TIDMIIN
RNS Number : 4253R
Inion Oy
30 April 2009
Inion Oy
("Inion or the "Company")
Preliminary results for the year ended 31 December 2008
Tampere, Finland and Guildford, UK. 30 April 2009, Inion (LSE: IIN.L), a company
focused on the development and commercialisation of novel biodegradable medical
implants, today announces its preliminary results for the year ended 31 December
2008.
Significant recent events in 2009
* During Q1 09, Inion continued to evaluate a range of options aimed at ensuring
it has sufficient funding to enable it to continue with its current strategy.
However, whilst it has been able to obtain indicative commitments from a number
of investors, in light of prevailing equity market conditions the Company has
not been able to secure a sufficient level of funding. Discussions are
continuing with a number of parties in relation to other strategic transactions
or divestment of certain assets to raise additional funding.
* The Directors have concluded that the combination of these
circumstances represents a material uncertainty that casts significant doubt
upon the Group's and the Company's ability to continue as a going concern and as
the Company has recently announced, the Directors will continue (i) to approach
potential investors and/or buyers of the Company's assets or (ii), failing such
additional investments/disposals, to facilitate an orderly liquidation of the
Company. Nevertheless following the discussions referred to above, and after
considering the uncertainties described, the Directors believe that they have a
reasonable expectation that the Group and the Company have adequate resources to
continue in operational existence for the foreseeable future. For these reasons,
they continue to adopt the going concern basis in preparing the annual report
and accounts. However, until the outcomes of discussions with potential
investors/buyers are known, there is considerable uncertainty over this basis of
presentation.
* Inion announced on 29 April 2009 that it intends to apply to cancel the listing
of its Ordinary Shares on the Official List and to trading on the London Stock
Exchange's market for listed securities.
2008 Financial summary
* Sales of EUR5.8 million in 2008 represent a 10% increase on 2007 sales of EUR5.2
million. The entire increase of approximately EUR0.6 million is due to new
sales of Inion Spine and Speciality Orthopaedic products in the Company's key US
market.
* Sales of Spine and Speciality Orthopaedics products in the US have grown from
zero and accelerated rapidly in the second half of the year since Inion's spinal
graft containment systems gained US marketing clearance in July 2008.
* Global sales in 2008 from Inion's core Spine and Speciality Orthopaedics
businesses are EUR3.3 million, an increase of 20% compared to EUR2.8 million in
2007. Sales of EUR2.4 million (2007: EUR2.3 million) from our Craniomaxillofacial
(CMF) business account for almost all of the remainder
* Underlying operating expenditure for the year of EUR12.2 million (before one-off
costs) is down by EUR2.7 million or 18% on prior year (2007: EUR14.9 million) as the
Company has continued to maintain a tight control over costs. Lower expenditure
also resulted from the strategic review in 2007 which led to the scaling back of
R&D activities in non-core areas including the closure of its Cambridge R&D
facility.
* Underlying loss before tax was EUR7.3 million (2007: EUR10.9 million) before one-off
costs. Including one-off costs loss before tax was EUR13.6 million (2007: EUR12.3
million).
* Cash, cash equivalents and short-term investments at 31 December 2008 totalled
EUR3.6 million
* The Company has also implemented measures to reduce its overhead expenditure and
headcount levels have been reduced to 20 from 83 at the end of 2008 to conserve
its current cash resource. This has meant the suspension of certain activities
within the business including manufacturing.
2008 Operational Summary
* Inion's commercial operation developed well during 2008 particularly in its
priority US market. Sales in this region grew rapidly in the second half of the
year as a result of a more effective sales management team and improved
distribution networks, dedicated training programme for sales teams and
end-users, and the approval of important new products.
* Inion received FDA 510(k) marketing clearance in July 2008 for its S-1(TM) and
S-2(TM) spinal graft containment systems for spinal fusion procedures,
completing its product offering for these applications. This major approval
allowed the Company to accelerate commercial activities in the US spine market
with a limited launch of these new products to high-volume and influential users
at selected trial sites, with a full US launch of these products planned for
2009
* The encouraging progress made in the US has seen Inion begin to replicate its
commercial model in its key markets within Europe and the Far East (Korea,
Taiwan and Australia).
* Inion initiated a programme to register its full core product portfolio in China
with a view to extending its commercial operations into this huge potential
market
* First out-licensing agreement signed in August with US firm Curative Biosciences
Inc. covering novel bioactive technology for promoting bone regrowth and repair
when treating patients with broken bones. Inion received an undisclosed upfront
payment on signing and could receive development and sales milestones of up to
$2.025 million and royalties on future product sales.
* Ian Paling, the former CEO of Corin Group PLC (LSE: CRG), was elected as Inion's
new Chairman in August 2008, replacing Dr Göran Ando, who stepped down from the
Board.
Ian Paling, Inion's Chairman, said: "The past several months have been a very
difficult period for Inion as we have tried unsuccessfully to raise the funds
needed to support our business strategy. This is a very frustrating situation
given the operational progress the Company has made in the last 12 months,
particularly in the US. We are now exploring a range of options that will allow
us to generate as much value as possible for our shareholders."
-ends-
For further information, please contact:
Inion Oy
Chris Lee, Chief Executive Officer
Julien Cotta, Chief Financial Officer
Tel: +44 (0)1483 685390
Citigate Dewe Rogerson
Mark Swallow / Helena Galilee / David Dible
Tel: +44 (0)207 638 9571
About Inion (www.inion.com)
Inion Oy is a medical devices company focused on the development and successful
commercialisation of innovative and unique biodegradable and bioactive surgical
implants in selected high value orthopaedic market segments.
Inion's core expertise and technology lies in the design and manufacture of
innovative biodegradable plates, screws, pins and membranes, which are used to
enhance the healing of bone or soft tissue injuries to the skeleton, such as
those caused by trauma or by reconstructive surgery. Inion implants are made
from its proprietary Inion family of biomaterials, with properties tailored for
specific surgical applications, in terms of strength, flexibility and rate of
degradation
Inion is also focused on developing proprietary new bioactive and biodegradable
biomaterials that promote bone healing and accelerate patient rehabilitation.
Inion was incorporated in early 2000 and listed on the Official List of the UK
Listing Authority in December 2004 (ticker: IIN). The Company has offices in the
UK and US, and its head office, R&D and production facilities are in Tampere,
Finland.
This announcement includes "forward-looking statements" which include all
statements other than statements of historical facts, including, without
limitation, those regarding the Group's financial position, business strategy,
plans and objectives of management for future operations (including development
plans and objectives relating to the Group's products), and any statements
preceded by, followed by or that include forward-looking terminology such as the
words "targets", "believes", "estimates", "expects", "aims", "intends", "will",
"can", "may", "anticipates", "would", "should", "could" or similar expressions
or the negative thereof. Such forward-looking statements involve known and
unknown risks, uncertainties and other important factors beyond the Group's
control that could cause the actual results, performance or achievements of the
Group to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements. Such
forward-looking statements are based on numerous assumptions regarding the
Group's present and future business strategies and the environment in which the
Group will operate in the future. Among the important factors that could cause
the Group's actual results, performance or achievements to differ materially
from those in forward-looking statements include those relating to Inion's
funding requirements, regulatory approvals, reliance on third parties,
intellectual property, key personnel and other factors. These forward-looking
statements speak only as at the date of this announcement. The Group expressly
disclaims any obligation or undertaking to disseminate any updates or revisions
to any forward-looking statements contained in this announcement to reflect any
change in the Group's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based. As a result
of these factors, prospective investors are cautioned not to rely on any
forward-looking statement.
CHAIRMAN'S STATEMENT
I am writing to you at a difficult time for your company. Despite the efforts of
your Board and Management team over the past several months, Inion has not been
able to raise the funding required to enable it to continue with its current
strategy. This situation has led to cost-reduction measures being implemented
and discussions with a number of parties in relation to other strategic
transactions or divestment of certain assets to raise additional funding. There
is no certainty at the time of writing that these discussions will result in an
injection of funds into the Company and more detail on the Board's outlook for
the Company is discussed below and in the Chief Executive's review and the
Financial Review.
This situation is very frustrating particularly as Inion's operational
performance in 2008 was encouraging with clear signs that its new business model
is working. This new model resulted from the Company's strategic review in 2007
that led to the development of an organisation better able to leverage its
innovative biodegradable technologies and to drive revenue growth towards the
business becoming profitable in the future. A key element of the new business
plan was a focus on recruiting high quality, commercially experienced personnel
in key positions to drive this realigned organisation.
Inion's business is focused on developing and commercialising biodegradable
surgical implants in two high-value high-growth segments of the global
orthopaedics market: Spine and Speciality Orthopaedics. The Company's priority
markets are the USA and certain other markets in Europe and the Far East, which
it accesses using a network of independent specialist distributors.
At the start of 2008, Inion had created a solid platform from which to implement
its commercial strategy and sales execution became the major priority. The
majority of our energy over the past year has been focused on developing sales
from our core business in the US, and the experience we gained there has helped
to shape our activities for the core business in our other key markets.
We were very pleased therefore to see the sales progress that we have made in
the US in 2008. In the first half of the year, sales developed gradually as
expected as our new distribution network took time to gain experience of Inion's
products. US sales accelerated sharply in the second half after we received
marketing clearance for our new and important spine products.
The financial performance of the Company is discussed in greater detail in the
Financial Review but some key highlights of the year are that total product
sales for 2008 rose 10% to EUR5.8 million (2007: EUR5.2 million). The increase of
EUR0.6 million is entirely due to new sales in the US of Inion's core Spine and
Speciality Orthopaedic products.
In the US, sales from the core business in Q4 2008 of EUR401,000 were up 255%
compared to the prior quarter and up from zero in Q4 the previous year.
Global sales from Inion's core business in 2008 were EUR3.3 million, an increase
of 20% compared to EUR2.8 million in 2007, driven by sales of the newly approved
spine products, which doubled from Q3 to Q4. Sales from the core business in Q4
2008 were 24% higher than sales in the corresponding quarter in 2007 (EUR1.2
million vs EUR995,000).
The vast majority of remaining sales were generated by the non-core
Craniomaxillofacial (CMF) business, which we are looking to license out or
divest.
The Company continued to maintain a tight control over costs and reduced its
operating costs considerably during the year with significant savings being seen
from the effects of the restructuring and realignment of the business. The
underlying loss before tax, before one off costs, was down 33% to EUR7.3 million
(2007: EUR10.9 million) and the Company ended 2008 with cash of EUR3.6 million.
Outlook
The sales growth that is being achieved from our core business is clearly very
encouraging and reflects the potential of our innovative products and
technology, giving us confidence that our commercial operation is working. The
positive experience and feedback we gained in the US has already begun to shape
our business in our other key markets around the world and substantial progress
has been made refocusing and retraining the sales teams in these regions. From
an operational perspective, going into 2009 we were well positioned to transfer
what we learned from the US to maximizing revenue growth in these and other new
markets.
However, the deteriorating economic environment and financial markets have made
it extremely difficult for us to secure the necessary funds to support the
further development of our growing business. Over the last several months we
made encouraging progress in our discussions with both new and existing
investors with the aim of raising additional equity capital. But, while we
obtained indicative commitments from a number of investors, in light of
prevailing equity market conditions, the Company was not able to secure a
sufficient level of funding to enable it to continue with its current strategy.
Discussions are continuing with a number of parties in relation to other
strategic transactions or divestment of certain assets to raise additional
funding and the Company has implemented measures to reduce its overhead
expenditure and headcount levels to conserve its current cash resource. This has
meant the suspension of certain activities within the business including
manufacturing.
In addition, Inion announced on 29 April 2009 that it intends to apply to cancel
the listing of its Ordinary Shares on the Official List and to trading on the
London Stock Exchange's market for listed securities.
The Board has come to the conclusion that the regulatory and financial
requirements of a listing on the Official List are too onerous for a company of
Inion's size and place too great a burden on the Company as it continues to seek
methods of raising additional funding. The Directors believe that following the
delisting, the Company will be better placed as an unlisted company either (i)
to approach potential investors and/or buyers of the Company's assets in order
to raise the necessary funds to execute the business plan, focused on the spinal
implant range, or (ii) failing such additional investment/disposals, to
facilitate an orderly liquidation of the Company.
It is anticipated that the effective date of the Cancellation will be 24 June
2009, pending approval by shareholders at an Extraordinary General Meeting to be
held in Tampere, Finland on 26 May 2009. Full details can be found on the
Company's website www.inion.com.
This has been a very tough time for the Company, particularly given all the hard
work and dedication our employees have shown in effecting the turnaround of the
business. It is extremely regrettable that we have had to implement such drastic
measures to reduce costs, and I would like to emphasise that the Company is
continuing to do all it can to find a solution that will be in the best
interests of employees and shareholders.
Ian Paling
Non-Executive Chairman
30 April 2009
CHIEF EXECUTIVE OFFICER'S REVIEW
As outlined in the Chairman's Statement, events occurring over the past several
months combined with the worsening economic environment have had a significant
negative impact on Inion's future prospects and its ability to raise the
necessary funds to continue operations in its current form. This situation is
very disappointing given the progress the Company has made over the past two
years. Therefore, while this review for the most part covers events and
operational performance of the business for the 12 months to 31 December 2008,
consideration must be given to the situation in which the Company now finds
itself.
Inion has built an operating business with a clear focus on two attractive and
valuable segments of the orthopaedics market: Spine and Speciality Orthopaedics.
These are segments that have the necessary scale and growth dynamic to drive a
successful business.
The Company's priority market is the USA. This is not only because it is the
world's largest market for orthopaedic products, but is also home to many early
adopters of new technology such as biodegradable medical implants. We have
identified several other markets outside the USA based on similar criteria - in
Europe and the Far East - where experience in building our US operation would be
used to develop our business.
Over the past two years, Inion has been developing a new business model,
initially in the USA, based on a approach to sales and distribution designed to
maximise the commercial potential of our innovative product offering. The model
is also designed to provide greater transparency on sales making it easier to
measure success.
At the start of 2009, we had engaged and trained 42 independent distributors in
the USA, with 22 focusing on the sales and distribution of Speciality
Orthopaedics products and 20 focusing on Spine product sales. These distributors
work closely with Inion to cultivate relationships with influential orthopaedic
surgeons thereby generating true Inion product champions who can further
validate and promote the clear clinical benefits of Inion products compared to
other available technologies.
To facilitate the new model, we recruited to Inion a significant number of
high-quality people with strong commercial experience of selling specialist
orthopaedic products into our target market as well as managing distributor
networks. As a result, we have now developed a focused and committed commercial
structure well equipped to exploit the potential of Inion's biodegradable
technologies.
Key product approvals in 2008
By the end of 2008, it was clear that our new strategy and model were beginning
to work in the US, as our commercial organisation gained experience with Inion
products and as we continued to strengthen the portfolio of spine and speciality
orthopaedics products we offer.
Our spine portfolio, in particular, received a significant boost in July when
the US Food and Drug Administration (FDA) granted 510(k) marketing clearance for
our innovative biodegradable spinal graft containment systems for spinal fusion
procedures: the Inion S-1(TM) Anterior Cervical Fusion System, the Inion S-1(TM)
double-level plate and the Inion S-2(TM) Anterior Thoraco-Lumbar Fusion System.
These biodegradable implant systems are used in conjunction with traditional
rigid fixation in procedures to treat a range of spinal conditions along its
entire length, including ruptures and displacement of inter-vertebral discs.
These new Inion systems are also enhanced with a radiographic marker that
enables surgeons to see the implants in situ using x-ray imaging thereby
allowing them to confirm the accurate positioning of implants and to visualise
and assess the healing process.
Furthermore, these new systems are designed for use with Inion BioRestore(TM)
Sahara, Inion's new synthetic, bioactive and biodegradable, bone grafting
substitute material, which was approved in the USA in 2009. It is made from
bioactive glass fibres and provides a highly porous three-dimensional scaffold
into which new bone will grow, while the substitute material is gradually
reabsorbed, allowing complete repair of the defect. Inion BioRestore(TM) Sahara
will be launched in to clinical sites in Q4 2009.
More than 183,000 cervical plating procedures, and more than 10,000 anterior
thoraco-lumbar plating procedures, were performed in 2006 in the USA, according
to a market research report in 2007 by Spinemarket. The US market for these
procedures was worth approximately EUR318 million and EUR32 million, respectively.
The number of spinal plating procedures has since grown at an annual rate of
approximately 30%.
These key product approvals have enabled Inion to market a complete spine
product offering to surgeons in the USA. As the first step of introducing these
new products into the market ahead of a full US launch, we conducted a limited
launch to high-volume and influential users at selected trial sites during the
second half of 2008.
We are very encouraged at how sales of these spine products have developed since
approval based on the limited exposure they have had to date. We have also
received good feedback from a number of the high-volume surgeons who have used
the products and this provides us with confidence in the underlying demand for
and commercial potential of this unique biodegradable product offering. This
feedback along with a larger body of evidence supporting the clinical use of our
spine implants will be invaluable for expanding sales in markets outside the US,
where the spine range is also approved.
Enhancing our offering
During 2008, Inion invested in several new products designed to strengthen its
spine and speciality orthopaedic portfolios. For example, we have been
finalising the development of a biodegradable cervical interbody fusion
block which is planned for launch in 2010.
We have also initiated a programme to register our full portfolio in China with
a view to extending commercial operations into this huge potential market.
Non-core businesses
While Inion's strategy has been focused on commercialising Spine and Speciality
Orthopaedic products, the Company also owns intellectual property and products
in other areas, from which it aims to realise value through out-licensing
agreements or divestment.
For example, we generated significant revenue from the sale of
Craniomaxillofacial (CMF) products in 2008. The continued demand for this
product line led us during the year to re-evaluate the previous timelines we had
for the disposal of this business. As a result, we decided to commit additional
investment to strengthen and enhance the value of this business, while retaining
the income it generates in the interim.
This investment resulted in the development of some additional products that are
expected to launch in 2009 such as a new CMF plating system consisting of
smaller plates and screws. We have also developed an innovative new faster
fixation technology that uses biodegradable tacks instead of screws for which a
development programme has been defined.
We see clear value in this business and continue to evaluate opportunities for
its divestment.
Elsewhere, we signed our first out-licensing agreement in August with US firm
Curative Biosciences Inc. covering novel bioactive technology for promoting bone
regrowth and repair when treating patients with broken bones. Inion received an
undisclosed upfront payment on signing and could receive development and sales
milestones of up to $2.025 million and royalties on revenues generated from any
products developed using the technology.
The licensed technology was developed through research work undertaken at the
Cambridge facility prior to its closing last year, and is based on the use of
N,N-dimethylacetamide (DMA) either alone or incorporated in resorbable polymer
structures (such as plates, membranes and screws).
Organisational changes
In August, Ian Paling was elected as the Chairman, replacing Göran Ando, who
stepped down from the Board with our gratitude for his important contribution to
the restructuring and turnaround process. Ian is a highly regarded businessman
with more than 25 years' senior management and Board-level experience, most
recently as CEO of Corin Group PLC (LSE: CRG), a world leader in the
development, manufacture and distribution of a wide range of reconstructive
orthopaedic devices. Ian was instrumental in Corin's growth from a small private
business into an internationally recognised and successful player in the global
orthopaedics sector, with a strong presence in most of the world's important
markets.
Early in 2009 we also announced the promotion of Christian Johnson to Sales
Director with responsibility for markets outside the US. Christian was recruited
from DePuy Orthopaedics and is an experienced sales professional with
significant experience in selling medical implants relevant to our core business
and, importantly, who already has excellent customer/surgeon networks in place.
However, the financial constraints under which Inion has been operating in
recent months have had a significant impact in 2009, leading the Company to take
measures to reduce costs. Regrettably, as a result, we have had to reduce our
headcount from 83 at the end of 2008 to 20, with the majority of those affected
being based at our facility in Finland. All current activities are now focused
on generating sales in our key markets while other activities, including
manufacturing, have been suspended. We continue to evaluate all options for
raising the necessary funding to continue operations.
Outlook
The progress the Company made during 2008 was very encouraging. We believe the
right infrastructure was put in place, an experienced commercial team was
recruited, we developed a strong and focused product portfolio in spine and
speciality orthopaedics and we have seen clear positive signs that the business
model in the US is working as evidenced by increasing sales.
Unfortunately the current economic climate and equity markets have made it
extremely difficult to pursue our strategy fully and as such we are evaluating
all options for raising additional funding through strategic transactions or
divestment of certain assets.
I would like to take this opportunity to thank Inion's staff for their hard work
and commitment during this period of great uncertainty.
Chris Lee
Chief Executive Officer
30 April 2009
FINANCIAL REVIEW
This financial review begins with a review of the important events that have
occurred since the balance sheet date. This is followed by an overview of
Inion's 2008 performance.
Subsequent events and going concern
In its Pre-Close Trading Statement on 12 January 2009, the Company announced
that it continued to seek additional funding to support its strategy. The
Company has been holding discussions with shareholders and other potential
investors with the aim of raising additional equity capital. However, whilst it
has been able to obtain indicative commitments from a number of investors, in
light of prevailing equity market conditions, the Company has not been able to
secure a sufficient level of funding to enable it to continue with its current
strategy.
On 19 March 2009, the Company announced that it is continuing with the
implementation of measures to reduce its overhead expenditure and headcount
levels to conserve its current cash resource. Despite these measures, the
Company continues to require additional funding to finance its working capital
requirements in the short term.
With an equity fundraising now highly unlikely, the Company has initiated
discussions with a number of parties in relation to other strategic transactions
or divestment of certain assets to raise additional funding. There is no
certainty that these discussions will result in an injection of funds into the
Company and the Company will continue to keep the market updated, as
appropriate.
The updated cash position of the Group as at 29 April 2009 was EUR1.0 million. As
a consequence of the actions taken to reduce overhead expenditure and headcount
levels, future cash expenditure has been considerably reduced.
The Directors have concluded that the combination of these
circumstances represents a material uncertainty that casts significant doubt
upon the Group's and the Company's ability to continue as a going concern and as
the Company has recently announced, the Directors will continue (i) to approach
potential investors and/or buyers of the Company's assets or (ii), failing such
additional investments/disposals, to facilitate an orderly liquidation of the
Company.
Nevertheless following the discussions referred to above, and after considering
the uncertainties described, the Directors believe that they have a reasonable
expectation that the Group and the Company have adequate resources to continue
in operational existence for the foreseeable future. For these reasons, they
continue to adopt the going concern basis in preparing the annual report and
accounts. However, until the outcomes of discussions with potential
investors/buyers are known, there is considerable uncertainty over this basis of
presentation.
The financial information does not reflect any adjustments which would be
required if the going concern assumption was not appropriate. Given the
uncertainty described above it is not currently possible to determine the extent
and quantification of such adjustments but these may include the
reclassification of liabilities due more than one year to less than one year and
the disclosure of or provision for additional liabilities.
Overview of results for 2008
Inion generated total revenues of EUR5.8 million in 2008 from the sale of its
biodegradable surgical implants. This figure is 10% higher than in 2007 (EUR5.2
million). The loss before income tax and one-off items of EUR7.3 million (2007:
EUR10.9 million) was a significant improvement on the previous year and arose
mainly from cost savings, tight control over expenditure and higher sales than
the previous year.
The table below reconciles the underlying results before one-off items of EUR6.3
million to aid comparison with the prior year. The one-off items in 2008 relate
mainly to the recognition of impairments against the cost of inventory and other
assets in view of the significant uncertainty over future funding, revenues and
therefore the going concern of the business. One-off items in 2007 relate to
reorganisation costs incurred during the year, including closure of the
Cambridge site.
+--------------------------------+----------------+----------------+--------------+
| Year ended 31 December 2008 | Before one-off | One-off items | Income |
| | items | EUR'000 | statement |
| | EUR'000 | | EUR'000 |
+--------------------------------+----------------+----------------+--------------+
| Revenue | 5,778 | - | 5,778 |
+--------------------------------+----------------+----------------+--------------+
| Cost of sales | (3,195) | (2,890) | (6,085) |
+--------------------------------+----------------+----------------+--------------+
| Gross profit | 2,583 | (2,890) | (307) |
+--------------------------------+----------------+----------------+--------------+
| Other operating income | 169 | - | 169 |
+--------------------------------+----------------+----------------+--------------+
| Research & development costs | (2,188) | (654) | (2,842) |
+--------------------------------+----------------+----------------+--------------+
| Sales & marketing | (3,955) | (989) | (4,944) |
+--------------------------------+----------------+----------------+--------------+
| Administrative expenses | (3,518) | (1,755) | (5,273) |
+--------------------------------+----------------+----------------+--------------+
| Operating loss | (6,909) | (6,288) | (13,197) |
+--------------------------------+----------------+----------------+--------------+
| Finance income | (386) | - | (386) |
+--------------------------------+----------------+----------------+--------------+
| Loss before income tax | (7,295) | (6,288) | (13,583) |
+--------------------------------+----------------+----------------+--------------+
| Income tax | (297) | - | (297) |
+--------------------------------+----------------+----------------+--------------+
| Loss for the year | (7,592) | (6,288) | (13,880) |
+--------------------------------+----------------+----------------+--------------+
+--------------------------------+----------------+----------------+--------------+
| Year ended 31 December 2007 | Before one-off | One-off items | Income |
| | items | EUR'000 | statement |
| | EUR'000 | | EUR'000 |
+--------------------------------+----------------+----------------+--------------+
| Revenue | 5,232 | - | 5,232 |
+--------------------------------+----------------+----------------+--------------+
| Cost of sales | (3,454) | (164) | (3,618) |
+--------------------------------+----------------+----------------+--------------+
| Gross profit | 1,778 | (164) | 1,614 |
+--------------------------------+----------------+----------------+--------------+
| Other operating income | 420 | - | 420 |
+--------------------------------+----------------+----------------+--------------+
| Research & development costs | (4,819) | (603) | (5,422) |
+--------------------------------+----------------+----------------+--------------+
| Sales & marketing | (3,636) | (306) | (3,942) |
+--------------------------------+----------------+----------------+--------------+
| Administrative expenses | (4,358) | (339) | (4,697) |
+--------------------------------+----------------+----------------+--------------+
| Operating loss | (10,615) | (1,412) | (12,027) |
+--------------------------------+----------------+----------------+--------------+
| Finance income & expense | (244) | - | (244) |
+--------------------------------+----------------+----------------+--------------+
| Loss before income tax | (10,859) | (1,412) | (12,271) |
+--------------------------------+----------------+----------------+--------------+
| Income tax | (137) | - | (137) |
+--------------------------------+----------------+----------------+--------------+
| Loss for the year | (10,996) | (1,412) | (12,408) |
+--------------------------------+----------------+----------------+--------------+
Revenue
Inion's revenue increased by 10% to EUR5.8 million in 2008 (2007: EUR5.2 million).
Revenue from each of the product segments is set out in the table below.
+--------------------------------------+----------+----------+----------+----------+
| | 2008 | 2007 | Change | Change |
| | EUR'000 | EUR'000 | EUR'000 | % |
+--------------------------------------+----------+----------+----------+----------+
| Spine | 725 | 383 | 342 | 89% |
+--------------------------------------+----------+----------+----------+----------+
| Speciality orthopaedics | 2,587 | 2,376 | 211 | 9% |
+--------------------------------------+----------+----------+----------+----------+
| Cranio-maxillofacial (CMF) | 2,371 | 2,338 | 33 | 1% |
+--------------------------------------+----------+----------+----------+----------+
| Dental | 95 | 135 | (40) | (30%) |
+--------------------------------------+----------+----------+----------+----------+
| Total | 5,778 | 5,232 | 546 | 10% |
+--------------------------------------+----------+----------+----------+----------+
Revenues from the core Spine and Speciality Orthopaedics business have increased
mainly because of sales generated by the new commercial operation established in
the US towards the end of 2007 which started generating sales from the beginning
of 2008. Spine sales in particular have been driven by the US launch in July
2008 of the Inion S-1(TM) Anterior Cervical Graft Containment System, the Inion
S-1(TM) double-level plate and the Inion S-2(TM) Anterior Thoraco-Lumbar Graft
Containment System.
Overall, sales performance was better in the second half of 2008 (up 23% from
EUR2.6 million in H1 to EUR3.2 million in H2) as sales in the US made a greater
contribution.
Gross profit
The gross profit before one-off items was EUR2.6 million (2007: EUR1.8 million).
Gross margin was 45% (2007: 34%). After one-off items, gross loss was EUR0.3
million (2007: gross profit EUR1.6 million) with a negative gross margin of 5%
(2007: gross margin 31%). One-off items in 2008 arose mainly from the
recognition of impairments against the cost of inventory and plant and machinery
used in production. This was because of the significant uncertainty over future
funding, revenues and therefore going concern of the business. One-off items in
2007 related to reorganisation costs.
The improvement in gross margin before one-off costs was due to two main
reasons. First, US sales of Spine and Speciality Orthopaedics products are made
direct to the customer and are therefore at a higher price than sales of the
same products in the rest of the world which are made to distributors. Second,
the sales volume this year was greater than last year resulting in a higher
contribution to the fixed production cost base and therefore a higher gross
margin.
Operating loss
The operating loss before one-off items decreased by 35% to EUR6.9 million (2007:
EUR10.6 million). Including one-off items of EUR6.3 million, operating loss
increased to EUR13.2 million (2007: EUR12.0 million).
The underlying operating loss before one-off items has improved due mainly to
savings of EUR2.7 million (18%) in operating expenditure compared to last year.
Operating expenditure decreased to EUR12.2 million this year. There were two main
reasons for this. First, expenditure on research-based projects was
significantly reduced following the closure of the Cambridge site in November
2007. Second, the lower average headcount in the year of 83 (2007: 94) resulted
in lower payroll costs. The lower operating loss also benefited from higher
sales of EUR0.6 million. This was offset by a decrease in grant revenue of EUR0.25
million from Tekes (Finnish National Technology Agency).
Before one-off items, R&D expenditure decreased by 55% to EUR2.2 million (2007:
EUR4.8 million). This decrease is mainly due to the closure of the Cambridge
facility in November 2007 and a significant reduction in expenditure on
research-based projects. One-off items of EUR0.7 million related mainly to the
impairment of patents in view of the significant uncertainty over future
funding. One-off items of EUR0.6 million in 2007 related mainly to the closure of
the Cambridge facility.
Sales and marketing costs before one-off items were EUR4.0 million (2007: EUR3.6
million). Including one-off items, costs were EUR4.9 million (2007: EUR3.9
million). Underlying sales and marketing costs were higher due to the
establishment of the US office in Florida and the recruitment of a US sales
team. The one-off items of EUR1.0 million in 2008 related mainly to impairment of
trademarks and provisions for doubtful debts in view of the significant
uncertainty over future funding. In 2007, the one-off items of EUR0.3 million
related to reorganisation costs.
Administrative expenses before one-off items were EUR3.5 million (2007: EUR4.4
million). Costs including one-off items were EUR5.3 million (2007: EUR4.7 million).
One-off costs of EUR1.8 million in 2008 related to fundraising costs during the
year and to a provision for an estimated tax liability of EUR0.8 million. This
arose following an audit carried out by a unit of the Central Finland Regional
Tax Office in respect of the years 2004 - 2006. The Company has the right to
file a response to the final tax report and respond to the findings included in
the report. If the response is not accepted, the Company can file an appeal
against the tax authority's decision and failing this, appeal to the Finnish
administrative court. Further details are disclosed in note 6 of the preliminary
financial statements.
Administrative expenditure decreased due mainly to operating efficiencies and a
reduction in the average headcount.
Other operating income for the year was EUR0.2 million (2007: EUR0.4 million). This
represents grant income that subsidises R&D expenditure on the Inion
OptimaPLUS(TM) biodegradable and bioactive range of biomaterials. The grant was
awarded by Tekes for the reimbursement of EUR1.9 million of a total EUR3.8 million
of qualifying expenditure.
Finance income and expense
Net finance expense for the year was EUR386,000 (2007: EUR244,000). This is further
analysed in note 3 of the preliminary financial statements.
Income tax expense
The income tax expense of EUR0.3 million (2007: EUR0.1 million) is made up of
EUR51,000 income tax and EUR246,000 deferred tax. The deferred tax charge represents
the write off of deferred tax assets.
Loss per share
The loss per share for the year ended 31 December 2008 is EUR0.18 per share (2007:
EUR0.17).
Dividend
The Board does not recommend the payment of a dividend for the year 2008.
Balance sheet and cash flow
Cash, cash equivalents and short-term investments at the end of 2008 were EUR3.6
million (2007: EUR13.8 million). The total debt, including finance leases, on the
balance sheet at the end of 2008 was EUR4.3 million (2007: EUR5.5 million). This is
made up of capital loans of EUR2.3m (2007: EUR2.3 million), bank borrowings EUR0.1
million (2007: EUR0.7 million) and finance lease liabilities EUR1.9 million (2007:
EUR2.5 million).
Repayment of capital loans is subject to distributable retained earnings being
at least equal to restricted equity as defined by Finnish GAAP. Bank borrowings
were fully paid up by March 2009. The main finance lease liability is in respect
of the Group's facility in Finland. The lease period for this ends in June 2011
at which time ownership of the building transfers to the Group once the
remaining finance lease commitments have been fully paid.
Total cash spent in the year was EUR10.2 million, (2007: EUR12.4 million excluding
the repayment of a $6.0m dollar facility in February 2007). The decrease in cash
burn is consistent with the decrease in operating expenditure within the Group
together with tight control over expenditure.
Cancellation of Listing
Inion announced on 29 April 2009 that it intends to apply to cancel the listing
of its Ordinary Shares on the Official List and to trading on the London Stock
Exchange's market for listed securities. The Board has come to the conclusion
that the regulatory and financial requirements of a listing on the Official List
are too onerous for a company of Inion's size and place too great a burden on
the Company as it continues to seek methods of raising additional funding. The
Directors believe that following the Delisting, the Company will be better
placed as an unlisted company either (i) to approach potential investors and/or
buyers of the Company's assets in order to raise the necessary funds to execute
the business plan, focused on the spinal implant range, or (ii) failing such
additional investment/disposals, to facilitate an orderly liquidation of the
Company.
It is anticipated that the effective date of the Cancellation will be 24 June
2009 pending approval by shareholders at an Extraordinary General Meeting to be
held in Tampere, Finland on 26 May 2009. Full details can be found on the
Company's website www.inion.com.
Risks and uncertainties
Going concern
As referred to earlier in the report, with an equity fundraising now highly
unlikely, the Company has initiated discussions with a number of parties in
relation to other strategic transactions or divestment of certain assets to
raise additional funding. There is no certainty that these discussions will
result in further funding for the Company.
The Directors have concluded that the combination of these
circumstances represents a material uncertainty that casts significant doubt
upon the Group's and the Company's ability to continue as a going concern and as
the Company has recently announced, the Directors will continue (i) to approach
potential investors and/or buyers of the Company's assets or (ii), failing such
additional investments/disposals, to facilitate an orderly liquidation of the
Company.
Nevertheless following the discussions referred to above, and after considering
the uncertainties described, the Directors believe that they have a reasonable
expectation that the Group and the Company have adequate resources to continue
in operational existence for the foreseeable future. For these reasons, they
continue to adopt the going concern basis in preparing the annual report and
accounts. However, until the outcomes of discussions with potential
investors/buyers are known, there is considerable uncertainty over this basis of
presentation.
Building lease agreement
The building premises in Tampere are leased on a finance lease which is due to
end in June 2011. The lease agreement provides that during the lifetime of the
lease agreement, the Group has the right to exercise an option to buy the
building by repayment of the remaining outstanding finance lease. The
outstanding finance lease on the building at 30 April 2009 was EUR1.5 million plus
indexation of EUR0.4 million.
The building lease agreement includes a clause entitling the lessor to terminate
the agreement in the event that the lessee is placed into liquidation or is
declared bankrupt. In this event, the Group will lose the right to exercise the
option to buy the building and will be liable for the remaining outstanding
lease payments due together with interest on overdue sums and a penalty fee of
approximately EUR0.4 million.
Due to the significant uncertainty in the ability to raise additional funding,
there is a risk that this clause could be triggered as a result of the Group
being placed into liquidation or being declared bankrupt.
Divestment of non-core assets
The Company is in the process of exploring strategic options for, and the
possible divestment of non-core assets. Should these strategic options cease to
be attractive, or should the divestment not proceed, this may have an adverse
impact on the solvency of the Group.
Tax liability relating to former Directors and employee
There is a pending tax audit liability following an inspection carried out by a
unit of the Central Finland Regional Tax Office at the Company's premises. The
audit was in respect of the tax years 2004 - 2006. The Company has been provided
with a final tax report following the audit. The proposals included in the final
tax report may trigger estimated tax liabilities of approximately EUR795,000. This
includes estimates for penalties and interest.
The Company has the right to file a response to the final tax report and respond
to the findings included in the report. If the response is not accepted, the
Company can file an appeal against the tax authority's decision and after that
appeal to the Finnish administrative court.
Litigation
A former employee of the Company has brought a legal action against the Company
before the Tampere District Court claiming that the Company terminated his
employment without sufficient legal basis. The total amount of the claim for
groundless termination and related claims is approximately EUR204,000 plus legal
interest and legal costs. The Company rebutted the claim, and the District Court
issued a decision in favour of Inion on 27 February 2009. The claimant has filed
for an appeal to the Court of Appeal.
Julien Cotta
Chief Financial Officer
30 April 2009
PRELIMINARY FINANCIAL STATEMENTS
+----------------------------------------+--------+-------------+------------+
| Consolidated income statement | Notes | 2008 | 2007 |
| Year ended 31 December | | EUR'000 | EUR'000 |
+----------------------------------------+--------+-------------+------------+
| Revenue | 2 | 5,778 | 5,232 |
+----------------------------------------+--------+-------------+------------+
| Cost of sales | | (6,085) | (3,618) |
+----------------------------------------+--------+-------------+------------+
| Gross profit | | (307) | 1,614 |
+----------------------------------------+--------+-------------+------------+
| Other operating income | | 169 | 420 |
+----------------------------------------+--------+-------------+------------+
| Research and development costs | | (2,842) | (5,422) |
+----------------------------------------+--------+-------------+------------+
| Sales and marketing | | (4,944) | (3,942) |
+----------------------------------------+--------+-------------+------------+
| Administrative expenses | | (5,273) | (4,697) |
+----------------------------------------+--------+-------------+------------+
| Operating loss | | (13,197) | (12,027) |
+----------------------------------------+--------+-------------+------------+
| Finance income | 3 | 155 | 521 |
+----------------------------------------+--------+-------------+------------+
| Finance expense | 3 | (541) | (765) |
+----------------------------------------+--------+-------------+------------+
| Loss before income tax | | (13,583) | (12,271) |
+----------------------------------------+--------+-------------+------------+
| Income tax | 4 | (297) | (137) |
+----------------------------------------+--------+-------------+------------+
| Loss for the year | | (13,880) | (12,408) |
+----------------------------------------+--------+-------------+------------+
| | | | |
+----------------------------------------+--------+-------------+------------+
| Loss per share (expressed in EUR per | | | |
| share) | | | |
+----------------------------------------+--------+-------------+------------+
| Basic and diluted | 5 | (0.18) | (0.17) |
+----------------------------------------+--------+-------------+------------+
+--------------------------------------+----------+-------------+-------------+
| Statement of recognised income and | | 2008 | 2007 |
| expense | | EUR'000 | EUR'000 |
| For the year ended 31 December | | | |
+--------------------------------------+----------+-------------+-------------+
| Loss for the year | | (13,880) | (12,408) |
+--------------------------------------+----------+-------------+-------------+
| Net exchange gain | 7 | 207 | 230 |
+--------------------------------------+----------+-------------+-------------+
| Total recognised expense for the | | (13,673) | (12,178) |
| year | | | |
+--------------------------------------+----------+-------------+-------------+
The notes that follow form an integral part of the preliminary financial
statements.
+----------------------------------------+-------+-------------+--------------+
| Consolidated balance sheet |Notes | 2008 | 2007 |
| As at 31 December | | EUR'000 | EUR'000 |
+----------------------------------------+-------+-------------+--------------+
| Assets | | | |
+----------------------------------------+-------+-------------+--------------+
| Non-current assets | | | |
+----------------------------------------+-------+-------------+--------------+
| Intangible assets | | - | 1,143 |
+----------------------------------------+-------+-------------+--------------+
| Property, plant & equipment | | 3,797 | 4,760 |
+----------------------------------------+-------+-------------+--------------+
| Deferred tax assets | | - | 252 |
+----------------------------------------+-------+-------------+--------------+
| | | 3,797 | 6,155 |
+----------------------------------------+-------+-------------+--------------+
| Current assets | | | |
+----------------------------------------+-------+-------------+--------------+
| Inventories | | 858 | 2,018 |
+----------------------------------------+-------+-------------+--------------+
| Trade receivables | | 1,699 | 1,709 |
+----------------------------------------+-------+-------------+--------------+
| Other receivables and prepaid expenses | | 652 | 1,593 |
+----------------------------------------+-------+-------------+--------------+
| Other financial assets at fair value | | - | 13,302 |
| through profit or loss | | | |
+----------------------------------------+-------+-------------+--------------+
| Cash and cash equivalents | | 3,630 | 516 |
+----------------------------------------+-------+-------------+--------------+
| | | 6,839 | 19,138 |
+----------------------------------------+-------+-------------+--------------+
| Total assets | | 10,636 | 25,293 |
+----------------------------------------+-------+-------------+--------------+
| Shareholders' equity and liabilities | | | |
+----------------------------------------+-------+-------------+--------------+
| Shareholders' equity | | | |
+----------------------------------------+-------+-------------+--------------+
| Share capital | 7 | 2,265 | 2,262 |
+----------------------------------------+-------+-------------+--------------+
| Share premium | 7 | 80,598 | 80,598 |
+----------------------------------------+-------+-------------+--------------+
| Fair value and other reserves | 7 | 3,782 | 2,953 |
+----------------------------------------+-------+-------------+--------------+
| Translation differences | 7 | 1,266 | 1,059 |
+----------------------------------------+-------+-------------+--------------+
| Retained earnings | 7 | (84,612) | (70,732) |
+----------------------------------------+-------+-------------+--------------+
| Total equity | 7 | 3,299 | 16,140 |
+----------------------------------------+-------+-------------+--------------+
| Non-current liabilities | | | |
+----------------------------------------+-------+-------------+--------------+
| Capital loans | | 2,342 | 2,342 |
+----------------------------------------+-------+-------------+--------------+
| Borrowings | | - | 92 |
+----------------------------------------+-------+-------------+--------------+
| Finance lease liabilities | | 1,107 | 1,742 |
+----------------------------------------+-------+-------------+--------------+
| Other non-current liabilities | | 515 | 427 |
+----------------------------------------+-------+-------------+--------------+
| | | 3,964 | 4,603 |
+----------------------------------------+-------+-------------+--------------+
| Current liabilities | | | |
+----------------------------------------+-------+-------------+--------------+
| Trade payables | | 585 | 1,143 |
+----------------------------------------+-------+-------------+--------------+
| Borrowings | | 92 | 609 |
+----------------------------------------+-------+-------------+--------------+
| Finance lease liabilities | | 716 | 690 |
+----------------------------------------+-------+-------------+--------------+
| Other current liabilities | | 1,185 | 2,108 |
+----------------------------------------+-------+-------------+--------------+
| Provisions | 6 | 795 | - |
+----------------------------------------+-------+-------------+--------------+
| | | 3,373 | 4,550 |
+----------------------------------------+-------+-------------+--------------+
| Total liabilities | | 7,337 | 9,153 |
+----------------------------------------+-------+-------------+--------------+
| Total shareholders' equity and | | 10,636 | 25,293 |
| liabilities | | | |
+----------------------------------------+-------+-------------+--------------+
The preliminary financial statements were approved by the Board on 30 April 2009
and signed on its behalf by:
Mr Ian Paling Mr Julien Cotta
Chairman CFO
The notes that follow form an integral part of the preliminary financial
statements.
+------------------------------------------+-------+-------------+------------+
| Consolidated cash flow statements |Notes | 2008 | 2007 |
| For the year ended 31 December | | EUR'000 | EUR'000 |
+------------------------------------------+-------+-------------+------------+
| Cash flows from operating activities | | | |
+------------------------------------------+-------+-------------+------------+
| Cash used in operations | 8 | (8,523) | (9,374) |
+------------------------------------------+-------+-------------+------------+
| Interest received | | 155 | 39 |
+------------------------------------------+-------+-------------+------------+
| Interest paid | | (39) | (526) |
+------------------------------------------+-------+-------------+------------+
| Income tax paid | | (51) | - |
+------------------------------------------+-------+-------------+------------+
| Net cash flow used in operating | | (8,458) | (9,861) |
| activities | | | |
+------------------------------------------+-------+-------------+------------+
| Cash flows from investing activities | | | |
+------------------------------------------+-------+-------------+------------+
| Purchase of property, plant & equipment | | (57) | (332) |
+------------------------------------------+-------+-------------+------------+
| Purchase of intangible fixed assets | | (126) | (237) |
+------------------------------------------+-------+-------------+------------+
| Disposal of other financial assets at | | 13,302 | 13,488 |
| fair value through profit or loss | | | |
+------------------------------------------+-------+-------------+------------+
| Net cash flow from investing activities | | 13,119 | 12,919 |
+------------------------------------------+-------+-------------+------------+
| Cash flows from financing activities | | | |
+------------------------------------------+-------+-------------+------------+
| Proceeds from issue of ordinary shares | | 3 | 11 |
+------------------------------------------+-------+-------------+------------+
| Repayment of borrowings | | (610) | (5,729) |
+------------------------------------------+-------+-------------+------------+
| Finance lease principal payments | | (940) | (942) |
+------------------------------------------+-------+-------------+------------+
| Net cash flow from financing activities | | (1,547) | (6,660) |
+------------------------------------------+-------+-------------+------------+
| Increase/(decrease) cash and cash | | 3,114 | (3,602) |
| equivalents | | | |
+------------------------------------------+-------+-------------+------------+
| Cash and cash equivalents at 1 January | | 516 | 4,118 |
+------------------------------------------+-------+-------------+------------+
| Cash and cash equivalents at 31 December | | 3,630 | 516 |
+------------------------------------------+-------+-------------+------------+
The notes that follow form an integral part of the preliminary financial
statements.
NOTES TO THE PRELIMINARY FINANCIAL STATEMENTS
1. Basis of preparation
The preliminary financial statements have been prepared in accordance with the
accounting policies set out in the Annual Report for the year ended 31 December
2008.
2. Segmental analysis
Primary reporting format - business segments
The Group is organised into five operating segments. The operating segments are
Spine Speciality Orthopaedics, CMF (Craniomaxillofacial), Sports and Dental.
These business segments are aggregated into one reportable business segment
being the manufacture and sale of biodegradable implants.
Secondary reporting format - geographical segments
+-------------------------------------------------+------------+------------+
| Year ended 31 December | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------+------------+------------+
| Europe | 1,725 | 1,785 |
+-------------------------------------------------+------------+------------+
| Americas | 2,021 | 1,238 |
+-------------------------------------------------+------------+------------+
| Asia, Australia, Pacific | 2,032 | 2,209 |
+-------------------------------------------------+------------+------------+
| Total | 5,778 | 5,232 |
+-------------------------------------------------+------------+------------+
| | | |
+-------------------------------------------------+------------+------------+
3. Finance income and expense
+-------------------------------------------------+------------+------------+
| Year ended 31 December | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------+------------+------------+
| Interest income | 155 | 39 |
+-------------------------------------------------+------------+------------+
| Interest expense | (362) | (450) |
+-------------------------------------------------+------------+------------+
| Exchange loss | (42) | (293) |
+-------------------------------------------------+------------+------------+
| Fair value (losses)/gains other financial | (121) | 482 |
| assets at fair value through profit or loss | | |
+-------------------------------------------------+------------+------------+
| Other financial items | (16) | (22) |
+-------------------------------------------------+------------+------------+
| | (386) | (244) |
+-------------------------------------------------+------------+------------+
Interest expense includes interest arising on capital loans of EUR88,000 (2007:
EUR70,000).
4. Taxation
+-------------------------------------------------+------------+------------+
| Year ended 31 December | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------+------------+------------+
| Income tax -current year | 51 | 106 |
+-------------------------------------------------+------------+------------+
| Deferred tax charge | 246 | 31 |
+-------------------------------------------------+------------+------------+
| | 297 | 137 |
+-------------------------------------------------+------------+------------+
5. Loss per share
+-------------------------------------------------+------------+-------------+
| Year ended 31 December | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------+------------+-------------+
| Loss for the year | (13,880) | (12,408) |
| | | |
+-------------------------------------------------+------------+-------------+
| | Number | Number |
+-------------------------------------------------+------------+-------------+
| Basic and diluted: Weighted average number of | 75,901,348 | 74,988,739 |
| shares | | |
+-------------------------------------------------+------------+-------------+
| Effect of anti-dilutive securities: | | |
+-------------------------------------------------+------------+-------------+
| Stock options | - | 2,514,489 |
+-------------------------------------------------+------------+-------------+
| Anti-dilutive: Adjusted weighted average number | 75,901,348 | 77,503,228 |
| of shares and assumed conversions | | |
+-------------------------------------------------+------------+-------------+
The exercise price of the options was higher than the share market price at 31
December 2008.
6. Provisions
+-------------------------------------------------+------------+------------+
| Year ended 31 December | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------+------------+------------+
| | | |
+-------------------------------------------------+------------+------------+
| At 1 January | - | 133 |
+-------------------------------------------------+------------+------------+
| Increase in provision | 795 | - |
+-------------------------------------------------+------------+------------+
| Utilised during the year | - | (133) |
+-------------------------------------------------+------------+------------+
| At 31 December | 795 | - |
+-------------------------------------------------+------------+------------+
The restructuring related costs (EUR133,000) provided in 2006 were utilised during
2007.
There is a pending tax audit liability following an inspection carried out by a
unit of the Central Finland Regional Tax Office at the Company's premises. The
audit was in respect of the tax years 2004 - 2006. The Company has been provided
with a final tax report following the audit. The proposals included in the final
tax report may trigger estimated tax liabilities of approximately EUR795,000. This
includes estimates for penalties and interest.
The Company has the right to file a response to the final tax report and respond
to the findings included in the report. If the response is not accepted, the
Company can file for an appeal against the tax authority's decision and after
that appeal to the Finnish administrative court.
The provision has been charged to administrative expenses within the income
statement. This is expected to be utilised in the second half of 2009.
7. Statement of changes in shareholders' equity
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| | Share | Share | Share | Other | Translation | Retained | Total |
| | capital | issue | premium | reserves | differences | earnings | EUR'000 |
| | EUR'000 | EUR'000 | EUR'000 | EUR'000 | EUR'000 | EUR'000 | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| At 1 January | 2,239 | 5 | 80,598 | 2,313 | 829 | (58,324) | 27,660 |
| 2007 | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Translation | - | - | - | - | 230 | - | 230 |
| differences | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Loss for the | - | - | - | - | - | (12,408) | (12,408) |
| year | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Employee | - | - | - | 640 | - | - | 640 |
| services - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Proceeds from | 23 | (5) | - | - | - | - | 18 |
| shares issued - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| At 31 December | 2,262 | - | 80,598 | 2,953 | 1,059 | (70,732) | 16,140 |
| 2007 | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Translation | - | - | - | - | 207 | - | 207 |
| differences | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Loss for the | - | - | - | - | - | (13,880) | (13,880) |
| year | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Employee | - | - | - | 829 | - | - | 829 |
| services - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| Proceeds from | 3 | - | - | - | - | - | 3 |
| shares issued - | | | | | | | |
| share option | | | | | | | |
| scheme | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
| At 31 December | 2,265 | - | 80,598 | 3,782 | 1,266 | (84,612) | 3,299 |
| 2008 | | | | | | | |
+-----------------+---------+-------+---------+----------+-------------+----------+----------+
8. Reconciliation of loss for the year to cash used in operations
+-------------------------------------------------+------------+------------+
| | 2008 | 2007 |
| | EUR'000 | EUR'000 |
+-------------------------------------------------+------------+------------+
| Loss for the year | (13,880) | (12,408) |
+-------------------------------------------------+------------+------------+
| Income taxes | 51 | - |
+-------------------------------------------------+------------+------------+
| Deferred taxes | 246 | 31 |
+-------------------------------------------------+------------+------------+
| Depreciation and amortisation | 717 | 796 |
+-------------------------------------------------+------------+------------+
| Share based compensations | 829 | 600 |
+-------------------------------------------------+------------+------------+
| Loss on disposal of property, plant and | - | 199 |
| equipment | | |
+-------------------------------------------------+------------+------------+
| Impairment charge on intangible assets | 1,150 | - |
+-------------------------------------------------+------------+------------+
| Impairment charge on property, plant and | 525 | - |
| equipment | | |
+-------------------------------------------------+------------+------------+
| Other adjustments | 43 | 209 |
+-------------------------------------------------+------------+------------+
| Fair value losses/(gains) on other financial | 121 | (482) |
| assets | | |
+-------------------------------------------------+------------+------------+
| Net interest expense | 207 | 411 |
+-------------------------------------------------+------------+------------+
| Exchange loss | 42 | 293 |
+-------------------------------------------------+------------+------------+
| Net loss before changes in working capital | (9,949) | (10,351) |
+-------------------------------------------------+------------+------------+
| | | |
+-------------------------------------------------+------------+------------+
| Decrease in inventory | 1,160 | 392 |
+-------------------------------------------------+------------+------------+
| Decrease in debtors | 951 | 366 |
+-------------------------------------------------+------------+------------+
| (Decrease)/increase in non-interest bearing | (1,480) | 219 |
| liabilities | | |
+-------------------------------------------------+------------+------------+
| Increase in provisions | 795 | - |
+-------------------------------------------------+------------+------------+
| Cash used in operations | (8,523) | (9,374) |
+-------------------------------------------------+------------+------------+
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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