2008-08-29 10:05:04 CEST
2008-08-29 10:05:04 CEST
REGULATED INFORMATION
Inion Oyj - Interim report (Q1 and Q3)
Inion Interim Report
Inion Oy
(“Inion or the “Company”)
Results for the six months ended 30 June 2008
Tampere, Finland and Guildford, UK. 29 August 2008, Inion (LSE: IIN.L), a
company focused on the development of novel biodegradable medical implants,
today announces its unaudited half-year results for the six months ended 30 June
2008.
The Company is holding a meeting for analysts at 9.30am today at the offices of
Piper Jaffray Ltd, One South Place, London EC2M 2RB. Conference call dial-in
details are as follows:
Std International Dial in: +44 (0) 1452 567 588
Conference code: 6121081267#
A copy of the presentation is available at www.inion.com
Financial summary
Sales for H1 2008 were €2.59 million, up 12% on sales of €2.31 million for the
same period in 2007. Sales development is in line with market expectation to
achieve full year sales of approximately €7 million.
Sales for Q2 2008 were €1.8 million, 115% higher than in Q1 2008, and 34% higher
than in the corresponding period in 2007.
Operating loss down 20% to €4.85 million (H1 2007: €6.08 million), with pre-tax
loss down 11% to €5.25 million (H1 2007: €5.92 million)
Cash, cash equivalents and short-term investments at €7.77 million as at 30 June
2008 (€13.82 million at 31 December 2007)
Currently evaluating a range of options available to the Company to ensure it is
well-funded in order to bridge the business to profitability
Operational summary (including post-period highlights)
FDA 510(k) marketing clearance received post the period end in July 2008 for
Inion's biodegradable graft containment systems for spinal fusion procedures
allowing the Company to accelerate commercial activities in the spine market.
Inion's spinal surgery products received European marketing clearance in 2007.
Inion's commercial operation continues to develop and deliver increasing sales.
In the USA, 40 distributors are currently engaged, with 22 focusing on the sales
and distribution of speciality orthopaedics products and 18 focusing on spine
product sales. US commercial activity is focused on the launch of the recently
approved spinal graft containment systems alongside the training and engagement
of high volume users in these areas. In the key markets within Europe and the
Far East retraining the distributors' sales force continues, focusing on the
core business areas of spine and speciality orthopaedics
David Follows has been promoted to Chief Operating Officer, from Chief
Commercial Officer and Dave Hawkes has been promoted to US National Sales
Director, from Regional Sales Manager for the Central USA region.
Out-licensing agreement signed in August with US firm Curative Biosciences Inc.
covering novel bioactive technology for promoting bone regrowth and repair when
treating patients with broken bones.
Ian Paling, Inion's Chairman, said: “Inion has a great product offering and a
focused commercial operation run by an experienced and professional team. With
these elements in place, the Company's future is all about successful execution
of its commercial strategy. We are pleased therefore to report today an improved
sales performance during the first half of 2008 compared to the same period last
year. Given the progress the Company has made over the past 18-24 months, we are
confident we will see continued growth during the second half of the year, to
achieve our sales target of approximately €7 million for the full year for
2008.”
-ends-
For further information, please contact:
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| Inion Oy | Tel: +44 (0)1483 685390 |
| Ian Paling, Chairman | |
| 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 Dible | |
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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 surgical implants and
bone graft substitutes 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[R] family of biodegradable materials, with properties
tailored for specific surgical applications, in terms of strength, flexibility
and rate of degradation
Inion is also focused on developing proprietary new 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 (ticker: IIN). The Company has offices in the
UK and USA, and its head office, R&D and production facilities are 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.
CEO statement
Inion has made solid progress during the first half of 2008 and this has been
reflected in the sales growth we have seen compared to the same period in 2007.
This sales development is more clearly visible by looking at the quarterly
performance, which shows that sales in the second quarter of the year were up
115% on those in the first quarter and up 34% on the corresponding period in
2007. This growth is from a low level given that the main focus of corporate
activity in 2007 was in restructuring the company and putting in place a new
commercial operation. The positive sales development reported today can be
attributed to the fact that we now have the majority of this international
commercial operation established and are focusing on increasing active training
and management of current distributors, to accelerate sales growth in our key
spine and orthopaedic trauma markets.
The Company remains focused on controlling costs, and losses from operations
during the first half of 2008 were reduced 20% to €4.85 million from €6.08
million in 2007. These figures are discussed in more detail in the Financial
Review but it is important to note that they reflect a 54% reduction in Research
and Development spend to €1.2 million, which is mainly due to the closure of the
Cambridge R&D facility and the termination of long term research projects. This
cost reduction more than offsets the increased sales and marketing cost (up 24%
to €2.30 million) and other administrative expenses invested as Inion
intensifies its commercial activities.
Commercial operation
Inion's business is focused on two high-value and high-growth segments of the
global orthopaedics market: Spine and Speciality Orthopaedics (targeting foot
and ankle, and upper extremities, i.e. hand, wrist and elbow). Inion's key
markets are in the USA and select territories across the rest of world, which
are accessed through a focused network of specialist distributors
Inion's priority market is the USA, where significant progress has been made in
building a network of specialist independent local distributors. A total of 40
independent distributors were engaged as at 30 June 2008, with 22 focusing on
the sales and distribution of Speciality Orthopaedics products and 18 focusing
on Spine product sales.
In select markets in Europe and the rest of the world, Inion continues to
develop its distribution network with established orthopaedics-focused
distributors.
The Company's global commercial operations are being led by Inion's newly
promoted Chief Operating Officer, David Follows. David originally joined Inion
in June 2007 as Chief Commercial Officer from ETHICON Endo-Surgery UK, where he
was Managing Director. He has more than 28 years of commercial experience in the
medical devices industry, predominantly with subsidiaries of Johnson & Johnson.
David is responsible for manufacturing, supply chain, logistics, research &
development and quality control, as well as sales outside the USA and global
marketing.
In the USA, Dave Hawkes has been promoted to US National Sales Director from his
previous role as Regional Sales Manager for the Central USA region.
Dave joined Inion in mid-2007 and has significant sales and marketing experience
in the medical implants industry from Stryker and latterly DePuy. In this new
role, and working closely with Chris Lee (CEO) and David Follows (COO), he will
take on responsibility for the development and growth of Inion's trauma and
spinal surgery businesses in the USA, including overseeing the appointment and
training of new independent distributors.
Inion is strongly focused on a programme of active training and management of
current distributors to accelerate sales growth in its key markets and since
March 2008 has had a full-time trainer based in the US for this purpose.
Strengthened product offering
Inion remains committed to introducing innovative products to market,
strengthening its respective portfolios targeting the Spine and Speciality
Orthopaedics segments.
An important milestone achieved in July, just after the period end, was receipt
of a 510(k) marketing clearance from the US Food and Drug Administration (FDA)
for biodegradable graft containment systems for spinal fusion procedures: the
Inion S-1™ Anterior Cervical Fusion System, the Inion S-1[TM] double-level plate
and the Inion S-2™ Anterior Thoraco-Lumbar Fusion System. These biodegradable
implant systems are used in conjunction with traditional rigid fixation in
procedures to treat a range of spinal conditions along its entire length,
including ruptures and displacement of inter-vertebral discs.
More than 183,000 cervical plating procedures, and more than 10,000 anterior
thoraco-lumbar plating procedures, were performed in 2006 in the USA, according
to a market research report in 2007 by Spinemarket. The US market for these
procedures was worth approximately €318 million and €32 million, respectively.
The number of spinal plating procedures has since grown at an annual rate of
approximately 30%.
The Inion S-1[TM] system was initially authorised for sale in the US and Europe
in 2005, however these new spine systems, which also received CE Mark marketing
authorisation in Europe in the second half of 2007, utilise a significant
technology advance whereby a radiographic marker has been incorporated along the
edges of the plates, and to the tips of screws. These markers enable surgeons to
view the position of the implants in post-operative x-ray without interfering
with their assessment of the site of surgery and its healing progress.
This product enhancement, in addition to the fact that Inion's biodegradable
implants degrade slowly and completely over time into carbon dioxide and water,
which are absorbed into the body, offers surgeons and patients significant
clinical benefits over traditional metal materials. These differentiated
features of Inion's spine systems will be key selling points for what is a major
product offering for Inion, targeting a significant and growing market
opportunity. As such, the commercial operation is prepared for an aggressive
sales and marketing delivery in all its important markets.
Ian Paling elected Chairman
In August, Inion elected Ian Paling as the Chairman of Inion, replacing Göran
Ando, who stepped down from the Board. Ian is a highly regarded businessman with
more than 25 years' senior management and Board-level experience, most recently
as CEO of Corin Group PLC (LSE: CRG), a world leader in the development,
manufacture and distribution of a wide range of reconstructive orthopaedic
devices. Ian was instrumental in Corin's growth from a small private business
into an internationally recognised and successful player in the global
orthopaedics sector, with a strong presence in most of the world's important
markets.
We believe Ian has the necessary skills, experience, contacts and qualities to
guide and support the business through the next phase of its commercial
development, and to help build on the solid foundation the Company has laid
during the past 18-24 months.
Inion would like to take this opportunity to thank Göran for his important
contribution to the restructuring and refocusing process, which has put the
Company in a good position to leverage its unique biomaterial technologies, to
realise its long-term value potential.
Non-core businesses
As a result of Inion's realigned product focus, the Company is seeking to divest
its cranio-maxillofacial (CMF) and dental businesses as well as certain other
assets. During 2007 and through the first half of 2008, these businesses and
distribution networks have been maintained with minimal investment and,
particularly in the case of the CMF business, continue to provide an important
revenue stream. As mentioned in Inion's results announcement in March 2008, the
sales performance in CMF, combined with discussions undertaken with potential
acquirers, has led Inion to re-evaluate the previous timelines for the disposal
of this business. The view then was that with a limited amount of additional
investment to strengthen the CMF product portfolio, Inion may be able to achieve
a greater valuation for this business, while retaining the income this business
generates in the interim. During the first half of 2008, Inion has made
strategic investments in the CMF business and continues to evaluate
opportunities for its divestment at an acceptable valuation.
Additionally, Inion has made progress in out-licensing some non-core
intellectual property and technologies from an early stage research programme
that was ceased as a result of the Company refocusing. In August, after the
period end, Inion signed an out-licensing agreement with US Company, Curative
Biosciences Inc. covering certain novel bioactive technologies for the promotion
of bone regrowth and repair when treating patients undergoing orthopaedic
surgical procedures. The licensed technology was developed through research work
undertaken at the Cambridge facility prior to its closing last year, and is
based on the use of N,N-dimethylacetamide (DMA) either alone or incorporated in
resorbable polymer structures (such as plates, membranes and screws).. Inion has
received a small upfront fee, and could receive development and sales milestones
of up to $2 million and royalties on revenues generated from any products
developed using the technology.
Over the course of its existence, Inion has been active in protecting its
intellectual property and by out-licensing such IP, Inion seeks to realise the
value resulting from research through companies more focused in these areas.
Outlook
Inion has made significant and positive changes to its strategy and
organisation, which have put it on track to become a successful business based
on commercialising innovative biodegradable products in the fields of spine and
speciality orthopaedics. Based on the recent progress the Company has made in
terms of strengthening its product offering and containing costs, and with sales
increasing month on month, the commercial operation is gaining real momentum.
While the new growth trajectory being established is expected to enable Inion to
become a profitable business, it is clear that further funding will be needed to
achieve this goal. The Directors of the Company are now looking at a range of
options that could provide the funding needed to bridge the period until Inion
becomes profitable.
Chris Lee
Chief Executive Officer
29 August 2008
Financial review
The financial results for H1 2008 are reviewed below and compared with H1 2007
unless otherwise stated.
Revenue
The revenue of €2.59 million was 12% higher than last year (H1 2007: €2.31
million). Revenue from each of the product segments is set out in the table
below.
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| | 2008 | 2007 | Change | Change |
| | €'000 | €'000 | €'000 | % |
--------------------------------------------------------------------------------
| Spine | 164 | 126 | 38 | 30% |
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| Speciality orthopaedics | 1,287 | 1,179 | 108 | 9% |
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| Cranio-maxillofacial | 1,105 | 933 | 172 | 18% |
| (CMF) | | | | |
--------------------------------------------------------------------------------
| Dental | 37 | 73 | (36) | (49%) |
--------------------------------------------------------------------------------
| Total | 2,593 | 2,311 | 282 | 12% |
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Spine revenues have increased mainly because of sales in the US.
Revenues from Speciality Orthopaedics have increased for three main reasons.
First, sales of Inion Hexalon[TM] biodegradable screws have benefited from both
the withdrawal of a competitor in the market and the increasing use of the
double-bundle technique for anterior cruciate ligament reconstruction where
twice as many screws are used per procedure.
Secondly, a large and final order for Inion Anchron[TM] (for use in fixing soft
tissue to bone) was received from a distributor in South America in advance of
our decision to cease supply of this product.
Finally, two new distributors for Speciality Orthopaedic products in Europe have
recently been appointed to replace an existing distributor whose exclusive
contract is not being renewed. Sales to the existing distributor when compared
to last year were lower. This has been partially offset by new sales in the US.
Revenues from CMF have improved in particular in the Far East as an increasing
number of users are converting from metal to biodegradable implants.
Gross profit
Gross profit has increased by 148% to €0.96 million (H1 2007: €0.39 million).
Gross margin was 37% (H1 2007: 17%). Except for reorganisation costs of €0.14
million which were included in cost of sales last year, the main reasons for the
increase in gross profit are the increase in sales and savings in production
costs. Savings in production costs amounted to €0.10 million.
Operating loss
The operating loss for H1 decreased by 20% to €4.85 million (H1 2007: €6.08
million). Operating loss last year included one-off costs of €0.76 million in
respect of re-organisation. The remaining decrease in operating loss is mainly
due to the increase in sales together with savings in operating costs.
R&D expenditure decreased by 54% to €1.20 million (H1 2007: €2.58 million). This
decrease is mainly due to the closure of the Cambridge research facility as well
as the termination of research based projects.
Sales and marketing costs were up 24% at €2.30 million (H1 2007: €1.85 million).
Re-organisation costs of €0.30 million are included in the figure for last year.
Excluding these costs, the increase is driven mainly by the new operating
subsidiary in the US.
Administrative expenses increased by 12% to €2.44 million (H1 2007: €2.18
million). Reorganisation costs of €0.30 million are included in costs for H1
2007. Administrative expenses have increased following the creation of a tax
provision of €0.65 million in respect of a potential tax liability arising from
earlier years.
Other operating income for the year was €0.14 million (H1 2007: €0.15 million).
This represents grant income that subsidises R&D expenditure on the Inion
OptimaPLUS[TM] 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 expense for the year was €0.40 million (H1 2007: net finance income
€0.16 million). This is due to lower interest income arising on lower average
cash balances and a weakening dollar.
Loss per share
The loss per share was €0.07 (H1 2007: €0.08).
Balance sheet and cash flow
Cash, cash equivalents and short-term investments at the end of June were €7.77
million (H1 2007: €19.22 million).
The total debt, including finance leases on the balance sheet was €4.80 million
(H1 2007: €6.17 million). This was made up of capital loans €2.34 million (H1
2007: €2.34 million), bank borrowings €0.35 million (H1 2007: €1.05 million) and
finance lease liabilities €2.11 million (H1 2007: €2.78 million).
Repayment of capital loans is subject to distributable retained earnings being
at least equal to restricted equity as defined by Finnish GAAP. Bank borrowings
will be fully paid up by March 2009. The main finance lease liability is in
respect of the Group's facility in Finland. The lease period for this ends in
June 2011 at which time ownership of the building transfers to the Group once
the remaining finance lease commitments have been fully paid.
Total cash spent in H1 2008 was €6.05 million (H1 2007: €6.41 million). Cash
spent in H1 2007 excludes repayment of a non-amortising US $6.0 million (€4.65
million) loan.
Risks and uncertainties
The Annual Report for 2007 summarises the key strategy for the business together
with the risks associated in carrying out our business. The following in respect
of going concern provides an update for H2 2008.
Going concern
The condensed set of financial statements have been prepared on a going concern
basis and, as described in Note 1, is dependent on measures to be taken to
conserve cash resources together with obtaining future alternative funding.
The condensed set of financial statements does not include any adjustments that
would result from a failure to obtain additional funds. Details of the
circumstances relating to this material uncertainty are described in Note 1.
Julien Cotta
Chief Financial Officer
29 August 2008
Statement of Directors' responsibilities
The Directors confirm that this condensed set of financial statements has been
prepared in accordance with IAS 34 as adopted by the European Union and that the
interim management report includes a fair review of the information required by
DTR 4.2.7 and DTR 4.2.8 being:
An indication of important events that have occurred during the first six months
and their impact on the condensed set of financial statements and a description
of the principal risks and uncertainties for the remaining six months of the
financial year
Material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last Annual Report
that have materially affected the financial position or performance of the
business
The Directors of Inion Oy are listed in the 2007 Annual Report with the
exception of the following changes in the period:
Peter Allen retired on 24 April 2008
Goran Ando retired on 13 August 2008
Ian Paling was elected as a Non-Executive Director and Chairman on 13 August
2008
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| Consolidated income statement | Notes | Unaudited | Unaudited | Audited |
| Half year ended 30 June 2008 | | Half year | Half year | Full year |
| | | 2008 | 2007 | 2007 |
| | | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Revenue | 2 | 2,593 | 2,311 | 5,232 |
--------------------------------------------------------------------------------
| Cost of sales | | (1,635) | (1,925) | (3,618) |
--------------------------------------------------------------------------------
| Gross profit | | 958 | 386 | 1,614 |
--------------------------------------------------------------------------------
| Other operating income | | 137 | 148 | 420 |
--------------------------------------------------------------------------------
| Research and development | | (1,198) | (2,584) | (5,422) |
| costs | | | | |
--------------------------------------------------------------------------------
| Sales and marketing | | (2,302) | (1,853) | (3,942) |
--------------------------------------------------------------------------------
| Administrative expenses | | (2,440) | (2,176) | (4,697) |
--------------------------------------------------------------------------------
| Operating loss | | (4,845) | (6,079) | (12,027) |
--------------------------------------------------------------------------------
| Finance (expense)/income | | (402) | 162 | (244) |
--------------------------------------------------------------------------------
| Loss before income tax | | (5,247) | (5,917) | (12,271) |
--------------------------------------------------------------------------------
| Income tax | 3 | 5 | (47) | (137) |
--------------------------------------------------------------------------------
| Loss for the period | | (5,242) | (5,964) | (12,408) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Loss per share (expressed in | | | | |
| € per share) | | | | |
--------------------------------------------------------------------------------
| Basic and diluted | 4 | (0.07) | (0.08) | (0.17) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Statements of recognised income and | Unaudited | Unaudited | Audited |
| expense | Half year | Half year | Full year |
| For the half year ended 30 June 2008 | 2008 | 2007 | 2007 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Loss for the period | (5,242) | (5,964) | (12,408) |
--------------------------------------------------------------------------------
| Net exchange gain/(loss) not | 40 | (25) | 230 |
| recognised in income statement | | | |
--------------------------------------------------------------------------------
| Total recognised expense for the | (5,202) | (5,989) | (12,178) |
| period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated balance sheet | Notes | Unaudited | Unaudited | Audited |
| As at 30 June 2008 | | Half year | Half year | Full year |
| | | 2008 | 2007 | 2007 |
| | | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Assets | | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Intangible assets | | 856 | 1,083 | 1,143 |
--------------------------------------------------------------------------------
| Property, plant & equipment | | 4,760 | 5,199 | 4,760 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 255 | 233 | 252 |
--------------------------------------------------------------------------------
| | | 5,871 | 6,515 | 6,155 |
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | | 2,537 | 1,946 | 2,018 |
--------------------------------------------------------------------------------
| Trade receivables | | 1,852 | 1,341 | 1,709 |
--------------------------------------------------------------------------------
| Other receivables and | | 1,181 | 1,350 | 1,593 |
| prepaid expenses | | | | |
--------------------------------------------------------------------------------
| Other financial assets at | | - | 18,175 | 13,302 |
| fair value through profit or | | | | |
| loss | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 7,768 | 1,045 | 516 |
--------------------------------------------------------------------------------
| | | 13,338 | 23,857 | 19,138 |
--------------------------------------------------------------------------------
| Total assets | | 19,209 | 30,372 | 25,293 |
--------------------------------------------------------------------------------
| Shareholders' equity and | | | | |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Shareholders' equity | | | | |
--------------------------------------------------------------------------------
| Share capital | 5 | 2,265 | 2,252 | 2,262 |
--------------------------------------------------------------------------------
| Share issue | 5 | - | 3 | - |
--------------------------------------------------------------------------------
| Share premium | 5 | 80,598 | 80,598 | 80,598 |
--------------------------------------------------------------------------------
| Fair value and other | 5 | 3,265 | 2,407 | 2,953 |
| reserves | | | | |
--------------------------------------------------------------------------------
| Translation differences | 5 | 1,099 | 804 | 1,059 |
--------------------------------------------------------------------------------
| Retained earnings | 5 | (76,025) | (64,288) | (70,732) |
--------------------------------------------------------------------------------
| Total equity | 5 | 11,202 | 21,776 | 16,140 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Capital loans | | 2,342 | 2,342 | 2,342 |
--------------------------------------------------------------------------------
| Borrowings | | - | 350 | 92 |
--------------------------------------------------------------------------------
| Finance lease liabilities | | 1,417 | 2,077 | 1,742 |
--------------------------------------------------------------------------------
| Other long-term liabilities | | 471 | 392 | 427 |
--------------------------------------------------------------------------------
| | | 4,230 | 5,161 | 4,603 |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Trade payables | | 1,150 | 622 | 1,143 |
--------------------------------------------------------------------------------
| Borrowings | | 350 | 700 | 609 |
--------------------------------------------------------------------------------
| Finance lease liabilities | | 691 | 701 | 690 |
--------------------------------------------------------------------------------
| Other short term liabilities | | 941 | 1,313 | 2,108 |
--------------------------------------------------------------------------------
| Provisions | | 645 | 99 | - |
--------------------------------------------------------------------------------
| | | 3,777 | 3,435 | 4,550 |
--------------------------------------------------------------------------------
| Total liabilities | | 8,007 | 8,596 | 9,153 |
--------------------------------------------------------------------------------
| Total shareholders' equity | | 19,209 | 30,372 | 25,293 |
| and liabilities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Consolidated cash flow | Notes | Unaudited | Unaudited | Audited |
| statements | | Half year | Half year | Full year |
| For the half year ended 30 | | 2008 | 2007 | 2007 |
| June 2008 | | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Cash flows from operating | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Cash used in operations | 6 | (4,907) | (5,416) | (9,374) |
--------------------------------------------------------------------------------
| Interest received | | 10 | 525 | 39 |
--------------------------------------------------------------------------------
| Interest paid | | (26) | (114) | (526) |
--------------------------------------------------------------------------------
| Net cash flow used in | | (4,923) | (5,005) | (9,861) |
| operating activities | | | | |
--------------------------------------------------------------------------------
| Cash flows from investing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Purchase of property, plant & | | (225) | (142) | (332) |
| equipment | | | | |
--------------------------------------------------------------------------------
| Purchase of intangible fixed | | (80) | (147) | (237) |
| assets | | | | |
--------------------------------------------------------------------------------
| Disposal of other financial | | 13,302 | 8,046 | 13,488 |
| assets at fair value through | | | | |
| profit or loss | | | | |
--------------------------------------------------------------------------------
| Net cash flow from investing | | 12,997 | 7,757 | 12,919 |
| activities | | | | |
--------------------------------------------------------------------------------
| Cash flows from financing | | | | |
| activities | | | | |
--------------------------------------------------------------------------------
| Proceeds from issue of | | 3 | 11 | 11 |
| ordinary shares | | | | |
--------------------------------------------------------------------------------
| Repayment of borrowings | | (351) | (5,304) | (5,729) |
--------------------------------------------------------------------------------
| Finance lease principal | | (474) | (474) | (942) |
| payments | | | | |
--------------------------------------------------------------------------------
| Net cash flow from financing | | (822) | (5,767) | (6,660) |
| activities | | | | |
--------------------------------------------------------------------------------
| Increase/(decrease) in cash | | 7,252 | (3,015) | (3,602) |
| and cash equivalents | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | | 516 | 4,118 | 4,118 |
| 1 January | | | | |
--------------------------------------------------------------------------------
| Change in cash and cash | | - | (58) | - |
| equivalents due to exchange | | | | |
| rate movements | | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | | 7,768 | 1,045 | 516 |
| 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
2007.
The results for the half year ended 30 June 2008 and 30 June 2007 have not been
audited and do not constitute statutory accounts.
The results for the year ended 31 December 2007 are extracted from the audited
annual financial statements on which the auditors reported without
qualification.
Going concern
Inion has had a history of operating losses since inception. It expects to incur
further losses as current planned expenditure exceeds its revenues from product
sales. Inion's existing cash balances are unlikely to be sufficient to fund its
future planned net losses and the Company is likely to require additional
finance within the next 12 months.
The interim financial information has been prepared on a going concern basis
which assumes that the Company will continue in operational existence for the
foreseeable future. The Directors have reviewed the working capital requirements
of the Group over the next 12 months. The Group's working capital requirements
are sensitive to future revenues which by their nature are uncertain and depend
upon the success of the realisation of Spine and Speciality Orthopaedic revenues
particularly in the US.
As at 30 June 2008, Inion had cash resources of €7.8 million. The Directors have
identified a number of steps that could be taken to manage its cash resources
and thereby ensure that it can continue in operation for the foreseeable future.
These include:
Further equity financing
Further non-equity based financing
Divestment of the Cranio-maxillofacial and Dental businesses
Reductions in the cost base and in particular continued rigorous management of
the discretionary spend
Segmental analysis
Primary reporting format - business segments
The Company is organised into four operating segments. The operating segments
are Spine, Speciality Orthopaedics, Cranio-maxillofacial (CMF) 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 |
| | 2008 | 2007 | 2007 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Europe | 800 | 891 | 1,785 |
--------------------------------------------------------------------------------
| Americas | 791 | 580 | 1,238 |
--------------------------------------------------------------------------------
| RoW | 1,002 | 840 | 2,209 |
--------------------------------------------------------------------------------
| Total | 2,593 | 2,311 | 5,232 |
--------------------------------------------------------------------------------
Taxation
--------------------------------------------------------------------------------
| Half year ended 30 June | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2008 | 2007 | 2007 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Income tax -current year | - | - | 106 |
--------------------------------------------------------------------------------
| Deferred tax (credit)/charge | (5) | 47 | 31 |
--------------------------------------------------------------------------------
| | (5) | 47 | 137 |
--------------------------------------------------------------------------------
Loss per share
--------------------------------------------------------------------------------
| | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2008 | 2007 | 2007 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Loss for the period | (5,242) | (5,964) | (12,408) |
--------------------------------------------------------------------------------
| | Number | Number | Number |
--------------------------------------------------------------------------------
| Basic and diluted: Weighted average | 75,703,074 | 74,791,673 | 74,988,739 |
| number of shares | | | |
--------------------------------------------------------------------------------
| Effect of anti-dilutive securities: | | | |
--------------------------------------------------------------------------------
| Stock options | 912,751 | 3,555,990 | 2,514,489 |
--------------------------------------------------------------------------------
| Anti-dilutive: Adjusted weighted | 76,615,825 | 78,347,663 | 77,503,228 |
| 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 | 2,239 | 5 | 80,598 | 2,313 | 829 | (58,324 | 27,660 |
| December | | | | | | ) | |
| 2006 | | | | | | | |
--------------------------------------------------------------------------------
| Translation | - | - | - | - | (25) | - | (25) |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Loss for the | - | - | - | - | - | (5,964) | (5,964 |
| period | | | | | | | ) |
--------------------------------------------------------------------------------
| 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 | | | | | | ) | |
--------------------------------------------------------------------------------
| Translation | - | - | - | - | 255 | - | 255 |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Loss for the | - | - | - | - | - | (6,444) | (6,444 |
| period | | | | | | | ) |
--------------------------------------------------------------------------------
| Employee | - | - | - | 546 | - | - | 546 |
| services - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds | 10 | (3) | - | - | - | - | 7 |
| from shares | | | | | | | |
| issued - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| At 31 | 2,262 | - | 80,598 | 2,953 | 1,059 | (70,732 | 16,140 |
| December | | | | | | ) | |
| 2007 | | | | | | | |
--------------------------------------------------------------------------------
| Translation | - | - | - | - | 40 | - | 40 |
| differences | | | | | | | |
--------------------------------------------------------------------------------
| Other net | - | - | - | - | - | (51) | (51) |
| decreases | | | | | | | |
--------------------------------------------------------------------------------
| Loss for the | - | - | - | - | - | (5,242) | (5,242 |
| period | | | | | | | ) |
--------------------------------------------------------------------------------
| Employee | - | - | - | 312 | - | - | 312 |
| services - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| Proceeds | 3 | - | - | - | - | - | 3 |
| from shares | | | | | | | |
| issued - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
--------------------------------------------------------------------------------
| At 30 June | 2,265 | - | 80,598 | 3,265 | 1,099 | (76,025 | 11,202 |
| 2008 | | | | | | ) | |
--------------------------------------------------------------------------------
Reconciliation of loss for the period to cash used in operations
--------------------------------------------------------------------------------
| | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2008 | 2007 | 2007 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| Loss for the period | (5,242) | (5,964) | (12,408) |
--------------------------------------------------------------------------------
| Deferred taxes | (5) | 47 | 31 |
--------------------------------------------------------------------------------
| Depreciation and amortisation | 779 | 412 | 796 |
--------------------------------------------------------------------------------
| Share based compensations | 312 | 94 | 600 |
--------------------------------------------------------------------------------
| Loss on disposal of property, plant | - | - | 199 |
| and equipment | | | |
--------------------------------------------------------------------------------
| Other adjustments | (353) | 163 | 209 |
--------------------------------------------------------------------------------
| Fair value loss/(gains) on other | 117 | 88 | (482) |
| financial assets | | | |
--------------------------------------------------------------------------------
| Net interest expense/(income) | 162 | (420) | 411 |
--------------------------------------------------------------------------------
| Exchange loss | 125 | - | 293 |
--------------------------------------------------------------------------------
| Net loss before changes in working | (4,105) | (5,580) | (10,351) |
| capital | | | |
--------------------------------------------------------------------------------
| (Increase)/decrease in inventory | (519) | 463 | 392 |
--------------------------------------------------------------------------------
| Decrease in debtors | 267 | 992 | 366 |
--------------------------------------------------------------------------------
| (Decrease)/increase in non-interest | (550) | (1,291) | 219 |
| bearing liabilities | | | |
--------------------------------------------------------------------------------
| Cash used in operations | (4,907) | (5,416) | (9,374) |
--------------------------------------------------------------------------------
Provisions
--------------------------------------------------------------------------------
| | Unaudited | Unaudited | Audited |
| | Half year | Half year | Full year |
| | 2008 | 2007 | 2007 |
| | €'000 | €'000 | €'000 |
--------------------------------------------------------------------------------
| B/f on 1 January | - | 133 | 133 |
--------------------------------------------------------------------------------
| Provided | 645 | - | - |
--------------------------------------------------------------------------------
| Utilised | - | (34) | (133) |
--------------------------------------------------------------------------------
| C/f at end of period | 645 | 99 | - |
--------------------------------------------------------------------------------
Following a tax audit for the years 2004 - 2006 carried out by an inspection
unit of the Central Finland Regional Tax Office, the Company has been provided
with a preliminary tax audit report. Based on the estimation, the proposals
included in the preliminary tax audit report may result in a potential tax
liability of approximately €645,000 to the Company. The preliminary tax audit
report is not a final or non-appealable decision, and the Company has been
allowed to respond to the matters included in the report.
The restructuring provision of €133,000 which was provided in 2006 was fully
utilised during the course of 2007.
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