Quarter 4 2008 Results
Revenues for quarter 4, 2008 amounted to $34.0 million compared to $35.7m for quarter 4, 2007, a decrease of 4.8%. This included a decrease 5.1% in our Point of Care revenues and 4.7% in our Clinical Laboratory revenues. Compared to revenues of $35.6m in quarter 3, 2008, revenues in quarter 4 have also fallen by approximately 4.4%. However, this fall is entirely attributable to currency movements. On a constant currency basis quarter 3 revenues would have also been $34.0 million and thus have remained constant quarter on quarter.
The fall in Clinical Laboratory revenues of 4.4% in real terms is largely due to seasonal factors such as lower sales of Lyme Disease products which tend to peak in quarters 2 and 3 each year. This decrease was offset by an increase of 25.2% in Point of Care revenues. This growth occurred in both of our key HIV markets of Africa and the USA.
Gross profit for the quarter amounted to $14.8 million, representing a gross margin of approximately 44%. This is broadly in line with gross margin levels recorded in the previous three quarters. As a significant number of other companies record instrument servicing costs in selling, general and administrative expenses rather than in cost of sales as Trinity does, we have provided additional information to enable more meaningful comparison of gross margins to be made. Gross profit for the quarter before instrument servicing costs amounted to $16.4 million representing a gross margin before instrument servicing of 48%.
Research and development expenditure of $1.9 million was incurred during the quarter. This equates to approximately 5% of revenues and thus coincides with the Company’s long term level of expenditure on such activities. Selling, general and administrative expenses of $11.2 million represents a 16% decrease from $13.3 million in quarter 4, 2007. This reduction is attributable to continued cost control and the impact of the stronger US dollar in quarter 4 2008.
Operating profit before restructuring expenses and impairment for the quarter amounted to $2.2m and was consistent with the same period in 2007. Profit before tax and restructuring expense and impairment was $1.8 million for quarter 4 compared to $1.5m for the same period in 2007, an increase of 16%. When compared to quarter 3, profit before tax on a similar basis showed an increase of 13% this quarter. EBITDA & share option expense and restructuring charges and impairment for the quarter was $4.4 million. This compares to $4.5 million in quarter 4, 2007. The Company recorded a net loss for the quarter of $81.7m. However, excluding restructuring expenses and impairment, this resulted in a profit after tax of $1.5m which equates to an EPS for the quarter of 7.1 US cents per ADR.
Comments
Commenting on the results, Kevin Tansley, Chief Financial Officer, said, “Trinity recorded a quarter 4 profit before tax and restructuring charges and impairment of $1.8m which is a 16% increase over the equivalent period in 2007. As well as maintaining our revenue levels, we have been successful in managing our cost base as we continue our drive for further operating efficiencies. This, combined with tight working capital management, has seen our cash balances grow from $3.5 million to $5.2 million in the space of one quarter.
“In our results today we also announced once off charges of $87.9m, the vast majority of which relate to non-cash impairment charges triggered by a comparison of our market value versus the book value of our net assets as required under IFRS accounting standards.”
Ronan O’Caoimh, chief executive officer, commented, “From a revenue perspective we are happy with our performance this quarter. Notwithstanding the difficult economic climate, we have been successful in maintaining our revenue levels when the impact of currency movements is removed. Our Point of Care sales demonstrated very strong growth, reaffirming the leading market position that our HIV products have in the key markets of Africa and the USA.
“We were also delighted with the launch of our new Destiny Max instrument this quarter. This is the most significant product launch ever undertaken by the Company and opens up huge market potential for us. The instrument has received a very enthusiastic response from customers and this has already been converted into sales in markets as diverse as Japan, China, the UK, Italy and Ireland.
“We also announced $6m of cost saving measures in December which combined with a more favourable currency environment positions us very well for 2009.”