RNS Number:4453J
Trinity Biotech PLC
07 December 2007
FOR RELEASE, December 7th , 2007
Trinity Biotech Announces Group Restructuring
DUBLIN, Ireland December 7th, 2007 ...- Trinity Biotech plc (Nasdaq: TRIB), a
leading developer and manufacturer of diagnostic products for the point-of-care
and clinical laboratory markets, today announced a restructuring of its business
activities. The main elements of this restructuring are
• A reorganisation of the worldwide sales and marketing function;
• Streamlining the Haemostasis and Infectious Diseases product lines;
• Increased focus within Research and Development;
• Closure of the Swedish manufacturing facility; and
• A headcount reduction resulting in payroll savings of US$5 million.
Management will be hosting a conference call today at 4.00pm GMT (11.00 a.m.
ET). Details of this call will follow in a separate press release and will be
noted on our website, www.trinitybiotech.com
Reorganisation of the Worldwide Sales and Marketing Function
In order to optimize its selling effort, Trinity Biotech has decided to
reorganise its Sales and Marketing function into two divisions: the Clinical
Laboratory Division and the Point-of-Care Division.
The new Clinical Laboratory Division will include the Company's Haemostasis,
Infectious Diseases and Clinical Chemistry laboratory products. As a
consequence, Trinity's salesforce in the USA will be amalgamated into one single
sales team, as is currently the case in the Company's other direct sales forces
in the United Kingdom, Germany and France. This will replace the current
structure of separate Haemostasis, Infectious Diseases and Clinical Chemistry
sales teams. This will enable Trinity to obtain better market coverage whilst
driving greater selling efficiencies. Trinity Biotech is pleased to announce
that Dr. Robert Passas has been appointed head of the Clinical Laboratory
Division. Dr. Passas joined the Company in 2006 as Vice President of Marketing
and International Sales. Prior to joining Trinity Biotech he was Regional
Director with Abbot Diabetes Care and has a total of over 20 years of experience
in the diagnostics industry.
The decision to establish a separate Point-of-Care (POC) Division is a
recognition of the strong growth potential in this market segment. The
Company's POC portfolio, consisting principally of its Unigold HIV test, has
recently been strengthened by the launch of the Unigold Legionella Urinary
Antigen and Tri-stat HbA1c POC products. David Oxley has been appointed head of
the global Point-of-Care Division. David Oxley joined Trinity Biotech in 2006
from Orasure where he was Vice-President of Government Affairs.
Streamlining the Haemostasis and Infectious Diseases Product Lines
Trinity has carried out a review of its product offering within its two key
product lines of Haemostasis and Infectious Diseases. The Company has decided
to cull a total of 106 Haemostasis and 69 Infectious Diseases products.
The result of the product rationalization is that in the future we will sell 79
Haemostasis products, compared to 185 in the past with a negligible impact on
revenues. The newly consolidated range of products will be launched under the
new "Trini" brand during 2008.
Within its Infectious Diseases product line, the Company is focusing on
eliminating low revenue products which have added complexity to the business but
which have not contributed significantly to generating revenue. The impact of
eliminating 69 of these products will have less than a 1% impact on the
Company's revenues.
In conjunction with the culling of its Haemostasis and Infectious Diseases
products, the Company is also rationalizing its range of instruments. This will
have specific benefits in terms of reducing the amount of effort required to
support multiple instrument platforms. These benefits arise in the areas of
production, training, customer support, logistics, inventory holding, servicing
and applications development. In Haemostasis, Trinity Biotech will concentrate
on the in-house manufactured Destiny Plus and the outsourced Thrombolyzer XRC
instruments. The portfolio will be further strengthened by the Destiny Max
instrument, which will address the high throughput segment of the market, upon
launch in the second half of 2008. In Infectious Diseases the focus will be on
the Nexgen and DSX instruments which are sourced from third party suppliers.
The Company will write down inventory in respect of those Haemostasis and
Infectious Diseases products and instruments which are being rationalized.
Increased Focus within Research and Development
To date Trinity Biotech has carried out a wide range of research and development
(R&D) projects at its facilities in Ireland, Germany and the USA. Whilst
development activity will continue at each of these sites, the Company has
decided to focus on a smaller number of projects, with a particular focus on
those which will make the greatest contribution to the strategic growth and
development of the Company and with a view to ensuring that they are delivered
on time and within budget. Consequently, the Company has decided to suspend
development of a number of on-going projects, the two most significant being a
HIV over-the-counter (OTC) product and the development of a HIV Western Blot
confirmatory test.
• The decision to suspend the HIV OTC project is based on an assessment of the
expected market size for this product. The Company's market research has
indicated that the market opportunity for this product is significantly less
than was originally envisaged. As a result we feel that the market size does
not justify the significant time and investment that would be required to
enter the OTC market. In the event that the market size turns out to be
larger than anticipated Trinity will be in a position to react quickly and
enter such a market.
• The Company's decision to suspend development of its HIV Western Blot
confirmatory test is again due to changes in the market place. It is now
felt that the use of Western Blot technology will be less of a feature in HIV
testing alogorithms in the future.
The suspension of a number of on-going projects will allow the Company to focus
on a small number of key projects in each division. Going forward the Company's
focus will be on the Destiny Max, a new D-dimer product, the development of a
new instrument as a successor to the PDQ HbA1c analyser and the redevelopment of
the Company's suite of Lyme products.
The above decisions will result in the write-off of the development costs
associated with those projects which are being suspended.
Closure of the Swedish Manufacturing Facility
Trinity Biotech has decided to close its manufacturing facility located in Umea,
Sweden. This facility manufactures a portion of the Company's Haemostasis
portfolio and was acquired with the Biopool product range in 2001. With the
haemostasis expertise within the Company, these products now can be easily
transferred to the Trinity's Irish and US facilities at minimal incremental
cost, thus resulting in an overall net saving of approximately US$0.5 million
per annum. Production will continue in Umea until March 2008. The Company will
have benefit from some of these savings in 2008 with the full year impact being
seen in 2009.
Impairment of Goodwill
In accordance with the provisions of accounting standards, companies are
required to carry out periodic impairment reviews of the asset valuations
contained on their balance sheet. This applies in the case of both US GAAP and
International Financial Reporting Standards. In determining whether a
potential impairment of assets exists, companies are required to consider a
range of internal and external factors. One such factor is the relationship
between the company's market valuation and the book value of its net assets. At
present Trinity Biotech is currently trading at a discount to the book value of
its net assets. In such circumstances the Company feels it is prudent to
recognize an impairment provision of approximately US$20.2 million against its
intangible assets (primarily goodwill). By its nature this adjustment has no
cash implications for the Company.
Headcount Reduction
The decision to cull Haemostasis and Infectious Diseases products will have
minimal impact on revenues going forward. In terms of future sales the Company
has decided to focus on those areas which have key growth potential.
The reduction in the number of products and the more focused Research and
Development approach will have the effect of significantly reducing complexity
in the business. Combined with the restructuring of Trinity's Sales and
Marketing function this will enable the Company to reduce its headcount. This
will result in an estimated annual saving of US$5 million and will contribute
towards counteracting the impact of the weakening US Dollar and normal wage
inflation.
Arising from the restructuring, there will be a once-off write-off of
approximately US$39.5 million before tax in Quarter 4, 2007. With the exception
of approximately US$2 million relating to redundancy costs and the closure of
the Swedish manufacturing facility the write-off has no cash impact. The
approximate split of the write-off is as follows:
US$ million
Inventory (instrumentation incl. spare parts) 7.8
Inventory (non-instrument related) 3.7
Research and Development project costs 5.5
Closure costs - Sweden manufacturing facility 0.6
Impairment of Goodwill 20.2
Redundancy costs 1.7
Total 39.5
Commenting on the restructuring, CEO Brendan Farrell, commented "The
acquisitions and investments made in the past have provided Trinity Biotech with
a strong foundation in both the clinical laboratory and point-of-care markets
world wide. Today's announcement brings improved focus to this foundation that
will drive long-term growth prospects in both product areas and deliver
significant future value for our shareholders."
Trinity Biotech develops, acquires, manufactures and markets over 500 diagnostic
products for the point-of-care and clinical laboratory segments of the
diagnostic market. The broad line of test kits is used to detect infectious
diseases, sexually transmitted diseases, blood coagulation disorders, and
autoimmune diseases. Trinity Biotech sells worldwide in over 80 countries
through its own sales force and a network of international distributors and
strategic partners. For further information please see the Company's website:
www.trinitybiotech.com.
Forward-looking statements in this release are made pursuant to the "safe
harbor" provision of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including, but not limited to, the results of research and
development efforts, the effect of regulation by the United States Food and Drug
Administration and other agencies, the impact of competitive products, product
development commercialization and technological difficulties, and other risks
detailed in the Company's periodic reports filed with the Securities and
Exchange Commission.
Contact : Trinity Biotech plc
Brendan Farrell - CEO
(353)-1-2769800
E-mail: brendan.farrell@trinitybiotech.com
END OF RELEASE
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