Trinity Biotech plc (Nasdaq:TRIB), a leading developer and
manufacturer of diagnostic products for the point-of-care and
clinical laboratory markets, today announced results for the
quarter ended December 31, 2016 and fiscal year 2016.
Fiscal Year 2016 Results
Total revenues for fiscal year 2016 were $99.6m
versus $100.2m in 2015, a decrease of 0.6% year on year.
|
Full Year 2015 |
Full Year 2016 |
Full Year 2016 vs 2015
|
|
US$’000 |
US$’000 |
% |
Point-of-Care |
18,810 |
16,908 |
(10.1 |
%) |
|
|
|
|
Clinical Laboratory |
81,385 |
82,703 |
1.6 |
% |
|
|
|
|
Total |
100,195 |
99,611 |
(0.6 |
%) |
Point-of-Care revenues decreased from $18.8m in
2015 to $16.9m in 2016, which represents a decrease of 10.1%. This
was due to lower HIV sales in Africa where, due to the nature of
the market, sales tend to fluctuate significantly quarter on
quarter. Critically, during 2016, the Company maintained its
position as the designated supplier of confirmatory tests in all of
the markets in which it operates.
Meanwhile, Clinical Laboratory revenues were
$82.7m, an increase of 1.6% versus 2015. This level of increase
would have been higher but for the impact of foreign exchange
movements. The impact of the strengthening of the US Dollar against
the Brazilian Real, Canadian Dollar and Sterling, all of which
represent the non-dollar currencies in which the Company invoices
sales, resulted in a reduction in our US Dollar denominated
revenues. In addition, in markets where we invoice in dollars but
where the local currency has weakened, we have been required to
reduce our pricing in order to preserve our competiveness. The
primary drivers of Clinical Laboratory growth during 2016 continued
to be sales of Diabetes and Autoimmune products, though this growth
was partly offset by lower infectious diseases revenues.
Gross margin for the year was 43.3% compared to
46.2% in 2015. This decrease was due to adverse sales mix (lower
sales of higher margin point-of-care products) and foreign exchange
factors, including the impact of exchange rates on distributor
pricing.
Operating profit for the year decreased from
$13.5m to $7.5m in 2016. This decrease was attributable to a
reduction in gross margin combined with higher Selling General and
Administrative (SG&A) expenses. The increase in SG&A
expenses was due to higher amortisation charges and the impact of
favourable non-cash foreign exchange rate movements last year,
principally in Q4, 2015.
Profit after tax (before the impact of once-off
items) was $5.2m which compares to $21.8m in 2015. However, these
amounts include non-cash financial income recognised in relation to
the Company’s Exchangeable Loan Notes. Excluding such movements,
profit after tax would have been $3.6m compared with $9.3m in
2015. This reduction is due to the lower operating profit but
is also impacted by the full year effect of financing expenses
associated with the Exchangeable Notes which were issued in early
Q2, 2015.
Basic EPS (excluding once-off charges) for the
year was 22.4 cents. However, excluding the impact of
non-cash financial income this would have been 15.7 cents versus
40.2 cents in 2015. Meanwhile, unconstrained diluted EPS was 29.0
cents compared to 46.2 cents in
2015. Earnings
before interest, tax, depreciation, amortisation and share option
expense for the year was $15.0m compared with $20.7m in 2015.
The above measures exclude the impact of
once-off charges amounting to $105.8m, more details of which are
provided below.
Quarter 4
Results
Total revenues for Q4, 2016 were $23.7m which compares to $24.9m in
Q4, 2015, a decrease of $1.2m.
Point-of-Care revenues for Q4, 2016 decreased
from $5.4m to $4.0m when compared to Q4, 2015, a decline of 27.3%.
This is due to the normal fluctuation patterns which impact HIV
sales in Africa.
Clinical Laboratory revenues increased to
$19.7m, which represents an increase of 1.2% compared to Q4, 2015.
As in the case of the annual revenues, this increase would have
been higher but for the impact of exchange rate movements.
Revenues for Q4, 2016 were as follows:
|
2015 Quarter 4 |
2016 Quarter 4 |
Increase/(decrease) |
|
US$’000 |
US$’000 |
% |
Point-of-Care |
5,436 |
3,950 |
(27.3 |
%) |
Clinical Laboratory |
19,501 |
19,731 |
1.2 |
% |
Total |
24,937 |
23,681 |
(5.0 |
%) |
Gross profit for Q4, 2016 amounted to $9.5m
representing a gross margin of 40%, which is lower than the 43.2%
achieved in Q4, 2015. This decrease is largely due to lower sales
of higher margin point-of-care products and the impact of currency
movements on distributor pricing. It has also been impacted
by lower production levels during the quarter in line with the
lower revenues experienced.
Research and Development expenses of $1.3m are
slightly lower than the equivalent quarter last year. However,
Selling, General and Administrative (SG&A) expenses at $7.2m
are $1.2m higher than Q4, 2015. Last year’s SG&A expenses
of $6.0m were unusually low due to the benefit from some once-off
foreign exchange gains. This quarter’s expense was actually
slightly lower than the average for the preceding three quarters of
$7.4m.
Operating profit for the quarter was $0.6m,
which is lower than the $3.1m achieved in Q4, 2015. This is
due to the combination of the lower revenues and gross margin, and
higher indirect costs.
The profit after tax, but before once-off
charges, for the quarter was $4.9m, though this was largely
impacted by non-cash income related to the Exchangeable
Notes. Excluding these non-cash items, the profit after tax,
before once-off charges, for the quarter was $0.1m.
The basic EPS (excluding once-off charges) for
the quarter was 21.6 cents. However, excluding non-cash financial
income, principally a gain of $5.0m on the fair value of the
embedded derivatives of the Exchangeable Notes, the EPS would have
been 0.2 cents versus 8.0 cents in Q4, 2015. Diluted EPS for the
quarter amounted to 4.3 cents, which compares to 10.5 cents in the
equivalent quarter in 2015.
Cash generated from operations during the
quarter was $4.6m, though this was largely offset by capital
expenditure of $4.2m and resulted in free cash inflows for the
quarter of $0.4m. This was offset by shares bought back of $3.3m,
Exchangeable Note interest of $2.3m and payments of $2.4m incurred
in relation to the closure of our facility in Sweden. Overall, this
resulted in a cash balance at the end of the quarter of $77.1m.
Earnings before interest, tax, depreciation,
amortisation and share option expense for the quarter was $2.6m
compared to $4.8m in Q4, 2015.
Once-off Charges
During the period the Company recognised
once-off charges amounting to $105.8m net of tax which is broken
down in the table below.
|
$m |
Meritas |
|
- Impairment of Assets |
56.7 |
|
- Closure costs |
5.8 |
|
- Foreign currency translation reserve |
3.8 |
|
Total Meritas |
66.3 |
|
|
|
Impairment Charges |
43.4 |
|
|
|
Product Cull Provision |
4.8 |
|
|
|
Tax Impact |
(8.7 |
) |
|
|
Total |
105.8 |
|
The Meritas impairment of $56.7m followed the
Company’s decision to withdraw its Meritas Troponin submission from
the FDA in October, 2016. The impairment charge represents
the write-off of all capitalised development costs, tangible fixed
assets, inventories and other assets associated with the Meritas
project. In addition, a further $5.8m was recognised in
relation to closure costs of the Swedish facility. This
principally consisted of employee redundancy costs and other
contractual obligations associated with terminating premises and
supplier contracts. A further charge of $3.8m was recognised
in relation to foreign translation reserves which had been
recognised in previous periods as a reserve movement, but which
under accounting rules is now required to be recognised through the
income statement.
The Company is also recognising an impairment
charge of $43.4m in relation to non-Meritas assets. This was
largely driven by the provisions of accounting standards, whereby
companies are required to carry out annual impairment reviews of
asset valuations contained on their balance sheet. In determining
whether a potential asset impairment exists, companies are required
to consider a range of internal and external factors. One such
factor is the relationship between a company’s market valuation and
the book value of its net assets. The fall in the Company’s
share price after our Meritas announcement resulted in the Company
trading at a significant discount to the book value of its net
assets. In such circumstances, given the accounting standard
requirements, the Company felt it was prudent to recognise an
impairment provision. By its nature this adjustment has no
cash implications for the Company.
Finally, the company has recognised a product
cull charge of $4.8m. This is in relation to a number of products
which have been discontinued. This mainly represents our Bartels
and Microtrak product lines which we acquired over 15 years ago.
Sales of these products have been declining significantly over the
last number of years and have now reached the end of their economic
life, especially given the level of technical support required to
keep older products of this nature on the market. The revenue
impact of this decision will be a reduction of approximately $3.0m
per annum.
The tax impact of the above mentioned items was
a tax credit of $8.7m, which is mainly the reversal of deferred tax
liabilities recognised in previous quarters.
Share Buyback
During the quarter the company bought back
572,000 shares at an average price of $6.84 and a total value of
$3.9m, of which $3.3m was paid out during the quarter. This
brings the total buyback for the year to over 1.1 million shares at
an average price of $8.95 and a total value of $9.9m. A
further 143,000 shares at a price of $6.92 were bought back during
the period to date in Q1, 2017.
Comments
Commenting on the results Kevin Tansley, Chief
Financial Officer said “Profitability for the quarter was adversely
impacted by a number of factors. Lower revenues due to HIV
fluctuations and compressed margins attributable to exchange rate
and sales mix factors have resulted in an operating profit for the
quarter of $0.6m and a reduction in diluted EPS to 4 cents per
ADR. During the quarter we recognised once-off charges
totalling $105.8m. Of this, $66.3m was due to our withdrawal of our
Meritas Troponin submission to the FDA and had previously been
flagged, whilst a further non-cash impairment charge of $43.4m was
recognised on non-Meritas assets, though this was largely driven by
the recent fall in the Company’s share price.
Meanwhile, for the year as a whole the Company
made an operating profit of $7.5m and a profit after tax of $3.6m
(excluding non-cash financing items and once-off charges) which
equates to an unconstrained diluted EPS of 29 cents for the
year. This is lower than earned in 2015 due to the impact of
exchange rate movements and higher SG&A expenses.”
Commenting, Ronan O’Caoimh, Chief Executive
Officer stated “The latter part of 2016 was particularly
challenging for Trinity Biotech. We withdrew our Troponin
submission to the FDA and this was followed shortly thereafter by
our decision to close our plant in Sweden and move the Meritas
technology to another group facility.
Since then we have also reviewed our product
portfolio and have decided to cull a number of older products which
have been declining for a number of years. These products
which would have continued to decrease were becoming economically
inefficient and no longer merited the level of investment and
resources required.
On a more positive note, the remainder of the
business remains strong, particularly with regard to Premier and
Autoimmunity, but also in the case of HIV notwithstanding the
fluctuating nature of its sales. By carrying out a targeted
cull we have removed a number of declining products from our
portfolio which have been depressing revenue growth in the Company.
Furthermore, with the closure of our Swedish facility, we have
meaningfully changed the cash generative ability of the Company,
such that going forward we will operate at close to a free cash
flow break even position. This provides us with the financial
flexibility to continue our share buyback program, which in our
opinion represents the best deployment of capital at current share
price levels.”
Conference Call Dial-in Details
The conference call to discuss the results
released today will be held at 11:00am ET (3:00pm GMT – not 4:00pm
GMT as previously released).
Interested parties can access the call by
dialing:
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USA: |
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1-844-861-5499 |
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International: |
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1-412-317-6581 |
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Conference ID #: |
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10102284 |
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A simultaneous webcast of the call can be accessed
at:https://www.webcaster4.com/Webcast/Page/1135/19990
Forward-looking statements in this release are
made pursuant to the "safe harbor" provision of the Private
Securities Litigation Reform Act of 1995. Investors are
cautioned that such forward-looking statements involve risks and
uncertainties including, but not limited to, the results of
research and development efforts, the effect of regulation by the
United States Food and Drug Administration and other agencies, the
impact of competitive products, product development
commercialisation and technological difficulties, and other risks
detailed in the Company's periodic reports filed with the
Securities and Exchange Commission.
Trinity Biotech develops, acquires, manufactures
and markets diagnostic systems, including both reagents and
instrumentation, for the point-of-care and clinical laboratory
segments of the diagnostic market. The products are used to detect
infectious diseases and to quantify the level of Haemoglobin A1c
and other chemistry parameters in serum, plasma and whole blood.
Trinity Biotech sells direct in the United States, Germany, France
and the U.K. and through a network of international distributors
and strategic partners in over 75 countries worldwide. For further
information please see the Company's website:
www.trinitybiotech.com.
|
Trinity Biotech
plcConsolidated Income Statements |
|
|
|
|
|
|
(US$000’s except
share data) |
|
Three MonthsEnded
Dec
31,2016(unaudited) |
|
|
Three Months
Ended Dec
31,
2015(unaudited) |
|
|
Year
Ended Dec
31,
2016(unaudited) |
|
|
|
Year
Ended Dec
31,
2015(unaudited) |
|
|
|
|
|
|
|
Revenues |
|
23,681 |
|
|
24,937 |
|
|
99,611 |
|
|
|
100,195 |
|
|
|
|
|
|
|
Cost of sales |
|
(14,202 |
) |
|
(14,170 |
) |
|
(56,518 |
) |
|
|
(53,950 |
) |
|
|
|
|
|
|
Gross
profit |
|
9,479 |
|
|
10,767 |
|
|
43,093 |
|
|
|
46,245 |
|
Gross profit % |
|
40.0 |
% |
|
43.2 |
% |
|
43.3 |
% |
|
|
46.2 |
% |
|
|
|
|
|
|
Other operating
income |
|
28 |
|
|
65 |
|
|
239 |
|
|
|
288 |
|
|
|
|
|
|
|
Research & development expenses |
|
(1,330 |
) |
|
(1,508 |
) |
|
(5,041 |
) |
|
|
(5,068 |
) |
Selling, general and
administrative expenses |
|
(7,206 |
) |
|
(6,009 |
) |
|
(29,451 |
) |
|
|
(26,475 |
) |
Indirect share based
payments |
|
(378 |
) |
|
(184 |
) |
|
(1,349 |
) |
|
|
(1,541 |
) |
|
|
|
|
|
|
Operating
profit |
|
593 |
|
|
3,131 |
|
|
7,491 |
|
|
|
13,449 |
|
|
|
|
|
|
|
Financial income |
|
221 |
|
|
132 |
|
|
877 |
|
|
|
431 |
|
Financial expenses |
|
(1,182 |
) |
|
(1,189 |
) |
|
(4,726 |
) |
|
|
(3,483 |
) |
Non-cash financial
income |
|
4,860 |
|
|
975 |
|
|
1,552 |
|
|
|
12,480 |
|
Net financing
income / (expense) |
|
3,899 |
|
|
(82 |
) |
|
(2,297 |
) |
|
|
9,428 |
|
|
|
|
|
|
|
Profit before
tax & once-off items |
|
4,492 |
|
|
3,049 |
|
|
5,194 |
|
|
|
22,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax credit /
(expense) |
|
421 |
|
|
(223 |
) |
|
(41 |
) |
|
|
(1,081 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before
once-off items |
|
4,913 |
|
|
2,826 |
|
|
5,153 |
|
|
|
21,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Once-off charges (net
of tax) |
|
(105,779) |
|
|
- |
|
|
(105,779) |
|
|
|
- |
|
(Loss) / profit after tax and once-off items |
|
(100,866 |
) |
|
2,826 |
|
|
(100,626 |
) |
|
|
21,796 |
|
|
|
|
|
|
|
(Loss) / earnings per
ADR (US cents) |
|
(443.1 |
) |
|
12.1 |
|
|
(438.2 |
) |
|
|
94.1 |
|
|
|
|
|
|
|
Earnings per ADR (US
cents)** |
|
21.6 |
|
|
12.1 |
|
|
22.4 |
|
|
|
94.1 |
|
|
|
|
|
|
|
Earnings per ADR
excluding non-cash financial income (US cents)** |
|
0.2 |
|
|
8.0 |
|
|
15.7 |
|
|
|
40.2 |
|
|
|
|
|
|
|
Diluted (loss) /
earnings per ADR (US cents) |
|
(373.1 |
) |
|
10.5 |
|
|
(344.8 |
)* |
|
|
46.2 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
ADR (US cents)** |
|
4.3 |
|
|
10.5 |
|
|
29.0 |
* |
|
|
46.2 |
|
|
|
|
|
|
|
Weighted average no. of
ADRs used in computing basic earnings per ADR |
|
22,761,641 |
|
|
23,259,669 |
|
|
22,964,703 |
|
|
|
23,161,773 |
|
|
|
|
|
|
|
Weighted average no. of
ADRs used in computing diluted earnings per ADR |
|
28,031,122 |
|
|
28,690,599 |
|
|
28,299,399 |
|
|
|
27,407,793 |
|
* Under IAS 33 Earnings per Share, diluted earnings per share
cannot be anti-dilutive. Therefore, diluted earnings per ADR in
accordance with IFRS would be 22.4 cents for the year (i.e. equal
to basic earnings per ADR).** Excluding once-off charges
The above financial statements have been prepared in accordance
with the principles of International Financial Reporting Standards
and the Company’s accounting policies but do not constitute an
interim financial report as defined in IAS 34 (Interim Financial
Reporting). Once-off charges is a non-GAAP accounting
presentation.
|
Trinity Biotech
plcConsolidated Balance
Sheets |
|
|
|
|
|
|
Dec 31,2016US$
‘000(unaudited) |
|
|
Sept 30,2016US$
‘000(unaudited) |
|
|
June 30,2016US$
‘000(unaudited) |
|
|
Dec 31,2015US$
‘000(unaudited) |
|
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
13,403 |
|
|
21,495 |
|
|
21,760 |
|
|
20,659 |
|
Goodwill and intangible
assets |
87,275 |
|
|
173,240 |
|
|
169,049 |
|
|
161,324 |
|
Deferred tax
assets |
14,556 |
|
|
13,531 |
|
|
13,312 |
|
|
12,792 |
|
Other assets |
870 |
|
|
849 |
|
|
932 |
|
|
954 |
|
Total
non-current assets |
116,104 |
|
|
209,115 |
|
|
205,053 |
|
|
195,729 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
Inventories |
32,589 |
|
|
39,989 |
|
|
39,253 |
|
|
35,125 |
|
Trade and other
receivables |
22,586 |
|
|
25,802 |
|
|
27,832 |
|
|
25,602 |
|
Income tax
receivable |
1,205 |
|
|
811 |
|
|
712 |
|
|
550 |
|
Cash and cash
equivalents |
77,108 |
|
|
84,751 |
|
|
84,920 |
|
|
101,953 |
|
Total current
assets |
133,488 |
|
|
151,353 |
|
|
152,717 |
|
|
163,230 |
|
|
|
|
|
|
TOTAL
ASSETS |
249,592 |
|
|
360,468 |
|
|
357,770 |
|
|
358,959 |
|
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
Equity
attributable to the equity holders of the parent |
|
|
|
|
Share capital |
1,224 |
|
|
1,222 |
|
|
1,221 |
|
|
1,220 |
|
Share premium |
16,187 |
|
|
15,801 |
|
|
15,575 |
|
|
15,526 |
|
Accumulated
surplus |
93,004 |
|
|
197,379 |
|
|
197,588 |
|
|
201,951 |
|
Other reserves |
(1,688 |
) |
|
(4,002 |
) |
|
(3,721 |
) |
|
(4,809 |
) |
Total
equity |
108,727 |
|
|
210,400 |
|
|
210,663 |
|
|
213,888 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
Income tax payable |
175 |
|
|
772 |
|
|
657 |
|
|
1,163 |
|
Trade and other
payables |
25,028 |
|
|
19,976 |
|
|
19,384 |
|
|
18,874 |
|
Provisions |
75 |
|
|
75 |
|
|
75 |
|
|
75 |
|
Total current
liabilities |
25,278 |
|
|
20,823 |
|
|
20,116 |
|
|
20,112 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Exchangeable senior
note payable |
96,491 |
|
|
101,351 |
|
|
99,232 |
|
|
98,044 |
|
Other payables |
735 |
|
|
1,939 |
|
|
1,986 |
|
|
2,096 |
|
Deferred tax
liabilities |
18,361 |
|
|
25,955 |
|
|
25,773 |
|
|
24,819 |
|
Total
non-current liabilities |
115,587 |
|
|
129,245 |
|
|
126,991 |
|
|
124,959 |
|
|
|
|
|
|
TOTAL
LIABILITIES |
140,865 |
|
|
150,068 |
|
|
147,107 |
|
|
145,071 |
|
|
|
|
|
|
TOTAL EQUITY
AND LIABILITIES |
249,592 |
|
|
360,468 |
|
|
357,770 |
|
|
358,959 |
|
The above financial statements have been prepared in accordance
with the principles of International Financial Reporting Standards
and the Company’s accounting policies but do not constitute an
interim financial report as defined in IAS 34 (Interim Financial
Reporting).
|
|
|
|
|
Trinity Biotech
plcConsolidated Statement of Cash
Flows |
|
|
|
|
|
(US$000’s) |
Three MonthsEnded
Dec 31, 2016
(unaudited) |
|
|
Three Months
Ended Dec
31,
2015(unaudited) |
|
|
YearEnded
Dec
31,2016(unaudited) |
|
|
YearEnded
Dec 31, 2015
(unaudited) |
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period |
84,751 |
|
|
104,289 |
|
|
101,953 |
|
|
9,102 |
|
|
|
|
|
|
Operating cash flows
before changes in working capital |
3,294 |
|
|
5,574 |
|
|
16,245 |
|
|
19,853 |
|
Changes in working
capital |
1,325 |
|
|
234 |
|
|
(2,147 |
) |
|
(7,157 |
) |
Cash generated from
operations |
4,619 |
|
|
5,808 |
|
|
14,098 |
|
|
12,696 |
|
|
|
|
|
|
Net Interest and Income
taxes received/(paid) |
(64 |
) |
|
79 |
|
|
(327 |
) |
|
(361 |
) |
|
|
|
|
|
Capital Expenditure
& Financing (net) |
(4,185 |
) |
|
(5,980 |
) |
|
(21,165 |
) |
|
(21,604 |
) |
|
|
|
|
|
Free cash flow |
370 |
|
|
(93 |
) |
|
(7,394 |
) |
|
(9,269 |
) |
|
|
|
|
|
Payment of HIV-2
licence fee |
- |
|
|
- |
|
|
(1,112 |
) |
|
(1,112 |
) |
|
|
|
|
|
Share buyback |
(3,296 |
) |
|
- |
|
|
(9,322 |
) |
|
- |
|
|
|
|
|
|
Once-off items |
(2,417 |
) |
|
- |
|
|
(2,417 |
) |
|
- |
|
|
|
|
|
|
30 year Exchangeable
Note proceeds, net of fees |
- |
|
|
(45 |
) |
|
- |
|
|
110,529 |
|
|
|
|
|
|
30 year Exchangeable
Note interest payment |
(2,300 |
) |
|
(2,198 |
) |
|
(4,600 |
) |
|
(2,198 |
) |
|
|
|
|
|
Dividend payment |
- |
|
|
- |
|
|
- |
|
|
(5,099 |
) |
|
|
|
|
|
Cash and cash
equivalents at end of period |
77,108 |
|
|
101,953 |
|
|
77,108 |
|
|
101,953 |
|
The above financial statements have been prepared in accordance
with the principles of International Financial Reporting Standards
and the Company’s accounting policies but do not constitute an
interim financial report as defined in IAS 34 (Interim Financial
Reporting).
Trinity Biotech plc
Kevin Tansley
(353)-1-2769800
E-mail: kevin.tansley@trinitybiotech.com
Lytham Partners LLC
Joe Diaz, Joe Dorame & Robert Blum
602-889-9700
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