SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For the month of November, 2000
TRINITY BIOTECH PLC
-------------------
(Translation of registrant's name into English)
IDA BUSINESS PARK,
BRAY,
CO. WICKLOW, IRELAND
(Address of Principal Executive Offices)
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Trinity Biotech plc ("Trinity" or the "Company") develops, manufactures and
markets diagnostic test kits used for the clinical laboratory, point-of-care
("POC"), and self-testing ("OTC") segments of the diagnostic market. The
Company's rapid tests provide fast and accurate results designed for home (OTC)
and doctor's office (POC) use. In addition, the Company manufactures and markets
a range of diagnostic test kits used in clinical laboratories to detect
infectious diseases and autoimmune disorders. The Company markets over 90
different diagnostic tests in 65 countries.
Trinity was incorporated in Ireland in January 1992. The Company was organised
to acquire, develop and market technologies for rapid in vitro blood and saliva
diagnostics for HIV and other infectious diseases. In October 1992, Trinity
completed an initial public offering in the United States in which it raised net
proceeds of more than US$4.9 million. In October 1993, Trinity took a
controlling interest in Disease Detection International Inc ("DDI") and in
October 1994 merged, Trinity's wholly owned subsidiary into DDI so that DDI
became a wholly owned subsidiary of Trinity. DDI was the surviving entity in the
merger and was subsequently renamed Trinity Biotech Inc ("TBI"). In December
1994, Trinity acquired the remaining 50% of FHC Corporation ("FHC"), which its
subsidiary TBI did not own. In 1995, Trinity raised net proceeds of $7 million
because of a private placement of the Company's shares. In February 1997,
Trinity acquired all the outstanding share capital of Clark Laboratories Inc.,
("Clark"), based in Jamestown, New York. In June 1997, Trinity acquired Centocor
UK Holdings Limited ("Centocor"), a company based in Guildford in the U.K.
Centocor was a 100% subsidiary of Centocor, Inc., a U.S. biotechnology company.
In July 1998, Trinity purchased the Microzyme product line ("Microzyme") for
hormones and drugs of abuse tests from Diatech Inc, a Boston based diagnostics
company. In September 1998, Trinity purchased the Macra Lp(a) laboratory test
("Macra Lp(a)") for monitoring Lipoprotein Lp(a) from Strategic Diagnostics Inc,
Newark, Delaware based diagnostics company. In addition, in September 1998,
Trinity purchased the infectious disease diagnostics business of Cambridge
Diagnostics Ireland Ltd, ("Cambridge") a subsidiary of Selfcare, Inc of Waltham,
Massachusetts. Also, in September 1998, Trinity acquired the Syva Microtrak
business ("Microtrak") from Dade Behring Inc of Chicago, Illinois. Also, in
September 1998, Trinity disposed of its interest in its pregnancy sales contract
with Warner Lambert to Applied Biotech Inc, a subsidiary of Sybron International
Corporation. In February, 2000 Trinity acquired all the outstanding share
capital of MarDx Diagnostics Inc., ("MarDx"), based in Carlsbad, California. The
group financial statements include the attributable results of TBI and of its
subsidiary FHC, the results of Clark, Trinity Biotech UK Ltd (formerly Centocor
UK Ltd) and the results for the Microzyme, Macra Lp(a), Cambridge and Microtrak
product lines for the six months ended June 30, 2000. They also include the
results from MarDx, acquired in February 2000 for the four months ended June 30,
2000.
The following discussion should be read in conjunction with the unaudited
condensed interim Financial Statements and notes thereto. The financial
statements have been prepared in accordance with Irish generally accepted
accounting principals, which conform in all material respects to US GAAP except
as indicated in the notes to the condensed Financial Statements.
Results of Operations
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
-------------------------------------------------------------------------
Trinity's consolidated revenues for the six month period ended June 30, 2000
were $14,251,000 an increase of $1,399,000 compared to consolidated revenues of
$12,852,000 for the six months ended June 30, 1999. This increase in revenues is
due to the inclusion of the revenues of MarDx for the four months to June 30,
2000, together with the continuing expansion of sales of the Group's rapid and
laboratory test portfolio. Management expects that revenues of all Trinity's
product lines will continue to increase due to further regulatory approvals,
increased sales from our existing distribution network and expansion of the
distribution network. In addition, the acquisition of MarDx in February 2000
will add further to the Company's overall revenues.
Trinity also had interest and other income of $191,000 for the six month period
ended June 30, 2000 compared to $39,000 the same period the year before. This
increase is as a result of the larger cash reserves on hand during the period.
The gross margin from product sales for the six month period ended June 30, 2000
was 49% compared to 41% for the six month period ended June 30, 1999. This
increase is due to the increase in sales of the Company's higher margin tests
and to further efficiencies gained in production as a result of higher output in
the 6 month period.
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Administrative expenses,including amortization, for the six month period ended
June 30, 2000 amounted to $2,379,000 compared to $1,883,000 for the six month
period ended June 30, 1999. The increase in administration expenses of $496,000
is due to an expansion of the Company's marketing efforts and increased costs
arising on the expansion of the business in addition to the inclusion of the
administration expense of MarDx for the four months to June 30, 2000. Research
and development expenditure increased to $1,535,000 from $1,093,000 during the
period.
The increase is due to the reallocation of resources to research and development
that had been used to aid in the technology transfer of the new products
acquired through the acquisition of the Microtrak, Microzyme, Macra Lp(a) and
Cambridge product lines in 1998. In addition, increased costs arose as a result
of the Company's ongoing FDA submission for UniGold HIV and the inclusion of the
research and development costs of MarDx for the four months to June 30, 2000.
The net profit for the six month period ended June 30, 2000 was $3,003,000
compared to a net profit of $2,008,000 for the same period last year. In
addition, management expects that anticipated increases in revenues and control
of overheads, will result in further improvements during 2000. However, there
can be no assurance that Trinity can increase the level of sales or reduce the
level of overheads necessary to sustain profitability.
Liquidity and Capital Resources
As of June 30, 2000 Trinity's consolidated cash and cash equivalents were
$10,945,000. This compares to cash and cash equivalents of $3,064,000 at
December 31, 1999. This increase has been caused primarily from the cash raised
by the issue of shares of $16,536,000 offset by the purchase of fixed assets,
the repayment of deferred consideration arising on acquisitions and the payments
due on some of the company's bank borrowings. The combination of these factors
has resulted in net cash inflows of $7,881,000 during the six month period.
The Company does not anticipate capital expenditures in excess of $750,000 over
the next twelve months. Much of this expenditure will relate to additional
expansion of the Company's manufacturing facility's and the purchase of new
equipment required to automate the production of the company's rapid and
laboratory based tests.
Until cash flows from operations are sufficient to cover overheads, Trinity will
require additional financing and expects to rely on one or more of the following
sources for cash:
1. Cash generated from operations.
2. Financial contributions made by strategic partners.
3. Exercise of stock options.
4. Issuance of stock in either private or public offerings.
There can be no assurance that financing from the preceding sources will be
available at attractive terms or at all. The Company believes success in raising
additional capital or obtaining profitability will be dependent on the viability
of its products and their success in the market place.
Impact of Inflation
Although Trinity's operations are influenced by general economic trends, Trinity
does not believe that inflation has a material effect on its operations for the
periods presented.
Impact of Currency Fluctuation
Trinity's revenue and expenses are affected by fluctuations in currency exchange
rates especially the exchange rate between the US Dollar and the Irish Pound.
Trinity's revenues are primarily denominated in US Dollars, its expenses are
incurred principally in Irish Pounds and US Dollars. The revenues and costs
incurred by US subsidiaries are denominated in US Dollars.
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<TABLE>
<CAPTION>
Trinity Biotech plc
Unaudited Consolidated Balance Sheet as at:
June 30, 2000 December 31, 1999
US$ US$
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents 10,944,584 3,064,443
Accounts receivable and prepayments 7,860,069 7,212,419
Inventories 10,240,056 9,510,542
---------- ---------
Total Current Assets 29,044,709 19,787,404
Property, plant & equipment, net 4,638,523 4,695,668
Intangible assets, net 24,239,392 20,559,223
---------- ----------
TOTAL ASSETS 57,922,624 45,042,295
---------- ----------
LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable & accrued expenses 7,806,715 14,234,246
Long term liabilities 6,410,562 8,086,232
SHAREHOLDERS' EQUITY
Called up share capital
Class 'A' ordinary shares 527,136 447,974
Class 'B' ordinary shares 12,255 12,255
Share premium account 65,583,490 47,863,861
Currency adjustment (4,684,722) (4,637,484)
Retained deficit (17,483,398) (20,732,540)
Minority interest (249,414) (232,249)
---------- ----------
Total Shareholders' Equity 43,705,347 22,721,817
---------- ----------
Total Liabilities and Shareholders' Equity 57,922,624 45,042,295
---------- ----------
</TABLE>
Note: The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
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<PAGE>
Trinity Biotech plc
Unaudited Consolidated Statement of Operations
Six months ended June 30
2000 1999
US$ US$
(Unaudited) (Unaudited)
Revenues 14,250,992 12,852,019
---------- --------
Costs and Expenses
Cost of goods sold (7,257,496) (7,555,546)
Selling, general and administrative (1,939,741) (1,482,920)
Research and development (1,534,943) (1,093,382)
Amortisation (439,200) (400,200)
--------- ---------
Operating profit 3,079,612 2,319,971
Interest and other income 190,553 38,639
Interest expense (267,437) (351,081)
------- --------
Profit on ordinary activities before taxation 3,002,728 2,007,529
Tax on profit on ordinary activities - -
--------- ---------
Net Profit 3,002,728 2,007,529
--------- ---------
Net profit per ordinary share 0.087 0.071
Weighted average number of
ordinary shares outstanding 34,706,102 28,078,920
STATEMENT OF RECOGNISED GAINS AND LOSSES Six months ended June 31
2000 1999
US$ US$
(Unaudited) (Unaudited)
Net Profit 3,002,728 2,007,529
Currency adjustment (47,238) 22,931
--------- ---------
Comprehensive income for the period 2,955,490 2,030,460
--------- ---------
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Trinity Biotech plc
Unaudited Consolidated Statement of Cash Flows
Six months ended June 30
2000 1999
US$ US$
(Unaudited) (Unaudited)
Net cash flow from operating activities 2,668,466 772,802
Investing activities
Interest receivable 180,451 38,641
Purchase of fixed assets (644,182) (613,520)
Purchase of intangible assets (206,114) (42,581)
Purchase of subsidiary undertaking (1,984,142)
---------- --------
(2,653,987) (617,460)
---------- --------
Financing activities
Interest payable (245,145) (351,080)
Issue of ordinary shares 16,536,314 280,150
Capital element of loan repayments (4,326,447) (1,531,442)
Payment of deferred consideration (4,099,060) (1,275,030)
Loans received - 2,575,916
--------- ---------
7,865,662 (301,486)
--------- --------
Increase (decrease) in cash and cash equivalents 7,880,141 (146,144)
Balance at beginning of period 3,064,443 1,301,658
--------- ---------
Balance at end of period 10,944,584 1,155,514
---------- ---------
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TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES The unaudited results for the
six months to June 30, 1999 and June 30, 1998 have been prepared in
accordance with Irish generally accepted accounting principals. The
accounting policies and the basis of preparation of these unaudited results
is consistent with those used in the Group's Annual Financial Statements.
The information included in the interim consolidated financial statements
is unaudited but reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented. The
results for the six months to June 30, 2000 are not necessarily indicative
of the results for the full fiscal year.
2. ANALYSIS OF REVENUE AND OPERATING INCOME
a) The distribution of revenue by geographical area was as follows:
Six months ended
June 30 June 30
2000 1999
US$ US$
U.S.A. 9,090,231 8,069,099
Central and South America 270,545 256,892
Asia 639,837 563,518
Europe 2,620,794 2,440,465
Africa 1,590,466 1,480,625
Ireland 39,119 41,420
--------- ----------
4,250,992 12,852,019
--------- ----------
b) The distribution of operating income by geographical area was as follows:
Six months ended
June 30 June 30
2000 1999
US$ US$
Ireland 1,717,898 1,659,697
United States 1,361,714 660,274
--------- ---------
Total operating income 3,079,612 2,319,971
--------- ---------
3. INVENTORIES June 30 June 30
2000 1999
US$ US$
Raw materials 5,042,234 5,019,176
Work in progress 3,986,236 3,872,223
Finished goods 1,211,586 1,578,953
---------- ----------
10,240,056 10,470,352
---------- ----------
The replacement cost of inventory is not materially different from that stated.
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<PAGE>
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The Consolidated Financial Statements are prepared in accordance with
accounting principles generally accepted in the Republic of Ireland ("Irish
GAAP"), which differ in certain significant respects from accounting
principles generally accepted in the United States ("US GAAP"). These
differences relate principally to the following items and the material
adjustments are shown in the table set out below;
(1) Goodwill:
Prior to 1998 Irish GAAP goodwill would be either written off immediately
on completion of the acquisition against shareholders' equity, or
capitalised in the balance sheet and amortised through the income statement
on a systematic basis over its useful economic life. From 1998, goodwill
must be capitalised and amortised over the period of its expected useful
life, however historic goodwill continues to remain an offset against
shareholders' equity. Under US GAAP, accounting for goodwill as a offset
against shareholders' equity is not permitted. Rather, goodwill must be
amortised over the period of its expected useful life, subject to a maximum
write off period of 40 years, through the income statement. For goodwill
arising prior to 1998, a useful life of 10 years has been adopted for the
purposes of the reconciliation. The carrying value of goodwill arising on
the acquisition of subsidiaries is reviewed on each balance sheet date on
the basis of estimated future profits. If the review indicates a shortfall
in the estimated future profits then the goodwill is written down by the
amount of the shortfall. Management believes no adjustment to the carrying
value is required in the current period.
(2) Share Capital Not Paid:
Under Irish GAAP, unpaid share capital is classified as a receivable under
current assets. Under US GAAP, share capital receivable should be reported
as a reduction to Shareholders' Equity.
(3) Statement of Comprehensive Income:
The Company prepares a "Statement of Recognised Gains and Losses" which is
essentially the same as the "Statement of Comprehensive Income" required
under US GAAP.
(4) Deferred Set-Up Costs:
Under Irish GAAP, certain costs arising on the integration of acquired
businesses or product lines may be capitalised and amortised over set
periods. Under US GAAP, these costs must be expensed in the period in which
they occur.
(5) Pre-Paid Offering Expenses:
Under Irish GAAP, share issue expenses arising as a result of fundraising
activities, where no funds have yet been raised, may be included in
prepayments and written off to share premium on the finalisation of the
fundraising. Under US GAAP, if the fundraising has suspended for a period
of more than 90 days the costs must be expensed to the profit and loss
account.
(6) Minority Interests:
Under Irish GAAP, Minority Interests are included as a portion of
Shareholders' Equity. Under US GAAP, Minority Interests are excluded from
Shareholders' Equity.
(7) Contingent Consideration:
Under Irish GAAP, consideration for the purchase of a business which is
contingent on one or more future events, may be estimated and included as
part of the overall cost at the time of purchase and then adjusted to take
account of the future events. Under US GAAP, this consideration would not
be included in the purchase price until the amount could be calculated with
certainty. In 1998, contingent consideration of $1,200,000 was included for
the purchase of the Macra Lp(a) product line. The amortisation charge for
this deferred consideration is therefore a reconciling item for us GAAP
purposes in the Net Profit for 1998 and 1999. For the year ended December
31, 1999, the amount of the contingent consideration has been accurately
calculated and has been revised to $663,000.
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<PAGE>
TRINITY BIOTECH PLC
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. DIFFERENCES BETWEEN IRISH AND US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (Continued)
(8) Sale and Leaseback:
Under Irish GAAP, the Company's sale and leaseback transaction was treated
as a disposal of assets with the gain on the disposal of US$1,014,080 being
credited to the profit and loss in year ended December 31, 1999. Under US
GAAP, this amount would be deferred and released to the profit and loss
account over the period of the lease (20 years).
<TABLE>
<S> <C> <C>
CUMULATIVE EFFECT ON 30 June 31 December
SHAREHOLDERS' EQUITY 2000 1999
US$ US$
Total shareholders' equity before
Minority Interests under Irish GAAP 43,954,761 22,954,066
US GAAP adjustments:
Goodwill 11,854,583 12,943,417
Share capital not paid (348,279) (419,061)
Adjustment for amortisation of contingent consideration - 26,850
Adjustment for deferred set-up costs (446,668) (536,000)
Adjustment for pre-paid offering expenses - (226,007)
Adjustment for sale and leaseback (993,798) (1,014,080)
---------- -----------
Shareholders' equity under US GAAP 54,020,599 33,729,185
---------- ----------
EFFECT ON NET PROFIT 30 June 30 June
2000 1999
US$ US$
Profit on ordinary activities after taxation
under Irish GAAP 3,002,728 2,007,529
US GAAP adjustments:
Goodwill amortisation (1,088,834) (1,088,834)
Adjustment for amortisation of contingent consideration - 13,425
Adjustment for sale and leaseback 20,282 -
Adjustment for deferred set-up costs (89,332) -
--------- -------
Profit under US GAAP 1,844,844 932,120
--------- -------
Basic earnings per ordinary share 0.053 0.033
Fully diluted earnings per ordinary share 0.050 0.024
Basic weighted average number of shares 34,706,102 28,078,920
Fully diluted weighted average number of shares 37,802,485 38,668,125
STATEMENT OF COMPREHENSIVE INCOME
Estimated income under US GAAP 1,844,844 918,695
Currency adjustment (47,238) 22,931
--------- -------
Comprehensive income for the period 1,797,606 941,626
--------- -------
</TABLE>
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Signatures
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has
duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorised.
TRINITY BIOTECH PLC
/s/Maurice Hickey
-----------------
Maurice Hickey
Chief Financial Officer
November 8, 2000
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