Trinity Biotech PLC (TRIB) 2011 Q4 法說會逐字稿

Good morning and welcome to the Trinity Biotech fourth-quarter and fiscal year 2011 financial results conference call. All participants will be in a listen-only mode. (Operator Instructions).

After today's presentation there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Joe Diaz. Please go ahead.

Thank you, Emily, and thank all of you for joining us today to review the financial results of Trinity Biotech for the fourth quarter and full year 2011, which ended on December 31, 2011. As the conference call operator indicated, my name is to Joe Diaz. I am with Lytham Partners. We are the financial relations consulting firm for Trinity Biotech.

With us on the call today are Mr. Ronan O'Caoimh, Chief Executive Officer; Mr. Rory Nealon, Chief Operating Officer; Mr. Kevin Tansley, Chief Financial Officer; and Mr. Jim Walsh, Chief Scientific Officer and Business Development Director. At the conclusion of today's prepared remarks, we'll open the call for question and answer session. If anyone participating on today's call does not have a full text copy of the release, you can retrieve it off the Company's website at TrinityBiotech.com or numerous financial sites on the Internet.

Before we begin with prepared remarks we submit for the record the following statement. Statements made by the management team of Trinity Biotech during the course of this conference call that are not historical facts are considered to be forward-looking statements, subject to risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will and other similar statements of expectation identify forward-looking statements.

The forward-looking statements contained herein are subject to certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements. 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 US Food and Drug Administration and other agencies, the impact of competitive products, product development, commercialization and technological difficulty and other risks detailed in the Company's periodic reports filed with the SEC.

Participants on the scholar cautioned not to place undue reliance on these forward-looking statements, which reflect Management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements which may be made -- which may reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

With that said, let me turn the call over to Kevin Tansley, Chief Financial Officer of Trinity Biotech. Kevin?

Thanks very much, Joe. I'll just start off the call by just taking you through the financial results for the quarter which will include a review of the income statement, balance sheet and cash flow movements for the quarter. And also this is quarter 4. I will make some comments on a financial performance of the Company for the financial year 2011 as a whole.

But to begin with, I will take you through the income statement for the quarter, starting with our revenue performance. Total revenues for the quarter were just over $20 million, and this compares to $19.2 million in quarter four of 2010, and hence represents a growth rate of 4%. Ronan will take you through the makeup of this revenue growth later on in the call.

Moving onto gross margin, at 51.5% this quarter's gross margin is broadly consistent with the last two quarters and compares very favorably to the 50.8% in the comparative period last year. The improvement in margin has been achieved through a combination of improved operating efficiencies and increased leverage of our manufacturing cost base of revenues have continued to rise, so this has been slightly offset by sales of our Premier instruments this quarter.

Taking our indirect expenses next, our R&D expenses this quarter are $862,000 and have remained consistent with comparative period last year and with quarter three 2011. Our selling, general and administrative expenses have also remained broadly fashioned and in fact show a slight decrease of 2% as we continue to manage our cost base.

Moving on to our net financial income next. This quarter our net financial income was $604,000, which is an increase of over -- over the $491,000 earned in the comparative quarter. This increase is mainly attributable to lower interest paid in relation to some smaller elements of financing, mainly associated with equipment financing which has since been paid down entirely.

We have also benefited from an interest income perspective from higher deposit interest rates this quarter. The tax charge for quarter four was $657,000 which represents an effective rate of 14%. This compares to a charge in the comparative period of $408,000 which, being an effective rate of only 10%, was unusually low due to losses forward being utilized, mostly due to the impact of some R&D tax credits which were received in that quarter.

Our operating profit for the quarter at $4.1 million was very strong and represents an increase of 15% compared to the equivalent of period of last year. Our operating margin is now 20.5% and ahead of our 20% target.

Meanwhile our profits before tax for the quarter increased from $4.1 million to $4.7 million, an increase of over 15%. In terms of profit after tax, we have seen growth of over 10% to $4 million this quarter. And this is the first time in the Company's history that we have earned over $4 million in a single quarter, so another milestone has been achieved.

Similarly our EPS has grown by just under 12%, increasing from $0.171 to $0.191.

As I mentioned earlier, given that it's quarter four, I will make some comment on the full year results before I move on to the balance sheet. Annual revenues excluding Coagulation increased from $73.8 million to $77.9 million, an increase of 5.6%. From an EPS perspective, we had a very strong year. We achieved a 14.2% increase in fiscal 2011 compared to 2010, moving from $0.641 per share to $0.732.

This obviously excludes the impact of nonrecurring items in 2010, principally the divestiture of Coagulation.

We also saw considerable growth in both profit before tax and profit after tax, which increased by 22.3% and 14.7% respectively.

Now, let's talk about our balance sheet where I'll explain the significant movements since the end of September 2011. Property, plant and equipment additions of $300,000 were offset by a depreciation charge of approximately $300,000 to leave the overall balance unchanged to $7.6 million.

During the same period, our intangible assets increased by $1.9 million. This is attributable to additions of $2.3 million, mainly on development projects. And this has been partially offset by an amortization charge of almost $400,000. The additions this quarter were slightly higher than in previous quarters due to increased activity and development for a new range of Point of Care tests.

Moving on to inventory next, you will see that our inventory has increased by nearly $400,000 this quarter. As was the case last quarter, this increase is attributable to the ramping up inventory levels in advance of full-scale production of Premier.

Meanwhile, trade and other receivables have increased by $800,000 in the last three months. This increase is mainly due to a rise in trade receivables, with debtor days having increased from the unusually low figure of 49 days at the end of September to a more normal 53 days at year-end. Within this caption also, there is the deferred consideration of $11.25 million which is due to be received from Stago at the end of next month.

Finally in relation to working capital, our trade and other payables have increased by just under $200,000 this quarter. This is due to two factors -- an increase of approximately $500,000 in trade creditors, mainly associated with our inventory buildup, offset by a reduction in deferred consideration of $333,000 that was paid to the former shareholders of Phoenix Biotech.

Lastly I will discuss our cash flows for the quarter. Our cash balance has remained unchanged at $71.1 million. $4.1 million of cash was generated from operations plus a further $200,000 of net income -- interest income and taxes. These positive cash movements have been partly offset by capital expenditure of $2 million, thus giving free cash flows for the quarter of just over $2.3 million.

This in turn was offset by two non-free cash flow related movements. Firstly we spend $2 million repurchasing over 205,000 ADRs in the quarter. Secondly there was the final deferred consideration payment of $300,000 in relation to Phoenix Biotech.

The level of free cash flows this quarter has been impacted by two factors; firstly, increased inventory in the run-up to the launch of Premier, and secondly, the slight slowing down of debtor cash collections while the debtor days normalized following the record performance in quarter three.

You may also notice that quarter four free cash flows appeared to be down when compared to the comparative period last year. I would like to remind you that last year's number is not a meaningful comparison, as it includes the benefits of unwinding the working capital associated with the divested Coagulation business.

For the year as a whole we generated $12.2 million of free cash flow, thereby exceeding our target of $1 million of free cash flow per month. Overall from a financial perspective, it was a very strong quarter with excellent underlying revenue and profit growth. I will now hand back to Ronan, who will give more information on revenues.

Thanks, Kevin. Firstly I will talk about our revenues for the year, and then I will talk briefly about the recent acquisition of Fiomi.

Though our sales for the year were $80 million, which is up from $73.8 million in 2010, an increase of 6%; however, our Fitzgerald antibody business had a 10% drop in sales due to weak flu antibody sales. And when this is excluded, our business grew 8.5% during 2011.

Our HIV point-of-care business generated revenues in 2011 of $16.6 million, up from $16.1 million, which is an increase of 3%. Our clinical laboratory business generated revenues of $60.6 million in 2011 from $56.9 million, which is an increase of 7%. However, when Fitzgerald is excluded, our business grew 11%. And this is made up of an increase of 10% in our infectious disease business and an increase of 12% in our diabetes business for the year.

For the first time we're issuing guidance today, which is that we will expect a revenues to go from $78 million in $2011 to $86 million in the current year. This will constitute organic growth close to an excess of 10%. Our earnings per share was $0.73 in 2011 and this is expected to grow to $0.80 in 2012.

Our HIV business, as I have indicated, grew 3% during the year, up 12% compared with the prior quarter. We see this trend continuing and anticipate strong year in Africa due to a number of contract gains.

Our core infectious disease and business grew 10% during 2011, as I already said. Gains arose primarily in our syphilis and new vitamin D business in the USA, and this trend should accelerate during 2012. China continues to perform well and new regulatory approvals will boost revenues.

Our diabetes business grew by 12% in 2011. During the last quarter we launched our new Premier instrument and have sold a total of 18 instruments prior to year-end to a combination of Menarini in Europe and to our Turkish distributor. Menarini also formally launched a Premier to the subsidiaries during the quarter and are actively engaged in demos to existing and prospective customers in the UK and France, with a launch in Germany expected in quarter two.

This has resulted in further shipments of estimates to Menarini in quarter one, and we're expecting significant further orders in coming months following on from this initial launch. Meanwhile, Turkey, which was our initial launch market, continues to perform well ahead of expectations. And we are very excited with the progress being made there.

During the quarter we've also been very active in conducting demos in various other jurisdictions including Taiwan, Israel, Japan and Columbia. In early December we also obtained ahead of schedule an FDA approval on the Premier, which is a significant milestone for the project. FDA approval enables the instrument to be launched and sold in the USA, but also greatly facilitates the ongoing rollout into other international jurisdictions.

Accordingly, since December we have commenced our rollout in the USA and have begun active demos in the instrument in various existing -- sorry, to various existing and prospective customers. Our strategy for the USA is to sell the Premier to a combination of our existing direct sales force and through the Fitzgerald Healthcare's extensive distribution network. As previously mentioned Fitzgerald has a strong position in haemoglobins and would be exclusively promoted in Premier instruments going forward. They have an already installed base of an excess of 1000 instruments which they would swap out over the coming years.

In recent months, we've also actively progressed the registration process for Premier in China. China is also a significant market for us in the haemoglobin area through our Ultra and PDQ instruments, and we're optimistic that Premier would be registered in the Chinese market before the end of this year. As a market, China has significant growth prospects in that there's an estimated 90 million diabetics in China, and very significant instrument placements are anticipated in 2013.

In conclusion, we're making good progress with their launch in Europe, in the USA and in Turkey. The product has been very well received and we will continue to rollout the product to other markets in coming quarters. In total we anticipate selling approximately 200 of the Premier instruments in 2012, which will drive a 25% growth in our diabetes business during the year.

We expect that this growth will be greatly exceeded in 2013 with the addition of sales in China and Brazil, wholesale registration process and post the launch of the ion-exchange version of the Premier instrument.

I'm now just going to talk for a few moments about the Fiomi acquisition. So, last Thursday we announced the acquisition of the Uppsala-based Fiomi diagnostics business just outside Stockholm. Trinity acquired the full share capital of Fiomi for a total consideration of $13.1 million, consisting of $5.6 million in cash and 408,000 ADRs on closing, plus a consideration of $3.4 million contingent on the achievement of certain milestones -- namely CE marking, FDA submission and FDA approval of a high sensitivity Troponin I assay.

Just mention, by the way, that the issuance of the shares was done on the insistence of a large VC, who declined our cash and wanted to take a position in Trinity and declined the opportunity of applying in the market. They insisted on some equity.

The CE marking on the Troponin product is expected in the second half of 2013 with FDA approval planned for early 2014. So fundamentally we expect to have an FDA approved Troponin I test at this time 24 months.

The point-of-care assay platform is based on technology originally developed in the early 2000s by an Uppsala-based company called Amic AB. Amic was sold in 2008 to a large multinational healthcare company. In 2010, the original Amic executives once again secured the rights to the platform and formed Fiomi diagnostics.

Since then, Fiomi's efforts have focused on development of a high sensitivity cardiac test for Troponin I. Troponin I is widely acknowledged as the preferred marker for detection and monitoring of acute cardiac infarction. The core technology supporting the Fiomi platform, which is protected by a family of more than 20 patents, consists of a small portable, benchtop, high-sensitivity fluorescence reader approximately the size of a standard telephone, weighing about 1 kilo or 2.2 pounds.

The instrument, which is standard across all assays, is accompanied by a disposable test cartridge. The test cartridge employs a unique micropillar flow technology. Micropillars, which are widely used in the CD industry, have been adopted by the Fiomi test to point-of-care diagnostics.

The inexpensive injection-molded micropillar assay -- I'm sorry, they allow precise control of assay dynamics, thus radically improving precision and sensitivity. This combination of highly sensitivity fluorescence detection with controlled flow Micropillars results in an assay platform with unrivaled performance characteristics, namely -- and central lab sensitivity and precision at the point-of-care. Also, application to both quantitative and qualitative assay formats; also multiplexing capability of up to 10 analytes simultaneously; also short essay times of between 5 and 15 minutes; and lastly, low-cost manufacturing.

Trinity is satisfied that Fiomi technology is significantly more sensitive and precise than the market-leading platforms today. A total of $60 million has been spent on development of the technology to date.

We now plan to complete development of the Troponin I assay and to follow in three monthly intervals with Troponin I myoglobin CKMB triplex T-timer -- sorry, firstly with the Troponin I, then with a panel of Troponin I, myoglobin, CKMB and then with a T-timer test, and lastly a BNP, heart failure marker.

The cardiac marker market is currently estimated at $900 million and is growing at a rate of 14% annually. The main participants in this market are Alere with a biosite Triage, Abbott with the i-STAT platform, and Roche with the COBAS handheld platform.

The Fiomi platform is consistently displaying significantly better sensitivity, but most importantly, superior precision to all of these platforms, thus leading Trinity to believe that it can take a leading share of this market when its panel of cardiac assays are released to the market in March 2014.

The platform of course is also well-suited to Trinity Biotech's core infectious disease Point of Care business, and is the ideal platform to develop the next generation of high sensitivity, multiplexed, Infectious Disease products such as chlamydia, gonorrhea or flu A/B where basically lateral flow tests don't exhibit enough sensitivity.

And Trinity now immediately plans to expand Fiomi's operations in Uppsala and expects to spend a further $11 million in completing the development of the cardiac panel, and investing in the necessary manufacturing infrastructure required for full-scale manufacturing.

In summary, Fiomi has developed a next-generation point-of-care immunoassay platform which is capable of generating extremely sensitive and accurate results. The platform is ideally suited to the point-of-care cardiac market -- marker market where high sensitivity and precision is essential, and indeed, where the current products in the market struggle to provide the necessary performance. Trinity will very quickly complete a range of cardiac assays to address this market and will eventually use the Fiomi platform as the platform of choice for next-generation point-of-care assays across its entire range.

If I could now hand back to the operator for a question and answer session, please.

(Operator Instructions) Matt Dolan, Roth Capital Partners

So maybe I'll start on the revenue side of guidance. First of all, what led you to decide to finally start providing guidance? And what in that $80 million number is Premier, both in terms of overall revenue?

Well, Matt, the reason we maybe decided to do what was you were too low. You have to get it out there that we actually expect it to do a little bit better. I think -- so maybe that was one of the reasons. But no, I think it was time for to maybe just start giving guidance.

With respect to the question relating to Premier, about $5 million is the answer.

$5 million? Okay. And then on the expense side, Kevin, it would seem, just a rough calculation, if I keep gross margin static, it seems like your expenses don't go up virtually at all this year. You've got a lot going on in terms of the rapids and the Premier rollout. Is that the right way to think about it? Or how do we think about expense control that is embedded in your guidance?

Yes, I mean obviously, if you even look at 2011 we have managed to keep a lid on our expenses and at sort of very modest increases there, if any. And again, I don't see us having huge increases going forward. There will be a little bit in relation to taking on a few additional people in relation to Premier and Point of Care. But other than that, there won't be any significant [increases].

Okay. And then I'm sorry, two follow-ups on the revenue side; did you give us a number on what you've placed so far in Premier units? I'm guessing that's --- the revenue from that's a little more back end loaded. And then the second question is on the Point of Care Rapids. Is that another piece of the revenue puzzle for your 2012 guidance?

So far we've placed 18 Premiers last year, to the first of your question, 18. And the second bit was?

On the Rapids, is that in the $86 million in guidance?

It's a very modest amount because what we are looking at, you would have seen that we got Giardia CE marked and we have just submitted to the FDA. But that's one enteric product, but it needs the C Difficile and the Cryptosporidium as partner products to complete the panel.

So we would expect them coming out of end of quarter three, start of quarter four with the FDA. We would also expect syphilis at that moment and HSV. So we've been conservative with what we have included there, and we included very little. But it doesn't mean to say we expect to celebrate it, but we regard that as upside.

Okay. And if I could sneak one more on the Fiomi acquisition, I realize that the market for Troponin and BNP are growing nicely, especially on the emergency side. But they have been around for a little while. As you said in the prepared remarks, they're sold by very well-established players and it seems that turnaround time rather than sensitivity has been the key driver.

Is that something that you're going to need the market to evolve to, in terms of sensitivity, for you to be able to hit some of the revenue, the out-year revenue numbers that you're throwing out there in relation to that acquisition? Or how do you see that playing out in terms of differentiating Fiomi?

Hi Matt, this is Jim. Just to take that question, the cardiac marker market is, you are right; there is really only three players in there right now. But all of their products tend to suffer from a couple of problems. One is sensitivity.

The FDA had guidance in 2010 which basically makes it very difficult for the current incumbents in the market to sort of grow their market share, because their product just doesn't perform to the characteristics that the FDA would like to see now. But more importantly, not just sensitivity; in terms of precision, that's really where this market is at.

What happens normally in an ER when a gentleman or a person comes in complaining of chest pain, is they will do a Troponin I assay. And they will monitor that assay over a period of maybe every couple of hours for the first number of hours. And it is very important to be able to notice discrete movements in that number, i.e. the number of picograms of Troponin that is actually in that patient's blood. If it's going up, it's not a good sign. If it's staying steady it is a good sign. That is where precision comes in.

And most of the assays in the market today are -- that precision is in the order of the 20% marks, okay, whereas we have a precision of less than 10%. And that is extremely important. So if you would say to me what is the differentiation for the Fiomi platform, it's much better sensitivity.

Perhaps sensitivity is not in order of five times more sensitive than the products currently in the market, but more importantly when you get down to that level of very, very exquisite precision is a very exquisite -- CV, very narrow range of accuracy that goes with that number. And that is what the differentiation is going to be. So (multiple speakers) a much better product.

So, Matt, just to go back, what we're really saying is that based on the results that we have been achieving, this product will be a world better. It basically will be able -- it will be much more useful than existing products in the emergency rooms, and will be a product of choice. It will be a real simple choice right across the world, because basically it's a much more precise test. It will pick up slight movements in Troponin that the rest of the competition are unable to do.

Okay. Should we look for more acquisitions of this kind of style and size this year?

I don't think so, no.

Joe Munda, Sidoti & Company.

In the press -- I'm just trying to figure out. What was the pure CapEx number?

The CapEx number, as you can see from the cash flow, the CapEx for the quarter was just under $2 million, $1.975 million, which includes both PPE and intangibles. There is a cash element of it. We have some differences between what was actually spent and accrued for (inaudible) so the two figures won't always match (multiple speakers)

I meant for the entire year.

$8.2 million.

And that includes CapEx and financing, correct?

That includes, yes; in certain cases if we had leased -- no, the leasing wasn't a significant factor for us this year.

Okay. With the Fiomi acquisition, are we expecting to see that pickup in 2012 or is that stable? Is that a normalized number?

As we indicated in our press release, it will probably take about a further $11 million in terms of the final development costs and the associated fixed assets to bring that test to production over the next two years. So you're going to be seeing of the order of $5 million to $6 million over that 24-month period per each 12 months. So that's $5 million extra for 2012.

It would put you at -- approximately $2 million would be capital equipment.

Yes, a little under, but yes, of that order.

Okay. On the acquisition itself, you mentioned the sensitivity but I'm curious about the testing time and detection time. Are those cut even smaller due to their platform?

The test time is approximately 10 minutes. The test consists of essentially a sampling result. There is no manipulation. It's a small [in a quart of whole blood] placed on the test strip, and 10 minutes later, 10 to 12 minutes later actually, the result is reported as a quantitative picograms per mil of Troponin. Which is a little bit quicker than the current incumbent in the market, I believe.

Okay and in the platform you had mentioned that Fiomi's platform will open you guys up for infectious diseases and testing on their platform. Are you guys going to take that platform and go back and work on some of the stuff you've already worked on and re-release it using the platform you just acquired?

No, Joe, I don't think so. To give you an example, HIV or say syphilis, for example, using a lateral flow -- using the traditional [lateral flow point method] gives a wonderfully accurate results, 99.9% accuracy. And so, in such circumstances there's no need to go on to this platform.

But that isn't the case, for example, if you are to look at chlamydia and gonorrhea for example. Chlamydia, for a lateral result test, just don't have kind of level of accuracy that you would need. And -- but it was never really our plan to develop a chlamydia/gonorrhea test on the lateral flow format.

Similarly for flu, as an example; this platform can give just much significantly better accuracy. So I suppose if you wanted to characterize it as -- maybe it is a halfway house in some instances between lateral in flow and molecular testing -- that would be a bit simplistic. But certainly in terms of for chlamydia gonorrhea or for flu, you would be getting significantly better results than on lateral flow.

The other thing about this platform, of course, is it's just quantitative. So there is an instrument involved, whereas the lateral flow is just simply eye-read based on a line and color. So this thing can basically give a reading. Therefore it has applications also for example in diabetes, infectious disease, as we said.

And importantly also of course we have (technical difficulty) in San Diego at the moment. So just to remind you, we've just launched Giardia with the Cryptosporidium. We'll have C Difficile all launched into the FDA by June.

We'll have syphilis; we'll have HSV, strep and pneumonia to go with our current Legionella. And then of course we have our H. pylori antigen test. And those products will continue and those products are excellent. They have excellent sensitivity.

I think it's in other areas, for example, like chlamydia/gonorrhea, that we would move on and use for example in infectious disease and use the new platform. But we will be -- in 18 months' time, I think our scientists in San Diego will be working on this platform on a number of projects. So what we will be doing probably is that in Sweden we'll be concentrating on cardiac and San Diego we'll be concentrating on infectious disease, both working with the same platform.

[Michael Troy], Diamondback Capital Management.

A couple questions. One is your guidance for 2012 is $86 million not $80 million, right, on the revenue line?

Right.

And then what is the free cash flow that is implied by your guidance for 2012?

As you would have known, our free cash flow throughout 2011 would have been running at about $1 million per month; came in at $12.2 million. We have slightly increased that rate in 2012, although that will be partially offset, then, by the additional investment required for Fiomi. We'll see the number coming in at somewhere between $8.5 million, $9 million.

That is including the impact from Fiomi?

Yes, absolutely includes everything.

And then if I look at your revenue and EPS for 2012, what is the total impact to revenue and to EBIT from the Fiomi acquisition to those two line items?

Well, clearly it won't have any impact on revenue. In terms of EBIT, it will have virtually no impact because of course we -- because the investment of Fiomi can be capitalized.

Okay.

Under our European accounting rules. It will constitute a reconciling item between US GAAP and our UK GAAP.

Okay, and then the --

So basically Fiomi won't impact -- Fiomi want impact our earnings per share, except to the extent that 400,000 shares were issued were slightly diluted. And that was the other impact to EPS slightly, but I think a (inaudible)

But you will expense the incremental spending that you plan to do. I think you said it was $5 million to $6 million a year, but part of that is capitalized, so maybe $3 million to $4 million running through the P&L?

No. You see (multiple speakers) that will be capitalized that's my point. That will be capitalized.

That is capitalized as well.

No, no, because even -- the investment under all caps -- I mean, the investment that we made up to today, that we made purchasing the business will be capitalized.

Right, I understand that.

But the difference is that under US GAAP you would not capitalize the actual salaries spent on this R&D. But under [RS] UK GAAP you would. So that is why our earnings per share are only marginally impacted to the extent that we should share it.

If I could just take the opportunity of talking about that, I mentioned it in the prepared speech, but basically the -- we reluctantly issued shares in this instance. And it was the desire on the part of venture capitalists who had supported Fiomi to actually take Trinity shares, and so that was the basis on which it was done.

So just to be clear, if had not done the Fiomi acquisition, your revenue and EBIT four 2012 would be roughly the same?

Yes, that is correct.

David Cohen, Midwood Capital.

Just a couple of adds; one, in the press release you guys showed the weighted average ADRs in your basic earnings. What is the diluted number for the quarter and the year?

The diluted number for the quarter is just over $22 million, so $22.036 million, and for the year as a whole is $22.23 million.

And just on the commentary you just made about capitalizing, even the incremental spend under the international accounting standards, is there any amortization of that capitalized cost?

That amortization will commence once the projects themselves are launched. So it will happen in 2014.

It is almost as if you are building a plant and are capitalizing the interest associated with -- investment in building it.

As well as it happens, we will be building a considerable amount of plants up there to get ready for production. And there are costs which are basically put on the balance sheet, and then once the project hits the market we'll start amortizing it.

Okay. And then to the growth that is targeted in revenue this year greater than 10% organic, which is what I thought I heard, without being specific about the dollars from a given (technical difficulty) line of business. But maybe you could just indicate which are the biggest contributors to that incremental $8 million revenue for the year.

Well, the single biggest impact there is obviously the new Premier instrument. And we have indicated that we believe we'll sell 200 of those instruments this year. So that is all incremental new business. That is the biggest single component.

Beyond that, then, you would have a modest impact. And it's a very modest impact as already indicated from the launch of the new lateral flow test that we talked about. That will come right at the end of the year.

Beyond that we have launched, and we talked about it before, a vitamin D test just at the end of the year which is doing very, very well. That will contribute to into growth. Beyond that, I think you're just looking at general organic growth right across the whole -- our whole business.

I would indicate that -- I have indicated that we have won some new contracts in Africa, which because of the view that we're going to do quite well in Africa this year, there is some of that in there.

But in general terms, remember we had achieved organic growth. If you exclude what happened with Fitzgerald last year we achieved organic growth of 8.5%. So given what is happening in Premier we don't think it's -- we think we can comfortably get to 10%, and we hope to obviously achieve beyond it.

And just to follow up -- and you say, when you reference the Premier business I assume you are also including reagent sales in that discussion.

Yes, absolutely. But of course in the first year in a situation like that, on average the instruments are only in for six months, so in the first year the reagents are not -- it's going to be mostly instrument sales other than reagent. But yes, it includes instruments and reagents. But in a circumstance like that, the actual reagent sales might be only 7% or 8% of the total in a first-year situation, when the average instrument is only in place for six months.

Okay. And what are you assuming as far as sales of your syphilis testing?

Syphilis is doing well, and maybe I over simplified it by just talking about vitamin D. The dynamic, really, particularly in the United States, is that we got 10% growth last year in our microtiter plate business, which would surprise many commentators.

We believe that how we achieved it was -- was that we placed a lot of instruments. And we think that the reason we placed so many instruments was because people were very interested in buying our syphilis test and also, more recently, and going into 2012, are very interested in buying our vitamin D test.

But the impact, of course, of their desire to buy both of them is that they end up also buying the other 30 products that form part of our catalog, because they buy an instrument. And they run -- as well as the vitamin D and the syphilis, they run the other 40 tests as well. And that is what has been giving us our growth and that's what we think will give us our growth as we continue through 2012.

Thanks guys, best of luck.

(Operator Instructions) [Mark Lipton, Lipton Pension Plan].

Hi guys. This may be a mundane question or tertiary on your list after all you guys have done. Are we going to have a dividend in June? Is there any possibility of it being increased?

Mark, absolutely there will be a dividend and I believe it will be increased. Look, we have a board meeting, an imminent board meeting, and it will decide. But I would imagine that it will increased, possibly by a modest percentage, but most definitely it's an annual dividend and it's not going away.

Thank you very much, and congratulations on the direction you guys are taking.

[Brent Morrison], Stern Group.

Hey guys, good quarter. Quick question; you gave guidance of, I think I heard this right, of $0.80 for EPS per ADR.

Yes, that's right, Brent.

What are you assuming on the share count throughout the year, the weighted average share count?

21.4 million.

So you are not assuming much buyback?

I haven't at this stage assumed. It doesn't mean it's not going to happen per se. But at this stage I'm just assuming pretty much where we're at, at the moment.

Any reason why you're not assuming the lower share count?

Just on the basis the first time we've given guidance and I'm just taking the number that is pretty much there at the moment.

Okay.

But besides, it is our intention to continue with the buyback, just to be clear.

What did you say? Sorry.

It is our intention to continue with the buyback.

Sure. Okay. Any reason why it hasn't been faster? Are you very limited by the volume in the fourth quarter, or some of the other hurdles for the buyback?

The volumes, as you probably are aware, are very modest and we have been buying to the maximum of our capability.

Okay, thanks.

Michael Troy.

Hi. Just on the free cash flow what would it have been ex-Fiomi for the year for 2012?

For 2012 it will be approaching $5 million for 2012, was the impact of Fiomi itself. So you can add back somewhere between $8.5 million and $9 million, so you could add a further $5 million back to that to get the pre-Fiomi number.

Okay, great. Thank you.

Bear in mind, that cash also took account of a dividend.

(Operator Instructions). This concludes our question and answer session. I would like to turn the conference back over to Mr. O'Caoimh for any closing remarks.

Just to say thank you very much to everybody, thank you for your interest and your support. And we look forward to talking to you at the end of April with our quarter one results. Good afternoon.

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