Trinity Biotech PLC (TRIB) 2009 Q3 法說會逐字稿

Good day. And welcome to the Trinity Biotech third quarter 2009 financial results conference call. All participants will be in listen-only mode. (Operator Instructions). After today's presentation there will be an opportunity to ask questions. (Operator Instructions). Please note, this event is being recorded.

I would now like to turn the conference over to Mr. Ronan O'Caoimh. Please go ahead, sir.

Thank you very much. And welcome to Trinity Biotech's third conference call. I'm here in Dublin. And I'm joined by Kevin Tansley, our Chief Financial Officer, and by Rory Nealon, our Chief Operations Officer.

Kevin is going to bring you through the results for the quarter, after which I will go through the sales and marketing and give a review for the quarter, after which we'll open the conference call to questions.

So, if I could hand over now to Kevin who'll also go through the safe harbor.

Thanks, Ronan. Before I take you through the financials, I am obliged to point out the provisions of the safe harbor code. Specifically, this presentation contains certain forward-looking statements, including statements concerning plans and objectives of management, expectations about future financial performance and strengths, economic and market conditions, and market positioning and opportunity.

These statements are not a promise nor guarantees, but are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated, including those identified in our most recent report on SEC Form 20-F and other periodic reports and registration statements filed at the SEC.

You should not place any undue reliance on any forward-looking statements, which are currently only -- current only as of today.

You should not expect that these forward-looking statements will be updated or supplemented as a result of change in currency or otherwise, and Trinity Biotech disclaims any obligations to do so.

Today I'll take you through a review of the income statement for quarter three, the key movements in the balance sheet from the end of quarter two 2009 to date, and finally, the major cash flow movements during the quarter.

Starting with our revenue performance, you will note in the press release an analysis of revenues broken down by our key product areas of Clinical Laboratory and Point-of-Care.

Looking at the total revenues, you will note that this quarter's revenues are $31.7 million. And this compares to $35.6 million in quarter three of last year. However, adjusting for currency movements, revenues in quarter three 2008 would have been $34.5 million. Thus, on a constant currency basis, we have seen revenues decline by approximately 8.2%. However, when compared to quarter two 2009, revenues have actually fallen 3.3%.

Rather than going into further detail on revenues, Ronan will give you more detailed information on sales later in the call.

I will now move on to discuss our gross margin. As you will see from the income statement, our gross margin for the quarter has increased from 44% to 45% when compared to the equivalent period last year. This improvement is directly due to cost savings, mainly coming in the area of instrument servicing.

A lot of our competitors are actually calculating gross margins before such servicing costs. And if we were to do the same, our gross margin for this quarter would rise to 49%.

Moving on to our indirect expenses, our R&D expenses have decreased by 3% this quarter to $1.8 million. On this basis, R&D expenditure now equates to approximately 5.7% of revenues for the year to date. This is similar to the long-term average expenditure by the Group.

This quarter, our selling, general, and administrative expenses have seen a further reduction. So far, our quarterly SG&A charges this year have been $9.6 million in quarter one, $9 million in quarter two, and falling to $8.7 million this quarter. This compares to $12 million, $11.9 million, and $11.8 million for the same three quarters last year. This equates to a 26% reduction this quarter and a 23% reduction for the year-to-date.

As has been the case throughout this year, this improvement is attributable to the impact of cost savings, more favorable exchange rates, but this is of less of a factor this quarter, and lower depreciation and amortization charges due to the impact of the impairment charge that we took in quarter four 2008.

Moving on to our net financial costs, these have also continued to reduce. The charge in quarter three was $289,000. And this compares to $462,000 for the same period last year, a reduction of 37%. This is due to a combination of lower debt levels as we continue to pay down our debt, plus the benefit of lower prevailing interest rates.

Moving on to the tax charge, this quarter's effective tax rate is just over 11%, which is similar to the effective rate for the first nine months of this year of 11.6%. This is slightly better than our expected long-term tax rate as we continue to utilize tax losses carried forward from previous years.

Our operating profit for the quarter amounted to over $3.7 million, which represents an increase of 85% over the $2 million we reported in quarter three of 2008. This brings the operating margin for the quarter to 11.8% and 11.2% for the nine months for the year-to-date.

From an after tax point of view, we've seen an increase from $1.3 million to over $3 million over the same period. And this equates to an increase of 131%.

To put this in context, last quarter was the first time that Trinity Biotech made profits of over $3 million in a single quarter, and we have now repeated this achievement this quarter.

Similarly, in EPS terms, this has grown significantly, increasing from 6.3 cents to 14.6 cents.

Now to talk about our balance sheet. I will take you through the movement in our significant captions since the end of June.

Starting with our increase in property, plant and equipment, the small increase is attributable to additions of $600,000 being largely offset by the depreciation charges for the quarter. Of the additions, approximately half relate to instruments placed with customers during the quarter.

During the same period, our goodwill and intangible assets have increased by over $1.8 million. And this is attributable to additions to development projects, offset by amortization on existing assets.

The level of additions includes expenditure on some of the final aspects of the Destiny Max project and the CLIA trials for TRI-Stat.

Moving on to inventory next, you will see that the inventory has decreased by approximately $0.4 million. And this reflects our continued efforts to control the level of inventory on hand.

Trade and other receivables have fallen by over $1.1 million in the last three months. And whilst this has been partly driven by lower revenues, we've also seen an improvement in debtor days, from 67 days at the end of June to 65 days at the end of September. As you will see from our press release, our level of debtors is something that we monitor closely. And this quarter has resulted in products not being shipped to one major customer.

Finally, in relation to working capital, our trade and other payables have decreased by $2.3 million this quarter, and this follows an increase in the previous quarter. And the level of payables can actually be expected to fluctuate significantly quarter-on-quarter, depending on the timing of payments.

Finally on the balance sheet, I would like to address our bank debt. During the quarter, we made a bank repayment of $3.2 million, which has now brought our level of bank debt below $30 million. And this is a key milestone for us.

I will now move on to discuss the major movements in our cash flows for the quarter. Our overall cash balance, as you will have seen, has decreased from $4.8 million to $3.7 million.

As you can see from the cash flow statement, this movement has been explained by the following items; cash from operations, which consists of operating profit plus depreciation, amortization, and other non-cash items of $4.7 million. And this has been partially offset by working capital movements of $600,00, of which the majority are decreases in accounts receivable, as offset by the decrease in payables.

Total capital expenditure during the quarter was $1.6 million. And this consists of property, plant, and equipment additions, and capitalized development costs net of financing.

Before I finish, I would like to address one other issue. I have been asked by a number of investors if there will be any one-off charges in quarter four this year. Whilst I cannot say with absolute certainty at this stage, the Company certainly has no intention to recognize such a charge in quarter four, although there is one possible exception.

We, like all other companies, are required by accounting rules to carry out an impairment review on an annual basis. As most of you are aware, this resulted in a significant charge being taken to last year's income statement.

It is possible that there could be a similar charge, or possibly a gain, this year. One of the key determining factors for this will be what the share price is at the end of December this year. And that'll only become apparent with time.

I will now hand back to Ronan, who will give more information on this quarter's sales.

Thanks, Kevin. During quarter three, our sales were at $31.7 million compared to $34.5 million for quarter three 2008, a decrease, as Kevin has said, of 8.2%. Almost exactly half of this decrease arose in Point-of-Care with, obviously, the other half in Clinical Laboratory.

Dealing first with Point-of-Care, this business dropped during the quarter by 23% versus last year's quarter. In round numbers, we went from $5 million to $4 million.

US HIV sales were solid, with all the drop coming in Africa. This arose because we decided, as Kevin said, not to ship in excess of $1 million order due to a credit-related concern. It is, however, expected that this business will recommence during this quarter.

As we've outlined in the past, the African component of this business tends to be lumpy, with big variations in sales quarter-by-quarter. Thus, we have a situation where we were down -- we are down 23% this quarter, having been up 50% last quarter.

Of more relevance are the year-to-date numbers. And here, for the first nine months of the year we were up 18% in US HIV sales, up 16% in Africa, and up 17% overall.

The significant growth in US sales year-to-date reflects the major efforts we have put in to breaking into the public health laboratory market across the United States with the allocation of a lot of sales rep time to this market.

In Africa, the fundamentals of the business are sound. And our product is regarded as the best quality product available in the market, with an instantly recognizable brand. Along with one competitor product, we both dominate the market. And with ever increasing funding from PEPFAR, this is the President Bush program, and other programs, the HIV spend in Africa will inevitably continue to increase.

Moving on to the Clinical Laboratory business, our sales were at $27.8 million, which is a drop of 5.6% over the same quarter 2008.

Looking at the three components, which are infectious disease sales are up 2%, diabetes sales are up 3%, and coagulation sales are down 7%. That's by comparison with the same quarter last year. However, it's important to note that when compared with quarter two of this year, sales of the Clinical Laboratory division are actually up 3.4%.

What is most encouraging is that the coagulation sales this quarter were 4.7% higher than in quarter two, which supports our contention that the coagulation revenues are stabilizing and will grow during 2010, as we place more and more Destiny Max and Destiny Plus instruments.

You'll remember that we received the FDA approval for the Destiny Max instrument on July 7. This follows the CE marking of the product on the December 23 last year. So Destiny Max is our highest throughput coagulation instrument and is a replacement for the old MDA instrument, which has been in the market and is an instrument, which will enable us -- sorry, the new Destiny Max instrument is an instrument which will seriously enable us to compete with our three main competitors in this market.

The approval of the Destiny Max gives us access to the high throughput coagulation market, estimated to be worth $500 million per year. We firmly believe that the instrument is best-in-class. And some of its attributes include the fact that it is the only high throughput instrument on the market that offers the choice of both mechanical and optical clot detection.

During quarter three, we placed 14 more Destiny Max instruments, bringing total sales to 35 this year, having sold 15 in quarter one and six in quarter two.

Having previously made sales in Japan, Ireland, the UK, Germany, Italy, Netherlands, Australia, and Turkey, this quarter we made our first sales in Spain and Greece. And very importantly, we gained sales and approvals in Brazil and China. Most important, however, of all is that we've secured our first sales during the quarter in the United States, with two placements. We also made further sales in Germany and the UK.

We have made the crucial breakthrough of first sales in our most important markets, being the United States, UK, Germany, China, and Brazil. And our first sale in the other most important market, which is France, is imminent.

However, the economic climate continues to make it difficult to get hospitals to commit to a capital spend. As an example, in the UK, where we have more than a 20% market share, the coagulation -- in coagulation, the Government, through the NHS, has effectively put a moratorium on all new instrument purchases. All tenders are now being deferred.

So far, we've sold four instruments in the United States -- sorry, excuse me, in the United Kingdom, which is significantly short of our budget. However, very importantly, we have lost no market share as our large installed base of MDAs works away.

None of our competitors are selling instruments in the UK market either. We are confident that the Destiny Max will replace the MDAs when capital spend resumes.

So, given the sales to date in a difficult market, the endorsements we've received from opinion leaders in various countries, and the quality of our instruments and reagents, we're confident of strong placement growth -- strong placement, despite the recession, over the coming quarters.

Moving now to infectious disease, this business grew 2% compared with last year's comparable quarter. Our Lyme Western Blot product has performed strongly. It is over 90% of the US market. And our broad range of infectious disease products are selling well in laboratories throughout the United States and Europe.

Fitzgerald, our antibody supply business, which had traded disappointingly for the first two quarters, recovered well this quarter as flu antibodies sold strongly, given the swine flu epidemic.

Our diabetes business grew 3%, with the business performing well in the United States where we have one the neonatal market in Illinois. During the quarter, we also placed numerous new instruments in China, where we continue to grow the business strongly.

With respect to our CLIA HbA1c TRI-Stat submissions, you remember that we originally submitted the CLIA application on July 20. The FDA has 90 days to respond to such applications, by which time they must revert with whatever questions they may have. We got our first set of questions in the last few days, which is just within the 90-day window. And we are currently in the process of formulating our response to the FDA.

The questions were two-fold. Firstly, to provide more detail on how we calibrate our individual [lot] of reagents; and secondly, a statistical question relating to the data provided by one of our four trial sites. As I mentioned, we are currently formulating our response, and the goal is to have it submitted to the FDA early next week.

While it's impossible to predict, we are very encouraged by the FDA response and don't anticipate any long delay with the application.

With respect to marketing partners, we are in discussions with numerous parties in the United States who are trialing and reviewing, and in some cases trialing and reviewing both the instruments and the reagents. Clearly, a [CLIA waiver] would be a large advantage in these discussions. In Europe, we're at an advanced stage of negotiations with a distribution partner.

So at this point, if I could hand back for questions, please.

(Operator Instructions). Our first question comes from Matt Dolan of Roth Capital. Mr. Dolan, your line is open.

Hey, guys. How are you? Can you hear me?

Yes, Matt, we can hear you.

Okay, great. Thanks. First question on HIV, the customer you didn't send to, can you just repeat what size was that order? Who and where was that customer? And why are you comfortable that their credit issues won't continue and you'll be able to continue to have them as a Trinity customer?

Well, Matt, I can't say -- I can't, as you can imagine, actually name the customer over a conference call, or indeed the country, because that would probably be the same thing. But the amount of the order was in excess of $1 million. And we didn't pay it because basically the account wasn't in order. And we're satisfied, I think, that that will come in order in the next few weeks, and that we're in a position then to recommence supply to that customer.

Okay. And could you talk about generally your market share in HIV? Do you expect to maintain share in both the US and Africa over the next few quarters? Do you feel your competitive position at this point is going to remain consistent, going forward?

Absolutely. I think -- as I mentioned, I think I said around 23% this quarter, but they were up 50% last quarter. So, particularly when you have first world countries supporting third world countries -- and as it happens, in this instance, you don't get level increases in sales so we've had a history of lumpy sales. But what's most important though is that the three quarters, i.e., for the nine months cumulatively, we're up, I think, it was 17% or 18% year-to-date. And we're up in both in Africa and in the United States.

In the United States, we're one of, effectively, three products approved, and we continue to grow our market share there. We have grown that business from zero, to $2 million, to $4 million, to $6 million, and, hopefully, this year $8 million.

And in Africa, we're one, effectively, of two products which are available in the market; both ourselves and Inverness. And you can imagine, with the level of the problem that's in Africa, that testing will continue to increase. And surely, Biotech is very much to recognize confirmatory tests within that market, although in some instances also, the screening test.

So we're absolutely confident that the fundamentals of the business are solid and that the business will grow, and it has been growing. Even without the $1.2 million of product that we actually didn't ship, we're still up, I think, 17% or 18%, HIV, so far this year.

Yes, okay, great. Then moving to Clinical Lab, it sounds like -- in your press release you said you expect to grow the coag business in 2010. Maybe, can you refresh your expectations for Destiny Max specifically now that we're in a more capital-constrained environment? We had some broad goals for placements and pull-through in the past. Are those still achievable in the first year of commercialization? Or what are your hopes there to get that business growing next year?

I think we're very confident of growing the business. As I said in the past, the most difficult thing to do is to sell the first instrument in the particular country. Typically, you won't do that without having some opinion leader support or endorse the instrument. So we've achieved that in various countries, and I think I outlined that too in the conference call. But in the most important countries, in the United States, in Germany, in the UK, in Brazil, and China, we've done it. I think, in France it's just about to happen.

And I think that typically, an instrument needs to develop a reputation. It needs to be supported by opinion leaders, and then it'll gather momentum in terms of sales. And we're confident, given the quality of the instrument, that that'll happen.

Now, clearly, given the recession that we're in the midst of, or may be coming out of in some instances, that obviously has made the whole thing more difficult. What's also been an issue has been that, of course, the FDA approval in the USA came probably three or four months later than we had hoped.

But you'll remember that I talked about placing 100 instruments this year. And as I said, so far this year we've placed 34 or 35. How many will we place for the year? If I had to estimate, I'd say it would be 50, or in the low 50's, we hope.

In terms of next year, we're not going to say how many we will place. We're not going to actually indicate that. But what I will say is that we're very positive that we will gather momentum in the United States. I think you'll see momentum now gather during quarter four.

I've dealt with the UK as a specific and unusual circumstance. And much in all, as it's very irritating that we're not placing instruments there, we do have 23% or 24% of the market, and we're not losing market share. Because basically, the US -- the UK Government, remember, it's a complete nationalized health scheme there, basically, they do all the purchasing, and basically they're not buying from anybody. So given that we have -- given that we have a big market share as it is, we're not losing anything.

Beyond that, in Germany, we are very encouraged. We've placed I think four or five so far. In France, we're about to place the first two. So we're -- we've got approval in Brazil, we've got approval in China. Approvals, again, we haven't talked about them much in the conference calls, but they're a big factor, and they're not so easily achieved.

So I think all the blocks have been put in place. And we're very confident as we move forward about our placement of this instrument.

Okay, that's great. In the UK, when was that moratorium implemented? And when do you expect that to be --?

I don't think it so much as an official moratorium. There was no press release about it or anything like that. But the reality is that all of the tenders out there -- existing tenders are just sitting there unfilled and no new tenders are being issued.

Okay.

There's been no placement for nine months in the United Kingdom.

And just another question on Clinical Lab. Flu season's clearly upon us; can you talk about your infectious business and how that may or may not play into the flu season? If you're seeing any, or expect any, pull-through for your flu antibodies.

Yes, we have some flu tests [which are in laboratories] (inaudible), but they're not H1N1 tests.

Sure.

They're doing reasonably well, but not particularly. But they're not particularly impacted by the epidemic. What have been impacted positively is our Fitzgerald antibodies. Flu sales have certainly grown in the last quarter, and have made up for the virtual -- for the very significant stalling in research institutional purchasing.

Okay. And then just two questions, Kevin, on the P&L. You talked about the possibility of an impairment. Although difficult to predict at today's prices, would there be something to think about for Q4?

There's one thing to remember on that one, Matt; the impairments can go either direction. It can be an impairment charge or it can be an impairment gain, if you will, a reversal of the previous one, so it's difficult to be specific.

But at today's prices, would it be a gain, or a charge, or neither?

At today's prices, you're certainly -- I wouldn't anticipate there being a loss. There could be a slight gain.

Okay. And then on the (multiple speakers).

[If I can try and answer that.] I think we just -- we dealt with that issue just because there's a lot of questions about it. But to be very clear about this, we don't anticipate -- we've no reason to anticipate in any manner or means that there would be any write-off, or indeed write-back. I think, just from memory, from recollection, the principal reason for the write-down last year was because of the share prices of the Company. And I think at that time it was probably about $2.50, was it?

Yes, towards the end of the year.

Yes, $2 possibly, so you can draw your own conclusions from that. But to be categoric about this, we don't expect or anticipate any write-down's, or indeed write-backs (multiple speakers) [out of our control.]

Okay. Thanks a lot, guys.

It's obviously a non-cash item as well, Matt, and, therefore, not particularly relevant to the trading of the business.

Understood. I just wanted the clarity. Thank you, guys.

Okay. Thanks, Matt.

Our next question comes from Michael Jolin of Heartland.

Yes, hey, guys. Just a quick question. I was wondering what percentage of the cost savings has come from the impairment related to the amortization write-down in the fourth quarter this year. So, what's the savings -- percentage of the savings related to that SG&A?

In terms of the SG&A, we would have had about -- probably about $400,000 or $500,000 in that particular caption in the quarter.

Okay. And then, what should we expect for goodwill going forward with the TRI-Stat and Destiny Max launch?

When you say by goodwill, I think you mean there about the intangible assets in the sense that we capitalize our development costs?

Exactly.

Yes, typically speaking, our quarterly capitalization rate tends to be of the order of $1.8 million per quarter. And it can go up or down by a couple of hundred thousand either way.

Okay.

But, Michael -- it's Ronan here, we would expect -- we do expect that to reduce now having come to the end of the Destiny Max and nearly out of the CLIA trial. And the kind of thing that we capitalize there would be end-user, stuff like FDA trials, cost of third party trials, that kind of thing. So there'd be significant reduction there, we hope, moving forward.

So what percentage would be the Destiny Max then?

I just don't have that.

Yes, going forward, what's the percentage of Destiny --? Destiny Max will tail-off and we'll be looking at other projects in terms of our other aspects of our instrument line. So, you would have seen it going from probably close to 40% or 50% of our expenditure probably down to a much lower level, sort of 10%, and then dwindling off then.

Okay. And then, what is your strategy to roll out into China and Brazil? How many people are working on that? And then, are you worried about the hospitals are typically -- tend to pay very slowly in China. So I was just curious what your thoughts are there.

Well, I think dealing first with Brazil, we have a very strong distributor in Brazil whom we're very close to. And I don't believe that we have credit concerns there. And we don't give extended credit, but we're very comfortable there.

I think in China, we've various distributors. And we tend to -- not just to -- we don't just typically give 60 days, or we actually put a finite limit on it, all right? So, for example, we might put a -- we might have 60 days but it can't go over $150,000, that kind of approach. But we're very cautious and we don't believe we've significant exposure there. In terms of China, we have four different distributors, so we're -- our exposure is diluted.

Okay, great. Thanks.

Thanks very much.

Our next question comes from [Evan Greenberg] of KC Capital.

Hey, guys. How are you? A couple of things. Number one, a lot of my questions on Destiny Max were answered, but you paid back $3 million out of free cash flow this quarter of debt; is that going to be a recurring theme here? Or was it just transition CapEx this quarter, transition marketing costs that enabled you to pay back that debt? Because it's a pretty aggressive repayment, and is it good use of your free cash flow?

No, we have a schedule whereby we would repay the banks, where we're obliged to repay the banks at the rate of $3.2 million every six months. That's $6.4 million a year. I think that would go for 3.5 years until such time we get -- we have actually repaid all the term loan. I think there's a revolver then, is it of $7 million, Kevin? $7 million.

So what we have at the moment is a revolver at $7 million, and we've a term loan with [$22 million/$22.5 million] or something outstanding. So that will be repaid over the next, what, 3.75 years, at which time you get to $7 million.

I think, as Kevin pointed out, we had been up at well over $40 million. And we have put our head down and paid that down now into the high $20 millions, and intend continuing to do so. And I think that's probably the right thing to do.

That's really a corporate strategy, because you probably -- based on your cash flows, you probably could put more money into other types of development. But there's -- you're doing enough development as it is. So your strategy's really just to pay down as much debt as you possibly can and get this Company to -- without having to raise equity, to a cash -- to a debt neutral position.

Yes, absolutely. And I think the other thing you should remember is that when you look at our P&L, you look at R&D at $6 million/$7 million a year, but you have to bear in mind you need to add on to that, of course, the capitalized R&D. So, our real R&D spend is more like $13 million/$13.5 million, which is like 10% of our revenues, which is more like the industry norm.

So I think even though we're paying back the bank's aggressively, we're also not neglecting our R&D.

Okay, well, that's great to know. And the other question, I guess, would be, with the excess cash flow that you're generating in addition, have you thought about putting in a small buyback, because the stock's incredibly undervalued? I think people misperceive the revenue situation because of the big [IB] HIV business that you have and the new launch of the Destiny Max. I think there's a misperception that this Company's not a growth company, and it really is a growth company but the growth has been masked by the fix you've had to -- fixing the business the way you've had to.

Well, yes, thank you for that, and I agree with you there. But in terms of whether or not it would be advisable at this moment in time to spend our money on a capital buyback -- sorry, on a stock buyback, I'm not so sure. And I don't know particularly that the banks would be great fans of such an approach, in any event. So I don't think that's in our short-term plans, but it's something we certainly might look at in the future.

Okay. Right, thanks a lot.

Thank you.

(Operator Instructions). Our next question comes from [David Levine] of Infinity Capital.

Yes, Ronan. Ronan, I've got a few questions, if I may. Looking back on October 26, 2006, revenues at that time were $33.3 million at that quarter. And over the past three years at [basis] you have been in a rut, if you will; been stuck at this range of between $31 million and $34 million for the past 12 quarters. When do you anticipate that we're going to get out of this very narrow range, and maybe start to see some decent and significant revenue growth forthcoming?

12 quarters ago we actually had higher revenues in that quarter than we do today, not to mention you've released several new products since then.

No, I do accept that. I think -- to run through the four divisions that we have, we've got -- just to deal with the simple ones. For starters, we've got diabetes, which is the Primus business, and clinical chemistry. That business is growing and it's growing 3% or 4% per annum, and it has done that, and I think it will continue to do that. I hope it will do an awful lot more. But that business is clearly growing.

Our infectious disease business grows, but doesn't grow spectacularly. It's the LION business and then the EIA infectious disease business, and the Fitzgerald business. That has been doing 4% or 5% per annum, and I think that can continue to do that.

Then we've got the HIV business which, as you could see there, it's lumpy. But if you look at the fundamentals of it, over the last 4.5 years we have grown our HIV business in the USA from a zero start. So we went from zero broadly, and I'm rounding, but it went zero, $2 million, $4 million, $6 million, $8 million; hoping to do $8 million to $8.5 million this year. So that's what it's done, there's no argument on that.

I think the HIV business, if you look back at it, and I don't have the numbers right in front of me now, but if you were to exclude a very, very unusual and lumpy 2007 where we had huge -- was it 2007 or --. We had two huge quarters that we still can't explain. If you were to actually run a graph across our African HIV sales, you will see that you've actually got impressive growth. And I don't have the percentage in front of me, but there is a -- it's been impressive.

So as I indicated already, that we were 23% down this quarter, but we were 50% up last quarter. But, overall, so far this year, we're up 18% in Africa -- or 16% in Africa.

So to make -- to just go back, the fundamentals of our Point-of-Care HIV business are solid. America is growing. The CDC are supportive of moving testing from instrumentation, where you come back after five days, to on-the-spot Point-of-Care testing.

So the fundamental dynamics are in our favor there. There are only three participants left in approved products. We're one of them. We are in second place with market share. And we continue to grow that market share at the expense of the market leader and in the context of an ever-growing market.

In Africa, I've explained I think that the fundamentals are positive; that we're growing the business; that there is more and more money being spent in Africa; that there's a huge American-backed PEPFAR program which is spending $5 billion a year; there is the Clinton Foundation; there's the World Health Organization, etc., etc.

And really, when it comes to actually running HIV tests, there's only really two places they can put their money. That's either with Inverness Medical or with us, which are [determined product to us]. And they are the two workhorses of the business.

So if more people are going to be tested for HIV in Africa, then Trinity will sell more tests, in the absence of some major new entrant into the market. I think that's absolutely [soundly] the case.

I'd like to move on to the last business -- piece of our business, which is coagulation. In coagulation, we currently have 7% world market share. We bought a [bumery] business a number of years ago. And the intention was that we would, basically, take the benefit of their big installed base and transfer out their old instruments and put in our new instruments. We had a very, very good Destiny Plus, [which we've had] (inaudible) instrument, and we were at the final stages of developing a very, very impressive Destiny Max, which is for the big hospitals.

Our strategy came unstuck when we didn't -- when we had a big delay finishing off the big instruments. And over the course of the last two years, we basically have had a situation where customers have had old MDAs, which basically have reached and have passed the end of their useful life, and we haven't been in a position, because we didn't have a completed instrument or an FDA approved instrument, to actually supply our new Destiny Max into that markets. And we have suffered terribly as a consequence of that. I think that's been reflected in our share price and in our revenues.

And the point we've been making today, and I think in our last call, is that now we're CE approved, we're approved in Brazil, we're approved in China, and we're now also approved in -- by the FDA in the United States. And we now have this wonderful instrument, and we're now confident that we can place this, that we can arrest the decline and that we can actually grow the business.

Our competitors are three companies. They're Siemens, which is the old Dade Behring business, Stago, and Instrumentation Laboratories, and ourselves. They are the only four, basically, people that you can go to when you need a coag instrument and reagents around the world. And we believe that we can confidently now grow our market share from 7% up, and significantly up. And that's an almost endless organic growth potential for us within that -- with coagulation.

So in summary, that's where we see the business. Obviously, we've also got the TRI-stat HbA1c product can grow significantly business for us as well. And in addition to that, we're developing a rapid flu tests, etc., etc.

But just if I looked at the four existing components, you can see that, in summary, Point-of-care in HIV is growing. We want to obviously add companion product to HIV within that segment. We want to leverage our license for lateral flow, but that business is growing. Our infectious disease business is growing. Our Primus/diabetes business is growing. Our coag business is not growing, but it's about to grow.

So I'm sorry if that was very lengthy, but that's my answer.

Thank for the explanation. So we can expect to see some reasonable amount of growth in 2010 quarter-on-quarter? Is that -- can we expect to see some?

Yes, --

[Or see] this basically stalemate growth in revenue, again, over the past 12 quarters, so --?

Yes. The position we have at the moment is that despite the fact -- I mentioned that I think it was 5.4% our -- actually quarter three coagulation revenues were up 5.4% in quarter two. Right?

Can I put my hand on my heart and say that from this month -- from this quarter forward that our coagulation sales will always grow quarter-on-quarter? No, I actually can't, right? But I do believe that we basically have reached bottom and that we will grow from here. I do firmly believe that, and I think we've got all the requisite attributes to do that.

If I may, what other products do we have in the pipeline besides the TRI-Stat? Anything that's notable, or that we could look forward to besides -- TRI-Stat's the only one that we know that at the moment that's --?

Well, I think we are working on a range of rapid Point-of-Care tests. Bear in mind that we have a full infectious disease license lateral flow from the Inverness Group. And what we need to leverage that, we've got -- we've demonstrated our know-how in HIV, and we want to add to our Point-of-Care range of products. So we, basically -- at the moment, our Point-of-Care is HIV on its own, and a lot of growth on that. We working on that; we're developing that.

Beyond that, we're developing a new diabetes instrument, called the PDX, for which we have -- and we're very enthusiastic about its prospects across Europe -- right across the world, but particularly in Europe, where we've got a partner who is very enthusiastic about taking that product into the market.

We are continuing to upgrade our Destiny Plus instrument, etc., etc. And then, we're working on various esoteric infectious disease products as well. But I suppose in terms of what we put up in lights, I would say obviously, the CLIA waiver on the TRI-Stat, the PDX, which is the diabetes instrument, and then the flu and other tests in the Point-of-Care range.

Right. As I recall, years ago you supposedly were going to be making some cancer markers. That was back in the late '90s, [I recall brand] (inaudible). What ever happened with that product development?

Well, we took a license at the time from Centocor, and we worked on the EIA tests with them. And to be honest with you, eventually the product was abandoned. We didn't reach the level of sensitivity that worked for both of us.

I see. So, I've basically covered everything. You made some purchases, going back in 2007, I believe it was about 300,000 shares you personally bought on the open market, do you still currently hold them or did you --?

Yes, I do, absolutely, yes. From recollection, I think I bought them around $7.

Well, no, the stock was around $4 in change when you bought them, if I recall, if you look on the chart in 2007. You bought them in March, if I recall, March of 2007. If you look at the history --

No, I didn't make any purchases in the $4 region. I don't have it in front of me now, but if you look back at the purchases, I think I spent $2 million there in the $7 range. And then prior to that, I think the Company raised $20 million and I took 10% of those, I think at a price, from memory, of $7.96 or $8. No, no; I made no purchases under $7, unfortunately, I think, from recollection. But it's a matter of public record. Okay?

Operator, have you any more questions?

There are no more questions at this time.

Right. Well, in that case then maybe I'll close the call. Thank you everybody for your attention. And I look forward to speaking to you at our quarter four conference call in February. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.