
Amortisation |
|
|
|
|
1,589 |
|
|
|
1,959 |
|
|
|
3,616 |
|
Income tax expense/(credit) |
|
|
|
|
942 |
|
|
|
1,091 |
|
|
|
(3,892 |
) |
Financial income |
|
|
|
|
(1,352 |
) |
|
|
(8 |
) |
|
|
(65 |
) |
Financial expense |
|
|
|
|
495 |
|
|
|
1,192 |
|
|
|
2,160 |
|
Share-based payments |
|
|
|
|
1,109 |
|
|
|
521 |
|
|
|
1,166 |
|
Foreign exchange losses on operating cash flows |
|
|
|
|
351 |
|
|
|
109 |
|
|
|
77 |
|
Loss/(profit) on disposal / retirement of property,
plant and equipment |
|
|
|
|
12 |
|
|
|
66 |
|
|
|
(682 |
) |
Impairment of assets |
|
28 |
|
|
|
|
|
|
|
|
|
|
85,793 |
|
Gain on divestment of business |
|
3 |
|
|
(46,775 |
) |
|
|
|
|
|
|
|
|
Other non-cash items |
|
|
|
|
3,112 |
|
|
|
1,158 |
|
|
|
871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows before changes in working capital |
|
|
|
|
21,131 |
|
|
|
19,698 |
|
|
|
15,691 |
|
Decrease/(increase) in trade and other receivables |
|
|
|
|
3,094 |
|
|
|
3,872 |
|
|
|
(4,131 |
) |
(Increase)/decrease in inventories |
|
|
|
|
(2,826 |
) |
|
|
2,372 |
|
|
|
2,062 |
|
Increase/(decrease) in trade and other payables |
|
|
|
|
1,574 |
|
|
|
(10,409 |
) |
|
|
(676 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations |
|
|
|
|
22,973 |
|
|
|
15,533 |
|
|
|
12,946 |
|
Interest paid |
|
|
|
|
(503 |
) |
|
|
(883 |
) |
|
|
(2,639 |
) |
Interest received |
|
|
|
|
842 |
|
|
|
12 |
|
|
|
63 |
|
Income taxes (paid)/received |
|
|
|
|
(239 |
) |
|
|
70 |
|
|
|
359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated by operating activities |
|
|
|
|
23,073 |
|
|
|
14,732 |
|
|
|
10,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from divestiture of coagulation business (net) |
|
|
|
|
65,886 |
|
|
|
|
|
|
|
|
|
Deferred consideration to acquire subsidiaries and
businesses |
|
|
|
|
|
|
|
|
|
|
|
|
(2,802 |
) |
Payments to acquire intangible assets |
|
|
|
|
(6,233 |
) |
|
|
(8,103 |
) |
|
|
(8,981 |
) |
Proceeds from disposal of property, plant and equipment |
|
|
|
|
16 |
|
|
|
249 |
|
|
|
808 |
|
Acquisition of property, plant and equipment |
|
|
|
|
(2,784 |
) |
|
|
(2,481 |
) |
|
|
(3,713 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated by/(used in) investing activities |
|
|
|
|
56,885 |
|
|
|
(10,335 |
) |
|
|
(14,688 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of ordinary share capital |
|
|
|
|
1,023 |
|
|
|
897 |
|
|
|
7,116 |
|
Proceeds from borrowings, long-term debt |
|
|
|
|
|
|
|
|
307 |
|
|
|
|
|
Expenses
paid in connection with share issue and debt financing |
|
|
|
|
(74 |
) |
|
|
(68 |
) |
|
|
(624 |
) |
Repayment of long-term debt |
|
|
|
|
(29,775 |
) |
|
|
(5,400 |
) |
|
|
(5,224 |
) |
Proceeds from new finance leases |
|
|
|
|
1,480 |
|
|
|
1,298 |
|
|
|
|
|
Payment of finance lease liabilities |
|
|
|
|
(638 |
) |
|
|
(546 |
) |
|
|
(787 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in)/generated by financing activities |
|
|
|
|
(27,984 |
) |
|
|
(3,512 |
) |
|
|
481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/(decrease) in cash and cash equivalents |
|
|
|
|
51,974 |
|
|
|
885 |
|
|
|
(3,478 |
) |
Effects of exchange rate movements on cash held |
|
|
|
|
(50 |
) |
|
|
9 |
|
|
|
(38 |
) |
Cash and cash equivalents at beginning of year |
|
|
|
|
6,078 |
|
|
|
5,184 |
|
|
|
8,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
17 |
|
|
58,002 |
|
|
|
6,078 |
|
|
|
5,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
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 2010.
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
30. |
|
|
|
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. |
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. |
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
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 |
|
5-15 years |
|
|
|
|
Office equipment and fittings |
|
10 years |
|
|
|
|
Buildings |
|
50 years |
|
|
|
|
Computer equipment |
|
3-5 years |
|
|
|
|
Plant and equipment |
|
5-15 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. |
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|
|
All business combinations are accounted for by applying the acquisition method. |
|
|
The revised standard on business combinations (IFRS 3R) introduced major changes to the accounting
requirements for business combinations. It retains the major features of the purchase method of
accounting, now referred to as the acquisition method. The most significant changes in IFRS 3R that
impact the Group are as follows: |
|
|
|
acquisition-related costs of the combination are recorded as an expense in the income statement.
Previously, these costs would have been accounted for as part of the cost of the acquisition |
|
|
|
any contingent consideration is measured at fair value at the acquisition date. If the contingent
consideration arrangement gives rise to a financial liability, any subsequent changes are generally
recognised in profit or loss. Previously, contingent consideration was recognised only once its
payment was probable and changes were recognised as an adjustment to goodwill |
|
|
|
the measurement of assets acquired and liabilities assumed at their acquisition-date fair values
is retained. However, IFRS 3R includes certain exceptions and provides specific measurement rules. |
|
|
IFRS 3R has been applied prospectively to business combinations for which the acquisition date is
on or after 1 January 2010. Business combinations for which the acquisition date is before 1
January 2010 have not been restated and were accounted for by applying the purchase method. |
|
|
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. |
|
|
The technical feasibility of a new product is determined by a specific feasibility study
undertaken at the first stage of any development project. The majority of our new product
developments involve the transfer of existing product know-how to a new application. Since the
technology is already proven in an existing product which is being used by customers, this
facilitates the proving of the technical feasibility of that same technology in a new product. The
results
of the feasibility study are reviewed by a design review committee comprising senior managers.
The feasibility study occurs in the initial research phase of a project and costs in this
phase are not capitalized. |
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|
|
The commercial feasibility of a new product is determined by preparing a discounted cash flow
projection. This projection compares the discounted sales revenues for future periods with the
relevant costs. As part of preparing the cash flow projection, the size of the relevant market is
determined, feedback is sought from customers and the strength of the proposed new product is
assessed against competitors offerings. Once the technical and commercial feasibility has been
established and the project has been approved for commencement, the project moves into the
development phase. |
|
|
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. |
|
|
|
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 |
|
|
|
The Group uses a useful economic life of 15 years for capitalized development costs. This is a
conservative estimate of the likely life of the products. The Group is confident that products have
a minimum of 15 years life given the inertia that characterizes the medical diagnostics industry
and the barriers to entry into the industry. The following factors have been considered in
estimating the useful life of developed products: |
|
(a) |
|
once a diagnostic test becomes established, customers are reluctant to change to new
technology until it is fully proven, thus resulting in relatively long product life cycles.
There is also reluctance in customers to change to a new product as it can be costly both in
terms of the initial changeover cost and as new technology is typically more expensive. |
|
(b) |
|
demand for the diagnostic tests is enduring and robust within a wide geographic base. The
diseases that the products diagnose are widely prevalent (HIV, diabetes and Chlamydia being
just three examples) in many countries. There is a general consensus that these diseases
will continue to be widely prevalent in the future. |
|
(c) |
|
there are significant barriers to new entrants in this industry. Patents and/or
licenses are in place for many of our products, though this is not the only
barrier to entry. There is a significant cost and time to develop new
products, it is necessary to obtain regulatory approval and tests are protected by
proprietary know-how, manufacturing techniques and trade secrets. |
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|
|
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. |
|
|
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, 2008, December 31, 2009 and December 2010. 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 cash-generating units on a pro-rata basis. |
|
|
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. |
|
|
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. |
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
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 six
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. |
|
|
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. |
|
|
The share options issued by the Group are not subject to market-based vesting conditions as
defined in IFRS 2, Share-based Payment. 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. |
|
|
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. |
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
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, consistent with our typical ex-works shipment terms.
Where the shipment terms do not permit revenue to be recognised as of the date of shipment, revenue
is recognised when the Group has satisfied all of its obligations to the customer in accordance
with the shipping terms. 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. |
|
|
Other operating income also comprises income derived from the Transitional Services Agreement (TSA)
which the Group entered into with Diagnostica Stago in 2010. The services provided by the Group
under the TSA mainly include: accounting, information technology and logistics support and
warehousing services. This income is not treated as revenue since the TSA activities are
incidental to the main revenue-generating activities of the Group. |
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. |
|
|
|
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. |
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|
|
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 changes in equity. |
|
|
Where Euro or Sterling amounts have been referenced in this document, their corresponding US Dollar
equivalent has also been included and these equivalents have been calculated with reference to the
foreign exchange rates prevailing at December 31, 2010. |
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. |
|
|
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating segments, has been identified as
the Board of Directors. |
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. |
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
|
|
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. Deferred tax assets are recognised when it is probable that future taxable profits will be
available to utilize the associated losses or temporary differences. 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. |
|
|
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. |
|
|
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 includes interest income on deposits and is recognised in the statement of
operations as it accrues, using the effective interest method. Finance income also includes
interest on the deferred consideration due to the Group as part of the divestiture of the
Coagulation business in 2010. |
|
|
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. |
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
1. |
|
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
z) |
|
New IFRS Standards and Interpretations not applied |
|
|
The IASB and IFRIC have issued additional standards and interpretations which are effective for
periods starting on or after January 1, 2010, some of which have not yet been adopted by the EU.
The following standards and interpretations have yet to be adopted by the Group: |
|
|
|
|
|
International Financial Reporting Standards (IFRS/IAS) |
|
Effective date |
IFRS 1
|
|
First-time Adoption of
International Financial Reporting
Standards Limited Exemption
from Comparative IFRS 7
Disclosures for First-time
Adopters
|
|
July 1, 2010 (not
yet adopted by the
EU) |
IAS 24
|
|
Related Party Disclosures (Revised)
|
|
January 1, 2011
(not yet adopted by
the EU) |
IAS 32
|
|
Financial Instruments:
Presentation Classification of
Rights Issues (Amendment)
|
|
February 1, 2010
(not yet adopted by
the EU) |
|
|
|
|
|
International Financial Reporting Interpretations Committee (IFRIC) |
|
|
IFRIC 14
|
|
Prepayments of a Minimum Funding Requirement (Amendment)
|
|
January 1, 2011
(not yet adopted by
the EU) |
IFRIC 19
|
|
Extinguishing Financial Liabilities with Equity Instruments
|
|
July 1, 2010 (not
yet 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. |
|
|
Standards, amendments and
interpretations to existing standards that are not yet effective and have not
been adopted early by the Group. |
|
|
At the date of
authorisation of these financial statements, certain new standards, amendments
and interpretations to existing standards have been published but are not yet
effective, and have not been adopted early by the Group. |
|
|
Management
anticipates that all of the relevant pronouncements will be adopted in the
Group’s accounting policies for the first period beginning after the
effective date of the pronouncement. Information on new standards, amendments
and interpretations that are expected to be relevant to the Group’s
financial statements is provided below. Certain other new standards and
interpretations have been issued but are not expected to have a material impact
on the Group’s financial statements. |
|
|
Annual Improvements 2010
(effective from 1 July 2010 and later) |
|
|
The IASB has
issued Improvements to IFRS 2010 (2010 Improvements). Most of these amendments
become effective in annual periods beginning on or after 1 July 2010 or 1
January 2011. The 2010 Improvements amend certain provisions of IFRS 3R,
clarify presentation of the reconciliation of each of the components of other
comprehensive income and clarify certain disclosure requirements for financial
instruments. The Group’s preliminary assessments indicate that the 2010
Improvements will not have a material impact on the Group’s financial
statements. |
|
|
IFRS 9
Financial Instruments (effective from 1 January 2013) |
|
|
The IASB aims to
replace IAS 39 Financial Instruments: Recognition and Measurement in its
entirety. The replacement standard (IFRS 9) is being issued in phases. To date,
the chapters dealing with recognition, classification, measurement and
derecognition of financial assets and liabilities have been issued. These
chapters are effective for annual periods beginning 1 January 2013.
Further chapters dealing with impairment methodology and hedge accounting are
still being developed. |
|
|
Management have
yet to assess the impact that this amendment is likely to have on the financial
statements of the Group. However, they do not expect to implement the
amendments until all chapters of IFRS 9 have been published and they can
comprehensively assess the impact of all changes |
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
2. |
|
SEGMENT INFORMATION |
|
|
|
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker. The chief operating decision-maker, who is responsible for
allocating resources and assessing the performance of the operating segments, has been identified
as the Board of Directors. Management has determined the operating segments based on the reports reviewed by the Board of
Directors, which are used to make strategic decisions. The Board considers the business from a
geographic perspective 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 year 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. |
|
|
|
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 as is
consistent with the information used by the Board of Directors. The reportable operating segments derive their revenue primarily from one source (i.e. 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, 2010 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers |
|
|
37,643 |
|
|
|
45,642 |
|
|
|
6,350 |
|
|
|
|
|
|
|
89,635 |
|
Inter-segment revenue |
|
|
21,786 |
|
|
|
12,154 |
|
|
|
7,101 |
|
|
|
(41,041 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
59,429 |
|
|
|
57,796 |
|
|
|
13,451 |
|
|
|
(41,041 |
) |
|
|
89,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2009 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers |
|
|
46,286 |
|
|
|
65,529 |
|
|
|
14,092 |
|
|
|
|
|
|
|
125,907 |
|
Inter-segment revenue |
|
|
25,527 |
|
|
|
20,843 |
|
|
|
9,588 |
|
|
|
(55,958 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
71,813 |
|
|
|
86,372 |
|
|
|
23,680 |
|
|
|
(55,958 |
) |
|
|
125,907 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2008 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from external customers |
|
|
48,615 |
|
|
|
72,676 |
|
|
|
18,848 |
|
|
|
|
|
|
|
140,139 |
|
Inter-segment revenue |
|
|
28,345 |
|
|
|
22,248 |
|
|
|
12,435 |
|
|
|
(63,028 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
76,960 |
|
|
|
94,924 |
|
|
|
31,283 |
|
|
|
(63,028 |
) |
|
|
140,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b) |
|
The distribution of revenue by customers geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
Revenue |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Americas |
|
|
53,993 |
|
|
|
68,130 |
|
|
|
69,915 |
|
Europe (including Ireland) * |
|
|
15,890 |
|
|
|
32,389 |
|
|
|
43,481 |
|
Asia / Africa |
|
|
19,752 |
|
|
|
25,388 |
|
|
|
26,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,635 |
|
|
|
125,907 |
|
|
|
140,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Revenue for customers in Ireland is not disclosed separately due to the immateriality of these
revenues. |
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
2. |
|
SEGMENT INFORMATION (CONTINUED) |
c) |
|
The distribution of revenue by major product group was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
Revenue |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Clinical laboratory |
|
|
73,553 |
|
|
|
107,778 |
|
|
|
121,143 |
|
Point of care |
|
|
16,082 |
|
|
|
18,129 |
|
|
|
18,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,635 |
|
|
|
125,907 |
|
|
|
140,139 |
|
|
|
|
|
|
|
|
|
|
|
d) |
|
The distribution of segment results by geographical area was as follows: |
|
|
|
Year ended December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Result before Gain on Sale and Restructuring |
|
|
7,103 |
|
|
|
4,912 |
|
|
|
2,600 |
|
|
|
14,615 |
|
Net gain on divestment of business and
restructuring expenses (note 3) |
|
|
5,745 |
|
|
|
32,918 |
|
|
|
7,811 |
|
|
|
46,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result after Gain on Sale and Restructuring |
|
|
12,848 |
|
|
|
37,830 |
|
|
|
10,411 |
|
|
|
61,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated expenses * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(586 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,503 |
|
Net financing income (note 4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,360 |
|
Income tax expense (note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(942 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Result |
|
|
9,073 |
|
|
|
7,004 |
|
|
|
(1,211 |
) |
|
|
14,866 |
|
Unallocated expenses * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(767 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,099 |
|
Net financing costs (note 4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,184 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,915 |
|
Income tax expense (note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,091 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Result before exceptional expenses |
|
|
807 |
|
|
|
10,848 |
|
|
|
(2,391 |
) |
|
|
9,264 |
|
Impairment expense (note 28) |
|
|
(17,645 |
) |
|
|
(66,152 |
) |
|
|
(1,996 |
) |
|
|
(85,793 |
) |
Restructuring expenses (note 28) |
|
|
(185 |
) |
|
|
(1,904 |
) |
|
|
|
|
|
|
(2,089 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Result after exceptional expenses |
|
|
(17,023 |
) |
|
|
(57,208 |
) |
|
|
(4,387 |
) |
|
|
(78,618 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated expenses * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(957 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(79,575 |
) |
Net financing costs (note 4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,095 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(81,670 |
) |
Income tax credit (note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(77,778 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Unallocated expenses represent head office general and administration costs of the Group which
cannot be allocated to the results of any specific geographical area. |
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
2. |
|
SEGMENT INFORMATION (CONTINUED) |
e) |
|
The distribution of segment assets and segment liabilities by geographical area was as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
36,726 |
|
|
|
61,249 |
|
|
|
|
|
|
|
97,975 |
|
Unallocated assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax assets (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,897 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets as reported in the Group balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
|
2,315 |
|
|
|
9,212 |
|
|
|
|
|
|
|
11,527 |
|
Unallocated liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax liabilities (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,787 |
|
Interest-bearing loans and borrowings (current and
non-current) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities as reported in the Group balance
sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Total |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
37,355 |
|
|
|
65,693 |
|
|
|
17,289 |
|
|
|
120,337 |
|
Unallocated assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax assets (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,030 |
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets as reported in the Group balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,445 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment liabilities |
|
|
2,695 |
|
|
|
7,749 |
|
|
|
2,567 |
|
|
|
13,011 |
|
Unallocated liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax liabilities (current and deferred) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,234 |
|
Interest-bearing loans and borrowings (current and
non-current) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities as reported in the Group balance
sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 and deferred
consideration), by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
27,433 |
|
|
|
38,756 |
|
Rest of World Other |
|
|
|
|
|
|
6,815 |
|
Americas |
|
|
16,299 |
|
|
|
12,637 |
|
|
|
|
|
|
|
|
|
|
|
43,732 |
|
|
|
58,208 |
|
|
|
|
|
|
|
|
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
2. |
|
SEGMENT INFORMATION (CONTINUED) |
g) |
|
The distribution of depreciation and amortisation by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Depreciation: |
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World Ireland |
|
|
276 |
|
|
|
325 |
|
|
|
1,799 |
|
Rest of World Other |
|
|
296 |
|
|
|
900 |
|
|
|
1,149 |
|
Americas |
|
|
658 |
|
|
|
561 |
|
|
|
1,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,230 |
|
|
|
1,786 |
|
|
|
4,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation: |
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World Ireland |
|
|
1,475 |
|
|
|
1,712 |
|
|
|
3,113 |
|
Rest of World Other |
|
|
55 |
|
|
|
169 |
|
|
|
206 |
|
Americas |
|
|
59 |
|
|
|
78 |
|
|
|
297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,589 |
|
|
|
1,959 |
|
|
|
3,616 |
|
|
|
|
|
|
|
|
|
|
|
h) |
|
The distribution of share-based payment expense by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
1,032 |
|
|
|
470 |
|
|
|
996 |
|
Rest of World Other |
|
|
1 |
|
|
|
17 |
|
|
|
38 |
|
Americas |
|
|
76 |
|
|
|
34 |
|
|
|
132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,109 |
|
|
|
521 |
|
|
|
1,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
See note 19 for further information on share-based payments. |
i) |
|
The distribution of impairment & restructuring expenses by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Impairment: |
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World Ireland |
|
|
|
|
|
|
|
|
|
|
66,152 |
|
Rest of World Other |
|
|
|
|
|
|
|
|
|
|
1,996 |
|
Americas |
|
|
|
|
|
|
|
|
|
|
17,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,793 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World Ireland |
|
|
301 |
|
|
|
|
|
|
|
1,904 |
|
Rest of World Other |
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
301 |
|
|
|
|
|
|
|
2,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The 2010 restructuring expenses were incurred in connection with a programme involving a
re-organisation of the Groups HIV manufacturing activities and comprised termination payments for
employees located in Ireland. This restructuring cost is included within Net gain on divestment of
business and restructuring expenses, on the face of the income statement. |
|
|
Asset impairments arose as a result of the annual impairment review which was performed on 31
December 2008 (see note 28). |
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
2. |
|
SEGMENT INFORMATION (CONTINUED) |
|
|
The Board of Directors announced a restructuring of the business in December 2008, which resulted
in certain one-off expenditure being incurred. These termination payments and other restructuring
costs resulted in an after tax charge of US$1.9 million (see note 28). |
|
j) |
|
The distribution of interest income and interest expense by geographical area was as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
Interest Income |
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2010 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income Earned |
|
|
|
|
|
|
910 |
|
|
|
|
|
|
|
|
|
|
|
910 |
|
Interest on Deferred Consideration |
|
|
98 |
|
|
|
344 |
|
|
|
|
|
|
|
|
|
|
|
442 |
|
Inter-segment Interest Income |
|
|
|
|
|
|
428 |
|
|
|
|
|
|
|
(428 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
98 |
|
|
|
1,682 |
|
|
|
|
|
|
|
(428 |
) |
|
|
1,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
Interest Expense |
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2010 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense |
|
|
85 |
|
|
|
410 |
|
|
|
|
|
|
|
|
|
|
|
495 |
|
Inter-segment Interest Expense |
|
|
73 |
|
|
|
355 |
|
|
|
|
|
|
|
(428 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
158 |
|
|
|
765 |
|
|
|
|
|
|
|
(428 |
) |
|
|
495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
Interest Income |
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2009 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income Earned |
|
|
|
|
|
|
6 |
|
|
|
2 |
|
|
|
|
|
|
|
8 |
|
Inter-segment Interest Income |
|
|
|
|
|
|
1,157 |
|
|
|
|
|
|
|
(1,157 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
|
|
|
|
1,163 |
|
|
|
2 |
|
|
|
(1,157 |
) |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
Interest Expense |
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2009 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense |
|
|
11 |
|
|
|
1,178 |
|
|
|
3 |
|
|
|
|
|
|
|
1,192 |
|
Inter-segment Interest Expense |
|
|
184 |
|
|
|
973 |
|
|
|
|
|
|
|
(1,157 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
195 |
|
|
|
2,151 |
|
|
|
3 |
|
|
|
(1,157 |
) |
|
|
1,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
Interest Income |
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2008 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income Earned |
|
|
1 |
|
|
|
62 |
|
|
|
2 |
|
|
|
|
|
|
|
65 |
|
Inter-segment Interest Income |
|
|
|
|
|
|
2,038 |
|
|
|
|
|
|
|
(2,038 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
1 |
|
|
|
2,100 |
|
|
|
2 |
|
|
|
(2,038 |
) |
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
2. |
|
SEGMENT INFORMATION (CONTINUED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World |
|
|
|
|
|
|
|
Interest Expense |
|
Americas |
|
|
Ireland |
|
|
Other |
|
|
Eliminations |
|
|
Total |
|
Year ended December 31, 2008 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense |
|
|
5 |
|
|
|
2,147 |
|
|
|
8 |
|
|
|
|
|
|
|
2,160 |
|
Inter-segment Interest Expense |
|
|
330 |
|
|
|
1,708 |
|
|
|
|
|
|
|
(2,038 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
335 |
|
|
|
3,855 |
|
|
|
8 |
|
|
|
(2,038 |
) |
|
|
2,160 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
k) |
|
The distribution of taxation (expense)/credit by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
591 |
|
|
|
(1,023 |
) |
|
|
3,716 |
|
Rest of World Other |
|
|
(815 |
) |
|
|
200 |
|
|
|
9 |
|
Americas |
|
|
(718 |
) |
|
|
(268 |
) |
|
|
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(942 |
) |
|
|
(1,091 |
) |
|
|
3,892 |
|
|
|
|
|
|
|
|
|
|
|
l) |
|
During 2010, 2009 and 2008 there were no customers generating 10% or more of total
revenues. |
m) |
|
The distribution of capital expenditure by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
4,077 |
|
|
|
6,816 |
|
Rest of World Other |
|
|
598 |
|
|
|
670 |
|
Americas |
|
|
3,923 |
|
|
|
3,071 |
|
|
|
|
|
|
|
|
|
|
|
8,598 |
|
|
|
10,557 |
|
|
|
|
|
|
|
|
3. |
|
NET GAIN ON DIVESTMENT OF BUSINESS AND RESTRUCTURING EXPENSES |
|
|
In May 2010, the Group sold its worldwide Coagulation business to Diagnostica Stago for US$89.9
million. Diagnostica Stago purchased the share capital of Trinity Biotech (UK Sales) Limited,
Trinity Biotech GmbH and Trinity Biotech S.à.r.l, along with Coagulation assets of Biopool US Inc.
and Trinity Biotech Manufacturing Limited. As part of the sale, the Group also transferred the
leasing arrangements of one of its facilities in Bray, Ireland to Diagnostica Stago. Included in
the sale are Trinitys lists of coagulation customers and suppliers, all coagulation inventory,
intellectual property and developed technology. |
|
|
The Group received consideration of
US$67.4 million and interest on deferred consideration of
US$1.0 million in 2010. These proceeds were used in part to repay the
Group’s bank loans in 2010 and accordingly there were no bank loans
outstanding at December 31, 2010. A further US$11.25 million will be
received from Diagnostica Stago in May 2011 (see note 16) and the
remaining US$11.25 million will be received in May 2012 (see note
14). These amounts are recognised net of deferred interest. No conditions or
earnout provisions will apply to this deferred element of the consideration,
which is supported by a bank guarantee. |
|
|
IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations) outlines the disclosures
required for a discontinued operation. However, the coagulation business falls outside of these
criteria, principally owing to the fact that it is not defined as a component of the Group. A
component is defined by IFRS 5 as operations and cashflows that can be clearly distinguished,
operationally and for financial reporting purposes, from the rest of the entity. The Group has
determined that neither the operations nor the cashflows of the coagulation business could be
clearly distinguished, operationally or from a financial reporting viewpoint and therefore, on that
basis, the coagulation business does not meet the definition of a discontinued operation. |
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
3. |
|
NET GAIN ON DIVESTMENT OF BUSINESS AND RESTRUCTURING EXPENSES (CONTINUED) |
|
|
Accordingly, the Group has disclosed the Gain on Sale under the heading Net gain on divestment of
business and restructuring expenses in the income statement, where it is shown net of termination
expenses of US$301,000 (see note 7). The Gain on divestment is also shown separately within the
Segment Information note as required by IFRS 8 (Operating Segments) where appropriate (see note 2). |
|
|
The gain on the divestment is summarised below according to the assets and liabilities which were
divested in May 2010 as part of the sale. The assets and liabilities divested have been
cross-referenced throughout this document in order to provide a clearer understanding of the
movements which have occurred in the current financial year. The effect of the divestment is
summarised as follows: |
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2010 |
|
|
|
US$000 |
|
|
US$000 |
|
Total Consideration |
|
|
|
|
|
|
89,923 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment (net book value) |
|
|
6,775 |
|
|
|
|
|
Goodwill and intangible assets |
|
|
12,270 |
|
|
|
|
|
Deferred tax assets |
|
|
123 |
|
|
|
|
|
Inventories (net) |
|
|
21,528 |
|
|
|
|
|
Trade and other receivables |
|
|
6,211 |
|
|
|
|
|
Cash and cash equivalents |
|
|
427 |
|
|
|
|
|
Interest bearing loans and borrowings |
|
|
(2,825 |
) |
|
|
|
|
Income tax payable |
|
|
(70 |
) |
|
|
|
|
Trade and other payables |
|
|
(3,463 |
) |
|
|
|
|
Deferred Tax Liabilities |
|
|
(183 |
) |
|
|
|
|
Net identifiable assets disposed |
|
|
40,793 |
|
|
|
(40,793 |
) |
|
|
|
Other Costs associated with the Divestiture of Coagulation |
|
|
|
|
|
|
(2,355 |
) |
Net gain on divestment of business |
|
|
|
|
|
|
46,775 |
|
Restructuring Expenses* |
|
|
|
|
|
|
(301 |
) |
Net gain on divestment of business and restructuring
expenses |
|
|
|
|
|
|
46,474 |
|
|
|
|
* |
|
The Restructuring Expenses relate to termination payments resulting from a restructuring
programme announced in 2010 (see note 7). |
4. |
|
FINANCIAL INCOME AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
Note |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Financial income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
910 |
|
|
|
8 |
|
|
|
65 |
|
Other interest income |
|
|
|
|
442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,352 |
|
|
|
8 |
|
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease interest |
|
|
|
|
(67 |
) |
|
|
(135 |
) |
|
|
(123 |
) |
Interest payable on interest
bearing loans and borrowings |
|
20 |
|
|
(425 |
) |
|
|
(1,053 |
) |
|
|
(1,912 |
) |
Other interest expense |
|
|
|
|
(3 |
) |
|
|
(4 |
) |
|
|
(125 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(495 |
) |
|
|
(1,192 |
) |
|
|
(2,160 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Financing Income/(expense) |
|
|
|
|
857 |
|
|
|
(1,184 |
) |
|
|
(2,095 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
4. |
|
FINANCIAL INCOME AND EXPENSES (CONTINUED) |
|
|
Other interest income recognised in 2010 is entirely comprised of interest income relating to the
deferred consideration of US$22,500,000 due to the Company as a result of the sale of the
Coagulation product line in 2010. For further information, see Note 3. |
|
|
Other interest expense recognised in 2008 mainly comprises an interest expense arising from the
discounting of the deferred consideration payable to bioMerieux, resulting from the acquisition of
the Coagulation business during 2006, to reflect the present value of this additional
consideration. |
5. |
|
OTHER OPERATING INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income from premises |
|
|
213 |
|
|
|
222 |
|
|
|
237 |
|
Employment / training grants |
|
|
(50 |
) |
|
|
215 |
|
|
|
936 |
|
Other income |
|
|
1,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,616 |
|
|
|
437 |
|
|
|
1,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As part of the divestiture of the Coagulation business in May 2010, the Group entered into a
Transitional Services Agreement (TSA) with Diagnostica Stago. The services provided by the Group
to Stago under the TSA comprise mainly: accounting; information technology and logistics support
and warehousing services. |
|
|
Other income therefore, mainly comprises income recognised under the TSA. This income has not been
treated as revenue since the TSA activities are incidental to the main revenue-generating
activities of the Group. |
6. |
|
PROFIT/(LOSS) BEFORE TAX |
|
|
The following amounts were charged / (credited) to the statement of operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Directors emoluments (including non-executive directors): |
|
|
|
|
|
|
|
|
|
|
|
|
Remuneration |
|
|
2,082 |
|
|
|
1,271 |
|
|
|
1,617 |
|
Pension |
|
|
127 |
|
|
|
105 |
|
|
|
241 |
|
Share based payments |
|
|
592 |
|
|
|
422 |
|
|
|
776 |
|
Compensation for loss of office |
|
|
|
|
|
|
|
|
|
|
1,283 |
|
Other |
|
|
39 |
|
|
|
|
|
|
|
44 |
|
Auditors remuneration |
|
|
|
|
|
|
|
|
|
|
|
|
Audit fees |
|
|
628 |
|
|
|
764 |
|
|
|
809 |
|
Non audit fees |
|
|
31 |
|
|
|
21 |
|
|
|
31 |
|
Depreciation leased assets |
|
|
84 |
|
|
|
87 |
|
|
|
372 |
|
Depreciation owned assets |
|
|
1,146 |
|
|
|
1,699 |
|
|
|
4,053 |
|
Amortisation |
|
|
1,589 |
|
|
|
1,959 |
|
|
|
3,616 |
|
Gain on divestiture of Coagulation business |
|
|
46,775 |
|
|
|
|
|
|
|
|
|
Loss/(profit) on the disposal of property,
plant and equipment |
|
|
12 |
|
|
|
66 |
|
|
|
(682 |
) |
Net foreign exchange differences |
|
|
1,119 |
|
|
|
32 |
|
|
|
(224 |
) |
Operating lease rentals: |
|
|
|
|
|
|
|
|
|
|
|
|
Plant and machinery |
|
|
5 |
|
|
|
15 |
|
|
|
31 |
|
Land and buildings |
|
|
3,211 |
|
|
|
3,727 |
|
|
|
4,421 |
|
Other equipment |
|
|
130 |
|
|
|
339 |
|
|
|
437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and salaries |
|
|
25,491 |
|
|
|
39,967 |
|
|
|
48,755 |
|
Social welfare costs |
|
|
2,279 |
|
|
|
4,237 |
|
|
|
5,338 |
|
Pension costs |
|
|
897 |
|
|
|
1,350 |
|
|
|
1,442 |
|
Share-based payments |
|
|
1,109 |
|
|
|
521 |
|
|
|
1,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,776 |
|
|
|
46,075 |
|
|
|
56,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2010 amounted to US$32,506,000 (2009: US$50,459,000) (2008: US$61,644,000). Total
share based payments, inclusive of amounts capitalised in the balance sheet, amounted to
US$1,240,000 for the year ended December 31, 2010 (2009: US$599,000) (2008: US$1,193,000). See
note 19. |
|
|
Included in personnel expenses for the year ended December 31, 2010 is US$301,000 which relates to
termination payments resulting from a restructuring programme announced in 2010. This programme
involved a re-organisation of the Groups HIV manufacturing activities and comprised termination
payments for employees located in Ireland. This restructuring cost is included within Net gain on
divestment of business and restructuring expenses, on the face of the income statement. |
|
|
Included in personnel expenses for the year ended December 31, 2008 is US$589,000 which relates to
termination payments resulting from the restructuring announced in December 2008 (see note 28). |
|
|
The average number of persons employed by the Group in the financial year was 452 (2009: 676)
(2008: 757) and is analysed into the following categories: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
37 |
|
|
|
61 |
|
|
|
57 |
|
Administration and sales |
|
|
130 |
|
|
|
189 |
|
|
|
261 |
|
Manufacturing and quality |
|
|
285 |
|
|
|
426 |
|
|
|
439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
452 |
|
|
|
676 |
|
|
|
757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The reduction in average
headcount is mainly due to the fact that 321 employees transferred to the
acquirer of the Coagulation business (Diagnostica Stago) in May 2010. These employees have been
included in the average headcount numbers on a pro-rata basis up to their date of departure. |
|
|
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$897,000 (2009: US$1,350,000) (2008: US$1,442,000) (note 7). The pension accrual for the Group
at December 31, 2010 was US$228,000 (2009: US$309,000), (2008: US$332,000). |
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
9. |
|
INCOME TAX EXPENSE / (CREDIT) |
(a) |
|
The charge for tax based on the profit / (loss) comprises: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Current tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
Corporation tax at 12.5% |
|
|
629 |
|
|
|
75 |
|
|
|
58 |
|
Overseas tax (a) |
|
|
356 |
|
|
|
46 |
|
|
|
35 |
|
Adjustment in respect of prior years (b) |
|
|
(138 |
) |
|
|
(120 |
) |
|
|
(33 |
) |
|
|
|
|
|
|
|
|
|
|
Total current tax expense |
|
|
847 |
|
|
|
1 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax expense / (credit) (c) |
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of temporary
differences (see note 13) |
|
|
380 |
|
|
|
1,354 |
|
|
|
(3,858 |
) |
Origination and reversal of net
operating losses (see note 13) |
|
|
(285 |
) |
|
|
(264 |
) |
|
|
(94 |
) |
|
|
|
|
|
|
|
|
|
|
Total deferred tax expense / (credit) |
|
|
95 |
|
|
|
1,090 |
|
|
|
(3,952 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax charge / (credit) in
income statement (d) |
|
|
942 |
|
|
|
1,091 |
|
|
|
(3,892 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The overseas tax charge in 2010, 2009 and 2008 relates primarily to US State Taxes. |
|
(b) |
|
The credit in 2010 relates to the claim for Irish Research and Development Tax Credits (R&D
tax credits) in respect of the year ended December 31, 2009. The credit in 2009 arises in respect
of the finalisation of a claim for Irish Research and Development Tax Credits in respect of the
year ended December 31, 2008 and the refund of US state taxes. The credit in 2008 relates primarily
to the release of a provision for US State taxes at December 31, 2007 which was not considered to
be required. |
|
(c) |
|
In 2010 there was a deferred tax credit of US$1,093,000 (2009: US$1,015,000 charge; 2008:
US$3,744,000 credit) recognised in respect of Ireland and a deferred tax charge of US$1,188,000
(2009: US$75,000 charge; 2008: US$208,000 credit) recognised in respect of overseas tax
jurisdictions. |
|
(d) |
|
In 2008 the impairment charge and restructuring charges had a significant impact on the income
tax (credit)/charge in those financial years. The tax credit in 2008 includes a deferred tax credit
of US$4,536,000 relating to the impairment and a deferred tax credit of US$215,000 relating to the
restructuring (see note 28). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
Effective tax rate |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Profit/(loss) before taxation |
|
|
61,360 |
|
|
|
12,915 |
|
|
|
(81,670 |
) |
As a percentage of profit/(loss) before tax: |
|
|
|
|
|
|
|
|
|
|
|
|
Current tax |
|
|
1.38 |
% |
|
|
0.00 |
% |
|
|
0.07 |
% |
Total (current and deferred) |
|
|
1.53 |
% |
|
|
8.45 |
% |
|
|
4.76 |
% |
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
9. |
|
INCOME TAX EXPENSE / (CREDIT) (CONTINUED) |
|
|
The following table reconciles the applicable Republic of Ireland statutory tax rate to the
effective total tax rate for the Group: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
Irish corporation tax |
|
|
12.50 |
% |
|
|
12.50 |
% |
|
|
12.50 |
% |
Adjustments in respect of prior years |
|
|
(0.22 |
%) |
|
|
(0.93 |
%) |
|
|
0.04 |
% |
Effect of tax rates on overseas earnings |
|
|
3.89 |
% |
|
|
25.30 |
% |
|
|
1.67 |
% |
Effect of non deductible expenses |
|
|
0.32 |
% |
|
|
1.09 |
% |
|
|
(6.48 |
%) |
Effect of current year net operating
losses and temporary differences for
which no deferred tax asset was
recognised |
|
|
(5.55 |
%) |
|
|
(30.66 |
%) |
|
|
(3.21 |
%) |
R&D tax credit |
|
|
(0.06 |
%) |
|
|
|
|
|
|
0.29 |
% |
|
|
|
|
|
|
|
|
|
|
Effect of Irish income taxable at
higher tax rate (a) |
|
|
(9.35 |
%) |
|
|
1.15 |
% |
|
|
(0.05 |
%) |
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
|
1.53 |
% |
|
|
8.45 |
% |
|
|
4.76 |
% |
|
|
|
(a) |
|
In 2010 the Irish income taxable at a higher tax rate has a negative effect on the overall
corporation tax rate. This is because the gain arising on sale of the assets and liabilities
of the coagulation business in Ireland, which is taxable at the higher tax rate of 25%,
resulted in a capital loss and consequently no capital gains tax is payable. For further
information see Note 3. |
|
|
The effect of current year net operating losses and temporary differences for which no deferred tax
asset was recognized is analyzed further in the table below (see also note 13). No deferred tax
asset was recognized because there was no reversing deferred tax liability in the same jurisdiction
reversing in the same period and no future taxable income in the same jurisdiction. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect in |
|
|
Percentage |
|
|
Effect in |
|
|
Percentage |
|
|
|
2010 |
|
|
effect in |
|
|
2009 |
|
|
effect in |
|
Unrecognised deferred tax assets |
|
US$000 |
|
|
2010 |
|
|
US$000 |
|
|
2009 |
|
Temporary differences arising in USA |
|
|
(387 |
) |
|
|
(0.63 |
%) |
|
|
(3,076 |
) |
|
|
(23.83 |
%) |
Net operating losses arising in USA |
|
|
(3,059 |
) |
|
|
(4.99 |
%) |
|
|
(1,055 |
) |
|
|
(8.16 |
%) |
Net operating losses arising in Ireland |
|
|
104 |
|
|
|
0.17 |
% |
|
|
|
|
|
|
|
|
Net operating losses arising in France |
|
|
(89 |
) |
|
|
(0.14 |
%) |
|
|
263 |
|
|
|
2.03 |
% |
Net operating losses arising in Germany |
|
|
26 |
|
|
|
0.04 |
% |
|
|
(588 |
) |
|
|
(4.55 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,405 |
) |
|
|
(5.55 |
%) |
|
|
(4,456 |
) |
|
|
(34.52 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Group Unrecognised deferred tax assets |
|
|
0 |
|
|
|
0.0 |
% |
|
|
348 |
|
|
|
2.69 |
% |
Change in tax rates |
|
|
0 |
|
|
|
0.0 |
% |
|
|
149 |
|
|
|
1.15 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
(3,405 |
) |
|
|
(5.55 |
%) |
|
|
(3,959 |
) |
|
|
(30.66 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax recognised directly in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Relating to forward
contracts as hedged
instruments |
|
|
6 |
|
|
|
3 |
|
|
|
26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
|
|
3 |
|
|
|
26 |
|
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
9. |
|
INCOME TAX EXPENSE / (CREDIT) (CONTINUED) |
|
a. |
|
The distribution of profit/(loss) before taxes by geographical area was as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Rest of World Ireland |
|
|
38,161 |
|
|
|
5,240 |
|
|
|
(59,917 |
) |
Rest of World Other |
|
|
10,411 |
|
|
|
(1,206 |
) |
|
|
(4,395 |
) |
Americas |
|
|
12,788 |
|
|
|
8,881 |
|
|
|
(17,358 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
61,360 |
|
|
|
12,915 |
|
|
|
(81,670 |
) |
|
|
|
|
|
|
|
|
|
|
|
b. |
|
At December 31, 2010, the Group had unutilised net operating losses as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
USA |
|
|
1,841 |
|
|
|
7,569 |
|
|
|
10,167 |
|
Ireland |
|
|
999 |
|
|
|
1,918 |
|
|
|
290 |
|
France |
|
|
|
|
|
|
2,368 |
|
|
|
1,812 |
|
Germany |
|
|
|
|
|
|
1,152 |
|
|
|
3,245 |
|
UK |
|
|
|
|
|
|
101 |
|
|
|
197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,840 |
|
|
|
13,108 |
|
|
|
15,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The utilisation of these net operating loss carryforwards is limited to future profits in the USA
and Ireland. The US net operating loss has a maximum carryforward of 20 years. US$847,000 will
expire by December 31, 2026 and US$994,000 will expire by December 31, 2027. The Irish net
operating losses can be carried forward indefinitely. |
|
|
The unutilised net operating losses in France, Germany and UK were transferred to Diagnostica Stago
on April 30, 2010 following their purchase of Trinity Biotech S.à.r.l., Trinity Biotech GmbH and
Trinity Biotech (UK Sales) Limited respectively. At December 31, 2009, the Group recognised a
deferred tax asset of US$96,000 (2008: US$133,000) in respect of net operating loss carryforwards
in Germany and the UK, as there were sufficient taxable temporary differences relating to the same
taxation authority and the same taxable entity which would result in taxable amounts against which
the unused tax losses could be utilised before they expire. |
|
|
At December 31, 2010, the Group had unrecognised deferred tax assets in respect of unused tax
losses, unused tax credits and deductible temporary differences as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
December 31, 2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
USA unused tax losses |
|
|
|
|
|
|
3,071 |
|
|
|
4,126 |
|
Germany unused tax losses |
|
|
|
|
|
|
427 |
|
|
|
866 |
|
France unused tax losses |
|
|
|
|
|
|
861 |
|
|
|
598 |
|
Ireland unused tax losses |
|
|
177 |
|
|
|
73 |
|
|
|
73 |
|
USA unused tax credits |
|
|
358 |
|
|
|
346 |
|
|
|
346 |
|
USAdeductible temporary
differences |
|
|
|
|
|
|
387 |
|
|
|
3,464 |
|
|
|
|
|
|
|
|
|
|
|
Unrecognised Deferred Tax Asset |
|
|
535 |
|
|
|
5,165 |
|
|
|
9,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The accounting policy for deferred tax is to calculate the deferred tax asset that is deemed
recoverable, considering all sources for future taxable profits. The deferred tax assets in the
above table have not been recognized due to uncertainty regarding the full utilization of these
losses in the related tax jurisdiction in future periods. Only when it is probable that future
profits will be available to utilize the forward losses or temporary differences is a deferred tax
asset recognized. When there is a reversing deferred tax liability in that jurisdiction that
reverses in the same period, the deferred tax asset is restricted so that it equals the reversing
deferred tax liability. |
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
9. |
|
INCOME TAX EXPENSE / (CREDIT) (CONTINUED) |
|
|
At December 31, 2009 a deferred tax asset of US $3,071,000 (2008 : US$4,126,000) in respect of net
operating losses in the US and US$387,000 (2008: US$3,464,000) in respect of temporary differences
in the US were not recognised because the deferred tax asset was restricted in order that it
equalled the reversing deferred tax liability in the US. The net operating losses in the USA have
reduced significantly in 2010, mainly due to the profit earned on the sale of the coagulation
business. The reduction in net operating losses has resulted in the deferred tax asset being less
than the reversing deferred tax liability. As a result, the unrecognised deferred tax assets in
respect of unused tax losses and temporary differences have reduced to nil at December 31, 2010. |
|
|
The Group has US state credit carryforwards of US$358,000 at December 31, 2010 (2009: US$346,000).
A deferred tax asset of US$358,000 (2009: US$346,000) in respect of US state credit carryforwards
was not recognised in 2010 due to uncertainties regarding future full utilisation of these state
credit carryforwards in the related tax jurisdiction in future periods. Unused tax losses in
respect of Germany and France have been transferred to Diagnostica Stago following their purchase
of the Groups German and French subsidiaries in 2010. |
10. |
|
EARNINGS/(LOSS) PER SHARE |
|
|
|
Basic earnings/(loss) per ordinary share |
|
|
Basic earnings/(loss) per ordinary share for the Group is computed by dividing the profit after
taxation of US$60,418,000 (2009: profit after tax of US$11,824,000) (2008: loss after tax of
US$77,778,000) for the financial year by the weighted average number of A ordinary and B
ordinary shares in issue of 84,734,378 (2009: 83,737,884) (2008: 81,394,075). 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 earnings/(loss) per share for a B ordinary share is exactly twice
the earnings/ (loss) per share of an A ordinary share. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
A ordinary shares |
|
|
83,334,378 |
|
|
|
82,337,884 |
|
|
|
79,994,075 |
|
B ordinary shares (multiplied by 2) |
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
|
1,400,000 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/ (loss) per share denominator |
|
|
84,734,378 |
|
|
|
83,737,884 |
|
|
|
81,394,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to weighted average earnings per
share denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Number of A ordinary shares at January 1 (note 18) |
|
|
82,952,037 |
|
|
|
82,017,581 |
|
|
|
74,756,765 |
|
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 |
|
|
382,341 |
|
|
|
320,303 |
|
|
|
5,237,310 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/ (loss) per share denominator |
|
|
84,734,378 |
|
|
|
83,737,884 |
|
|
|
81,394,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average number of shares issued during the year is calculated by taking the number of
shares issued multiplied by the number of days in the year each share is in issue divided by 365
days. |
|
|
|
Diluted earnings/ (loss) per ordinary share |
|
|
Diluted earnings/ (loss) per ordinary share is computed by dividing the profit after tax of
US$60,418,000 (2009: profit after tax of US$11,824,000) (2008: loss after tax of US$77,778,000)
for the financial year by the diluted weighted average number of ordinary shares in issue of
86,661,535 (2009: 83,772,094) (2008: 81,394,075). |
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
10. |
|
EARNINGS/(LOSS) PER SHARE (CONTINUED) |
|
|
The basic weighted average number of shares for the Group may be reconciled to the number used in
the diluted earnings/ (loss) per ordinary share calculation as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
Basic earnings/ (loss) per share denominator
(see above) |
|
|
84,734,378 |
|
|
|
83,737,884 |
|
|
|
81,394,075 |
|
Issuable on exercise of options and warrants |
|
|
1,927,157 |
|
|
|
34,210 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings/ (loss) per share denominator * |
|
|
86,661,535 |
|
|
|
83,772,094 |
|
|
|
81,394,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
At December 31, 2010 and December 31, 2009 the number of shares issuable on the exercise of
options and warrants was dilutive. At December 31, 2008, the number of shares issuable on the
exercise of options and warrants was not dilutive. |
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 earnings/ (loss) per ADS for the Group is computed by dividing the profit after taxation of
US$60,418,000 (2009: profit after tax of US$11,824,000) (2008: loss after tax of US$77,778,000)
for the financial year by the weighted average number of ADS in issue of 21,183,594 (2009:
20,934,471); (2008: 20,348,519). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
A ordinary shares ADS |
|
|
20,833,594 |
|
|
|
20,584,471 |
|
|
|
19,998,519 |
|
B ordinary shares ADS |
|
|
350,000 |
|
|
|
350,000 |
|
|
|
350,000 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings/ (loss) per share denominator |
|
|
21,183,594 |
|
|
|
20,934,471 |
|
|
|
20,348,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings/ (loss) per ADS for the Group is computed by dividing the profit after taxation
of US$60,418,000 (2009: profit after taxation of US$11,824,000) (2008: loss after tax of
US$77,778,000) for the financial year, by the diluted weighted average number of ADS in issue of
21,665,383 (2009: 20,943,024) (2008: 20,348,519). |
|
|
The basic weighted average number of ADS shares for the Group may be reconciled to the number used
in the diluted earnings per ADS share calculation as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
Basic earnings/ (loss) per share denominator
(see above) |
|
|
21,183,594 |
|
|
|
20,934,471 |
|
|
|
20,348,519 |
|
Issuable on exercise of options and warrants |
|
|
481,789 |
|
|
|
8,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)/ earnings per share denominator * |
|
|
21,665,383 |
|
|
|
20,943,024 |
|
|
|
20,348,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
At December 31, 2010 and December 31, 2009, the number of shares issuable on the exercise of
options and warrants was dilutive. At December 31, 2008, the number of ADSs issuable on the
exercise of options and warrants was not dilutive. |
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
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, 2009 |
|
|
5,716 |
|
|
|
3,682 |
|
|
|
5,706 |
|
|
|
31,390 |
|
|
|
46,494 |
|
Additions |
|
|
29 |
|
|
|
8 |
|
|
|
157 |
|
|
|
2,111 |
|
|
|
2,305 |
|
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
(322 |
) |
|
|
(933 |
) |
|
|
(1,255 |
) |
Exchange adjustments |
|
|
81 |
|
|
|
|
|
|
|
5 |
|
|
|
117 |
|
|
|
203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
5,826 |
|
|
|
3,690 |
|
|
|
5,546 |
|
|
|
32,685 |
|
|
|
47,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2010 |
|
|
5,826 |
|
|
|
3,690 |
|
|
|
5,546 |
|
|
|
32,685 |
|
|
|
47,747 |
|
Additions |
|
|
11 |
|
|
|
188 |
|
|
|
453 |
|
|
|
1,644 |
|
|
|
2,296 |
|
Disposals / retirements |
|
|
(3,498 |
) |
|
|
(1,625 |
) |
|
|
(1,695 |
) |
|
|
(20,233 |
) |
|
|
(27,051 |
) |
Exchange adjustments |
|
|
(259 |
) |
|
|
|
|
|
|
(14 |
) |
|
|
(156 |
) |
|
|
(429 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
2,080 |
|
|
|
2,253 |
|
|
|
4,290 |
|
|
|
13,940 |
|
|
|
22,563 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation and
impairment losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2009 |
|
|
(1,077 |
) |
|
|
(3,161 |
) |
|
|
(5,081 |
) |
|
|
(25,320 |
) |
|
|
(34,639 |
) |
Charge for the year |
|
|
(124 |
) |
|
|
(92 |
) |
|
|
(159 |
) |
|
|
(1,411 |
) |
|
|
(1,786 |
) |
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
322 |
|
|
|
618 |
|
|
|
940 |
|
Exchange adjustments |
|
|
(10 |
) |
|
|
|
|
|
|
(5 |
) |
|
|
(73 |
) |
|
|
(88 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
(1,211 |
) |
|
|
(3,253 |
) |
|
|
(4,923 |
) |
|
|
(26,186 |
) |
|
|
(35,573 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2010 |
|
|
(1,211 |
) |
|
|
(3,253 |
) |
|
|
(4,923 |
) |
|
|
(26,186 |
) |
|
|
(35,573 |
) |
Charge for the year |
|
|
(146 |
) |
|
|
(79 |
) |
|
|
(144 |
) |
|
|
(861 |
) |
|
|
(1,230 |
) |
Disposals / retirements |
|
|
571 |
|
|
|
1,396 |
|
|
|
1,331 |
|
|
|
16,929 |
|
|
|
20,227 |
|
Exchange adjustments |
|
|
5 |
|
|
|
|
|
|
|
1 |
|
|
|
6 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
(781 |
) |
|
|
(1,936 |
) |
|
|
(3,735 |
) |
|
|
(10,112 |
) |
|
|
(16,564 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
1,299 |
|
|
|
317 |
|
|
|
555 |
|
|
|
3,828 |
|
|
|
5,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
4,615 |
|
|
|
437 |
|
|
|
623 |
|
|
|
6,499 |
|
|
|
12,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within disposals/retirements in 2010 is Property, Plant and Equipment with a net book
value of US$6,775,000, which was disposed of as part of the divestiture of the Coagulation business
in May 2010 (see note 3). |
|
|
The annual impairment review performed at December 31, 2010 and December 31, 2009, showed that the
carrying value of the Groups assets did not exceed the amount that could be recovered through
their use or sale and, on that basis, there was no impairment in 2010 or 2009. |
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
11. |
|
PROPERTY, PLANT AND EQUIPMENT (CONTINUED) |
|
|
|
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, 2010 is US$557,000 (2009: US$1,409,000). Depreciation charged
on these assets in 2010 amounted to US$126,000 (2009: US$427,000). |
|
|
Included in disposals/retirements in 2010 is US$15,000 (2009: US$321,000) relating to the net book
value of leased instruments reclassified as inventory on return from customers. |
|
|
|
Assets held under finance leases |
|
|
Included in the carrying amount of property, plant and equipment is an amount for capitalised
leased assets of US$499,000 (2009: US$704,000). The leased equipment secures the lease
obligations (note 20). The depreciation charge in respect of capitalised leased assets for the
year ended December 31, 2010 was US$85,000 (2009: US$ US$87,000). This is split as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers, |
|
|
|
|
|
|
|
|
|
Leasehold |
|
|
fixtures and |
|
|
Plant and |
|
|
|
|
|
|
improvements |
|
|
fittings |
|
|
equipment |
|
|
Total |
|
At December 31, 2010 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation charge |
|
|
|
|
|
|
|
|
|
|
85 |
|
|
|
85 |
|
Carrying value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
499 |
|
|
|
499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computers, |
|
|
|
|
|
|
|
|
|
Leasehold |
|
|
fixtures and |
|
|
Plant and |
|
|
|
|
|
|
improvements |
|
|
fittings |
|
|
equipment |
|
|
Total |
|
At December 31, 2009 |
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation charge |
|
|
7 |
|
|
|
7 |
|
|
|
73 |
|
|
|
87 |
|
Carrying value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
26 |
|
|
|
48 |
|
|
|
630 |
|
|
|
704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment under construction |
|
|
There were no assets in the course of construction included in plant and equipment at December
31, 2010 (2009: US$9,000). The assets in the course of construction at December 31, 2009 were
transferred to additions during the course of the year. |
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
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, 2009 |
|
|
79,599 |
|
|
|
34,212 |
|
|
|
10,093 |
|
|
|
26,078 |
|
|
|
149,982 |
|
Additions |
|
|
|
|
|
|
7,845 |
|
|
|
|
|
|
|
407 |
|
|
|
8,252 |
|
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25 |
) |
|
|
(25 |
) |
Exchange adjustments |
|
|
|
|
|
|
13 |
|
|
|
|
|
|
|
4 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
79,599 |
|
|
|
42,070 |
|
|
|
10,093 |
|
|
|
26,464 |
|
|
|
158,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2010 |
|
|
79,599 |
|
|
|
42,070 |
|
|
|
10,093 |
|
|
|
26,464 |
|
|
|
158,226 |
|
Additions |
|
|
|
|
|
|
5,887 |
|
|
|
8 |
|
|
|
407 |
|
|
|
6,302 |
|
Disposals / retirements |
|
|
(32,345 |
) |
|
|
(20,113 |
) |
|
|
(3,675 |
) |
|
|
(7,169 |
) |
|
|
(63,302 |
) |
Exchange adjustments |
|
|
|
|
|
|
(13 |
) |
|
|
|
|
|
|
(4 |
) |
|
|
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
47,254 |
|
|
|
27,831 |
|
|
|
6,426 |
|
|
|
19,698 |
|
|
|
101,209 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
amortisation and
Impairment losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2009 |
|
|
(59,546 |
) |
|
|
(28,874 |
) |
|
|
(8,808 |
) |
|
|
(14,229 |
) |
|
|
(111,457 |
) |
Charge for the year |
|
|
|
|
|
|
(401 |
) |
|
|
(149 |
) |
|
|
(1,409 |
) |
|
|
(1,959 |
) |
Disposals / retirements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
25 |
|
Exchange adjustments |
|
|
|
|
|
|
(10 |
) |
|
|
|
|
|
|
(3 |
) |
|
|
(13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
(59,546 |
) |
|
|
(29,285 |
) |
|
|
(8,957 |
) |
|
|
(15,616 |
) |
|
|
(113,404 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At January 1, 2010 |
|
|
(59,546 |
) |
|
|
(29,285 |
) |
|
|
(8,957 |
) |
|
|
(15,616 |
) |
|
|
(113,404 |
) |
Charge for the year |
|
|
|
|
|
|
(297 |
) |
|
|
(86 |
) |
|
|
(1,206 |
) |
|
|
(1,589 |
) |
Disposals / retirements |
|
|
30,120 |
|
|
|
11,824 |
|
|
|
3,184 |
|
|
|
5,904 |
|
|
|
51,032 |
|
Exchange adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
(29,426 |
) |
|
|
(17,758 |
) |
|
|
(5,859 |
) |
|
|
(10,918 |
) |
|
|
(63,961 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
17,828 |
|
|
|
10,073 |
|
|
|
567 |
|
|
|
8,780 |
|
|
|
37,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
20,053 |
|
|
|
12,785 |
|
|
|
1,136 |
|
|
|
10,848 |
|
|
|
44,822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included within disposals/retirements in 2010 are intangible assets with a net book value of
US$12,270,000, which were disposed of as part of the divestiture of the Coagulation business in May
2010 (see Note 3). |
|
|
Included within development costs are costs of US$8,682,000 which were not amortised in 2010 (2009:
US$4,564,000). These development costs are not being amortised as the projects to which the costs
relate were not fully complete at December 31, 2010 or at December 31, 2009. As at December 31,
2010 these projects are expected to be completed during the period from January 1, 2011 to December
31, 2013 at an expected further cost of approximately US$6.5 million. |
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
12. |
|
GOODWILL AND INTANGIBLE ASSETS (CONTINUED) |
|
|
The following represents the costs incurred during each period presented for each of the principal
development projects: |
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
2009 |
|
Product Name |
|
US$000 |
|
|
US$000 |
|
Premier Hb 9210 Instrument for Haemoglobin A1c testing |
|
|
2,569 |
|
|
|
1,023 |
|
Destiny Max coagulation instrument* |
|
|
956 |
|
|
|
3,234 |
|
Bordetella Pertussis Western Blot test |
|
|
337 |
|
|
|
156 |
|
Tristat point of care instrument |
|
|
318 |
|
|
|
1,072 |
|
Coagulation assays and intermediates* |
|
|
312 |
|
|
|
1,010 |
|
HIV Ag-Ab rapid test |
|
|
247 |
|
|
|
|
|
Legionella Urinary Antigen |
|
|
198 |
|
|
|
|
|
Syphilis Rapid point-of-care test |
|
|
185 |
|
|
|
|
|
Unigold Recombigen HIV Rapid enhancement |
|
|
142 |
|
|
|
456 |
|
Lyme assays |
|
|
|
|
|
|
629 |
|
Trinblot Scanner |
|
|
|
|
|
|
72 |
|
Other projects with spend less than $150,000 |
|
|
623 |
|
|
|
193 |
|
|
|
|
|
|
|
|
Total capitalized development costs |
|
|
5,887 |
|
|
|
7,845 |
|
|
|
|
|
|
|
|
|
|
|
* |
|
Note that these projects ceased in May 2010 following the divestiture of the Coagulation
Business. |
|
|
All of the development projects for which costs have been capitalized are judged to be technically
feasible, commercially viable and likely to produce future economic benefits. In reaching this
conclusion, many factors have been considered including the following: |
|
(a) |
|
The Group only develops products within its field of expertise. The R&D team is
experienced in developing new products in this field and this experience means that only
products which have a high probability of technical success are put forward for
consideration as potential new products. |
|
(b) |
|
A technical feasibility study is undertaken in advance of every project. The feasibility
study for each project is reviewed by the R&D team leader, and by other senior management
depending on the size of the project. The feasibility study occurs in the initial research
phase of the project and costs in this phase are not capitalized. |
|
(c) |
|
Nearly all of our new product developments involve the transfer of our existing product
know-how to a new application. The Group does not engage in pure research. Every development
project is undertaken with the intention of bringing a particular new product to market for
which there is a known demand. |
|
(d) |
|
The commercial feasibility of each new product is established prior to commencement of a
project by ensuring it is projected to achieve an acceptable income after applying
appropriate discount rates. |
|
|
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. |
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
12. |
|
GOODWILL AND INTANGIBLE ASSETS (CONTINUED) |
|
|
Included in other intangibles are the following indefinite lived assets: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Fitzgerald trade name |
|
|
970 |
|
|
|
970 |
|
RDI trade name |
|
|
560 |
|
|
|
560 |
|
Primus trade name |
|
|
670 |
|
|
|
670 |
|
|
|
|
|
|
|
|
|
|
|
2,200 |
|
|
|
2,200 |
|
|
|
|
|
|
|
|
|
|
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 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. |
|
|
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 market sector (namely diagnostics) and accordingly the key assumptions
are similar for all CGUs. The value in use calculations use cash flow projections based on the
2011 budget and projections for a further four years using projected revenue and cost growth rates
of between 3% and 5%. At the end of the five year forecast period, terminal values for each CGU,
based on a long term growth rate 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 18% to
32%. |
|
|
The value in use calculation is 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, the following impairment loss/write back would be recorded at
December 31, 2010: |
|
|
|
No impairment loss or reversal of impairment in the event of a 10% increase in the
growth in revenues. |
|
|
|
No impairment loss or reversal of impairment in the event of a 10% decrease in the
growth in revenues. |
|
|
Similarly if there was a 10% variation in the discount rate used to calculate the potential
impairment of the carrying values, which would represent a reasonably likely range of outcomes,
there would be the following impairment loss/write back would be recorded at December 31, 2010: |
|
|
|
No impairment loss or reversal of impairment in the event of a 10% decrease in the
discount rate |
|
|
|
No impairment loss or reversal of impairment in the event of a 10% increase in the
discount rate |
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
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 |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
2,369 |
|
|
|
3,869 |
|
|
|
(581 |
) |
|
|
(1,187 |
) |
|
|
1,788 |
|
|
|
2,682 |
|
Intangible assets |
|
|
|
|
|
|
|
|
|
|
(6,031 |
) |
|
|
(6,343 |
) |
|
|
(6,031 |
) |
|
|
(6,343 |
) |
Inventories |
|
|
955 |
|
|
|
1,253 |
|
|
|
|
|
|
|
|
|
|
|
955 |
|
|
|
1,253 |
|
Provisions |
|
|
294 |
|
|
|
118 |
|
|
|
|
|
|
|
|
|
|
|
294 |
|
|
|
118 |
|
Other items |
|
|
216 |
|
|
|
|
|
|
|
(578 |
) |
|
|
(680 |
) |
|
|
(362 |
) |
|
|
(680 |
) |
Tax value of loss carryforwards
recognised |
|
|
846 |
|
|
|
561 |
|
|
|
|
|
|
|
|
|
|
|
846 |
|
|
|
561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets/(liabilities) |
|
|
4,680 |
|
|
|
5,801 |
|
|
|
(7,190 |
) |
|
|
(8,210 |
) |
|
|
(2,510 |
) |
|
|
(2,409 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The deferred tax asset in 2010 is due mainly to deductible temporary differences relating to
property, plant and equipment, inventory and the elimination of unrealised intercompany inventory
profit. The deferred tax asset decreased US$1,121,000 in 2010 principally due to a decrease in
unrecognised deferred tax assets. The accounting policy for deferred tax is to calculate the
deferred tax asset that is deemed recoverable, considering all sources for future taxable profits.
However when there is a reversing deferred tax liability in that jurisdiction that reverses in the
same period, the deferred tax asset is restricted so that it equals the reversing deferred tax
liability. |
|
|
The deferred tax assets in
Germany and UK were derecognised in 2010 following the divestiture of the
German and UK subsidiaries to Diagnostica Stago (see Note 3 for further information on the
divestiture of these subsidiaries). At December 31, 2009, the Group recognised a deferred tax asset
of US$96,000 (2008: US$133,000) in respect of net operating loss carryforwards in Germany and the
UK, as there were sufficient taxable temporary differences relating to the same taxation authority
and the same taxable entity which would result in taxable amounts against which the unused tax
losses could be utilised before they expire. |
|
|
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 and the USA
and deferred tax recognised on fair value asset uplifts in connection with business combinations.
The deferred tax liability decreased US$1,020,000 in 2010, principally due to sale of property,
plant and equipment and intangible assets to Diagnostica Stago and the resulting elimination of the
temporary differences in respect of these assets. |
|
|
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, 2010 and at December 31, 2009 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, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Capital losses |
|
|
8,513 |
|
|
|
6,138 |
|
Net operating losses |
|
|
704 |
|
|
|
11,720 |
|
US state credit carryforwards |
|
|
358 |
|
|
|
346 |
|
Deductible temporary differences |
|
|
|
|
|
|
954 |
|
|
|
|
|
|
|
|
|
|
|
9,575 |
|
|
|
19,158 |
|
|
|
|
|
|
|
|
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
13. |
|
DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED) |
|
|
There was a decrease of US$9,583,000 in the unrecognised deferred tax assets during the year ended
December 31, 2010. For comments on the uncertainty prompting less than full recognition refer to
note 9. The movement in the unrecognised deferred tax assets during the year ended December 31,
2010 is analysed as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase/ |
|
|
Applicable |
|
|
|
|
|
|
(decrease) |
|
|
tax rate |
|
|
Tax effect |
|
Movement in Unrecognised deferred tax assets |
|
US$000 |
|
|
% |
|
|
US$000 |
|
Deductible temporary differences |
|
|
(954 |
) |
|
|
40.6 |
% |
|
|
(387 |
) |
Net operating losses Ireland |
|
|
414 |
|
|
|
25.0 |
% |
|
|
104 |
|
Net operating losses USA |
|
|
(7,569 |
) |
|
|
40.6 |
% |
|
|
(3,071 |
) |
Net operating losses France to date of divestiture |
|
|
(267 |
) |
|
|
33.0 |
% |
|
|
(89 |
) |
Net operating losses Germany to date of divestiture |
|
|
79 |
|
|
|
34.0 |
% |
|
|
26 |
|
US state credit carryforwards |
|
|
12 |
|
|
|
n/a |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,285 |
) |
|
|
|
|
|
|
(3,405 |
) |
Capital losses in Ireland |
|
|
2,375 |
|
|
|
25.0 |
% |
|
|
594 |
|
Net operating losses France eliminated on divestiture |
|
|
(2,341 |
) |
|
|
33.0 |
% |
|
|
(773 |
) |
Net operating losses Germany eliminated on divestiture |
|
|
(1,332 |
) |
|
|
34.0 |
% |
|
|
(453 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,583 |
) |
|
|
|
|
|
|
(4,037 |
) |
|
|
At December 31, 2009 net operating losses in the US of US$3,071,000 and temporary differences of
$954,000 also in the US were not recognised because recognition would have resulted in the deferred
tax asset exceeding the reversing deferred tax liability in the US. At December 31, 2010 the
deferred tax asset in the US is less than the reversing deferred tax liability and therefore no
restriction is required on the amount of net operating losses and temporary differences recognised
as deferred tax assets. |
|
|
A deferred tax asset of US$358,000 (2009: US$346,000) 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$177,000 (2009: US$73,000) in respect of net operating losses of
US$704,000 (2009: US$290,000) in Ireland was not recognised due to uncertainties regarding the
timing of the utilisation of these losses in the relevant entity in future periods. |
|
|
A deferred tax asset of US$772,000 (2009: US$861,000) in respect of net operating losses of
US$2,341,000 (2009: US$2,608,000) in France was not recognised up to the date of divestiture of
the Groups French subsidiary 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$453,000 (2009: US$427,000) in respect of net operating losses of
US$1,332,000 (2009: US$1,253,000) in Germany and UK was not recognised up to the date of
divestiture of the Groups German and UK subsidiaries due to uncertainties regarding the timing of
the utilisation of these losses in the related tax jurisdictions in future periods. |
|
|
No deferred tax asset is recognised in respect of a capital loss forward of US$8,513,000 (2009:
US$6,138,000) in Ireland as it is not probable that there will be future capital gains against
which to offset these capital losses. The increase in the capital loss in 2010 is due to the
divestiture of the assets and liabilities of the coagulation business in Ireland (see Note 3 for
further information). |
Unrecognised deferred tax liabilities
|
|
At December 31, 2010 and 2009, 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. |
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
13. |
|
DEFERRED TAX ASSETS AND LIABILITIES (CONTINUED) |
Movement in temporary differences during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
Balance |
|
|
Recognised in |
|
|
Recognised |
|
|
December 31, |
|
|
|
January, 1 2010 |
|
|
income |
|
|
in equity |
|
|
2010 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
2,682 |
|
|
|
(894 |
) |
|
|
|
|
|
|
1,788 |
|
Intangible assets |
|
|
(6,343 |
) |
|
|
312 |
|
|
|
|
|
|
|
(6,031 |
) |
Inventories |
|
|
1,253 |
|
|
|
(298 |
) |
|
|
|
|
|
|
955 |
|
Provisions |
|
|
118 |
|
|
|
176 |
|
|
|
|
|
|
|
294 |
|
Other items |
|
|
(680 |
) |
|
|
324 |
|
|
|
(6 |
) |
|
|
(362 |
) |
Tax value of loss
carryforwards recognised |
|
|
561 |
|
|
|
285 |
|
|
|
|
|
|
|
846 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,409 |
) |
|
|
(95 |
) |
|
|
(6 |
) |
|
|
(2,510 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
Balance |
|
|
Recognised in |
|
|
Recognised |
|
|
December 31, |
|
|
|
January, 1 2009 |
|
|
income |
|
|
in equity |
|
|
2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Property, plant and equipment |
|
|
400 |
|
|
|
2,282 |
|
|
|
|
|
|
|
2,682 |
|
Intangible assets |
|
|
(3,069 |
) |
|
|
(3,274 |
) |
|
|
|
|
|
|
(6,343 |
) |
Inventories |
|
|
1,214 |
|
|
|
39 |
|
|
|
|
|
|
|
1,253 |
|
Provisions |
|
|
255 |
|
|
|
(137 |
) |
|
|
|
|
|
|
118 |
|
Other items |
|
|
(419 |
) |
|
|
(264 |
) |
|
|
3 |
|
|
|
(680 |
) |
Tax value of loss
carryforwards recognised |
|
|
297 |
|
|
|
264 |
|
|
|
|
|
|
|
561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,322 |
) |
|
|
(1,090 |
) |
|
|
3 |
|
|
|
(2,409 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
Deferred Consideration |
|
|
11,138 |
|
|
|
|
|
Finance lease receivables (see note 16) |
|
|
412 |
|
|
|
1,106 |
|
Other assets |
|
|
73 |
|
|
|
106 |
|
|
|
|
|
|
|
|
|
|
|
11,623 |
|
|
|
1,212 |
|
|
|
|
|
|
|
|
|
|
The deferred consideration arises as a result of the sale of the coagulation business (see note 3)
and comprises US$11,250,000 of a receivable due from Diagnostica Stago in May 2012 shown net of
US$112,000 of deferred interest income. A further US$11,250,000 (net US$10,804,000) is receivable
in May 2011 and, as this falls due within one year, it is shown in Note 16, Trade and Other
Receivables. |
|
|
The Group leases instruments as part of its business. For details of future minimum finance lease
receivables with non-cancellable terms, please refer to note 16. |
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
Raw materials and consumables |
|
|
4,516 |
|
|
|
9,191 |
|
Work-in-progress |
|
|
4,676 |
|
|
|
10,478 |
|
Finished goods |
|
|
8,384 |
|
|
|
19,529 |
|
|
|
|
|
|
|
|
|
|
|
17,576 |
|
|
|
39,198 |
|
|
|
|
|
|
|
|
|
|
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$6,400,000 (2009: US$12,566,000). Note 3 outlines the net
inventories which were transferred to Diagnostica Stago during the year as part of the divestiture
of the Coagulation business. |
|
|
The movement on the inventory provision for the three year period to December 31, 2010 is as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Opening provision at January 1 |
|
|
12,566 |
|
|
|
16,461 |
|
|
|
18,234 |
|
Charged during the year |
|
|
3,006 |
|
|
|
2,064 |
|
|
|
1,570 |
|
Utilised during the year |
|
|
(8,440 |
) |
|
|
(4,751 |
) |
|
|
(2,182 |
) |
Released during the year |
|
|
(732 |
) |
|
|
(1,208 |
) |
|
|
(1,161 |
) |
|
|
|
|
|
|
|
|
|
|
Closing provision at December 31 |
|
|
6,400 |
|
|
|
12,566 |
|
|
|
16,461 |
|
|
|
|
|
|
|
|
|
|
|
16. |
|
TRADE AND OTHER RECEIVABLES |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
Trade receivables, net of impairment losses |
|
|
11,762 |
|
|
|
20,120 |
|
Deferred consideration |
|
|
10,804 |
|
|
|
|
|
Prepayments |
|
|
2,331 |
|
|
|
1,798 |
|
Value added tax |
|
|
204 |
|
|
|
67 |
|
Finance lease receivables |
|
|
229 |
|
|
|
692 |
|
Other receivables |
|
|
199 |
|
|
|
254 |
|
|
|
|
|
|
|
|
|
|
|
25,529 |
|
|
|
22,931 |
|
|
|
|
|
|
|
|
|
|
The deferred consideration arises as a result of the sale of the coagulation business (see note 3)
and comprises US$11,250,000 of a receivable due from Diagnostica Stago in May 2011 shown net of
US$446,000 of deferred interest income. A further US$11,250,000 (net US$11,138,000) is receivable
in May 2012 and, as this falls due after one year, it is shown in Note 14, Other Assets. |
|
|
Trade receivables are shown net of an impairment losses provision of US$1,443,000 (2009:
US$855,000) (see note 27). |
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
16. |
|
TRADE AND OTHER RECEIVABLES (CONTINUED) |
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, 2010 |
|
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
Minimum |
|
|
|
Gross |
|
|
Unearned |
|
|
Payments |
|
|
|
investment |
|
|
income |
|
|
receivable |
|
Less than one year |
|
|
367 |
|
|
|
138 |
|
|
|
229 |
|
Between one and five years (note 14) |
|
|
628 |
|
|
|
216 |
|
|
|
412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
995 |
|
|
|
354 |
|
|
|
641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
Minimum |
|
|
|
Gross |
|
|
Unearned |
|
|
payments |
|
|
|
investment |
|
|
income |
|
|
receivable |
|
Less than one year |
|
|
1,002 |
|
|
|
310 |
|
|
|
692 |
|
Between one and five years (note 14) |
|
|
1,559 |
|
|
|
453 |
|
|
|
1,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,561 |
|
|
|
763 |
|
|
|
1,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
In 2010, the Group classified future minimum lease receivables between one and five years of
US$412,000 (2009: US$1,106,000) 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, 2010 |
|
|
|
US$000 |
|
|
|
Land and |
|
|
|
|
|
|
|
|
|
buildings |
|
|
Instruments |
|
|
Total |
|
Less than one year |
|
|
209 |
|
|
|
1,759 |
|
|
|
1,968 |
|
Between one and five years |
|
|
838 |
|
|
|
689 |
|
|
|
1,527 |
|
More than five years |
|
|
157 |
|
|
|
|
|
|
|
157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,204 |
|
|
|
2,448 |
|
|
|
3,652 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
|
Land and |
|
|
|
|
|
|
|
|
|
buildings |
|
|
Instruments |
|
|
Total |
|
Less than one year |
|
|
228 |
|
|
|
1,992 |
|
|
|
2,220 |
|
Between one and five years |
|
|
911 |
|
|
|
852 |
|
|
|
1,763 |
|
More than five years |
|
|
399 |
|
|
|
|
|
|
|
399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,538 |
|
|
|
2,844 |
|
|
|
4,382 |
|
|
|
|
|
|
|
|
|
|
|
104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
17. |
|
CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Cash at bank and in hand |
|
|
2,449 |
|
|
|
4,711 |
|
Short-term deposits |
|
|
55,553 |
|
|
|
1,367 |
|
|
|
|
|
|
|
|
Cash and cash equivalents in the statements of cash flows |
|
|
58,002 |
|
|
|
6,078 |
|
|
|
|
|
|
|
|
|
|
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 six months, which are not restricted.
See note 25 (c). |
Share capital
|
|
|
|
|
|
|
|
|
|
|
Class A Ordinary shares |
|
|
Class A Ordinary shares |
|
In thousands of shares |
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
In issue at January 1 |
|
|
82,952 |
|
|
|
82,017 |
|
Issued for cash |
|
|
1,165 |
|
|
|
935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In issue at December 31 |
|
|
84,117 |
|
|
|
82,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Ordinary shares |
|
|
Class B Ordinary shares |
|
In thousands of shares |
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
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 (2009:
200,000,000 A ordinary shares of US$0.0109 each) and 700,000 B ordinary shares of US$0.0109
each (2009: 700,000 B ordinary shares of US$0.0109 each) as at December 31, 2010. |
(a) |
|
During 2010, the Group issued 1,165,000 A Ordinary shares from the exercise of warrants and
employee options for a consideration of US$1,023,000 settled in cash. The Group incurred
costs of US$64,000 in connection with the issue of shares. |
(b) |
|
During 2009, the Group issued 935,000 A Ordinary shares from the exercise of employee
options for a consideration of US$897,000 settled in cash. The Group incurred costs of
US$68,000 in connection with the issue of shares. |
(c) |
|
Since its incorporation the Group has not declared or paid dividends on its A Ordinary
Shares or B Ordinary Shares. In 2011 the Company announced that it intended to commence a
dividend policy, to be paid once a year. In this regard, the Board have proposed a final
dividend of 10 cent per ADR in respect of 2010 and this proposal will be submitted to
shareholders for their approval at the next Annual General Meeting of the Company. As
provided in the Articles of Association of the Company, dividends or other distributions are
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. |
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
18. |
|
CAPITAL AND RESERVES (CONTINUED) |
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 with IFRS 2, 3,477,068 warrants with a fair value of US$4,529,000 (2009: 3,437,068
warrants with a fair value of US$4,498,000) have been classified as a separate reserve. There were
no new warrants issued by the Group in 2009. |
|
|
The following input assumptions were made to fair value the warrants issued by the Group during
2010: |
|
|
|
|
|
Fair value at date of measurement |
|
US$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
Share price |
|
US$ |
1.50 |
|
Exercise price |
|
US$ |
1.50 |
|
Expected volatility |
|
|
72.65 |
% |
Contractual life |
|
7 years |
|
Risk free rate |
|
|
1.62 |
% |
Expected dividend yield |
|
|
|
|
|
|
The following input assumptions were made to fair value the warrants issued by the Group during
2008: |
|
|
|
|
|
Fair value at date of measurement |
|
US$ |
0.32 |
|
|
|
|
|
|
|
|
|
|
Share price |
|
US$ |
0.91 |
|
Exercise price |
|
US$ |
1.39 |
|
Expected volatility |
|
|
51.31 |
% |
Contractual life |
|
5 years |
|
Risk free rate |
|
|
2.57 |
% |
Expected dividend yield |
|
|
|
|
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. |
19. |
|
SHARE OPTIONS AND SHARE WARRANTS |
Warrants
|
|
The Company granted warrants to purchase 2,178,244 Class A Ordinary Shares (vesting immediately)
in April 2008. These warrants were issued at an exercise price of US$1.39 and have a term of five
years. |
|
|
The Company granted warrants to purchase 40,000 Class A Ordinary Shares (vesting immediately) in
April 2010. These warrants were issued at an exercise price of US$1.50 and have a seven year life. |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
|
|
|
|
Outstanding at beginning of year |
|
|
2,178,244 |
|
|
|
3,437,068 |
|
Granted |
|
|
40,000 |
|
|
|
|
|
Exercised |
|
|
(546,000 |
) |
|
|
|
|
Forfeited |
|
|
|
|
|
|
(1,258,824 |
) |
|
|
|
|
|
|
|
Outstanding at end of year |
|
|
1,672,244 |
|
|
|
2,178,244 |
|
|
|
|
|
|
|
|
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
19. |
|
SHARE OPTIONS AND SHARE WARRANTS (CONTINUED) |
Options
|
|
Under the terms of the Companys Employee Share Option Plans, options to purchase 9,281,427
(excluding warrants of 1,672,244) A Ordinary Shares were outstanding at December 31, 2010. Under
the Plans, 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. |
|
|
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 three to four year
period. There are no market conditions associated with the share option grants. |
Contractual life
|
|
The term of an option is 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, 2008 |
|
|
9,068,119 |
|
|
|
2.36 |
|
|
|
0.98 - 5.25 |
|
Granted |
|
|
4,378,244 |
|
|
|
1.14 |
|
|
|
0.74 - 1.66 |
|
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(1,635,249 |
) |
|
|
1.58 |
|
|
|
0.74 - 4.50 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year |
|
|
11,811,114 |
|
|
|
2.01 |
|
|
|
0.74 - 5.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year |
|
|
8,670,013 |
|
|
|
2.27 |
|
|
|
0.74 - 5.25 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2009 |
|
|
11,811,114 |
|
|
|
2.01 |
|
|
|
0.74 - 5.25 |
|
Granted |
|
|
2,220,000 |
|
|
|
0.66 |
|
|
|
0.66 - 0.66 |
|
Exercised |
|
|
(934,456 |
) |
|
|
0.96 |
|
|
|
0.74 - 1.07 |
|
Forfeited |
|
|
(2,447,948 |
) |
|
|
3.52 |
|
|
|
0.87 - 5.25 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year |
|
|
10,648,710 |
|
|
|
1.48 |
|
|
|
0.66 - 4.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year |
|
|
6,915,952 |
|
|
|
1.84 |
|
|
|
0.74 - 4.00 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2010 |
|
|
10,648,710 |
|
|
|
1.48 |
|
|
|
0.66 - 4.00 |
|
Granted |
|
|
3,760,000 |
|
|
|
1.47 |
|
|
|
0.97 - 2.00 |
|
Exercised |
|
|
(1,410,156 |
) |
|
|
1.02 |
|
|
|
0.66 - 1.78 |
|
Forfeited |
|
|
(2,044,883 |
) |
|
|
1.96 |
|
|
|
0.87 - 4.00 |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year |
|
|
10,953,671 |
|
|
|
1.44 |
|
|
|
0.66 - 4.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year |
|
|
5,226,413 |
|
|
|
1.70 |
|
|
|
0.66 - 4.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average share price per A Ordinary share at the date of exercise for options
exercised in 2010 was US$1.65 (2009: US$1.05). There were no share options exercised in 2008. |
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
19. |
|
SHARE OPTIONS AND SHARE WARRANTS (CONTINUED) |
|
|
The opening share price per A Ordinary share at the start of the financial year was US$1.04
(2009: US$0.40) (2008: US$1.68) and the closing share price at December 31, 2010 was US$2.20 (2009:
US$1.01) (2008: US$0.40). The average share price for the year ended December 31, 2010 was US$1.54. |
|
|
A summary of the range of prices for the Companys stock options and warrants for the year ended
December 31, 2010 follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
Exercisable |
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
Weighted- |
|
|
life |
|
|
|
|
|
|
Weighted- |
|
|
life |
|
|
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
Exercise price range |
|
options/warrants |
|
|
price |
|
|
(years) |
|
|
options/warrants |
|
|
price |
|
|
(years) |
|
US$0.66-US$0.99 |
|
|
2,761,677 |
|
|
|
0.72 |
|
|
|
5.21 |
|
|
|
638,336 |
|
|
|
0.72 |
|
|
|
4.88 |
|
US$1.00-US$2.05 |
|
|
6,430,244 |
|
|
|
1.48 |
|
|
|
4.47 |
|
|
|
2,847,744 |
|
|
|
1.47 |
|
|
|
2.39 |
|
US$2.06-US$2.99 |
|
|
1,733,250 |
|
|
|
2.41 |
|
|
|
1.59 |
|
|
|
1,711,833 |
|
|
|
2.41 |
|
|
|
1.57 |
|
US$3.00-US$4.00 |
|
|
28,500 |
|
|
|
3.27 |
|
|
|
0.69 |
|
|
|
28,500 |
|
|
|
3.27 |
|
|
|
0.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,953,671 |
|
|
|
|
|
|
|
|
|
|
|
5,226,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average remaining contractual life of options and warrants outstanding at December 31,
2009 was 4.19 years (2009: 3.88 years). |
|
|
A summary of the range of prices for the Companys stock options and warrants for the year ended
December 31, 2009 follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding |
|
|
Exercisable |
|
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
avg |
|
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
|
|
|
contractual |
|
|
|
|
|
|
|
Weighted- |
|
|
life |
|
|
|
|
|
|
Weighted- |
|
|
life |
|
|
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
|
No. of |
|
|
avg exercise |
|
|
remaining |
|
Exercise price range |
|
options |
|
|
price |
|
|
(years) |
|
|
options |
|
|
price |
|
|
(years) |
|
US$0.66-US$0.99 |
|
|
3,275,000 |
|
|
US$ |
0.70 |
|
|
|
6.12 |
|
|
|
196,666 |
|
|
US$ |
0.74 |
|
|
|
5.72 |
|
US$1.00-US$2.05 |
|
|
4,666,294 |
|
|
US$ |
1.47 |
|
|
|
3.02 |
|
|
|
4,141,040 |
|
|
US$ |
1.51 |
|
|
|
2.76 |
|
US$2.06-US$2.99 |
|
|
2,551,916 |
|
|
US$ |
2.38 |
|
|
|
2.74 |
|
|
|
2,422,746 |
|
|
US$ |
2.39 |
|
|
|
2.66 |
|
US$3.00-US$5.25 |
|
|
155,500 |
|
|
US$ |
3.21 |
|
|
|
1.37 |
|
|
|
155,500 |
|
|
US$ |
3.21 |
|
|
|
1.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,648,710 |
|
|
|
|
|
|
|
|
|
|
|
6,915,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The recognition and measurement principles of IFRS 2 have been applied to share options granted
under the Companys Share Option Plans since November 7, 2002 which have not vested by January 1,
2005 in accordance with IFRS 2. |
108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
19. |
|
SHARE OPTIONS AND SHARE WARRANTS (CONTINUED) |
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$1,109,000 was
charged to the statement of operations in 2010, (2009: US$521,000), (2008: US$1,166,000) split as
follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Share-based payments cost of sales |
|
|
29 |
|
|
|
19 |
|
|
|
51 |
|
Share-based payments research and development |
|
|
31 |
|
|
|
15 |
|
|
|
48 |
|
Share-based payments selling, general and
administrative |
|
|
1,049 |
|
|
|
487 |
|
|
|
1,067 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,109 |
|
|
|
521 |
|
|
|
1,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The total share based payments charge for the year was US$1,240,000. However, a total of US$131,000
(2009: US$78,000) (2008: US$27,000) of research and development share based payments were
capitalised in intangible development project assets during the year. |
|
|
The fair value of services received in return for share options granted are measured by reference
to the fair value of share options granted. The estimate of the fair value of services received is
measured based on a trinomial model. The following are the input assumptions used in determining
the fair value of share options granted in 2010, 2009 and 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key |
|
|
|
|
|
|
Key |
|
|
|
|
|
|
Key |
|
|
|
|
|
|
management |
|
|
Other |
|
|
management |
|
|
Other |
|
|
management |
|
|
Other |
|
|
|
personnel |
|
|
employees |
|
|
personnel |
|
|
employees |
|
|
personnel |
|
|
employees |
|
|
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2009 |
|
|
2008 |
|
|
2008 |
|
Weighted average
fair value at
measurement date |
|
US$ |
0.86 |
|
|
US$ |
0.72 |
|
|
US$ |
0.38 |
|
|
|
|
|
|
US$ |
0.47 |
|
|
US$ |
0.39 |
|
Total share options
granted |
|
|
2,500,000 |
|
|
|
1,220,000 |
|
|
|
2,220,000 |
|
|
|
|
|
|
|
1,665,000 |
|
|
|
535,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
share price |
|
US$ |
1.53 |
|
|
US$ |
1.34 |
|
|
US$ |
0.66 |
|
|
|
|
|
|
US$ |
0.89 |
|
|
US$ |
0.92 |
|
Weighted average
exercise price |
|
US$ |
1.53 |
|
|
US$ |
1.34 |
|
|
US$ |
0.66 |
|
|
|
|
|
|
US$ |
0.89 |
|
|
US$ |
0.92 |
|
Weighted average
expected volatility |
|
|
64.86 |
% |
|
|
68.97 |
% |
|
|
63.31 |
% |
|
|
|
|
|
|
51.61 |
% |
|
|
46.79 |
% |
Weighted average
expected life |
|
|
5.34 |
|
|
|
4.33 |
|
|
5.73 years |
|
|
|
|
|
|
6.36 years |
|
|
4.60 years |
|
Weighted average
risk free interest
rate |
|
|
2.04 |
% |
|
|
1.78 |
% |
|
|
2.47 |
% |
|
|
|
|
|
|
2.77 |
% |
|
|
3.28 |
% |
Expected dividend
yield |
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
|
|
|
|
|
|
0 |
% |
|
|
0 |
% |
|
|
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. |
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
20. |
|
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 27. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
Note |
|
|
US$000 |
|
|
US$000 |
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease liabilities |
|
|
|
|
|
|
162 |
|
|
|
791 |
|
Bank loans, secured |
|
|
25 |
(c) |
|
|
|
|
|
|
|
|
- Repayable by instalment |
|
|
|
|
|
|
|
|
|
|
4,890 |
|
- Repayable not by instalment |
|
|
|
|
|
|
|
|
|
|
6,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
162 |
|
|
|
12,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease liabilities |
|
|
|
|
|
|
111 |
|
|
|
1,470 |
|
Bank loans, secured |
|
|
25 |
(c) |
|
|
|
|
|
|
|
|
- Repayable by instalment |
|
|
|
|
|
|
|
|
|
|
17,761 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111 |
|
|
|
19,231 |
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans
|
|
During 2010 the Group repaid in full all outstanding bank loans following the receipt of the
proceeds from the sale of the Coagulation business (for further information, please refer to note
3). Before the repayment of these loans, Trinity Biotech had a US$48,340,000 club banking facility
with Allied Irish Bank plc and Bank of Scotland (Ireland) Limited (the banks). This facility
consisted of a US Dollar floating interest rate term loan of US$41,340,000 and a one year revolver
of US$7,000,000. Various covenants applied to these Group bank borrowings. At December 31, 2010,
the total amount outstanding under this facility amounted to US$NIL (2009: US$29,327,000, net of
unamortised funding costs of US$180,000). |
Finance lease liabilities
|
|
Finance lease liabilities are payable as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
|
US$000 |
|
|
|
Minimum |
|
|
|
|
|
|
|
|
|
lease |
|
|
|
|
|
|
|
|
|
payments |
|
|
Interest |
|
|
Principal |
|
Less than one year |
|
|
172 |
|
|
|
10 |
|
|
|
162 |
|
In more than one year, but not more than two |
|
|
113 |
|
|
|
2 |
|
|
|
111 |
|
In more than two years but not more than five |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
285 |
|
|
|
12 |
|
|
|
273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
|
Minimum |
|
|
|
|
|
|
|
|
|
lease |
|
|
|
|
|
|
|
|
|
payments |
|
|
Interest |
|
|
Principal |
|
Less than one year |
|
|
909 |
|
|
|
118 |
|
|
|
791 |
|
In more than one year, but not more than two |
|
|
904 |
|
|
|
66 |
|
|
|
838 |
|
In more than two years but not more than five |
|
|
665 |
|
|
|
32 |
|
|
|
633 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,478 |
|
|
|
216 |
|
|
|
2,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Under the terms of the lease arrangements, no contingent rents are payable. |
110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
20. |
|
INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED) |
Terms and debt repayment schedule
|
|
The terms and conditions of outstanding interest bearing loans and borrowings at December 31, 2010
are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interest |
|
|
Year of |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
Facility |
|
Currency |
|
|
rate |
|
|
maturity |
|
|
Value |
|
|
Value |
|
|
Value |
|
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed bank loans |
|
USD |
|
|
5.00% - 6.00 |
% |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
268 |
|
|
|
268 |
|
Floating (LIBOR) bank
loans |
|
USD |
|
|
2.53 |
% |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
29,327 |
|
|
|
29,327 |
|
Finance lease liabilities |
|
Euro |
|
|
5.16 |
% |
|
|
2010 -2012 |
|
|
|
273 |
|
|
|
273 |
|
|
|
2,268 |
|
|
|
2,257 |
|
Finance lease liabilities |
|
GBP |
|
|
7.72 |
% |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing
loans and borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
273 |
|
|
|
273 |
|
|
|
31,868 |
|
|
|
31,857 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21. |
|
TRADE AND OTHER PAYABLES |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
Trade payables |
|
|
3,267 |
|
|
|
3,693 |
|
Payroll taxes |
|
|
74 |
|
|
|
424 |
|
Employee related social insurance |
|
|
85 |
|
|
|
485 |
|
Accrued liabilities |
|
|
7,379 |
|
|
|
6,926 |
|
Deferred income |
|
|
642 |
|
|
|
1,316 |
|
|
|
|
|
|
|
|
|
|
|
11,447 |
|
|
|
12,844 |
|
|
|
|
|
|
|
|
|
|
Included within accrued liabilities is an amount of US$89,000 which relates to termination costs
associated with the restructuring announced in 2010 (see note 7). |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
Provisions |
|
|
50 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
Movement on provisions during the year is as follows: |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
Balance at January 1 |
|
|
50 |
|
|
|
50 |
|
Provisions released during the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31 |
|
|
50 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
During 2010 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, 2010 represents the estimated cost of product warranties, the exact
amount which cannot be determined. US$50,000 represents managements best estimate of these
obligations at December 31, 2010. |
111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
23. |
|
OTHER PAYABLES DUE AFTER ONE YEAR |
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Other payables |
|
|
30 |
|
|
|
59 |
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
59 |
|
|
|
|
|
|
|
|
24. |
|
BUSINESS COMBINATIONS |
Acquisitions 2008 2010
|
|
There were no acquisitions made by the Group between 2008 and 2010. |
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. |
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
24. |
|
BUSINESS COMBINATIONS (CONTINUED) |
|
|
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. |
|
|
The following represents the increases to goodwill which took place in 2007. |
|
|
|
|
|
|
|
US$000 |
|
Goodwill recognised with respect to 2007 acquisitions |
|
|
|
|
- Cortex |
|
|
2,035 |
|
- Sterilab |
|
|
905 |
|
Goodwill recognised with respect to 2006 acquisitions |
|
|
|
|
- bioMerieux |
|
|
42 |
|
|
|
|
|
Total goodwill movement in 2007 |
|
|
2,982 |
|
|
|
|
|
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
25. |
|
COMMITMENTS AND CONTINGENCIES |
|
|
The Group has no capital commitments authorised and contracted for as at December 31, 2010 (2009:
US$Nil). |
|
|
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$2,411,000 (2009: US$4,289,000) payable on leases of buildings at Dublin and Bray, Ireland,
Jamestown, New York, Kansas City, Missouri, Acton, Massachusetts and Carlsbad, California.
US$42,000 (2009: US$415,000) of these operating lease commitments relates to leases whose
remaining term will expire within one year, US$172,000 (2009: US$406,000) relates to leases whose
remaining term expires between one and two years, US$345,000 (2009: US$395,000) between two and
five years and the balance of US$1,852,000 (2009: US$3,073,000) relates to leases which expire
after more than five years. See note 26 for related party leasing arrangements. |
|
|
|
Future minimum operating lease commitments with non-cancellable terms in excess of one year are as follows: |
|
|
|
|
|
|
|
Year ended |
|
|
|
2010 |
|
|
|
Operating leases |
|
|
|
US$000 |
|
|
|
|
|
|
2011 |
|
|
2,411 |
|
2012 |
|
|
2,299 |
|
2013 |
|
|
2,228 |
|
2014 |
|
|
2,221 |
|
2015 |
|
|
2,099 |
|
Later years |
|
|
25,298 |
|
|
|
|
|
|
|
|
|
|
Total lease obligations |
|
|
36,556 |
|
|
|
|
|
|
|
|
Year ended |
|
|
|
2009 |
|
|
|
Operating leases |
|
|
|
US$000 |
|
|
|
|
|
|
2010 |
|
|
4,289 |
|
2011 |
|
|
3,743 |
|
2012 |
|
|
3,486 |
|
2013 |
|
|
3,482 |
|
2014 |
|
|
3,317 |
|
Later years |
|
|
35,503 |
|
|
|
|
|
|
|
|
|
|
Total lease obligations |
|
|
53,820 |
|
|
|
For future minimum finance lease commitments, in respect of which the lessor has a charge over the
related assets, see note 20. |
|
|
The Group repaid in full its bank borrowings in May 2010. In 2009 the Groups bank borrowings
(note 20) were 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. These charges were
released following the repayment of the loans in May 2010. |
114
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
25. |
|
COMMITMENTS AND CONTINGENCIES (CONTINUED) |
(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 Research Limited,
Benen Trading Limited and Trinity Biotech Financial Services Limited subsidiary undertakings in the
Republic of Ireland, for the financial year to December 31, 2010 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 guarantees with third parties. |
(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, 2010. However if the income were
to become repayable, the maximum amounts repayable as at December 31, 2010 would amount to
US$3,373,000 (2009: US$3,646,000). |
|
|
In 2010, Laboratoires Nephrotek, formerly a distributor for Trinity Biotech, took a legal action in
France against the Group, claiming damages of US$0.8 million. They claim that certain instruments
supplied by Trinity Biotech did not operate properly in the field. No court hearings have occurred
in relation to this case yet. Trinity Biotech will be defending the claim. There are also a small
number of legal cases being brought against the Group by certain of its former employees in the
previously owned French subsidiary, Trinity Biotech France S.à.r.l. The ultimate resolution of the
aforementioned proceedings is not expected to have a material adverse effect on our financial
position, results of operations or cash flows. |
26. |
|
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$254,000). 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$367,000). The lease on this property was assigned to Diagnostica Stago in May,
2010 following the divestiture of the Coagulation business. |
|
|
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$509,000) is payable from January 1, 2004. There was a rent review
performed on this premises in 2009 and further to this review, there was no change to the annual
rental charge. |
|
|
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$1,051,000). |
|
|
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. |
115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
26. |
|
RELATED PARTY TRANSACTIONS (CONTINUED) |
Compensation of key management personnel of the Group
At December 31, 2010 the key management personnel of the Group were made up of four key personnel:
the three executive directors; Mr. Ronan OCaoimh, Mr. Rory Nealon and Dr. Jim Walsh and Mr. Kevin
Tansley, our Chief Financial Officer/Company Secretary. At December 31, 2009 the key management
personnel of the Group were made up of three key personnel: the two executive directors; Mr. Ronan
OCaoimh and Mr. Rory Nealon and the Chief Financial Officer/Company Secretary, Mr Kevin Tansley.
Compensation for the year ended December 31, 2010 of these personnel is detailed below:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Short-term employee benefits |
|
|
1,299 |
|
|
|
1,244 |
|
Performance related bonus |
|
|
1,050 |
|
|
|
|
|
Post-employment benefits |
|
|
155 |
|
|
|
136 |
|
Equity compensation benefits |
|
|
828 |
|
|
|
367 |
|
|
|
|
|
|
|
|
|
|
|
3,332 |
|
|
|
1,747 |
|
|
|
|
|
|
|
|
Total director emoluments charged to the statement of operations shown in note 6 is net of amounts
capitalised of US$137,000 and includes non executive directors fees and other compensation of
US$357,000 (2009: US$313,000) and equity compensation benefits of US$122,000 (2009: US$55,000) and
excludes the compensation costs of the Chief Financial Officer comprising total remuneration of
US$613,000 (2009: US$317,000) and equity compensation of US$221,000 (2009: US$107,000). Total
directors remuneration is also included in personnel expenses (note 7).
Directors and Company Secretarys interests in the Companys shares and share option plan
|
|
|
|
|
|
|
|
|
|
|
A Ordinary Shares |
|
|
Share options |
|
At January 1, 2010 |
|
|
5,671,106 |
|
|
|
5,667,086 |
|
Exercised |
|
|
|
|
|
|
(566,664 |
) |
Granted |
|
|
|
|
|
|
2,500,000 |
|
Expired Options |
|
|
|
|
|
|
(248,333 |
) |
Shares purchased/(sold) during the year |
|
|
(140,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2010 |
|
|
5,531,106 |
|
|
|
7,352,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A Ordinary Shares |
|
|
Share options |
|
At January 1, 2009 |
|
|
5,520,110 |
|
|
|
4,114,085 |
|
Exercised |
|
|
|
|
|
|
(471,955 |
) |
Granted |
|
|
|
|
|
|
2,220,000 |
|
Expired Options |
|
|
|
|
|
|
(195,044 |
) |
Shares purchased |
|
|
150,996 |
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009 |
|
|
5,671,106 |
|
|
|
5,667,086 |
|
|
|
|
|
|
|
|
Rayville Limited, an Irish registered company, which is wholly owned by the two 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.
There were no director loans advanced during 2010 or 2009.
116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
26. |
|
RELATED PARTY TRANSACTIONS (CONTINUED) |
In June 2009, the Board approved the payment of a dividend of $2,830,000 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. 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 2009 & 2010
consolidated financial statements.
The amount of payments to Rayville included in compensation expense was US$1,866,000, US$1,071,000
and US$2,149,000 for 2008, 2009 and 2010 respectively, of which US$1,610,000, US$887,000 and
US$1,431,000 respectively related to the key management personnel of the Group. There were no
dividends payable to Rayville Limited as of December 31, 2010 or 2009. Dividends payable to
Rayville at December 31, 2008 amounted to US$60,000. Of the US$2,149,000 of payments made to
Rayville Limited in 2010, US$565,000 represented repayments of the loan to Trinity Research Limited
referred to above.
27. |
|
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 utilization of these financial instruments are interest rate risk, liquidity
risk and credit risk.
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, |
|
|
|
|
|
Effective |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
interest |
|
|
Total |
|
|
6 mths or less |
|
|
6-12 mths |
|
|
1-2 years |
|
|
2-5 years |
|
US$000 |
|
Note |
|
|
rate |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
Cash and cash
equivalents |
|
|
17 |
|
|
|
3.24 |
% |
|
|
58,002 |
|
|
|
58,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Consideration |
|
|
14/16 |
|
|
|
3.1 |
% |
|
|
21,942 |
|
|
|
10,804 |
|
|
|
|
|
|
|
11,138 |
|
|
|
|
|
Secured bank loans
floating |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
fixed |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease
liabilities fixed |
|
|
20 |
|
|
|
5.08 |
% |
|
|
(273 |
) |
|
|
|
|
|
|
|
|
|
|
(273 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
79,671 |
|
|
|
68,806 |
|
|
|
|
|
|
|
10,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
27. |
|
DERIVATIVES AND FINANCIAL INSTRUMENTS (CONTINUED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at December 31, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
|
|
|
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 |
|
|
17 |
|
|
|
0.2 |
% |
|
|
6,078 |
|
|
|
6,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
floating |
|
|
20 |
|
|
|
2.53 |
% |
|
|
(29,327 |
) |
|
|
(29,327 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans
fixed |
|
|
20 |
|
|
|
6.00 |
% |
|
|
(268 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(268 |
) |
Finance lease
liabilities fixed |
|
|
20 |
|
|
|
6.61 |
% |
|
|
(2,261 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
(305 |
) |
|
|
(1,951 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
(25,778 |
) |
|
|
(23,254 |
) |
|
|
|
|
|
|
(305 |
) |
|
|
(2,219 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effective interest rate on all loans and borrowings is the same as the actual interest rates.
Interest rate risk
The Group borrows in US dollars. At December 31, 2010 all of the Group borrowings were at fixed
rates of interest. At December 31, 2009 Group borrowings were at both fixed and floating rates of
interest. Year-end borrowings totalled US$273,000 (2009: US$31,856,000), (net of cash: surplus of
US$57,729,000), (2009: deficit of US$25,778,000), at interest rates ranging from 5.02% to 5.29%
(2009: 2.53% to 6.61%).
Year-end borrowings consist entirely of fixed rate debt of US$273,000 (2009: US$2,529,000) at
interest rates ranging from 5.02% to 5.29% (2009: 6% to 6.61%). There was no floating rate debt at
December 31, 2010 (2009: US$29,327,000 at an interest rate of 2.53%). In broad terms, a
one-percentage point increase in interest rates would increase interest income by US$580,000 (2009:
US$61,000) and would not affect the interest expense in 2010 (2009: US$295,000) resulting in an
increase in interest income of US$580,000 (2009: increase in the charge of US$234,000).
Interest rate profile of financial liabilities
The interest rate profile of financial assets/liabilities of the Group were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
Fixed rate instruments |
|
|
|
|
|
|
|
|
Fixed rate financial liabilities |
|
|
(273 |
) |
|
|
(2,529 |
) |
Financial assets |
|
|
21,942 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable rate instruments |
|
|
|
|
|
|
|
|
Financial assets |
|
|
58,002 |
|
|
|
6,078 |
|
Floating rate financial liabilities |
|
|
|
|
|
|
(29,327 |
) |
|
|
|
|
|
|
|
|
|
|
79,671 |
|
|
|
(25,778 |
) |
|
|
|
|
|
|
|
Fixed rate financial liabilities 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, 2010 |
|
|
December 31, 2009 |
|
Fixed rate financial liabilities |
|
|
|
|
|
|
|
|
Weighted average interest rate |
|
|
5.08 |
% |
|
|
6.21 |
% |
Weighted average period for which rate is fixed |
|
1.59 years |
|
|
2.82 years |
|
Financial assets comprise of cash and cash equivalents at December 31, 2010 and at December 31,
2009 (see note 17) and deferred consideration at December 31, 2010 (see note 14 & 16).
Floating rate financial liabilities in 2009 comprise other borrowings that bore interest at a rate
of 2.53%. These borrowings were provided by lenders at a margin of 2.25% over inter-bank rates.
118
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
27. |
|
DERIVATIVES AND FINANCIAL INSTRUMENTS (CONTINUED) |
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, 2010 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/liabilities
and their fair values:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Loans and |
|
|
hedge |
|
|
Assets/(Liabilities) |
|
|
carrying |
|
|
Fair |
|
|
|
Note |
|
|
receivables |
|
|
derivatives |
|
|
at amortised cost |
|
|
amount |
|
|
Value |
|
December 31, 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables |
|
|
16 |
|
|
|
11,762 |
|
|
|
|
|
|
|
|
|
|
|
11,762 |
|
|
|
11,762 |
|
Cash and cash equivalents |
|
|
17 |
|
|
|
58,002 |
|
|
|
|
|
|
|
|
|
|
|
58,002 |
|
|
|
58,002 |
|
Finance lease receivable |
|
|
14, 16 |
|
|
|
641 |
|
|
|
|
|
|
|
|
|
|
|
641 |
|
|
|
641 |
|
Net Deferred
Consideration Receivable |
|
|
14, 16 |
|
|
|
21,942 |
|
|
|
|
|
|
|
|
|
|
|
21,942 |
|
|
|
21,942 |
|
Grant income receivable |
|
|
|
|
|
|
167 |
|
|
|
|
|
|
|
|
|
|
|
167 |
|
|
|
167 |
|
Finance lease liabilities |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
(273 |
) |
|
|
(273 |
) |
|
|
(273 |
) |
Trade and other payables
(excluding deferred
revenue) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,318 |
) |
|
|
(11,318 |
) |
|
|
(11,318 |
) |
Other payables |
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
(30 |
) |
|
|
(30 |
) |
|
|
(30 |
) |
Provisions |
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
(50 |
) |
|
|
(50 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,514 |
|
|
|
|
|
|
|
(11,671 |
) |
|
|
80,843 |
|
|
|
80,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow |
|
|
Liabilities at |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Loans and |
|
|
hedge |
|
|
amortised |
|
|
carrying |
|
|
Fair |
|
|
|
Note |
|
|
receivables |
|
|
derivatives |
|
|
cost |
|
|
amount |
|
|
Value |
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables |
|
|
16 |
|
|
|
20,120 |
|
|
|
|
|
|
|
|
|
|
|
20,120 |
|
|
|
20,120 |
|
Cash and cash equivalents |
|
|
17 |
|
|
|
6,078 |
|
|
|
|
|
|
|
|
|
|
|
6,078 |
|
|
|
6,078 |
|
Finance lease receivable |
|
|
14, 16 |
|
|
|
1,798 |
|
|
|
|
|
|
|
|
|
|
|
1,798 |
|
|
|
1,798 |
|
Forward contracts used
for hedging |
|
|
|
|
|
|
|
|
|
|
(58 |
) |
|
|
|
|
|
|
(58 |
) |
|
|
(58 |
) |
Grant income receivable |
|
|
|
|
|
|
201 |
|
|
|
|
|
|
|
|
|
|
|
201 |
|
|
|
201 |
|
Secured bank loans |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
(29,595 |
) |
|
|
(29,595 |
) |
|
|
(29,595 |
) |
Finance lease liabilities |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
(2,261 |
) |
|
|
(2,261 |
) |
|
|
(2,273 |
) |
Trade and other payables
(excluding deferred
revenue) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,528 |
) |
|
|
(11,528 |
) |
|
|
(11,528 |
) |
Other payables |
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
(59 |
) |
|
|
(59 |
) |
|
|
(59 |
) |
Provisions |
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
(50 |
) |
|
|
(50 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,197 |
|
|
|
(58 |
) |
|
|
(43,493 |
) |
|
|
(15,354 |
) |
|
|
(15,366 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
27. |
|
DERIVATIVES AND FINANCIAL INSTRUMENTS (CONTINUED) |
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, 2010 |
|
|
December 31, 2009 |
|
|
|
|
|
|
|
|
|
|
Deferred Consideration |
|
|
3.10 |
% |
|
|
|
|
Loans and borrowings |
|
|
|
|
|
|
2.53 |
% |
Leases |
|
|
5.02% - 5.29 |
% |
|
|
5.66% - 5.82 |
% |
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, 2010 and December, 31 2009 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.
The following are the contractual maturities of financial liabilities, including estimated interest
payments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying |
|
|
Contractual |
|
|
6 mths or |
|
|
6 mths- |
|
|
|
|
|
|
|
As at December 31, 2010 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured bank loans fixed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease liabilities
fixed |
|
|
273 |
|
|
|
285 |
|
|
|
86 |
|
|
|
86 |
|
|
|
113 |
|
|
|
|
|
Trade & other payables |
|
|
11,447 |
|
|
|
11,447 |
|
|
|
11,447 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,720 |
|
|
|
11,732 |
|
|
|
11,533 |
|
|
|
86 |
|
|
|
113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying |
|
|
Contractual |
|
|
6 mths or |
|
|
6 mths- |
|
|
|
|
|
|
|
As at December 31, 2009 |
|
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 |
|
|
29,327 |
|
|
|
30,268 |
|
|
|
9,660 |
|
|
|
2,592 |
|
|
|
6,549 |
|
|
|
11,467 |
|
Secured bank loans fixed |
|
|
268 |
|
|
|
288 |
|
|
|
56 |
|
|
|
56 |
|
|
|
112 |
|
|
|
64 |
|
Finance lease liabilities
fixed |
|
|
2,261 |
|
|
|
2,478 |
|
|
|
457 |
|
|
|
452 |
|
|
|
898 |
|
|
|
671 |
|
Trade & other payables |
|
|
12,844 |
|
|
|
12,844 |
|
|
|
12,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,700 |
|
|
|
45,878 |
|
|
|
23,017 |
|
|
|
3,100 |
|
|
|
7,559 |
|
|
|
12,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trinity Biotech had a US$48,340,000 club banking facility with AIB plc and Bank of Scotland
(Ireland) Limited (the banks) which was utilised until May 2010; at which point the bank loans
were repaid in their entirety and the facility ceased. The facility consisted of a five year term
loan of US$41,340,000 and a one year revolver of US$7,000,000. At December 31, 2009, the total
amount outstanding under the facility amounted to US$29,327,000, net of unamortised funding costs
of US$180,000. Various covenants applied to these borrowings. As at December 31, 2009 the Group
was in breach of one of these covenants which was waived by the banks. The covenant which was
breached concerned the level of earnings before interest, tax, depreciation, amortisation and share
option expense for the year end December 31, 2009. The margin applied to the loan facility was
2.25% above LIBOR.
120
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
27. |
|
DERIVATIVES AND FINANCIAL INSTRUMENTS (CONTINUED) |
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. Forward contracts normally have
maturities of less than one year after the balance sheet date. There were no forward contracts in
place at December 31, 2010.
The Group had foreign currency denominated cash balances equivalent to US$215,000 at December 31,
2010 (2009: US$518,000).
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 2010 and 2009, changes in the fair value of these contracts were
recognized in equity and then in the case of contracts which were exercised during 2010 and 2009,
the cumulative gain or losses were transferred to the statement of operations.
At December 31, 2010 there were no forward exchange contracts in place (2009: liability of
US$58,000).
Sensitivity analysis
A 10% strengthening of the US dollar against the following currencies at December 31, 2010 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, 2010 |
|
|
|
|
|
|
|
|
Euro |
|
|
(1,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009 |
|
|
|
|
|
|
|
|
Euro |
|
|
2,009 |
|
|
|
5 |
|
Pound Sterling |
|
|
(416 |
) |
|
|
|
|
A 10% weakening of the US dollar against the above currencies at December 31, 2010 and December 31,
2009 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 deferred consideration, 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 into forward contracts, when necessary,
with various financial institutions. The Group performs regular and detailed evaluations of these
financial institutions to assess their relative credit standing. The carrying amount reported in
the balance sheet for cash and cash equivalents and forward contracts approximate their fair value.
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
27. |
|
DERIVATIVES AND FINANCIAL INSTRUMENTS (CONTINUED) |
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, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
Third party trade receivables |
|
|
11,762 |
|
|
|
20,120 |
|
Finance lease income receivable |
|
|
641 |
|
|
|
1,798 |
|
Cash & cash equivalents |
|
|
58,002 |
|
|
|
6,078 |
|
Net Deferred Consideration |
|
|
21,942 |
|
|
|
|
|
Grant income receivable |
|
|
167 |
|
|
|
201 |
|
|
|
|
|
|
|
|
|
|
|
92,514 |
|
|
|
28,197 |
|
|
|
|
|
|
|
|
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, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
United States |
|
|
6,175 |
|
|
|
10,187 |
|
Euro-zone countries |
|
|
2,652 |
|
|
|
3,215 |
|
UK |
|
|
701 |
|
|
|
599 |
|
Other European countries |
|
|
106 |
|
|
|
732 |
|
Other regions |
|
|
2,769 |
|
|
|
7,185 |
|
|
|
|
|
|
|
|
|
|
|
12,403 |
|
|
|
21,918 |
|
|
|
|
|
|
|
|
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, 2010 |
|
|
December 31, 2009 |
|
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
End-user customers |
|
|
6,366 |
|
|
|
11,524 |
|
Distributors |
|
|
5,497 |
|
|
|
9,742 |
|
Non-governmental organisations |
|
|
540 |
|
|
|
652 |
|
|
|
|
|
|
|
|
|
|
|
12,403 |
|
|
|
21,918 |
|
|
|
|
|
|
|
|
Due to the large number of customers and the geographical dispersion of these customers, the Group
has no significant concentrations of accounts receivable.
122
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
27. |
|
DERIVATIVES AND FINANCIAL INSTRUMENTS (CONTINUED) |
Impairment Losses
The ageing of trade receivables at December 31, 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
Impairment |
|
|
Gross |
|
|
Impairment |
|
In thousands of US$ |
|
2010 |
|
|
2010 |
|
|
2009 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Not past due |
|
|
6,099 |
|
|
|
35 |
|
|
|
13,388 |
|
|
|
102 |
|
Past due 0-30 days |
|
|
3,459 |
|
|
|
19 |
|
|
|
3,817 |
|
|
|
6 |
|
Past due 31-120 days |
|
|
2,039 |
|
|
|
25 |
|
|
|
962 |
|
|
|
29 |
|
Greater than 120 days |
|
|
1,608 |
|
|
|
1,364 |
|
|
|
2,808 |
|
|
|
718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,205 |
|
|
|
1,443 |
|
|
|
20,975 |
|
|
|
855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The movement in the allowance for impairment in respect of trade receivables during the year was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
In thousands of US$ |
|
2010 |
|
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Balance at January 1 |
|
|
855 |
|
|
|
619 |
|
|
|
657 |
|
Charged to costs and expenses |
|
|
717 |
|
|
|
302 |
|
|
|
544 |
|
Amounts recovered during the year |
|
|
(13 |
) |
|
|
(22 |
) |
|
|
(82 |
) |
Amounts written off during the year |
|
|
(116 |
) |
|
|
(44 |
) |
|
|
(500 |
) |
|
|
|
|
|
|
|
|
|
|
Balance at December 31 |
|
|
1,443 |
|
|
|
855 |
|
|
|
619 |
|
|
|
|
|
|
|
|
|
|
|
The allowance for impairment in respect of trade receivables is 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.
Following the divestiture of the Coagulation product line in 2010, the Group now has significant
cash reserves and has eliminated all bank debt. In the past, the Group has funded 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.
Although at December 31, 2010 the Group has no debt, it maintains a relationship with a number of
lending banks 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 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. |
Capital management in the Group has been assisted by the sale of the Coagulation product line to
Stago in 2010. The sale allowed the Group to eliminate bank debt and increases cash reserves.
These cash reserves are monitored closely and cash deposits are aligned to mature with the capital
requirements of the Group.
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
28. |
|
2008 IMPAIRMENT CHARGES AND RESTRUCTURING EXPENSES |
In the year ended December 31, 2008, asset impairment charges totalling US$85,793,000 were
recognised in the statement of operations. No impairment charge was recognised in the
statement of operations for the year ended December 31, 2010 or December 31, 2009.
In accordance with IAS 36, Impairment of Assets, the Group carries out an annual impairment review
of the asset valuations. The Group carries out its impairment review on 31 December each year. In
determining whether a potential asset impairment exists, the Group considered a range of internal
and external factors. One such factor was the relationship between the Groups market valuation
and the book value of its net assets. Trinity Biotechs market capitalization at the end of 2008
was significantly below the book value of its net assets. In such circumstances given the
accounting standard guidance, the Group decided to recognize at December 31, 2008 a non-cash
impairment charge of US$81.3 million after tax. The impairment was taken against goodwill and
other intangible assets, property, plant and equipment and prepayments. The tax impact of the
impairment charges is described in note 9.
The Board of Directors announced a restructuring of the business in December 2008. The
restructuring aimed to reduce costs through improved operational efficiency within the Group. As a
result of the restructuring, there was a reduction in the size of the workforce, mainly affecting
the sales, marketing and administration functions. Termination payments and other restructuring
costs resulted in an after tax charge of US$1.9 million in the current year. Included in this
amount is US$1.5 million relating to the resignation of Brendan Farrell as Chief Executive Officer
in October 2008.
The impact of the above items on the statement of operations for the year ended December 31, 2008
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment |
|
|
Restructuring |
|
|
Total |
|
|
|
|
|
|
|
US$000 |
|
|
US$000 |
|
|
US$000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administration expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of PP&E |
|
|
|
|
|
|
13,095 |
|
|
|
|
|
|
|
13,095 |
|
Impairment of goodwill and other
intangible assets |
|
|
|
|
|
|
71,684 |
|
|
|
|
|
|
|
71,684 |
|
Impairment of prepayments |
|
|
|
|
|
|
1,014 |
|
|
|
|
|
|
|
1,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee termination payments |
|
|
(a) |
|
|
|
|
|
|
|
589 |
|
|
|
589 |
|
Directors compensation for loss of
office and share option
expense |
|
|
(b) |
|
|
|
|
|
|
|
1,465 |
|
|
|
1,465 |
|
Other restructuring expenses |
|
|
|
|
|
|
|
|
|
|
35 |
|
|
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment loss and restructuring
expenses before tax |
|
|
|
|
|
|
85,793 |
|
|
|
2,089 |
|
|
|
87,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impact of impairment loss and
restructuring expenses (note 9) |
|
|
|
|
|
|
(4,536 |
) |
|
|
(215 |
) |
|
|
(4,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment loss and restructuring
expenses after tax |
|
|
|
|
|
|
81,257 |
|
|
|
1,874 |
|
|
|
83,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Under the restructuring plan announced in December 2008, the Groups
workforce was reduced by about 10%. The redundancies occurred in the Groups US,
Irish and German operations. The total redundancy costs amounted to US$589,000, of
which an amount of US$156,000 is accrued at December 31, 2008. |
|
(b) |
|
An expense of US$1,465,000 was recorded in 2008 in relation to the
resignation of the former Chief Executive Officer, Brendan Farrell. Mr. Farrell left
the company in October 2008. The expense comprises termination payments of
US$1,283,000, of which US$988,000 is included in accrued restructuring expenses at
December 31, 2008, and an accelerated share option expense of US$182,000. |
124
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
29. |
|
POST BALANCE SHEET EVENTS |
Acquisition of Phoenix Bio-tech Corp.
On January 4, 2011, the Group purchased 100% of the common stock of Phoenix Bio-tech Corporation
for US$2.5 million. Phoenix Bio-tech manufactures and sells products for the detection of syphilis.
This acquisition has not been reflected in the financial statements for the year ended December
31, 2010 as it was completed subsequent to the financial year end. The fair values of the acquired
assets and liabilities have not been established yet.
Phoenix Bio-tech was founded in 1992 and is based in Toronto, Canada. It sells its products under
the TrepSure and TrepCheck labels. Phoenixs annual revenues are approximately US$1.25 million.
Prior to the acquisition, Trinity Biotech distributed Phoenix Bio-techs syphilis products on a
non-exclusive basis in the USA.
The key terms of the acquisition are as follows:
|
|
|
Consideration of US$2,500,000. US$1,000,000 was payable on closing and the
remaining US$1,500,000 is payable in four instalments in the period April 2011 to
January 2012. |
|
|
|
The consideration of US$2,500,000 includes acquired net working capital of
approximately US$500,000. |
As the initial accounting and fair value assessment for the business combination is
incomplete at the time that these financial statements were authorised for issue the
following disclosures cannot be made but will be reported if relevant in the Form 20-F for
the period ended December 31, 2011:
|
|
|
A qualitative description of the factors that make up the goodwill to be recognised, |
|
|
|
Details of the indemnification assets, |
|
|
|
Details of acquired receivables, |
|
|
|
The amounts recognised as of the acquisition date for each major class of asset
acquired and liability assumed, |
|
|
|
Details of contingent liabilities recognised; and |
|
|
|
The total amount of goodwill that is expected to be deductible for tax purposes. |
Dividend
In 2011 the Company announced that it intended to commence a dividend policy, to be paid once a
year. In this regard, the Board of Directors has proposed a final dividend of 10 cent per ADR in
respect of 2010 and this proposal will be submitted to shareholders for their approval at the next
Annual General Meeting of the Company. As provided in the Articles of Association of the Company,
dividends or other distributions are declared and paid in US Dollars.
30. |
|
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 19 outlines information regarding the valuation of share options and warrants.
In note 27, detailed analysis is given about the interest rate risk, credit risk, liquidity risk
and foreign exchange risk of the Group.
125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
30. |
|
ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) |
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.
126
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
30. |
|
ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) |
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.
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
utilized 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 utilization 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 2010, 2009 or 2008.
127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
The consolidated financial statements include the financial statements of Trinity Biotech plc and
the following principal subsidiary undertakings:
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Principal Country of |
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incorporation and |
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Name and registered office |
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Principal activity |
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operation |
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Group % holding |
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Trinity Biotech plc
IDA Business Park, Bray,
Co. Wicklow, Ireland |
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Investment and holding company |
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Ireland |
|
Holding company |
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|
Trinity Biotech Manufacturing Limited
IDA Business Park, Bray,
Co. Wicklow, Ireland |
|
Manufacture and sale of diagnostic test kits |
|
Ireland |
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|
100 |
% |
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|
Trinity Research Limited
IDA Business Park, Bray,
Co. Wicklow, Ireland |
|
Research and development |
|
Ireland |
|
|
100 |
% |
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|
|
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|
Benen Trading Limited
IDA Business Park, Bray,
Co. Wicklow, Ireland |
|
Trading |
|
Ireland |
|
|
100 |
% |
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|
Trinity Biotech Manufacturing Services Limited
IDA Business Park, Bray,
Co. Wicklow, Ireland |
|
Engineering services |
|
Ireland |
|
|
100 |
% |
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|
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|
Trinity Biotech Financial Services Limited
IDA Business Park, Bray,
Co Wicklow, Ireland |
|
Provision of financial services |
|
Ireland |
|
|
100 |
% |
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|
Trinity Biotech Inc
Girts Road, Jamestown, NY 14702, USA |
|
Holding Company |
|
U.S.A. |
|
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|
100 |
% |
|
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|
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Clark Laboratories Inc
Trading as Trinity Biotech (USA)
Girts Road, Jamestown
NY14702, USA |
|
Manufacture and sale of diagnostic test kits |
|
U.S.A. |
|
|
|
100 |
% |
|
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|
|
|
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|
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Mardx Diagnostics Inc
5919 Farnsworth Court
Carlsbad
CA 92008, USA |
|
Manufacture and sale of diagnostic test kits |
|
U.S.A. |
|
|
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100 |
% |
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|
Fitzgerald Industries International, Inc
2711 Centerville Road, Suite 400
Wilmington, New Castle
Delaware, 19808, USA |
|
Management services company |
|
U.S.A. |
|
|
|
100 |
% |
|
|
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|
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|
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|
|
Biopool US Inc (trading as Trinity Biotech Distribution)
Girts Road, Jamestown
NY14702, USA |
|
Sale of diagnostic test kits |
|
U.S.A. |
|
|
|
100 |
% |
|
|
|
|
|
|
|
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|
Primus Corporation
4231 E 75th Terrace
Kansas City,
MO 64132, USA |
|
Manufacture and sale of diagnostic test kits and instrumentation |
|
U.S.A. |
|
|
|
100 |
% |
128
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2010
32. |
|
AUTHORISATION FOR ISSUE |
These Group consolidated financial statements were authorised for issue by the Board of
Directors on April 14, 2011.
129
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.
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TRINITY BIOTECH PLC |
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By:
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RONAN OCAOIMH
Mr Ronan OCaoimh
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Director/ |
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Chief Executive Officer |
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Date: April 14, 2011 |
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By:
|
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KEVIN TANSLEY
Mr Kevin Tansley
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Company secretary/ |
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Chief Financial Officer |
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Date: April 14, 2011 |
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130
Item 19
Exhibits
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Exhibit No. |
|
Description of Exhibit |
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10 |
c |
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Purchase and Sale Agreement of the Diagnostic Coagulation Business |
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12.1
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Certification by Chief Executive Officer Pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002. |
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12.2
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Certification by Chief Financial Officer Pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002. |
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13.1
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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. |
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13.2
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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. |
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15.1
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Consent of Independent Registered Public Accounting Firm (GT) |
131