Report of Independent Auditors
Ernst & Young's unqualified audit report on the financial statements is set out below. In response to Trinity Biotech's decision to comply with both Irish and US disclosure requirements in one document, the Ernst & Young audit report encompasses the differing requirements of Irish and US regulations.
TO THE MEMBERS AND BOARD OF TRINITY BIOTECH plc
We have audited the consolidated financial statements and the summary of differences between Irish and US generally accepted accounting principles on pages 17 to 40 which have been prepared under the historical cost convention and on the basis of the accounting policies set out on pages 22 and 23.
Respective Responsibilities of Directors and Auditors
As described on page 15, the company's directors are responsible for the preparation of the financial statements. It is our responsibility to form an independent opinion, based on our audit, on those statements and to report our opinion to you.
Basis of Opinion
We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
REPUBLIC OF IRELAND OPINION
In our opinion the financial statements give a true and fair view of the state of affairs of the company and the group at December 31, 1997 and of the profit of the group for the year then ended and have been properly prepared in accordance with the provisions of the Companies Acts, 1963 to 1990, and the European Communities (Companies: Group Accounts) Regulations, 1992.
We have obtained all the information and explanations we considered necessary for the purpose of our audit. In our opinion, proper books of account have been kept by the company. The company's balance sheet is in agreement with the books of account.
In our opinion, the information given in the Directors' report on pages 13 to 15 is consistent with the financial statements.
In our opinion, the balance sheet on page 21 does not disclose a position which, under the provisions of the Companies (Amendment) Act, 1983, would require the convening of an extraordinary general meeting of the company.
UNITED STATES OPINION
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Trinity Biotech plc and its subsidiaries at December 31, 1996 and December 31, 1997 and the consolidated results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles in the Republic of Ireland which differ in certain respects from those followed in the United States (see note 26 of notes to the financial statements).
Ernst & Young
Chartered Accountants and
Registered Auditors
Dublin
Date: 5th March 1998
Consolidated Profit
and Loss Account for the
Year Ended December 31, 1997
| 31 December | 31 December | 31 December | 31 December | ||
| 1995 | 1996 | 1997 | 1997 | ||
| Notes | IR£ | IR£ | IR£ | US$ | |
| Sales | |||||
| - Continuing operations | 1 | 6,191,502 | 4,227,197 | 7,181,130 | 10,211,567 |
| - Acquisitions | 1 | - | - | 4,655,303 | 6,619,841 |
| ________ | ________ | ________ | ________ | ||
| 6,191,502 | 4,227,197 | 11,836,433 | 16,831,408 | ||
| Cost of Sales | |||||
| - Continuing operations | (4,959,853 ) | (3,084,740 ) | (5,208,575 ) | (7,406,594 ) | |
| - Acquisitions | - | - | (2,795,796 ) | (3,975,622 ) | |
| ________ | ________ | ________ | ________ | ||
| (4,959,853 ) | (3,084,740 ) | (8,004,371 ) | (11,382,216 ) | ||
| Gross profit | 1,231,649 | 1,142,457 | 3,832,062 | 5,449,192 | |
| Research & development expenses | (936,277 ) | (854,990 ) | (1,245,860 ) | (1,771,613 ) | |
| Administrative expenses - normal | |||||
| - Continuing operations | (1,230,581 ) | (876,692 ) | (1,350,719 ) | (1,920,722 ) | |
| - Acquisitions | - | - | (973,929 ) | (1,384,928 ) | |
| ________ | ________ | ________ | ________ | ||
| (1,230,581 ) | (876,692 ) | (2,324,648 ) | (3,305,650 ) | ||
| Administrative expenses - exceptional | 3 | (179,222 ) | (439,072 ) | 67,892 | 96,542 |
| Other operating income | 3 | 528,042 | 344,185 | 541,423 | 769,904 |
| ________ | ________ | ________ | ________ | ||
| Operating profit (loss) | |||||
| - Continuing operations | (586,389 ) | (684,112 ) | (14,709 ) | (20,917 ) | |
| - Acquisitions | - | - | 885,578 | 1,259,292 | |
| ________ | ________ | ________ | ________ | ||
| (586,389 ) | (684,112 ) | 870,869 | 1,238,375 | ||
| Interest receivable and similar income | 83,001 | 226,488 | 102,124 | 145,221 | |
| Interest payable and similar charges | 4 | (15,741 ) | (10,580 ) | (123,296 ) | (175,327 ) |
| ________ | ________ | ________ | ________ | ||
| Profit (loss) on ordinary
activities before taxation |
2 | (519,129 ) | (468,204 ) | 849,697 | 1,208,269 |
| Tax on profit (loss) on ordinary activities | 6 | - | - | - | - |
| ________ | ________ | ________ | ________ | ||
| Retained profit (loss) on
ordinary activities after taxation for the financial period |
(519,129 ) | (468,204 ) | 849,697 | 1,208,269 | |
| ________ | ________ | ________ | ________ | ||
| Earnings per ordinary share | 8 | (0.05 ) | (0.03 ) | 0.04 | 0.06 |
| Fully diluted earnings per ordinary share | 8 | - | - | 0.04 | 0.06 |
Movements on reserves are shown in the "Consolidated Statement of Movement in Shareholders' Funds"on page 19.
Approved by the Board on 5th March 1998
Ronan O'Caoimh
Jonathan O'Connell
Directors
Consolidated Balance Sheet
at December 31, 1997
| 31 December | 31 December | 31 December | ||
| 1996 | 1997 | 1997 | ||
| Notes | IR£ | IR£ | US$ | |
| FIXED ASSETS | ||||
| Intangible assets | 9 | 24,645 | 263,831 | 375,168 |
| Tangible assets | 10 | 750,902 | 4,078,881 | 5,800,169 |
| Financial assets | 11 | 1,565,228 | 1,819,449 | 2,587,257 |
| ________ | ________ | ________ | ||
| 2,340,775 | 6,162,161 | 8,762,594 | ||
| ________ | ________ | ________ | ||
| CURRENT ASSETS | ||||
| Investments | 14 | 402,591 | 1,018,033 | 1,447,643 |
| Inventories | 13 | 310,354 | 2,575,975 | 3,663,036 |
| Debtors and prepayments | 12 | 2,093,925 | 5,554,977 | 7,899,177 |
| Cash and short term deposits and liquid resources | 2,904,847 | 1,988,222 | 2,827,251 | |
| ________ | ________ | ________ | ||
| 5,711,717 | 11,137,207 | 15,837,107 | ||
| CREDITORS (Amounts falling due within | ||||
| one year) | 15 | (1,758,839 ) | (6,165,597 ) | (8,767,479 ) |
| ________ | ________ | ________ | ||
| NET CURRENT ASSETS | 3,952,878 | 4,971,610 | 7,069,628 | |
| ________ | ________ | ________ | ||
| TOTAL ASSETS LESS CURRENT LIABILITIES | 6,293,653 | 11,133,771 | 15,832,222 | |
| CREDITORS (Amounts falling due | ||||
| after more than one year) | 16 | (45,106 ) | (6,137,491 ) | (8,727,511 ) |
| ________ | ________ | ________ | ||
| 6,248,547 | 4,996,280 | 7,104,711 | ||
| ________ | ________ | ________ | ||
| CAPITAL AND
RESERVES Called up share capital |
||||
| Class 'A' Ordinary shares | 17 | 155,988 | 221,918 | 315,567 |
| Class 'B' Ordinary shares | 17 | 7,000 | 7,000 | 9,954 |
| Share premium account | 18,302,300 | 24,652,136 | 35,055,338 | |
| Currency adjustment | (138,910 ) | (44,392 ) | (63,125 ) | |
| Profit and loss account | (5,024,878 ) | (4,175,181 ) | (5,937,107 ) | |
| Goodwill reserve | (7,052,953 ) | (15,665,201 ) | (22,275,916 ) | |
| ________ | ________ | ________ | ||
| 6,248,547 | 4,996,280 | 7,104,711 | ||
| ________ | ________ | ________ |
Approved by the Board on 5th March 1998
Ronan O'Caoimh
Jonathan O'Connell
Directors