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Immunodiagnostic Sys IDH Half Yearly Report

  Immunodiagnostic Sys (IDH) - Half Yearly Report

RNS Number : 9610R
Immunodiagnostic Systems Hldgs PLC
26 November 2012




26 November 2012

                    Immunodiagnostic Systems Holdings PLC

                                      

                     Interim Results - 30 September 2012



Immunodiagnostic  Systems  Holdings  PLC  ("IDS"  or  '"the  Company"  or  the 
"Group"), a leading producer of diagnostic testing kits and automated  systems 
for the clinical and research markets, announces its unaudited interim results
for the six month period to 30 September 2012.



Financial Summary:



· Revenue decreased 10% at constant exchange rates

§ Automated revenues  (IDS-iSYS), 39% of  revenues, increased by  4% to  £9.2m 
(2011: £8.9m)

§ Revenues from manual testing decreased by 17% to £14.6m (2011: £18.4m)

· Revenue decreased 13% at actual exchange rates to £23.8m (2011: £27.3m)

· Gross margin increased to 76.4% (2011: 75.8%)

· Pre-tax profit decreased 26% to £6.3m (2011: £8.4m)

· Exceptional income relating to bad debt recovery of £1.5m (2011: £nil)

· Pre-tax profit before exceptional income £4.8m (2011: £8.4m)

· Diluted earnings per share decreased 25% to 16.4p (2011: 22.0p)

· Net cash £10.4m (31 March 2012: £6.9m) 



Operational Summary:



· Patrik Dahlen appointed Chief Executive

· Three automated assay launches in period

· 41 IDS-iSYS reagent systems placed* in USA & Europe in H1 2012 (H1 2011
47)

· IDS-iSYS reagent systems placed increased  23% in period from 31  March 
2012



*Net of returns



Patrik Dahlen, Chief Executive Officer, IDS commented:



"During the first half  IDS increased its gross  margin and remained  strongly 
cash generative despite the expected pressure on revenues from the competitive
vitamin D market. We  have made progress in  transferring our customers  from 
manual to automated assays and are seeing an encouraging response to the three
new assays launched in the period.



"We continue to expect  full year revenues  in the range of  £48m to £50m  and 
with costs under control we  are comfortable with current market  expectations 
for the  full year.  Overall, we  believe that  we have  the technology,  the 
strategy and balance sheet  to cement our position  as a leading developer  of 
specialist assays in small to medium niche markets." 



Contacts:



IDS                                     Peel Hunt LLP      FTI Consulting LLP
Patrik Dahlen, CEO                      James Steel        Ben Atwell
Barry Hextall, Interim Finance Director Vijay Barathan     Simon Conway
                                                           Mo Noonan
Tel: 0191 519 0660                      Tel: 020 7418 8900 Tel: 020 7831 3113



Notes to Editors



About Immunodiagnostic Systems Holdings PLC



The Group operates in  the in-vitro diagnostics  ("IVD") market by  designing, 
manufacturing and selling immunoassay kits as well as its automated  analyser, 
the IDS-iSYS  System. The  IDS product  range  is used  to measure  or  detect 
particular substances within a sample, thus aiding the diagnosis or monitoring
of a disease or providing information for research studies.



http://www.idsplc.com





Chief Executive's Statement



Overview



In previous years  the Group  enjoyed a  growing revenue  stream dominated  by 
vitamin D  assay sales,  a reflection  of the  growth seen  in the  vitamin  D 
testing market as  a whole. It  is now well-reported,  that while  originally 
considered  a  niche,   specialist  assay,  these   growing  testing   volumes 
increasingly  attracted  the  attention  of  the  major  in-vitro  diagnostics 
players. This reporting period is the first time in which the full impact  of 
competition from all  these players  can be seen,  as all  now have  automated 
vitamin D  assays  on the  market  and the  test  is available  on  the  major 
workhorse laboratory testing  systems. This  intensely competitive  landscape 
has unsurprisingly resulted in pricing pressure in this segment which has  now 
been exacerbated somewhat by a muting in the market volume growth of vitamin D
testing.



The Group  continues to  aggressively defend  its position  in the  vitamin  D 
segment by a number of measures.  These include leveraging its reputation  of 
best-in-class quality  and  reliability,  securing  customers  by  negotiating 
attractive extended contracts and upselling new assays to customers that  have 
historically been vitamin D assay only.



Within the Group there has been has a long-standing internal programme of  new 
assay identification,  development  and  commercialisation  aimed  at  revenue 
diversification. This has resulted  in the successful launch  of a number  of 
tests over the past few years,  particularly automated tests for the  IDS-iSYS 
system. As  discussed  below  in  the  strategy  update,  this  programme  of 
innovation will continue and the Board is confident that it will ultimately be
a significant driver of growth in the medium to longer-term.



Strategy



Over the last few years, the Group has become a trusted producer of diagnostic
testing kits  for  the clinical  and  research markets.  The  Group  designs, 
manufactures and sells immunoassay kits, which  are used to measure or  detect 
particular substances within a sample, aiding the diagnosis or monitoring of a
disease or providing information for research studies.



Following the appointment of Patrik Dahlen as CEO in July 2012, the Board  has 
undertaken a strategic review with the  aim of cementing the Group's  position 
as a leading developer of specialist  assays in small to medium niche  markets 
where it can  compete most  effectively. To do  this, the  Group will  pursue 
three core pathways:



· Increase its appeal to customers by developing new specialist assays

· Expand  its geographic  reach  with judicious  entry into  high  growth 
markets

· Develop a next generation IDS-iSYS system with a smaller footprint



1. Increase its  appeal to customers  by developing new  specialist assays  to 
broaden menu



The Group has a  strong reputation amongst clinicians  for its assay  quality, 
reliability and the ease of use of its IDS-iSYS system. The Group's  strategy 
is to build on this  by expanding its range of  assays. In particular, it  is 
seeking  to  become  a  global  leader   in  the  areas  of  kidney   disease, 
hypertension, bone and cartilage and human  growth. These are all niche  areas 
where the IDS-iSYS system enables the  conversion to an automated format  with 
associated improvements in workflow.



In the six months ended 30 September 2012, the Group has made good progress in
broadening  its  product  range  -  launching  three  new  assays  in   Renin, 
Aldosterone and 1,25 Vitamin D. These  launches have been well received.  We 
also see increased interest  in our growth panel,  particularly in IGF-I,  and 
currently we have  more than 20  evaluations ongoing across  all of these  new 
products.



The Group will drive the growth of recently launched assays and invest in  the 
development of new assays within its core specialist areas. We expect further
launches in the years  ahead, including assays  currently available in  Europe 
moving into the USA upon FDA clearance.



In addition to internal product development, acquisitions and partnerships are
expected  to  form  an  important  part  of  the  Group's  strategy.  IDS  is 
strengthening its  marketing  to drive  adoption  of  the new  assays  with  a 
particular focus on building  a leadership position  with both clinicians  and 
Key Opinion Leaders  ("KOLs"). The  Board believes  that as  well as  driving 
sales, this will help future product development as the Group will improve its
ability to respond to these customers' needs.



2. Expand geographic reach with judicious entry into high growth markets



The Group's principal markets have historically been the USA and Europe  which 
together represent 77% of Group revenue for the six months ended 30  September 
2012.  The  Group  has  direct  sales  and  marketing  operations  in   these 
territories (excluding  Spain  and Italy)  and  it sells  through  third-party 
distributors in other territories.



Marketing support will be enhanced in key geographic markets, particularly the
USA, and will be aiming  to expand the number  of territories where the  Group 
will market directly. This  will include expanding  in North Africa,  Eastern 
Europe and in the longer term, Central America.



In the  last few  months, the  Group's international  expansion has  continued 
through its distribution network and the IDS-iSYS is now being introduced into
the Middle  East and  India. In  addition, IDS  is seeking  to capitalise  on 
opportunities for  the  IDS-iSYS system  in  higher growth  emerging  markets, 
including China,  by partnering  with local  market leaders  with  appropriate 
automation expertise. Preparations  for entry  into other  key markets  where 
there are profitable commercial opportunities are ongoing.



3. Develop next generation IDS-iSYS system



The ease of  use and reliability  of the  IDS-iSYS system has  been a  driving 
force behind the conversion of  customers from manual to automatic  diagnostic 
testing. Development of  a next  generation IDS-iSYS  system with  comparable 
performance on a reduced footprint has now commenced.



The smaller instrument aims to increase penetration into new customer segments
where the current  model has not  yet gained acceptance.  In particular,  the 
Board believes based on customer feedback, that a smaller, more cost-effective
instrument will be  attractive to  smaller laboratories  where space  is at  a 
premium and budgets are constrained. It is intended that the new system  will 
open up export markets where testing volumes have been insufficient to justify
the current level of investment required.



In addition, the IDS-iSYS mark II  will be more useful in larger  laboratories 
as a specialist complement to general-purpose competitor systems as it will be
fully connectable to laboratory  track systems and  therefore able to  improve 
operational workflow efficiency.



The IDS-iSYS mark  II will also  open up new  opportunities for  collaboration 
with  industry   players  in   adjacent  non-competitive   market   segments. 
Development work  commenced  in October  2012  and  it is  expected  that  the 
timescale for completion of the European system  will be in the first half  of 
2015.



Delivering the Strategy



The Group's execution capabilities will  be enhanced through a combination  of 
selective recruitment, extended collaboration with KOLs and a broader range of
commercial partnerships. Investment in facilities and people will continue  to 
ensure that it maintains its reputation as a leader in its fields of activity.



Overall,  the  Board  believes  that  the  Group  has  the  requisite  skills, 
technology and financial strength  to build on  its core expertise.  Pathways 
have been set  in motion to  broaden product offerings,  enter new  geographic 
regions and develop the next generation  of instrument and assays. The  Board 
looks forward to driving business forward in the coming months.



Financial review



Revenue



During the six month  period, like for like  revenue (excluding the impact  of 
foreign exchange movements) decreased by 10.4% with unaudited revenues for the
six months ended  30 September  2012 at  £23.8m (2011:  £27.3m). The  revenue 
reported includes an adverse £0.7m impact of exchange differences between  the 
two periods as  well as  the challenging  vitamin D  environment as  discussed 
above. The following revenue  comparisons in this  statement are reported  at 
constant exchange rates.



IDS-iSYS revenues grew by 3.6% over the prior period and this growth was  9.4% 
if the one off effect of a license  fee of £0.4m received in the prior  period 
was excluded. Manual revenues declined, as expected, by 17.2%, reflecting the
continuing competitive environment of this market place and the transition  of 
certain laboratories from manual to automated testing.



A total of 41 IDS-iSYS instruments have been sold or placed to reagent  rental 
IDS end user  customers during  the period,  net of  returns, representing  an 
increase of 23% over the installed base as at 31 March 2012. As announced  in 
the trading update at the time of  the Company's AGM on 14 September 2012  the 
Board has  recently reviewed  the  criterion that  is  used to  both  classify 
instrument placements and also to define a live system. This has resulted  in 
the opening position  being restated  and the following  placements and  sales 
during the period are set out below -



System category 31 Mar 2012 Placements 30 Sept 2012

                 (Restated) 
Reagent rental          175         41          216
Distributors             54         10           64
OEM & partners          135          7          142
Total                   364         58          422



Average revenue per instrument  from the Group's  reagent rental accounts  was 
£76,000 per annum (calculated on  a rolling 12 month  basis) and in line  with 
expectations (31  March  2012: £84,000).  The  decline is  due  primarily  to 
pricing pressure of  the vitamin D  market and increasing  emphasis on  medium 
sized laboratories placements.



The volume of  IDS-iSYS system  placements with  reagent rental  IDS end  user 
customers reported for the  last two financial years  has averaged 80  systems 
per year and it is expected to be at a similar level in the current  financial 
year.



Revenue by sales territory



                            Year to Six months Six months       % Change

                             31 Mar   30 Sept    30 Sept       30 Sept
                               2012       2012       2011
                               £000       £000       £000   Actual Constant FX
                                                                         rates
                                                          FX rates
USA                          22,283      9,912     11,364   (12.8)      (15.4)
Europe - Direct              22,572      8,564     10,617   (19.4)      (12.3)
Rest     of     World     -   8,815      5,362      5,351      0.1         4.1
Distribution
Group revenue                53,670     23,838     27,332   (12.8)      (10.4)



The Group's USA revenue declined 15.4%  at constant exchange rates in the  six 
months to 30  September 2012 compared  to the  prior period and  is driven  by 
manual revenue reducing by 31.7%. Part  of this decline was substituted  with 
automated (iSYS) revenue as it increased by 26.5% in the same period. The USA
had an increase in vitamin D automated testing competition in the second  half 
of 2011 as a number of larger diagnostic companies introduced their vitamin  D 
assays to  the  USA  market and  these  results  reflect the  impact  of  that 
increased competitiveness.  Whilst this  set of  results reflects  the  first 
period of  full competition  on vitamin  D, we  are seeing  encouraging  sales 
progress with other automated assays, in particular, the Group's growth  assay 
(IGF-I).



In Europe, the decline in revenue at constant exchange rates of 12.3% includes
the effect of  the one  off license  sale of  £0.4m in  the six  months to  30 
September 2011. A second similar step down in revenue of £0.4m also  occurred 
due to the Group  entering into a short-term  contract for automated test  kit 
supplies in France in the prior period that is no longer running in the  2012. 
Removing the impact of  these two issues means  that the adjusted decline  in 
revenue  in  Europe  is  5.2%  again  driven  by  declining  manual   revenue, 
particularly in  France. The  Group is  also experiencing  IDS-iSYS  placement 
returns in France due to ongoing consolidation in the private sector resulting
from Government de-regulation.  In contrast,  the German  market saw  18.9% 
revenue growth  at constant  exchange rates  in the  period driven  by  strong 
momentum on the new assays. The impact on the product revenue from the issues
described above is set out below:



Revenue by product group



                           Year to    Six months   Six months     % Change

                       31 Mar 2012 30 Sept 2012 30 Sept 2011     30 Sept
                              £000          £000         £000  Actual Constant
                                                                       FX Rate
                                                              FX Rate
Manual revenue
Vitamin D reagent           25,840         9,583       13,458  (28.8)   (27.2)
Other reagents               8,493         3,867        4,513  (14.3)    (5.0)
License  and   royalty       1,087         1,175          436   169.4    161.0
income
Total manual                35,420        14,625       18,407  (20.5)   (17.2)
Automated revenue

(IDS-iSYS)
Vitamin D reagent           11,355         5,765        5,446     5.9      9.5
Other reagents               1,287           914          523    74.9     62.5
License  and   royalty       1,052             -          459 (100.0)  (100.0)
income
Instrument revenue           2,416         1,074        1,522  (29.4)   (36.1)
Operating lease rental       2,140         1,460          975    49.7     49.8
Total automated             18,250         9,213        8,925     3.2      3.6
Group revenue               53,670        23,838       27,332  (12.8)   (10.4)



Operating costs



Operating costs  are being  carefully  managed and  remain  in line  with  our 
expectations for the full  year. Importantly, the Group  has continued to  be 
strongly cash generative from its  operating activities during the six  months 
ended 30 September 2012.



The prior period has been restated for two prior period adjustments (PPA) that
were made at 31 March 2012 and are described below. These PPA's have had  the 
effect of decreasing the  prior period operating costs  by £0.8m. During  the 
second half of the year  ended 31March 2012 the Board  also made a number  of 
changes in  accounting  estimates  which were  applied  prospectively.  These 
changes in  estimates  do not  result  in  a restatement  of  the  comparative 
information provided for the six  months ended 30September 2011. However  to 
assist the user  of the  accounts in comparing  the Group's  period on  period 
results, the following table has been prepared to show what the effect of  the 
changes in estimates would have been on the six months ended 30 September 2011
had they been implemented prior to the interim reporting date. The effect on
the prior year income statement is set out in full in Note 3.



The Group's total expenses comprise -



Six months ended 30            2011  2011     2011        2011      2011 *2012
September
                               £000  £000     £000        £000      £000  £000

                      As originally   PPA Restated   Pro-forma  Restated     
                           reported
                                                   adjustments Pro-forma
Cost of sales                 6,610     -    6,610         192     6,802 5,619
Distribution costs            4,358     -    4,358         104     4,462 4,168
Administrative                8,592 (768)    7,824       1,744     9,568 9,350
expenses



*Excluding exceptional income from bad debt provision movement



Escalon receivable



In December 2008 the  Group disposed of its  non-core Haematology Division  to 
BHH a subsidiary of Escalon Medical  Corporation (EMC) as it was considered  a 
non-core  business  operation.  The  sale  agreement  incorporated   deferred 
consideration of €3.2m  due from  the purchaser,  BHH, and  guaranteed by  its 
ultimate parent company EMC.  BHH later went into  administration and in  May 
2012 EMC indicated that it would have financial difficulties if it had to meet
the guaranteed amount and as a consequence the Group provided in full  against 
the outstanding receivable at 31 March 2012.



Following the sale of EMC's clinical diagnostic business to ERBA on 4  October 
2012 for $6.5m a settlement was reached with EMC for it to pay the Group €1.9m
as full and  final settlement of  the amount  due. The cash  was received  in 
October 2012  and the  bad debt  provision  equivalent in  value to  the  cash 
receipt was released in the income statement for the six month period ended 30
September 2012.



Profit before tax



The Group's profit before tax on a  statutory basis decreased by 26% to  £6.3m 
(2011: £8.4m). The current period includes an exceptional credit of £1.5m  in 
connection with the movement on a  bad debt provision originally set aside  at 
31  March  2012   following  uncertainty   over  the   recovery  of   deferred 
consideration that was due following the sale of a business division in 2008.



The prior period has been restated for two prior period adjustments which have
had the  effect of  increasing profit  before tax  by £0.7m.  The Group  also 
changed a  number of  its accounting  estimates in  the second  half of  prior 
financial year which impacted  the reported operating  costs of the  business. 
These  changes  in  estimates  were  made  in  March  2012  and  are  applied 
prospectively so did not affect the profit before tax for the period ended  30 
September 2011.



Taxation



The Group's effective  tax rate is  a blend of  corporation tax rates  ranging 
from 25% in Denmark through to 40% in the USA combined with dedicated R&D  tax 
credit schemes in the UK and France.  The Group's effective tax rate for  the 
current period is based on an estimate of the rate for the full financial year
and is 24% (2011: 22%).



Earnings per share



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



Adjusted earnings per share is calculated  using profit after tax adjusted  to 
exclude the after tax effect of charges for non-recurring costs and changes in
accounting estimates.



Diluted earnings per share are 16.4p (2011: 22.0p).



Balance Sheet



The Group's  shareholders'  funds at  30  September 2012  were  £73.6m  (2011: 
£78.5m). The  lack of  growth in  shareholders' funds  reflects a  number  of 
non-cash accounting adjustments that were made during the year ended 31  March 
2012 which the  Board believe  will assist in  a better  understanding of  the 
Group's financial results going forward. The underlying intellectual property
that the  Group  possesses  through  patents, know-how  and  its  own  testing 
instrument remains strong and this is reflected in the positive cash flows.



Cash flow



The Group continues to generate strong positive cash flows from its  operating 
activities resulting  in closing  cash  of £10.4m  (31  March 2012:  Net  cash 
£6.9m). This cash generation has continued  since the end of the period  both 
from operating activities and the one off receipt of £1.5m in relation to  the 
BHH receivable settlement such that the Group's cash balance as at 19 November
2012 is £13.1m



Prior period adjustments



Walloon Government grants



The Group acquired the whole of the share capital of Immunodiagnostic  Systems 
SA (formerly Biocode Hycel  SA) on 31 August  2007. Prior to the  acquisition 
this subsidiary  undertaking had  received grants  from the  Walloon  Regional 
Government towards  the development  of certain  automated immunoassays  ("the 
products"). The terms of grant agreements provide for future repayment of the
grant received in the  event that the products  are being commercialised.  It 
was determined in the second  half of the financial  year ended 31 March  2012 
that the  Walloon  Regional  Government  had been  notified  of  the  intended 
commercialisation of a small  number of products in  the financial year  ended 
31March 2010, at which point the grant became repayable in its entirety.  As 
a result  of  this event  the  grant must  be  recognised as  a  liability  in 
accordance with IAS20. As the event giving rise to the repayment  obligation 
occurred in the  financial year ended  31March 2010, the  recognition of  the 
liability, which had previously been disclosed as a contingent liability,  has 
been treated as a prior period adjustment at 31 March 2012.



Remuneration bonus payments



A review of  management performance bonus  agreements was carried  out in  the 
second half of  the financial  year ended 31  March 2012.  These bonuses  had 
previously been treated as discretionary,  and therefore recognised in  profit 
or loss in the period in which they were paid. The review has concluded  that 
in the majority of cases, the terms of the agreements were such as to  justify 
that the  bonus should  have been  accrued in  accordance with  IAS 19.  This 
change has been applied retrospectively by way of a prior period adjustment at
31 March 2012.



Capital management



The Board's objective  is to  maintain a balance  sheet that  is efficient  in 
terms of providing long term returns  to shareholders whilst at the same  time 
safeguards the Group's financial  position through variable economic  cycles. 
As at the 30 September 2012, the Group had cash of £10.4m (31 March 2012:  Net 
cash of £6.9m). The Group's cash was further increased after the 30 September
2012 when it received £1.5m in  settlement for the BHH deferred  consideration 
receivable. Given this  cash position  the Board considers  that its  capital 
management objective is being achieved.



Management changes



In additional to the appointment of Patrik Dahlen as Chief Executive  Officer, 
Barry  Hextall  will  become  interim  finance  director  on  Gerard  Murray's 
departure on 30 November 2012. The search for a permanent replacement for the
finance director is ongoing.  Roger Duggan left the  Company on 14  September 
2012, Patrik Dahlen has assumed responsibility for business development.



Outlook



During the  first half  the  Group increased  its  gross margin  and  remained 
strongly cash generative despite  the expected pressure  on revenues from  the 
competitive vitamin  D market.  Progress has  been made  in transferring  our 
customers from  manual to  automated  assays and  the  Group has  received  an 
encouraging response to the three new assays launched in the period.



The Board continues to expect full year  revenues in the range of £48 to  £50m 
and with costs under control are comfortable with current market  expectations 
for the  full year.  Overall, we  believe that  we have  the technology,  the 
strategy and balance sheet  to cement our position  as a leading developer  of 
specialist assays in small to medium niche markets.



Patrik Dahlen

Chief Executive Officer





               Unaudited consolidated interim income statement

For the six month period to 30 September 2012



                                                6 Months     6 Months     Year
                                                   ended        ended    ended
                                                                      31 March

                                            30 Sept 2012 30 Sept 2011     2012
                                                           (Restated)
                                               Unaudited    Unaudited  Audited
                                       Note         £000         £000     £000
Revenue                                   4       23,838       27,332   53,670
Cost of sales                                   (5,619)      (6,610) (13,574)
Gross Profit                                      18,219       20,722   40,096
Distribution costs                               (4,168)      (4,358)  (8,400)
Administrative expenses
Non-recurring items
Impairment of other receivable            5        1,505            -  (2,795)
Restructuring costs                                    -            -  (1,297)
Retirement of development costs                        -            -    (481)
Impairment of development costs                        -            -    (604)
Recurring items
Change in accounting estimates                         -            -  (2,505)
Other administrative expenses                    (9,350)      (7,824) (16,497)
Profit from operations                             6,206        8,540    7,517
Finance income                                       108          114      241
                                                   6,314        8,654    7,758
Finance costs                                       (51)        (237)    (508)
Profit before tax                                  6,263        8,417    7,250
Income tax expense                        7      (1,562)      (1,892)  (2,512)
Profit for the period
 attributable to owners of the parent             4,701        6,525    4,738
Earnings per share
- basic                                   6        16.5p        23.1p    16.7p
- diluted                                 6        16.4p        22.0p    16.2p
Adjusted earnings per share
- basic                                   6        13.1p        23.1p    34.6p
- diluted                                 6        13.0p        22.0p    33.5p



          Unaudited interim statement of other comprehensive income

For the six month period to 30 September 2012



                                              6 Months     6 Months Year ended
                                                 ended        ended
                                                                      31 March

                                          30 Sept 2012 30 Sept 2011       2012
                                                         (Restated)
                                             Unaudited    Unaudited    Audited
                                                  £000         £000       £000
Profit for the period                            4,701        6,525      4,738
Currency translation differences               (2,624)        (412)    (2,842)
Other comprehensive income, before tax         (2,624)        (412)    (2,842)
Income tax relating to items
credited/charged to equity                       (122)         (16)       (54)
Other comprehensive income, net of tax         (2,746)        (428)    (2,896)
Total comprehensive income for the period
 attributable to owners of the parent           1,955        6,097      1,842



Unaudited consolidated interim balance sheet



                                                   30 Sept    30 Sept 31 March

                                                      2012       2011     2012
                                                           (Restated)
                                                 Unaudited  Unaudited  Audited
                                            Note      £000       £000     £000
Assets
Non-current assets
Property, plant and equipment                        9,525      8,952    9,542
Goodwill                                            15,412     17,551   16,809
Other intangible assets                             34,843     40,486   36,826
Investments                                              4          4        4
Deferred tax assets                                    773      3,966    1,829
Other non-current assets                               224        236      234
                                                    60,781     71,195   65,244
Current assets
Inventories                                          6,525      9,285    7,462
Trade and other receivables                          8,743     10,434    7,706
Income tax assets                                    1,402      1,019    1,190
Cash and cash equivalents                           10,406      8,511   11,031
                                                    27,076     29,249   27,389
Total assets                                        87,857    100,444   92,633
Liabilities
Current liabilities
Short term portion of long term borrowings               -        873    4,162
Trade and other payables                             7,233      6,578    7,994
Income tax liabilities                                 397      1,972      792
Deferred income                                         84        110       95
                                                     7,714      9,533   13,043
Net current assets                                  19,362     19,716   14,346
Non-current liabilities
Long term borrowings                                     -      4,313        -
Repayable grants                                     1,396      1,383    1,314
Provisions                                     8        68        674      566
Deferred tax liabilities                             5,119      6,045    5,365
                                                     6,583     12,415    7,245
Total liabilities                                   14,297     21,948   20,288
Net assets                                          73,560     78,496   72,345
Total equity
Called up share capital                                567        567      567
Share premium account                               30,041     30,040   30,041
Merger reserve                                         583        583      583
Share-based payments reserve                         1,005      2,863      966
Currency translation reserve                         2,675      7,889    5,421
Retained earnings                                   38,689     36,554   34,767
Equity attributable to owners of the parent         73,560     78,496   72,345



Unaudited consolidated interim cash flow statement

For the six month period to 30 September 2012



                                                  6 Months   6 Months     Year
                                                     ended      ended    ended
                                                   30 Sept    30 Sept 31 March

                                                      2012       2011     2012
                                                           (Restated)
                                                 Unaudited  Unaudited  Audited
                                                      £000       £000     £000
Profit before tax                                    6,263      8,417    7,250
Adjustments for:
Depreciation of property, plant and equipment        1,173      1,012    2,162
Amortisation of intangible assets                    2,191      1,270    4,407
Loss on disposal of property, plant and
equipment and intangible assets                          -          -        6
Share based payment expense                             72        107      214
Release of deferred grants                             (8)       (11)     (22)
Finance income                                       (108)      (114)    (241)


Finance costs                                           51        237      508
Operating cash flows before movements in working
capital                                              9,634     10,918   14,284
Movement in inventories                                704      (848)      706
Movement in receivables                            (1,209)      1,289    3,763
Movement in payables                                 (483)    (1,894)    (157)
Cash generated by operations                         8,646      9,465   18,596
Income taxes paid                                  (1,514)    (1,909)  (4,320)
Interest paid                                         (51)      (199)    (508)
Net cash from operating activities                   7,081      7,357   13,768
Investing activities
Acquisition of investments in subsidiaries (net
of cash acquired)/Asset acquisition                   (20)      (486)    (593)
Purchases of other intangible assets               (1,519)    (1,787)  (2,485)
Purchases of property, plant and equipment         (1,482)    (1,709)  (3,753)
Interest received                                      108        114      241
Net cash used by investing activities              (2,913)    (3,868)  (6,590)
Financing activities
Proceeds from issue of shares for cash                   -        695      696
Grants received                                          -          1        1
Repayments of borrowings                           (4,072)    (1,195)  (2,027)
Repayments of hire-purchase obligations                (9)       (15)     (26)
Dividends paid                                       (779)      (708)    (708)
Net cash used by financing activities              (4,860)    (1,222)  (2,064)
Effect of exchange rate differences                     67      (120)    (447)
Net (decrease)/increase in cash and cash
equivalents                                          (625)      2,147    4,667
Cash and cash equivalents at beginning of period    11,031      6,364    6,364
Cash and cash equivalents at end of period          10,406      8,511   11,031



Unaudited consolidated statement of changes in equity



                                                     Share         Share-based
                                             Share premium  Merger    payments
                                           capital account Reserve     reserve
                                              £000    £000    £000        £000
At 1 April 2011 (restated)                     559  29,353     583       3,166
Profit for the period                            -       -       -           -
Other comprehensive income
Foreign exchange translation differences
on foreign currency net investment in
subsidiaries                                                     -           -
Tax effect of treatment of foreign
currency translation differences                                 -           -
Transactions with owners
Share based payments charged to equity
reserves                                                 -       -         214
Deferred tax recognised on share based
payments charged to equity reserves                              -     (2,199)
Transfer in respect of share options
exercised in the period                                         -       (215)
Dividend Paid                                    -       -       -           -
Shares issued in the period (net of
expenses)                                        8     688       -           -
At 31 March 2012 and 1 April 2012              567  30,041     583         966
Profit for the period                            -       -       -           -
Other comprehensive income
Foreign exchange translation differences
on foreign currency net investment in
subsidiaries                                                     -           -
Tax effect of treatment of foreign
currency translation differences                                 -           -
Transactions with owners
Share based payments charged to equity
reserves                                                         -          72
Deferred tax recognised on share based
payments charged to equity reserves                              -        (33)
Dividend Paid                                    -       -                   -
Shares issued in the period (net of
expenses)                                                -       -           -
At 30 September 2012                           567  30,041     583       1,005
At 1 April 2011 (restated)                     559  29,353     583       3,166
Profit for the period                                    -       -           -
Other comprehensive income
Foreign exchange translation differences
on foreign currency net investment in
subsidiaries                                                     -           -
Tax effect of treatment of foreign
currency translation differences                                -           -
Transactions with owners
Share based payments charged to equity
reserves                                                 -       -         107
Deferred tax recognised on share based
payments charged to equity reserves                              -       (195)
Transfer in respect of share options
exercised in the period                                          -       (215)
Dividend Paid                                                    -           -
Shares issued in the period (net of
expenses)                                        8     687       -           -
At 30 September 2011 (restated)                567  30,040     583       2,863



                                               Currency                      
                                            Translation   Retained           
                                                Reserve   Earnings     Total 
                                                   £000       £000      £000 
At 1 April 2011 (restated)                        8,317     30,522    72,500 
Profit for the period                                 -      4,738     4,738 
Other comprehensive income                                                   
Foreign exchange translation differences on
foreign currency net investment in                                           
subsidiaries                                                     -   (2,842)
Tax effect of treatment of foreign currency                                  
translation differences                                          -      (54)
Transactions with owners                                                     
Share based payments charged to equity                                       
reserves                                       (2,842)          -       214
Deferred tax recognised on share based                                      
payments charged to equity reserves                (54)          -   (2,199)
Transfer in respect of share options                                         
exercised in the period                               -        215         -
Dividend Paid                                         -      (708)     (708) 
Shares issued in the period (net of                                          
expenses)                                             -          -       696
At 31 March 2012 and 1 April 2012                 5,421     34,767    72,345 
Profit for the period-                                -      4,701     4,701 
Other comprehensive income                                                   
Foreign exchange translation differences on
foreign currency net investment in                                           
subsidiaries                                    (2,624)          -   (2,624)
Tax effect of treatment of foreign currency                                  
translation differences                           (122)          -     (122)
Transactions with owners                                                     
Share based payments charged to equity                                       
reserves                                              -          -        72
Deferred tax recognised on share based                                       
payments charged to equity reserves                              -      (33)
Dividend Paid                                         -      (779)     (779) 
Shares issued in the period (net of                                          
expenses)                                             -          -         -
At 30 September 2012                              2,675     38,689    73,560 
                                                                             
At 1 April 2011 (restated)                        8,317     30,522    72,500 
Profit for the period                                 -      6,525     6,525 
Other comprehensive income                                                   
Foreign exchange translation differences on
foreign currency net investment in
subsidiaries                                           (412)          -  (412)
Tax effect of treatment of foreign
currency translation differences                       (16)          -   (16)
Transactions with owners
Share based payments charged to equity
reserves                                                   -          -    107
Deferred tax recognised on share based
payments charged to equity reserves                        -          -  (195)
Transfer in respect of share options
exercised in the period                                    -        215      -
Dividend Paid                                                     (708)  (708)
Shares issued in the period (net of
expenses)                                                  -          -    695
At 30 September 2011 (restated)                        7,889     36,554 78,496



Notes to the Interim Financial Statements

For the six month period to 30 September 2012



1 Basis of preparation



The condensed financial statements for the six months ended 30 September  2012 
have been prepared in accordance  with IAS 34, 'Interim Financial  Reporting', 
as adopted by  the European  Union. They do  not include  all the  information 
required  for  full  annual  financial  statements  and  should  be  read   in 
conjunction with the consolidated  financial statements of  the Group for  the 
year ended  31March  2012.  The  condensed  financial  information  has  been 
prepared using the same accounting policies and methods of computation used to
prepare the Group's Annual Report  for the year ended  31 March 2012 that  are 
described on pages 45 to 52 of that  report which can be found on the  Group's 
website at www.idsplc.com. The  annual financial statements  of the Group  are 
prepared in accordance with IFRS as adopted by the European Union.



The following new  standards or  interpretations are mandatory  for the  first 
time for the financial year ending 31 March 2013:



·  IFRS  1  First-Time  Adoption  of  International  Financial  Reporting 
Standards (Amendment) - Severe Hyperinflation  and Removal of Fixed Dates  for 
First-time Adopters. This amendment is not expected to have any effect on  the 
financial statements of the Group.

· IFRS 7 Financial  Instruments: Disclosures (Amendment). This  amendment 
relates to disclosures about rights of set-off of financial instruments and is
not expected to have  any material impact on  the financial statements of  the 
Group.

·  IAS  12  Income  Taxes  (Amendment)  -  Deferred  Taxes:  Recovery  of 
Underlying Assets. This amendment relates to the treatment of deferred tax  on 
investment properties and non-depreciable assets  and is not expected to  have 
any effect on the financial statements of the Group.



None of the above standards and  interpretations had a material effect on  the 
half year results.



The financial information for the six  months ended 30 September 2012 and  the 
comparative financial information for the  six months ended 30 September  2011 
have not been audited, but have been reviewed by the auditors. The comparative
financial information for the year ended 31 March 2012 has been extracted from
the 2012 Annual Report  and Accounts. The  financial information contained  in 
this interim  report does  not  constitute statutory  accounts as  defined  in 
section 435  of  the Companies  Act  2006 and  does  not reflect  all  of  the 
information contained in the Group's  Annual Report and financial  statements. 
The annual financial statements for the  year ended 31 March 2012, which  were 
approved by the Board  of Directors on 22  June 2012, received an  unqualified 
audit report, did not contain a statement under Section 498 (2) or (3) of  the 
Companies Act 2006 and have been filed with the Registrar of Companies.



2 Prior period adjustment



Walloon Regional Government grants

The Group acquired the whole of the share capital of Immunodiagnostic  Systems 
SA (formerly Biocode Hycel  SA) on 31 August  2007. Prior to the  acquisition 
this subsidiary  undertaking had  received grants  from the  Walloon  Regional 
Government towards  the development  of certain  automated immunoassays  ("the 
products"). As described in the Group's  Annual Report for the year ended  31 
March 2012 the Group  made a prior  period adjustment as at  31 March 2012  to 
recognise that the terms of the grant agreements provided for future repayment
of the grant received.



The consolidated income statement for  the six months ended  30September2011 
and the consolidated balance sheet as at 30September 2011 have been  restated 
accordingly. The effect  has been to  decrease the profit  before tax for  the 
period by £45,000, the retained earnings for the period by £29,000 and the net
assets as at 30September2011 by £979,000.



Bonus payments

Following a review of the Group's performance bonus agreements as at 31  March 
2012 it was  concluded that the  terms of  the agreements were  such that  the 
bonuses payable should have been accrued  by the Group in accordance with  IAS 
19 instead of recognised when the cost was incurred. This change in policy to
an accruals  basis  was applied  retrospectively  by  way of  a  prior  period 
adjustment in the financial statements for the year ended 31March2012.



The consolidated income statement for  the six months ended  30September2011 
and the consolidated balance sheet as at 30September 2011 have been  restated 
accordingly. The effect  has been to  increase the profit  before tax for  the 
period by £768,000 and the retained earnings for the period by £568,000. There
has been no effect on the net assets as at 30September2011.



3 Prior period changes in accounting estimates



During the second half of the year ended 31March 2012 the Board made a number
of changes  in accounting  estimate which  were applied  prospectively.  These 
changes in  estimate  do  not  result in  a  restatement  of  the  comparative 
information provided for the six  months ended 30September 2011. However,  to 
assist the user of the accounts in comparing our period on period results, the
following pro-forma consolidated  income statement has  been prepared to  show 
what the effect of the changes in estimates would have been on that period had
they been applied prior to the interim reporting date.



The changes in estimates are detailed on page 19 of the Group's Annual  Report 
for the  year  ended  31 March  2012,  and  relate to  changes  in  accounting 
estimates and  non-recurring items.  Changes  in accounting  estimates,  being 
stock provisions and changes in amortisation periods, have led to an  increase 
of £192,000 in cost of sales  and an increase of £1,380,000 in  administrative 
expenses. Non-recurring  items,  being  retirement of  development  costs  and 
initial recognition of  accruals for have  led to an  increase of £104,000  in 
distribution costs and an increase of £364,000 in administrative expenses.



                                                     6 months ended
                             30 Sept 2011        30 Sept 2011     30 Sept 2011
                                                    Pro-forma        Pro-forma
                              As reported         adjustments         adjusted
                               (Restated)
                                Unaudited           Unaudited        Unaudited
                                     £000                £000             £000
Revenue                            27,332                   -           27,332
Cost of Sales                     (6,610)               (192)          (6,802)
Gross Profit                       20,722               (192)           20,530
Distribution costs                (4,358)               (104)          (4,462)
Administrative expenses           (7,824)             (1,744)          (9,568)
Profit from operations              8,540             (2,040)            6,500
Finance income                        114                   -              114
                                    8,654             (2,040)            6,614
Finance costs                       (237)                   -            (237)
Profit before tax                   8,417             (2,040)            6,377
Income tax expense                (1,892)                 566          (1,326)
Profit for the period
 attributable to owners of
the parent                          6,525             (1,474)            5,051
Earnings per share
- basic                             23.1p                                17.8p
- diluted                           22.0p                                17.0p



4 Revenue and segmental information



For management purposes, the Group is currently organised into three operating
regions: direct sales operations  in the USA,  Europe (excluding Spain,  Italy 
and Portugal) and distributor sales operations in the Rest of the World. These
regions are the basis on which the Group reports its segment information.  The 
main activity of the  Group is the manufacturing  and distributing of  medical 
diagnostic products.  Inter-segment  sales  are priced  based  on  the  market 
selling price for the  individual item obtainable  by the purchasing  segment, 
reduced by a margin equivalent to the  gross margin that would be expected  to 
have been achieved by purchasing the item on the local wholesale market.



                             USA Europe          ROW
                          direct direct distribution Eliminations Consolidated
                            £000   £000         £000         £000         £000
Period ended 30 September 2012
(unaudited)
Revenue
External sales             9,912  8,564        5,362            -       23,838
Inter-segment sales            - 15,144            -     (15,144)            -
Total revenue              9,912 23,708        5,362     (15,144)       23,838
Result
Segment result             1,671  4,666        1,415            -        7,752
Central administration
and distribution costs                                                 (1,546)
Profit from operations                                                   6,206
Finance income                                                             108
Finance costs                                                             (51)
Profit before tax                                                        6,263
Income tax expense                                                     (1,562)
Profit after tax                                                         4,701
Period ended 30 September 2011 (Restated and
unaudited)
Revenue
External sales            11,364 10,617        5,351            -       27,332
Inter-segment sales            - 17,143            -     (17,143)            -
Total revenue             11,364 27,760        5,351     (17,143)       27,332
Result
Segment result             1.981  6,606        1,942            -       10,529
Central administration
and distribution costs                                                 (1,989)
Profit from operations                                                   8,540
Finance income                                                             114
Finance costs                                                            (237)
Profit before tax                                                        8,417
Income tax expense                                                     (1,892)
Profit after tax                                                         6,525
Year ended 31 March 2012
(audited)
Revenue
External sales            22,283 22,572        8,815            -       53,670
Inter-segment sales            - 13,372            -     (13,372)            -
Total revenue             22,283 35,944        8,815     (13,372)       53,670
Result
Segment result             4,162 18,255        3,524            -       25,941
Central administration
and distribution costs                                                (18,424)
Profit from operations                                                   7,517
Finance income                                                             241
Finance costs                                                            (508)
Profit before tax                                                        7,250
Income tax expense                                                     (2,512)
Profit after tax                                                         4,738



5 Movement on exceptional provision for doubtful debt



This relates to  deferred consideration due  from Escalon Medical  Corporation 
("EMC") in respect of the sale of the haematology activities of IDS France  SA 
in 2008.  In the  financial statements  for the  year ended  31March 2012,  a 
provision of €3.2m was made after EMC indicated that it would have  difficulty 
settling this obligation. In October  2012, immediately following the sale  by 
EMC of one of  its trading divisions  an amount of €1.9m  was received by  the 
Group in  full and  settlement of  the debt.  Consequently the  doubtful  debt 
provision was reduced by this amount  in the interim financial statements  for 
the period ended 30September 2012.



6 Earnings per share



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



For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume  conversion of all dilutive potential  ordinary 
shares. The Group has two classes of dilutive potential ordinary shares: those
share options granted to employees where  the exercise price is less than  the 
average market price of  the Company's ordinary shares  during the period  and 
the contingently issuable shares under the Group's share option scheme. At  30 
September 2012, the performance criteria for  the vesting of the awards  under 
the option scheme  had been met  and consequently the  shares in question  are 
included in the diluted EPS calculation.



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



                                           6 Months     6 Months          Year
                                              ended        ended         Ended
                                       30 Sept 2012 30 Sept 2011 31 March 2012
                                                      (Restated)
                                          Unaudited    Unaudited       Audited
                                               £000         £000          £000
Profit after tax                              4,701        6,525         4,738
                                                No.          No.           No.
Weighted average no of shares:
For basic earnings per share             28,336,915   28,303,582    28,320,248
Effect of dilutive potential ordinary
shares:
-Share Options                              123,872    1,324,134       977,696
For diluted earnings per share           28,460,787   29,627,716    29,297,944
Basic earnings per share                      16.5p        23.1p         16.7p
Diluted earnings per share                    16.4p        22.0p         16.2p



The calculation of  the adjusted  earnings per  share has  been calculated  by 
adjusting the  profit as  reported  for the  after-tax  effects of  the  items 
disclosed separately on the face of the income statement.



                                           6 Months     6 Months    Year ended
                                              ended        ended      31 March
                                       30 Sept 2012 30 Sept 2011 31 March 2012
                                                      (Restated)
                                          Unaudited    Unaudited       Audited
                                               £000         £000          £000
Profit on ordinary activities after
tax as reported                               4,701        6,525         4,738
Non-recurring items                         (1,003)            -         3,523
Changes in accounting estimates                   -            -         1,545
Profit on ordinary activities after
tax as adjusted                               3,698        6,525         9,806
Adjusted basic earnings per share             13.1p        23.1p         34.6p
Adjusted diluted earnings per share           13.0p        22.0p         33.5p



7 Taxation



Taxation for the six months ended 30 September 2012 is based on the  effective 
rates of taxation in  each jurisdiction which are  estimated to apply for  the 
year ended 31 March 2013.



8 Provisions



                                6 Months     6 Months          Year
                                   ended        ended         ended
                            30 Sept 2012 30 Sept 2011 31 March 2012
                               Unaudited    Unaudited       Audited
                                    £000         £000          £000
Earn-out liability
Brought forward                      566        1,160         1,160
Payments made in the period         (20)        (486)         (593)
Reassessment of liability
Change in assumptions              (495)         (13)          (13)
Foreign exchange gain                (7)         (17)          (38)
Unwinding of discount                 24           30            50
Carried forward                       68          674           566



9 Interim results



These results were approved  by the Board of  Directors on Friday 23  November 
2012. Copies of this interim report will be available to the public from  the 
Group's registered office and www.idsplc.com.



Independent review report to the Immunodiagnostic Systems Holdings PLC



We have been engaged by the Company  to review the condensed set of  financial 
statements in the  half-yearly financial report  for the six  months ended  30 
September 2012  which comprises  the  Consolidated Interim  Income  Statement, 
Consolidated Interim Statement of  Comprehensive Income, Consolidated  Interim 
Balance  Sheet,  Consolidated  Interim   Cash  Flow  Statement,   Consolidated 
Statement of Changes in Equity and the related Notes 1 to 9. We have read  the 
other information contained in the half yearly financial report and considered
whether it  contains any  apparent misstatements  or material  inconsistencies 
with the information in the condensed set of financial statements.



This report  is  made  solely  to the  company  in  accordance  with  guidance 
contained in  International  Standard  on  Review  Engagements  2410  (UK  and 
Ireland) 'Review of Interim Financial Information Performed by the Independent
Auditor of the Entity' issued by the Auditing Practices Board. To the  fullest 
extent permitted by law, we do  not accept or assume responsibility to  anyone 
other than the company, for our work, for this report, or for the  conclusions 
we have formed.



Directors' responsibilities



The half  yearly financial  report  is the  responsibility  of, and  has  been 
approved by, the Directors.  The Directors are  responsible for preparing  the 
half yearly  financial  report  in accordance  with  International  Accounting 
Standards 34, "Interim Financial Reporting", as adopted by the European Union.



As disclosed  in Note  1, the  annual financial  statements of  the Group  are 
prepared in  accordance with  IFRSs  as adopted  by  the European  Union.  The 
condensed set of financial statements  included in this half yearly  financial 
report has been prepared in accordance with International Accounting  Standard 
34, 'Interim Financial Reporting,' as adopted by the European Union.



Our responsibility



Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.



Scope of review



We conducted our review  in accordance with  International Standard on  Review 
Engagements 2410 (UK  and Ireland), 'Review  of Interim Financial  Information 
Performed by the  Independent Auditor of  the Entity' issued  by the  Auditing 
Practices Board for use in the  United Kingdom. A review of interim  financial 
information consists of making enquiries, primarily of persons responsible for
financial and accounting  matters, and  applying analytical  and other  review 
procedures. A review is substantially less in scope than an audit conducted in
accordance with  International  Standards on  Auditing  (UK and  Ireland)  and 
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit.  Accordingly, 
we do not express an audit opinion.



Conclusion



Based on our  review, nothing  has come  to our  attention that  causes us  to 
believe that the  condensed set  of financial  statements in  the half  yearly 
financial report for the six months  ended 30 September 2012 is not  prepared, 
in all material respects, in accordance with International Accounting Standard
34 as adopted by the European Union.



Ernst & Young LLP

Newcastle upon Tyne

23 November 2012



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IR PGGCWGUPPPGA -0- Nov/26/2012 07:00 GMT
 
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