IDS update proves resilience and cash generation

Revenues from medical diagnostics group Immunodiagnostic Systems to the end of March will be marginally reduced on the previous year but in line with expectations.

In a year-end trading update, the Newcastle-upon-Tyne based company said total revenues would hit £49.8m for the year to March 31st, down from £53.7m previously.

The group delivered particularly strong cashflow in the year, generating £13.6m of cash compared to a pre-exceptional £6.7m in 2012, to leave year-end net funds at £20.5m.

The company claimed the performance was encouraging in light of the tough trading environment, where its historically strong market of manual vitamin D testing is declining "rapidly", while competition increasing in automated vitamin D market too, all against a backdrop of a shrinking number of laboratory customers due to consolidation.

The average revenue per direct instrument placed with customers was £72,000 per year, falling from £84,000 in the previous period.

Looking forward, IDH declared it would continue to pursue its threefold strategy of developing new specialist assays, entering into new geographies with attractive growth opportunities and developing the next-generation IDS-iSYS system, having made progress in all three of these areas during 2012/13.

Management anticipates a number of further product launches in 2013/14, with US regulatory clearance sought for five automated assays which have already achieved European CE marking.

Patrik Dahlen, Chief Executive Officer of IDS, said: "We are pleased to report trading has been in line with Company guidance following a strong second half of the financial year, with robust growth in our range of recently launched bone, growth and hypertension panels.

"Our focus remains on the development of our IDS-iSYS automated platform through broadening the assay menu, improved instrumentation and greater geographic penetration. We believe that IDS is now well positioned to execute this strategy and drive continued change within the business."

Analyst Savvas Neophytou at broker Panmure Gordon attributed the "impressive" cash generation to the group's "better working capital management and reduced investment".

"Nonetheless, it underlies the cash generative nature of the business," he said. "With that sort of cash, it can turn itself to self-help if future acquisitions need to be funded, thus removing the risk of dilution [from potential acquisitions].

OH