2007-09-19 13:03:00 CEST
2008-01-17 13:05:10 CET
REGLERAD INFORMATION
Inion Oyj - Half Year financial report
Interim Results for the Six Months ended 30 June 2007
Inion Oy
(“Inion” or the “Company”)
Interim Results for the Six Months ended 30 June 2007
Tampere, Finland and Guildford, UK. 19 September 2007…Inion (LSE: IIN.L), a
company focused on the development of novel biodegradable medical implants,
today announces its interim results for the six months ended 30 June 2007.
A presentation to analysts will take place today at 09.30hrs at the offices of
Piper Jaffray Ltd, One South Place, London EC2M 2RB. Conference call dial-in
details are as follows:
Std Intl Dial in: +44 (0) 1452 567 588
Conference code: 6121081267#
A copy of the presentation is available at www.inion.com
Financial summary (unaudited)
Sales of €2.3 million were ahead of market expectation but down on the previous
year (H1 2006: €3.7 million) as a result of the Company focusing on the
implementation of decisions resulting from its strategic review
Operating expenditure down by €1.1 million (12%) compared to the same period
last year
Pre-tax loss at €5.9 million remained at approximately the same level as in the
first half of 2006 (€6.0 million)
Cash, cash equivalents and short-term investments of €19.2 million as at 30 June
2007 (30 June 2006: €35.8 million)
Operational summary
Strategic Review completed as planned. Key decisions are:
Business to refocus on Spine and Specialty Orthopaedics market segments and
divestment of non-core assets
Target markets are USA and select territories in rest of world, using focused
network of specialist distributors
Near-term R&D focus on product development in key market segments and
longer-term focus on next-generation bioactive biomaterials
Key appointments to the Board of Directors and Senior Management team and
internal realignment of resources
Good progress made towards achieving key objectives for 2007, which are to build
the infrastructure, networks, competencies and critical processes to support
Inion's new commercial strategy.
First stage completed - Building the organisation: high-quality Board of
Directors and Senior Management team appointed; restructuring and realignment
across the rest of the organisation completed
Four new Non-Executive Directors elected to Board at AGM
Peter Allen, David Anderson, Peter Jensen and Markku Silén
Mr Chris Lee appointed Chief Executive Officer and Director
Dr Auvo Kaikkonen appointed CSO and Director
Mr David Follows appointed as Chief Commercial Officer
Mr Scott Pravda appointed as President, Inion USA
Mr Peter Gibson and Mr Paul Garvey elected not to stand for re-appointment to
the Board at the AGM
New commercial organisation has begun developing specialist distributor networks
in key markets and appointments will commence from Q4 2007.
Discussions progressing for the disposal of remaining non-core businesses
(cranio-maxillofacial and dental).
New products received marketing clearance to strengthen product offerings in
Spine and Specialty Orthopaedics segments:
European marketing clearance received for Inion S-1™ spinal system enhanced with
radiographic markers for single and double-level fusion procedures.
Inion Hexalon™ biodegradable screw receives 510(k) clearance in the USA and CE
Mark in Europe extending its uses for the surgical fixation of soft tissue.
Inion CPS/OTPS FreedomPlate™, a multipurpose biodegradable plating system for
the fixation of wide range of bones, cleared for marketing in the USA and
Europe.
Inion BioRestore™, a new bioactive bone filler material, received 510(k)
marketing clearance in the USA for use in dental and cranio-maxillofacial
applications.
Results from the first of two pilot clinical proof of principle studies with
Inion OptimaPLUS™ bioactive material to assess accelerated bone growth have
proved inconclusive. A full evaluation of the trial and data collected so far,
together with interim results of the second pilot study evaluating bone quality
(expected October 2007) will be a further step towards making a final decision
on the future direction of the clinical programme for Inion OptimaPLUS™.
Dr Göran Ando, Inion's Chairman, commented: “I am delighted with the progress
made by the new management team in meeting the objectives and milestones set out
at the strategic review. Furthermore, my confidence in completing the execution
of the plan is significantly enhanced.”
-Ends-
For further information, please contact:
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| Inion Oy | Tel: +44 (0)1483 685 390 |
| Göran Ando, Non-Executive Chairman | Mob: +44 (0) 7941 438 862 |
| Chris Lee, Chief Executive Officer | |
| Julien | |
| Cotta, Chief Financial Officer | |
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| Citigate Dewe Rogerson | Tel: +44 (0)207 638 9571 |
| Mark Swallow / David | Mob: + 44 (0) 7903 737 703 |
| Dible / Helena Galilee | |
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About Inion (www.inion.com)
Inion Oy is a medical devices company focused on the development and successful
commercialisation of innovative and unique biodegradable and bioactive surgical
implants in selected high value orthopaedic market segments.
Inion's core expertise and technology lies in the design and manufacture of
innovative biodegradable plates, screws, pins and membranes, which are used to
enhance the healing of bone or soft tissue injuries to the skeleton, such as
those caused by trauma or by reconstructive surgery. Inion implants are made
from its proprietary Inion Optima™ family of biomaterials, with properties
tailored for specific surgical applications, in terms of strength, flexibility
and rate of degradation
Inion is also focused on developing proprietary new bioactive and
biodegradable biomaterials that promote bone healing and accelerate patient
rehabilitation.
Inion was incorporated in early 2000 and listed on the Official List of the UK
Listing Authority in December 2004. The Company has an office and an R&D
facility in the UK and head office, R&D and production facilities in Tampere,
Finland.
This announcement includes "forward-looking statements" which include all
statements other than statements of historical facts, including, without
limitation, those regarding the Group's financial position, business strategy,
plans and objectives of management for future operations (including development
plans and objectives relating to the Group's products), and any statements
preceded by, followed by or that include forward-looking terminology such as the
words "targets", "believes", "estimates", "expects", "aims", "intends", "will",
"can", "may", "anticipates", "would", "should", "could" or similar expressions
or the negative thereof. Such forward-looking statements involve known and
unknown risks, uncertainties and other important factors beyond the Group's
control that could cause the actual results, performance or achievements of the
Group to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Such
forward-looking statements are based on numerous assumptions regarding the
Group's present and future business strategies and the environment in which the
Group will operate in the future. Among the important factors that could cause
the Group's actual results, performance or achievements to differ materially
from those in forward-looking statements include those relating to Inion's
funding requirements, regulatory approvals, reliance on third parties,
intellectual property, key personnel and other factors. These forward-looking
statements speak only as at the date of this announcement. The Group expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained in this announcement to reflect any
change in the Group's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based. As a result
of these factors, prospective investors are cautioned not to rely on any
forward-looking statement.
Interim results for the six months ended 30 June 2007
Joint Chairman and CEO statement
In the first half of 2007 I am pleased to say that significant progress has been
made in focusing Inion on clear and achievable goals and putting in place the
key components that are crucial for the Company to capitalise on its significant
commercial opportunities. These achievements follow a period of thorough
evaluation of Inion's business which concluded with the completion of the
strategic review in March 2007.
At €2.3 million, sales in the first half of 2007 were ahead of market
expectation but down on the previous year. This is the result of the changes
that have been implemented to enable the Company to focus its resources on
strategic product categories and select geographies going forward. These sales
have been generated with long-term sustainability in mind.
The loss before tax for the period of €5.9 million was in line with the same
period in 2006 (€6.0 million), despite lower sales, with operating expenditure
reduced by €1.1 million compared to H1 2006.
Results of the strategic review
Our mission is to be the leading medical devices company focused on the
development and successful commercialisation of innovative and unique
biodegradable and bioactive surgical implants in selected high-value orthopaedic
market segments.
The strategic review, which was completed and published in March, was the first
significant step towards this. The key decisions were:
Sharper product focus - Spine and Specialty Orthopaedics (targeting foot and
ankle, and injuries to the upper extremity, i.e. hand, wrist and elbow) offer
high-value, high-growth innovative market segments
Worldwide distribution strategy - to gain control, visibility and improved
profitability, a network of specialist independent distributors will be
appointed in our target geographies
Focused R&D strategy - creating the potential for rapid high-quality product
development to create a sustainable pipeline in our target markets
Organisational structure and personnel - recruitment of world-class commercial
professionals demonstrating the Company's new commercial orientation. In support
of the executive team, a high-quality Board has been established
The strategic review was very well received by stakeholders and the execution of
the plan is exceeding expectations.
Building the organisation
Inion has been extremely successful in recruiting experienced, commercially
focused individuals to execute its new commercial strategy, outlined in the
strategic review.
Global commercial operations are now being led by David Follows, who was
appointed Chief Commercial Officer in June. David has spent the past 20 years in
the medical devices industry in positions of commercial leadership for the
medical device division of Johnson & Johnson. In order to secure functional
alignment, David has full responsibility for operations and supply chain
management in addition to his sales and marketing responsibility.
Establishing Inion's commercial operation in the USA is a priority and we are
very pleased to have recruited Scott Pravda as President, Inion USA. Scott has a
substantial track record of building successful sales organisations for medical
device companies in the USA. Scott has already recruited a highly experienced
team of regional sales managers (RSMs) and is in the process of establishing the
independent distributor networks that will be vital to Inion achieving its goals
in the world's largest market for orthopaedic implants.
The new US team of sector experienced RSMs includes Josh Sewell, Dave Hawkes and
Chris Shepherd. Josh will be based in Denver and manage distributor networks in
the West Coast region. He was previously an RSM for Nexa Orthopedics, and prior
to that he had a successful career managing his own orthopaedic distributorship.
Dave has significant sales and marketing experience from Stryker and latterly
DePuy, and will manage distributor networks for Inion in the Central region
based out of Indiana. Chris was formerly an RSM with Pegasus Biologics and
Kinetikos Medical, and will be focused on the South East region, based in
Charlotte, NC.
A fourth and final RSM to cover the North East region is expected to be
announced imminently. Finally, Carlos Fernandez has been appointed as an Office
Manager at the US headquarters in Florida, where he will be responsible for
logistics, accounting and customer service.
We are very encouraged to have been able to attract people of such high calibre
to Inion and look forward to their contribution and support as the business
implements its new strategy.
Importantly, we have also completed restructuring across all functions, and
believe we now have the alignment and focus necessary to implement the
commercial strategy.
Board appointments include Peter Allen, David Anderson, Peter Jensen and Markku
Silén as Non-Executive Directors at the Company's AGM in May. These four highly
experienced individuals will provide valuable guidance to Inion towards
achieving its commercial objectives.
Finally, we would like to thank Paul Garvey and Peter Gibson, who elected not to
stand for re-appointment to the Board at the Company's AGM. Paul and Peter have
contributed a great deal to the Company over their time on the Board, and
particularly during the strategic review process. We wish them both well for the
future.
New product development
As a result of the strategic review, we have aligned our new product development
activities around our key target segments of spine and specialty orthopaedics
and have important planned product launches in these areas during the remainder
of 2007.
We have gained marketing clearance in the USA and Europe for the Inion CPS/OTPS
FreedomPlate™, a multi-purpose biodegradable plating system for a wide range of
orthopaedic trauma indications. Also, Inion Anchron™ Plus suture anchor has
gained 510(k) regulatory clearance in the USA for use in procedures to attach
torn tendons or ligaments to bone as a result of injuries to the shoulder or
other joints.
More recently, we have greatly extended the range of soft tissue trauma injuries
for which our Inion Hexalon™ biodegradable screw can be used, to include
injuries of the shoulder, elbow, ankle, foot, hand and wrist. This is in
addition to the repair of injuries to cruciate ligaments in the knee, for which
it was initially approved.
We have also received marketing clearance in Europe for the Inion S-1™ Anterior
Cervical Fusion System enhanced with a radiographic marker. This advance enables
surgeons to see the implants using x-ray imaging and is designed to facilitate
the post-operative evaluation of the site of surgery in the spine, to confirm
the accurate positioning of implants and to visualise and assess the healing
process.
Importantly, this clearance also covers the use of the Inion S-1™ system for
double-level fusions, where three vertebrae are fused together. This clearance
therefore makes Inion S-1™ products suitable for a wider range of procedures and
provides surgeons using Inion products with a greater choice of implants to use.
We have also received a 510(k) marketing clearance in the USA for our newest
implant material, Inion BioRestore™. This product is the first commercially
available synthetic bioactive and biodegradable bone grafting substitute
material made from bioactive glass fibres and is designed to fill holes in the
skeleton, a market worth an estimated $158 million in the USA in 2007.
Research & development
As stated in the strategic review, Inion is maintaining a strong focus on R&D,
which has been realigned with its commercial objectives. Further product
development continues to be determined through consultation with key opinion
leaders in their respective fields and rigorous market analysis to validate the
commercial opportunity for each project.
Meanwhile, our longer-term focus is on developing next-generation bioactive
biomaterials that offer a significant clinical benefit through accelerated bone
growth.
Since the end of the interim period, we announced results from the first of two
pilot clinical proof of principle studies with Inion OptimaPLUS™ bioactive
material to assess accelerated bone growth. This trial has proved inconclusive,
as it was necessary to stop the trial prematurely following five patients
experiencing inflammatory events in the Hong Kong arm. These events do not
appear to be related to the Inion OptimaPLUS™ bioactive material as surgical
controls in the Hong Kong arm also experienced the same inflammatory events.
Furthermore, no similar events were observed at the second trial site in Zurich,
Switzerland.
We are undertaking a full evaluation of the trial and data collected to
determine whether the active ingredient in Inion OptimaPLUS™,
N-methyl-pyrrolidone (NMP), can reproduce in the clinic the accelerated bone
growth we have seen in preclinical trials. This, together with the interim
results of our ongoing bone quality trial (expected in October), will provide
important input into our decision on how to proceed with the clinical programme
for Inion OptimaPLUS™.
Outlook
Inion has made significant progress during the first half of 2007. The strategic
review has resulted in a focused commercial strategy designed to maximise our
ability to generate long-term value for our shareholders.
The review has been very well received by the market and we have worked hard to
build the necessary organisation from which to execute the new strategy. The
team is now recruited, is fully operational and highly motivated to achieve the
high expectations we have for Inion's technology in the market place. By the end
of 2007, a large part of our new independent distributor network will be in
place and trained, and this coupled with the planned Q4 product launches
provides us with a solid platform for growth in 2008.
We would like to express our sincere appreciation to Inion's employees in
Finland and the UK for their continued hard work and commitment through a period
of significant change and uncertainty. We would also like to thank our
shareholders for their patience and support during this transition period. The
Board believes that Inion is making great progress and is confident that results
from the new commercial strategy will be evident in its sales performance for
2008.
--------------------------------------------------------------------------------
| Dr Göran Ando | Chris Lee |
| Non-Executive Chairman | Chief Executive Officer |
| 19 September 2007 | |
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Financial review
Revenue in the first half of 2007 was ahead of market expectation but down on
the previous year. This is the result of the changes that have taken place to
enable the Company to focus its efforts on a smaller number of strategic product
categories and a number of key geographies going forward. However, despite this
lower sales figure, the loss before tax for the first half of 2007 of €5.9
million was in line with the loss reported in the same period in 2006 (€6.0
million). This was due mainly to headcount reduction and tighter control over
expenditure which together resulted in a reduction in operating expenditure of
€1.1 million compared to H1 2006.
The face of the income statement has been modified to reflect two changes. The
first is the inclusion of gross profit. The nature of this change is discussed
in more detail under the heading “gross profit”. The second is to show grant
income gross for the period under the heading “other operating income”. In H1
2006, this was netted off against research and development costs. Figures for H1
2006 have been re-stated to reflect this change. None of these changes impact
the loss for the year reported in H1 2006.
We first reported these changes in the Annual Report for 2006 and at that time
full year figures for 2006 were presented in the new format and comparative
figures for the full year for 2005 were re-stated. Therefore no further changes
are required for the 2006 full year comparative figures in this Interim report.
None of these changes affected the loss for the year reported.
During the first half of 2007, the Company has undergone a significant number of
organisational changes many of which arose as recommendations from the strategic
review in the first quarter of this year. The income statement below identifies
the underlying results, before the one-off items of €0.7 million (all of which
are reorganisation costs). The figures in the right hand column are those which
appear in the income statement.
--------------------------------------------------------------------------------
| H1 2007 | Before | One-off items | Income |
| | one-off items | €'000 | statement |
| | €'000 | | €'000 |
--------------------------------------------------------------------------------
| Revenue | 2,311 | - | 2,311 |
--------------------------------------------------------------------------------
| Cost of sales | (1,785) | (140) | (1,925) |
--------------------------------------------------------------------------------
| Gross profit | 526 | (140) | 386 |
--------------------------------------------------------------------------------
| Other operating income | 148 | - | 148 |
--------------------------------------------------------------------------------
| Research & development | (2,584) | - | (2,584) |
| costs | | | |
--------------------------------------------------------------------------------
| Sales & marketing | (1,547) | (306) | (1,853) |
--------------------------------------------------------------------------------
| Administrative expenses | (1,875) | (301) | (2,176) |
--------------------------------------------------------------------------------
| Operating loss | (5,332) | (747) | (6,079) |
--------------------------------------------------------------------------------
| Finance income & expense | 162 | - | 162 |
--------------------------------------------------------------------------------
| Loss before income tax | (5,170) | (747) | (5,917) |
--------------------------------------------------------------------------------
| Income tax | (47) | - | (47) |
--------------------------------------------------------------------------------
| Loss for the year | (5,217) | (747) | (5,964) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| H1 2006 | Before | One-off items | Income |
| | one-off items | €'000 | statement |
| | €'000 | | €'000 |
--------------------------------------------------------------------------------
| Revenue | 3,733 | - | 3,733 |
--------------------------------------------------------------------------------
| Cost of sales | (2,480) | (229) | (2,709) |
--------------------------------------------------------------------------------
| Gross profit | 1,253 | (229) | 1,024 |
--------------------------------------------------------------------------------
| Other operating income | 299 | - | 299 |
--------------------------------------------------------------------------------
| Research & development | (2,919) | - | (2,919) |
| costs | | | |
--------------------------------------------------------------------------------
| Sales & marketing | (1,911) | (253) | (2,164) |
--------------------------------------------------------------------------------
| Administrative expenses | (1,817) | (278) | (2,095) |
--------------------------------------------------------------------------------
| Operating loss | (5,095) | (760) | (5,855) |
--------------------------------------------------------------------------------
| Finance income & expense | (102) | - | (102) |
--------------------------------------------------------------------------------
| Loss before & after income | (5,197) | (760) | (5,957) |
| tax | | | |
--------------------------------------------------------------------------------
Revenue
The revenue of €2.3 million exceeded expectation of €2.0 million but shows a
decrease of 38% compared to last year (H1 2006: €3.7 million). The decrease was
expected during this period of change while the distribution strategy was being
reviewed and changes made.
Revenue from each of the product segments was as follows: Spine €0.1 million (H1
2006: €0.7 million), Cranio-maxillofacial (CMF) €0.9 million (H1 2006: €1.3
million), Orthopaedic trauma €0.8 million (H1 2006: €0.9 million), Sports
medicine €0.4 million (H1 2006: €0.5 million) and Dental €0.1 million (H1 2006:
€0.3 million).
There were three main reasons for the decrease compared to last year. The first
was the launch of Inion S-1™ Biodegradable Anterior Cervical Fusion system in
the Spinal market. Sales for this were €0.7 million last year (mainly stocking
orders) and €0.1 million this year as we have embarked on building an
independent distributor network for our Spine products. The second was our
significant although not complete withdrawal from the Latin American market.
Sales this year were €0.2 million (H1 2006: €0.4 million). Finally, following
our decision in the strategic review to dispose of CMF and Dental, CMF revenue
has declined by €0.4 million to €0.9 million and Dental by €0.2 million to €0.1
million.
Gross profit
The reporting of gross profit in the income statement has been modified. In
previous years, costs for quality assurance and quality control were included
within administrative expenses. These costs have been re-allocated to research
and development costs and to cost of sales as appropriate to reflect the true
costs of these functions. Prior period figures for H1 2006 have been re-stated
to reflect this accounting change.
Gross profit before one-off items was €0.5 million (H1 2006: €1.3 million).
Gross margin was 23% (H1 2006: 34%). Gross profit after one-off items was €0.4
million (H1 2006: €1.0 million). Gross margin for H1 was 17% (H1 2006: 27%). The
decrease in gross margin is mainly due to the lower sales and production volumes
in the period.
Operating loss
The operating loss for H1 before one-off items was €5.3 million (H1 2006: €5.1
million). The operating loss after one-off items was €6.1 million (H1 2006:
€5.9 million). The decrease in contribution from the lower sales in H1 2007 was
offset by savings of €1.1 million in total operating expenditure. Headcount at
the end of June decreased by 24% to 89 compared to the same period last year (H1
2006: 117) and was a significant contributing factor to the overall savings. The
reduction in headcount followed the union talks announced at the beginning of
2007 and further changes followed recommendations from the strategic review.
R&D expenditure decreased by 11% to €2.6 million (H1 2006: €2.9 million). This
decrease follows the decision in the strategic review to focus our efforts on
short and medium term projects.
Other R&D costs are attributed to the progress of a number of additional new
products, some of which have been recently announced, including line extensions,
through development, regulatory phases and onto the market.
Sales and marketing costs before one-off items were down 19% at €1.5 million (H1
2006: €1.9 million). After one-off items, these were down 14% to €1.9 million
(H1 2006: €2.2 million). Sales and marketing expenditure is expected to increase
in H2 following the recent appointment of Scott Pravda as President Inion USA
and the establishment of a new operating subsidiary in the US.
Administrative expenses before one-off items increased by 3% to €1.9 million (H1
2006: €1.8 million). After one-off items expenditure had increased by 4% to €2.2
million (H1 2006: €2.1 million). The increase mainly reflects the increase in
Board costs for the period.
Other operating income for the year was €148,000 (H1 2006: €299,000). This
represents grant income which subsidises R&D expenditure on the Inion
OptimaPLUS™ biodegradable and bioactive range of biomaterials. The grant was
awarded by Tekes (Finnish National Technology Agency) for the reimbursement of
€1.9 million of a total €3.8 million of qualifying expenditure.
Finance income and expense
Net finance income for the year was €0.2 million (H1 2006: net finance expense
€0.1 million). There were significant unrealised foreign exchange losses in the
previous year arising from a weakening dollar which are not present this year.
Income tax expense
The income tax expense of €47,000 relates to a deferred tax charge arising on
the net decrease of deferred tax assets mainly due to falling finance lease
liabilities.
Loss per share
The loss per share was €0.08 (H1 2006: €0.08).
Balance sheet and cash flow
Cash, cash equivalents and short-term investments at the end of the period were
€19.2 million (H1 2006: €35.8 million).
The total debt, including finance leases on the balance sheet was €6.2 million
(H1 2006: €12.5 million). This was made up of capital loans €2.3 million (H1
2006: €2.3 million), bank borrowings €1.1 million (H1 2006: €6.9 million) and
finance lease liabilities €2.8 million (H1 2006: €3.3 million). The
non-amortising loan of US$6.0 million was repaid in February 2007, thus reducing
bank borrowings by €4.7 million. The loan served as a hedge which was no longer
required. It could not be used for working capital purposes as it was secured
with cash.
Total cash spent in the six months was €6.4 million (H1 2006: €7.4 million)
excluding the repayment of the €4.7 million loan. This includes re-organisation
costs of €0.7 million. This decrease is mainly due to headcount decreases, tight
controls over expenditure and significant improvements in working capital
management. Purchase of property plant and equipment was €0.1 million (H1 2006:
€0.1 million).
Inventory and trade debtors are also down since the beginning of the year
following active management of the working capital. Inventory was down 19% since
the beginning of the year to €1.9 million (31 December 2006: €2.4 million).
Trade receivables were down 25% to €1.3 million (31 December 2006: €1.8 million)
following introduction of tight credit control management over the last twelve
months.
Julien Cotta
Chief Financial Officer
19 September 2007
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| Consolidated income statement | Notes | Unaudited | Unaudited | Audited |
| Half year ended 30 June 2007 | | Half year | Half year | Full year |
| | | 2007 | 2006 | 2006 |
| | | €'000 | Re-stated1 | €'000 |
| | | | €'000 | |
--------------------------------------------------------------------------------
| Revenue | 3 | 2,311 | 3,733 | 5,714 |
--------------------------------------------------------------------------------
| Cost of sales | | (1,925) | (2,709) | (4,775) |
--------------------------------------------------------------------------------
| Gross profit | | 386 | 1,024 | 939 |
--------------------------------------------------------------------------------
| Other operating income | | 148 | 299 | 707 |
--------------------------------------------------------------------------------
| Research and development | | (2,584) | (2,919) | (5,735) |
| costs | | | | |
--------------------------------------------------------------------------------
| Sales and marketing | | (1,853) | (2,164) | (5,507) |
--------------------------------------------------------------------------------
| Administrative expenses | | (2,176) | (2,095) | (4,546) |
--------------------------------------------------------------------------------
| Operating loss | | (6,079) | (5,855) | (14,142) |
--------------------------------------------------------------------------------
| Finance income/(expense) | | 162 | (102) | (336) |
--------------------------------------------------------------------------------
| Loss before income tax | | (5,917) | (5,957) | (14,478) |
--------------------------------------------------------------------------------
| Income tax | 4 | (47) | - | (4,120) |
--------------------------------------------------------------------------------
| Loss for the year | | (5,964) | (5,957) | (18,598) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Loss per share (expressed in | | | | |
| € per share) | | | | |
--------------------------------------------------------------------------------
| Basic and diluted | 5 | (0.08) | (0.08) | (0.25) |
--------------------------------------------------------------------------------
1See note 2.
--------------------------------------------------------------------------------
| Statements of recognised income | Unaudited | Unaudited | Audited |
| and expense | Half year | Half year | Full year |
| For the half year ended 30 June | 2007 | 2006 | 2006 |
| 2007 | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Loss for the year | (5,964) | (5,957) | (18,598) |
--------------------------------------------------------------------------------
| Net exchange (loss)/gain | (25) | 357 | 567 |
--------------------------------------------------------------------------------
| Deferred tax reversed from share | - | - | (1,085) |
| premium | | | |
--------------------------------------------------------------------------------
| Net (loss)/gain not recognised in | (25) | 357 | (518) |
| income statement | | | |
--------------------------------------------------------------------------------
| Total recognised expense for the | (5,989) | (5,600) | (19,116) |
| year | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated balance sheet | Notes | Unaudited | Unaudited | Audited |
| As at 30 June 2007 | | Half year | Half year | Full year |
| | | 2007 | 2006 | 2006 |
| | | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Assets | | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Intangible assets | | 1,083 | 1,020 | 1,046 |
--------------------------------------------------------------------------------
| Property, plant & equipment | | 5,199 | 5,563 | 5,359 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 233 | 5,476 | 279 |
--------------------------------------------------------------------------------
| | | 6,515 | 12,059 | 6,684 |
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | | 1,946 | 2,377 | 2,410 |
--------------------------------------------------------------------------------
| Trade receivables | | 1,341 | 4,550 | 1,780 |
--------------------------------------------------------------------------------
| Other receivables and | | 1,350 | 1,355 | 1,903 |
| prepaid expenses | | | | |
--------------------------------------------------------------------------------
| Other financial assets at | | 18,175 | 25,760 | 26,308 |
| fair value through profit or | | | | |
| loss | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 1,045 | 10,017 | 4,118 |
--------------------------------------------------------------------------------
| | | 23,857 | 44,059 | 36,519 |
--------------------------------------------------------------------------------
| Total assets | | 30,372 | 56,118 | 43,203 |
--------------------------------------------------------------------------------
| Shareholders' equity and | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Shareholders' equity | | | | |
--------------------------------------------------------------------------------
| Share capital | 6 | 2,252 | 2,235 | 2,239 |
--------------------------------------------------------------------------------
| Share issue | 6 | 3 | 2 | 5 |
--------------------------------------------------------------------------------
| Share premium | 6 | 80,598 | 81,683 | 80,598 |
--------------------------------------------------------------------------------
| Fair value and other | 6 | 2,407 | 2,223 | 2,313 |
| reserves | | | | |
--------------------------------------------------------------------------------
| Translation differences | 6 | 804 | 619 | 829 |
--------------------------------------------------------------------------------
| Retained earnings | 6 | (64,288) | (45,683) | (58,324) |
--------------------------------------------------------------------------------
| Total equity | 6 | 21,776 | 41,079 | 27,660 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Capital loans | | 2,342 | 2,342 | 2,342 |
--------------------------------------------------------------------------------
| Borrowings | | 350 | 5,769 | 700 |
--------------------------------------------------------------------------------
| Finance lease liabilities | | 2,077 | 2,663 | 2,432 |
--------------------------------------------------------------------------------
| Other long-term liabilities | | 392 | 322 | 356 |
--------------------------------------------------------------------------------
| | | 5,161 | 11,096 | 5,830 |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Trade payables | | 622 | 783 | 1,576 |
--------------------------------------------------------------------------------
| Borrowings | | 700 | 1,088 | 5,653 |
--------------------------------------------------------------------------------
| Finance lease liabilities | | 701 | 624 | 688 |
--------------------------------------------------------------------------------
| Other short term liabilities | | 1,313 | 1,448 | 1,663 |
--------------------------------------------------------------------------------
| Provisions | | 99 | - | 133 |
--------------------------------------------------------------------------------
| | | 3,435 | 3,943 | 9,713 |
--------------------------------------------------------------------------------
| Total liabilities | | 8,596 | 15,039 | 15,543 |
--------------------------------------------------------------------------------
| Total shareholders' equity | | 30,372 | 56,118 | 43,203 |
| and liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated cash flow | Notes | Unaudited | Unaudited | Audited |
| statements | | Half year | Half year | Full year |
| For the half year ended 30 | | 2007 | 2006 | 2006 |
| June 2007 | | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Cash flows from operating | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Cash used in operations | 7 | (5,416) | (6,447) | (11,318) |
--------------------------------------------------------------------------------
| Interest received | | 525 | 274 | 377 |
--------------------------------------------------------------------------------
| Interest paid | | (114) | (177) | (365) |
--------------------------------------------------------------------------------
| Net cash flow used in | | (5,005) | (6,350) | (11,306) |
| operating activities | | | | |
--------------------------------------------------------------------------------
| Cash flows from investing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Purchase of property, plant & | | (142) | (66) | (112) |
| equipment | | | | |
--------------------------------------------------------------------------------
| Purchase of intangible fixed | | (147) | (162) | (257) |
| assets | | | | |
--------------------------------------------------------------------------------
| Disposal of other financial | | 8,046 | 11,510 | 11,510 |
| assets at fair value through | | | | |
| profit or loss | | | | |
--------------------------------------------------------------------------------
| Net cash flow from investing | | 7,757 | 11,282 | 11,141 |
| activities | | | | |
--------------------------------------------------------------------------------
| Cash flows from financing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Proceeds from issue of | | 11 | 29 | 36 |
| ordinary shares | | | | |
--------------------------------------------------------------------------------
| Proceeds from capital loans | | - | 51 | 51 |
--------------------------------------------------------------------------------
| Repayment of borrowings | | (5,304) | (496) | (837) |
--------------------------------------------------------------------------------
| Finance lease principal | | (474) | (451) | (914) |
| payments | | | | |
--------------------------------------------------------------------------------
| Net cash flow from financing | | (5,767) | (867) | (1,664) |
| activities | | | | |
--------------------------------------------------------------------------------
| (Decrease)/increase in cash | | (3,015) | 4,065 | (1,829) |
| and cash equivalents | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | | 4,118 | 5,961 | 5,961 |
| 1 January | | | | |
--------------------------------------------------------------------------------
| Change in cash and cash | | (58) | (9) | (14) |
| equivalents due to exchange | | | | |
| rate movements | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | | 1,045 | 10,017 | 4,118 |
| period end | | | | |
--------------------------------------------------------------------------------
Notes to the accounts
Basis of preparation
The interim financial statements have been prepared in accordance with the
accounting policies set out in the Annual Report for the year ended 31 December
2006.
The results for the half year ended 30 June 2007 and 30 June 2006 have not been
audited and do not constitute statutory accounts.
The results for the year ended 31 December 2006 are extracted from the audited
annual financial statements on which the auditors reported without
qualification.
Re-stated prior year figures
The reporting of gross profit in the income statement has been modified. In H1
2006, costs for quality assurance and quality control had been included within
administrative expenses. These costs have been re-allocated to research and
development costs and to cost of sales as appropriate, to reflect the true costs
of these functions. In addition, grant income is now shown gross under the
heading “other operating income”. In H1 2006, this was netted off against
research and development expenditure. Figures for H1 2006 have been re-stated to
reflect this accounting change. These changes have no impact on the loss for the
year reported in H1 2006.
Segmental analysis
Primary reporting format - business segments
The Company is organised into five operating segments. The operating segments
are CMF surgery, Orthopaedic trauma, Sports medicine, Spine and Dental.
As each of these segments has similar characteristics, they can be aggregated
into one reportable business segment being the manufacture and sale of
biodegradable implants.
Secondary reporting format - geographical segments
--------------------------------------------------------------------------------
| Half year ended 30 June | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2007 | 2006 | 2006 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Europe | 891 | 1,256 | 1,914 |
--------------------------------------------------------------------------------
| Americas | 580 | 1,434 | 1,963 |
--------------------------------------------------------------------------------
| RoW | 840 | 1,043 | 1,837 |
--------------------------------------------------------------------------------
| Total | 2,311 | 3,733 | 5,714 |
--------------------------------------------------------------------------------
Taxation
--------------------------------------------------------------------------------
| Half year ended 30 June | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2007 | 2006 | 2006 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Income tax -current year | - | - | 7 |
--------------------------------------------------------------------------------
| Deferred tax charge | 47 | - | 4,113 |
--------------------------------------------------------------------------------
| | 47 | - | 4,120 |
--------------------------------------------------------------------------------
Loss per share
--------------------------------------------------------------------------------
| | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2007 | 2006 | 2006 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Loss for the year | (5,964) | (5,957) | (18,598) |
--------------------------------------------------------------------------------
| | Number | Number | Number |
--------------------------------------------------------------------------------
| Basic and diluted: Weighted average | 74,791,673 | 73,726,894 | 74,090,837 |
| number of shares | | | |
--------------------------------------------------------------------------------
| Effect of anti-dilutive securities: | | | |
--------------------------------------------------------------------------------
| Stock options | 712,975 | 1,651,329 | 2,371,077 |
--------------------------------------------------------------------------------
| Anti-dilutive: Adjusted weighted | 75,504,648 | 75,378,223 | 76,461,914 |
| average number of shares and assumed | | | |
| conversations | | | |
--------------------------------------------------------------------------------
Statement of changes in shareholders' equity
--------------------------------------------------------------------------------
| | Share | Share | Share | Other | Translat | Retaine | Total |
| | capit | issue | premiu | reserv | ion | d | €'000 |
| | al | €'000 | m | es | differen | earning | |
| | €'000 | | €'000 | €'000 | ces | s | |
| | | | | | €'000 | €'000 | |
--------------------------------------------------------------------------------
| At 31 | 2,200 | 8 | 81,683 | 2,114 | 262 | (39,726 | 46,541 |
| December | | | | | | ) | |
| 2005 | | | | | | | |
--------------------------------------------------------------------------------
| Translation | - | - | - | - | 357 | - | 357 |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Loss for the | - | - | - | - | - | (5,957) | (5,957 |
| year | | | | | | | ) |
--------------------------------------------------------------------------------
| Employee | - | - | - | 109 | - | - | 109 |
| services - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds | 35 | (6) | - | - | - | - | 29 |
| from shares | | | | | | | |
| issued - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| At 30 June | 2,235 | 2 | 81,683 | 2,223 | 619 | (45,683 | 41,079 |
| 2006 | | | | | | ) | |
--------------------------------------------------------------------------------
| Translation | - | - | - | - | 210 | - | 210 |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Other net | - | - | (1,085 | - | - | - | (1,085 |
| decreases | | | ) | | | | ) |
--------------------------------------------------------------------------------
| Loss for the | - | - | - | - | - | (12,641 | (12,64 |
| year | | | | | | ) | 1) |
--------------------------------------------------------------------------------
| Employee | - | - | - | 90 | - | - | 90 |
| services - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds | 4 | 3 | - | - | - | - | 7 |
| from shares | | | | | | | |
| issued - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| At 31 | 2,239 | 5 | 80,598 | 2,313 | 829 | (58,324 | 27,660 |
| December | | | | | | ) | |
| 2006 | | | | | | | |
--------------------------------------------------------------------------------
| Translation | - | - | - | - | (25) | - | (25) |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Loss for the | - | - | - | - | - | (5,964) | (5,964 |
| year | | | | | | | ) |
--------------------------------------------------------------------------------
| Employee | - | - | - | 94 | - | - | 94 |
| services - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds | 13 | (2) | - | - | - | - | 11 |
| from shares | | | | | | | |
| issued - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| At 30 June | 2,252 | 3 | 80,598 | 2,407 | 804 | (64,288 | 21,776 |
| 2007 | | | | | | ) | |
--------------------------------------------------------------------------------
Reconciliation of loss for the year to cash used in operations
--------------------------------------------------------------------------------
| | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2007 | 2006 | 2006 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Loss for the year | (5,964) | (5,957) | (18,598) |
--------------------------------------------------------------------------------
| Deferred taxes | 47 | - | 4,113 |
--------------------------------------------------------------------------------
| Depreciation | 412 | 548 | 1,028 |
--------------------------------------------------------------------------------
| Share based compensations | 94 | 109 | 199 |
--------------------------------------------------------------------------------
| Other adjustments | 163 | 189 | 846 |
--------------------------------------------------------------------------------
| Fair value losses/(gains) on other | 88 | (139) | (687) |
| financial instruments | | | |
--------------------------------------------------------------------------------
| Fair value loss on derivative | - | - | 102 |
| financial instruments | | | |
--------------------------------------------------------------------------------
| Interest (income)/expense | (420) | (63) | 55 |
--------------------------------------------------------------------------------
| Exchange gain | - | - | (299) |
--------------------------------------------------------------------------------
| Decrease in inventory | 463 | 144 | 111 |
--------------------------------------------------------------------------------
| Decrease / (increase) in debtors | 992 | (513) | 1,533 |
--------------------------------------------------------------------------------
| (Decrease) / increase in non-interest | (1,291) | (765) | 279 |
| bearing liabilities | | | |
--------------------------------------------------------------------------------
| Cash used in operations | (5,416) | (6,447) | (11,318) |
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