Information  X 
Enter a valid email address

Corin Group PLC (CRG)

  Print      Mail a friend       Annual reports

Wednesday 29 August, 2012

Corin Group PLC

Half year results

RNS Number : 9379K
Corin Group PLC
29 August 2012
 



 

29 August 2012

 

 

Corin Group PLC

 

Growing hip sales drive revenue up 15%

 

Corin Group PLC (LSE: CRG, "Corin" or "the Group"), a leading manufacturer and supplier of orthopaedic devices, has today published its half year results for the six months to 30 June 2012.

 

Highlights

·      Group sales up 15% to £25.0m (H1 2011: £21.8m**), an increase of 13% on a constant currency basis*

-      9% growth on a constant currency basis, excluding stocking sales to Mako Surgical Corp ("MAKO")

-      Hip product sales up 38% to £15.9m (H1 2011: £11.5m**), driven by new cementless hip systems

·      Operating profit £1.0m (H1 2011, excluding discontinued operations: £0.5m**. H1 2011, excluding exceptional items and discontinued operations: £0.9m**)

·      Earnings per share 1.69p (H1 2011: earnings per share excluding discontinued operations of 0.23p)

·      Evaluation surgeries on new Unity total knee system progressing well

·      LARS distribution agreement extended until December 2016 with increased distribution rights and closer collaboration

 

Peter Huntley, Corin Chief Executive, said:

 

"This strong level of organic growth, driven by our new hip range, emphasises the successful evolution of the Group towards a balanced portfolio of hip products.

 

"We are encouraged by the steady growth achieved across a number of geographies.  The US in particular remains a great opportunity for us.  We continue to invest behind our sales and marketing efforts and are well placed to grow and support our products in all our markets.

 

"The first phase of evaluation surgeries of the Unity knee has been completed successfully, with encouraging feedback.  The next phase is expected to start in the second half of this year, which should add further sales momentum in 2013."

 

*Constant currency sales are calculated by translating 2011 revenue at the average exchange rates used for the six month period ended 30 June 2012.

 

**These figures have been restated to present Chinese operations as discontinued.  Details of Discontinued Operations are set out in Note 5.

 

Enquiries:

 

Corin Group PLC


Peter Huntley, Chief Executive

Iain Slater, Finance Director

01285 659 866



College Hill


Adrian Duffield/Rozi Morris

020 7457 2020

 

Overview

 

Corin achieved significant progress during the first half of 2012, with strong sales growth driven by the new hip portfolio and with the commencement of evaluation surgeries of the new Unity total knee system.

 

Group sales increased by 15% to £25.0m (H1 2011: £21.8m), representing growth of 13% on a constant currency basis. Excluding the final stocking order sales of hip implants and instruments to MAKO in the first half, the underlying constant currency sales growth was an encouraging 9%.

 

The hip portfolio grew by 37% on a constant currency basis, led by the new cementless hip systems, Trinity cup, Metafix stem and MiniHip stem. Underlying constant currency sales growth in hips, excluding sales to MAKO and sales of metal-on-metal ("MoM") hips, was 35% which continued the very strong trend from last year. The rate of decline in the knee portfolio reduced, in part from the positive effect of commencing the initial evaluation surgeries on the new Unity total knee system. LARS continued to decline as anticipated following the downturn experienced in Australia in 2011.

 

Good growth was reported across five of the Group's six direct markets, the exception being Australia. The US market was particularly strong, following the successful conversion of Cormet to direct distribution, the roll-out of the full hip portfolio in 2011 and the MAKO stocking orders.

 

Operating profit was £1.0m (H1 2011, excluding discontinued operations: £0.5m. H1 2011, excluding exceptional items and discontinued operations: £0.9m).  The Group continued to invest in its sales infrastructure to support the growth of the new hip portfolio, particularly in the important US market.

 

In June 2012, the agreement with LARS to distribute its ligament augmentation system was extended for a further three years until the end of 2016, with the addition of exclusive distribution in a number of markets. The most important of these is the US where regulatory approvals will first be sought. The review of the reimbursement of artificial ligaments, including LARS, in the important Australian market has not yet been concluded, but the current reimbursement will continue until at least February 2013.

 

Financial review

 

Group sales in the first half of 2012 increased by 15% to £25.0m (H1 2011: £21.8m), an increase of 13% on a constant currency basis, excluding the discontinued operations in China. 

 

Constant currency is calculated by translating 2011 revenue at the average exchange rates used for six month period ended 30 June 2012 (see note 14).

 

Sales by product and by area of operations, together with comparatives, are set out below:

 


H1 2012

£m

H1 2011

£m

(restated note 5)

% Growth (reported)

% Growth

(constant currency)

Hips

15.9

11.5

38%

37%

Knees

3.5

3.7

-5%

-5%

Other products

5.6

6.6

-15%

-17%

Total

25.0

21.8

15%

13%

 

 


H1 2012

£m

H1 2011

£m

(restated note 5)

% Growth (reported)

% Growth

(constant currency)

 

UK

4.2

3.8

10%

10%

Germany & Austria

3.2

2.7

17%

24%

Australia

5.6

6.2

-10%

-12%

Japan

4.0

3.5

15%

8%

US

4.7

2.3

103%

101%

Distributor markets

3.3

3.3

0%

0%

Total

25.0

21.8

15%

13%

 

Group operating profit was £1.0m (H1 2011, excluding discontinued operations: £0.5m. H1 2011, excluding exceptional items and discontinued operations: £0.9m). A gross margin percentage of 66% was achieved in both the 2012 and 2011 first half periods. The increase in gross profit was largely offset by increased sales commissions in a number of markets, including the switch to direct distribution of Cormet in the US, and the continued investment in the Group sales and marketing infrastructure in the US, Japan and Australia to support the roll out of the new hip systems.

 

Financing charges were £0.2m (H1 2011: £0.2m) of which £0.1m (H1 2011: £0.1m) related to the amortisation of the discount on the Australian minority put option.

 

The reported profit before tax was £0.9m (H1 2011, excluding discontinued items: £0.2m). 

 

The tax charge of £0.1m on ordinary activities represents a tax rate of 16%, an improvement on the prior year underlying tax rate of 47%. Prior period credit adjustments to current and deferred taxes have reduced the H1 2012 charge.

 

The reported profit after tax was £0.7m (H1 2011, excluding discontinued operations: £0.1m).

 

The Group reported earnings per share were 1.69p (H1 2011: excluding discontinued items: earnings per share 0.23p; including discontinued items loss per share of 0.56p). 

 

As announced with the preliminary results for 2011, no interim dividend is being paid (H1 2011: 0.48p per share).

 

The Group generated cash from operations after net capital expenditure of £2.2m (H1 2011: cash absorbed of £0.9m). Capital expenditure, which predominantly related to surgical instrumentation and plant and machinery, was £1.9m (H1 2011: £1.8m) - 98% of depreciation and amortisation (H1 2011: 93%).

 

Net debt was £4.4m at 30 June 2012 (31 December 2011: £5.7m), principally as a result of the level of stocks and debtors decreasing following the completion of the stocking orders from MAKO. The balance sheet value of inventory decreased to £13.6m (31 December 2011: £14.2m), with £0.3m of this decrease being attributable to currency movements. 

 

Operating review

 

Corin's strategy is to generate growth by broadening its hip and knee portfolio, developing innovative implant solutions and building its sales and marketing teams in a focused set of international markets. The broadening of the hip and knee portfolio is addressing high volume and high growth segments where Corin has been underrepresented. The new brand pillars established in this portfolio are being supported by further incremental innovations and line extensions. 

 

Orthopaedic market

 

The global orthopaedic hip and knee market improved slightly in the first half of the year, with growth of 2% compared to a 0.5% decline in 2011. The market in Europe grew by approximately 1%, with knee growth marginally stronger than hips, while the UK grew by 6% against a very poor start in 2011 when healthcare reforms had a significant impact on volumes.

 

Hips

 

Sales of the Group's hip products increased by 38% to £15.9m (H1 2011: £11.5m), an increase of 37% on a constant currency basis.

 

The growth in hips was driven by the new cementless hip systems, Trinity cup, Metafix stem and MiniHip stem.  The growth of Trinity was reinforced during the period by the line extensions introduced in the second half of 2011 - the ECiMa Vitamin E polyethylene liner, to provide long-term stability and very low wear rates, and additional cup and liner sizes, to allow larger femoral head sizes to be inserted in a given cup size.  The growth of the cementless hips was complemented by the Taperfit cemented stem, which had new implant sizes and instruments introduced in late 2011.

 

The growth in the first half was also assisted by the final stocking orders of instruments and implants from MAKO, for use with their robotic orthopaedic system. With that stocking phase completed, and MAKO in the roll out phase of its plans in the US, no significant deliveries to MAKO are expected in the second half of this year.

 

The industry wide decline in MoM products continued during the first half of the year. While the volume of sales of the Group's MoM products, Cormet and Optimom, continued to decline, the value of these sales increased slightly in the first half. This was as a result of taking on the direct distribution of Cormet in the US following the termination of the distribution agreement with Stryker in July 2011, and benefiting from the higher in-market selling price versus the former selling price to a distributor.

 

The development of a new cementless hip stem, to address the significant blade segment of the cementless hip market not addressed by Metafix and MiniHip, has progressed well. This new stem, the TriFit TS, has successfully achieved CE marking and evaluation surgeries are expected to commence shortly with full commercial launch in the first half of 2013. The upgraded instruments for MiniHip commenced evaluation surgeries in the first half, with the commercial roll-out planned to commence in the second half of this year.

 

Knees

 

Sales of knee products were £3.5m (H1 2011: £3.7m), a decline of 5% on a constant currency basis.

 

The rate of decline in the knee portfolio reduced significantly from the 21% constant currency decline experienced in 2011. There was an improved performance from the Uniglide partial knee, from new accounts in Germany and better market conditions in the UK. The evaluation surgeries on the new Unity total knee also contributed to offsetting the ongoing decline in the Group's existing total knee products.

 

The first phase of evaluation surgeries of Unity has progressed well. The second version of the Unity instruments, upgraded following the feedback from the first phase evaluations, is currently being manufactured ahead of the second phase evaluation surgeries expected to commence in the second half of this year. A significant financial impact from Unity is not expected until its full commercial release in 2013.

 

Other products

 

Sales of other products, which include LARS ligament augmentation, Zenith mobile-bearing ankle and surgical disposable products, were £5.6m (H1 2011: £6.6m), a decline of 17% on a constant currency basis.

 

As expected, the decline in LARS in Australia continued in the first half of the year, following a high profile clinical debate on the use of LARS in anterior cruciate ligament surgery in that market. Good growth was achieved with LARS in the UK. As previously reported, the Prosthesis List Advisory Committee (PLAC), the relevant reimbursement body in Australia, is conducting a review of all artificial ligaments included in their list of reimbursed products for private health insured cases, including LARS ligaments. While this review has not concluded, it has not altered the reimbursement of LARS ligaments for the six monthly reimbursement cycle which concludes in February 2013. 

 

The existing two year distribution agreement with LARS was renegotiated in June 2012, with the agreement extended by a further three years until December 2016. This will enable greater cooperation in marketing and clinical research between Corin and LARS. Corin obtained exclusive distribution rights to the LARS ligament range in several additional countries, the most significant of which is the USA where Corin will seek regulatory approvals for the LARS ligaments. US FDA 510K approval applications for various extra-articular LARS ligaments are currently being prepared.

 

The Zenith mobile bearing ankle grew marginally in the first half, while sales of the distributed surgical disposable products continued to decline, as a result of competition in this price sensitive segment of the market.

 

Geographic results

 

Sales in the UK were £4.2m (H1 2011: £3.8m), an increase of 10%.  Market conditions improved during the first half, compared to the very slow start in 2011 when the impact of the NHS reforms in the UK were particularly noticeable. The new cementless hip portfolio, led by Trinity, grew very strongly in the UK market.

 

Sales in the Group's other direct European markets, Germany and Austria, grew strongly to £3.2m (H1 2011: £2.7m), an increase of 24% on a constant currency basis. In both these markets, there was strong growth in hips, while declines in the traditional knee portfolio were partially offset by the initial Unity evaluation surgeries and growth in Uniglide. The turnaround in profitability in these markets, following the management changes made in 2011, was pleasing.

 

Sales to US customers again grew strongly to £4.7m (H1 2011: £2.3m), an increase of 101% on a constant currency basis. The same factors as in the second half of 2011 supported this growth, stocking orders to MAKO, conversion of Cormet to direct distribution and the roll out of the full hip portfolio.

 

Australian sales declined on a constant currency basis by 12% to £5.6m (H1 2011: £6.2m), due to the downturn in LARS ligament sales in this market. The encouraging growth of the hip portfolio continued in Australia, led by Trinity and Metafix. Sales in Japan were £4.0m (H1 2011: £3.5m), an increase of 8% on a constant currency basis.  Growth was generated by the traditional hip portfolio, while efforts to gain regulatory approvals for the new cementless hip systems continue.

 

Sales to distributor markets were £3.3m (H1 2011: £3.3m), flat compared to last year on a constant currency basis. There was good growth in the European markets, from the roll out of the new hip portfolio, offset by the slowdown in a number of the Group's key South American markets.

 

Litigation

 

The negative sentiment around MoM, combined with the withdrawal of some MoM products by the Group's competitors, has led to an increasingly litigious environment around these implants.  The Group saw a rise in the number of litigation claims and potential claims concerning its MoM products during the first half. In the majority of these claims, very little information has been provided so far by the claimants.

 

The Group will defend MoM claims based on the clinical results and regulatory approvals of its products. In the US, the first MoM litigation case taken to court was successfully defended with a motion to dismiss the case, based on the Investigation Device Exemption ("IDE") study and Class III PMA approval of Cormet in that market. The legal expenses incurred in administering and defending MoM product liability claims, during the first half, were £0.1m (H1 2011: £nil). The Group also has insurance on commercial terms in place against product liability claims.

 

Current trading and outlook

 

The sales trends across the Group from the first half are broadly continuing in the second half to date. However, following the high level of stocking orders to MAKO in the second half of 2011 and with no significant orders from MAKO expected in the second half of this year, overall the second half of 2012 will see a lower level of sales reported than in the previous year.

 

The ongoing growth of the new hip portfolio demonstrates the benefits of the Group's strategy, rebalancing the portfolio away from MoM hips and distributed products. Uncertainty around the cost of defending the MoM product liability claims gives the Board some cause for caution but the Board believes the Group is well positioned to continue its strategic development.

 

 

Condensed Consolidated Unaudited Income Statement

 



6 Months to

6 Months to

12 Months to



30 June

30 June

December



2012

2011

2011


Note

£'000

£'000

Restated

£'000

 

Revenue

2

24,978

21,803

47,875

Cost of sales


(8,598)

(7,503)

(17,243)

Gross profit


16,380

14,300

30,632






Distribution costs


(526)

(438)

(1,006)

Administrative expenses


(14,806)

(13,410)

(27,611)

Operating profit before exceptional items


1,048

872

2,470

Exceptional items included:





Within administrative expenses

11

-

(420)

(455)

Operating profit


1,048

452

2,015

Finance costs

3

(193)

(239)

(542)

Finance income


7

11

38

Profit before tax and exceptional items for continuing operations


862

644

1,966

Exceptional items included:





Within administrative expenses

11

-

(420)

(455)

Profit before tax for continuing operations

2

862

224

1,511

Taxation

4

(141)

(125)

(700)

Profit after tax for continuing operations


721

99

811

Loss from discontinued operations after tax

5

-

(338)

(1,127)

Profit/(Loss) for the period attributable to owners of the parent


721

(239)

(316)






Earnings per share


- Basic and diluted

7

1.69p

(0.56)p

(0.74)p

- Basic and diluted continuing operations

7

1.69p

1.90p

 

 

Condensed Consolidated Unaudited Statement of Comprehensive Income

 


6 Months to

6 Months to

12 Months to


30 June

30 June

December


2012

2011

2011


£'000

£'000

£'000

Profit/(Loss) for the period

721

(239)

(316)

Other comprehensive (expense)/income:




Exchange differences on translation of foreign currency net investments

(353)

60

145

Tax taken directly to equity in respect of share based payments

-

10

-









Total comprehensive income/(expense) for the period attributable to owners of the parent

368

(169)

(171)





 

 

Condensed Consolidated Unaudited Statement of Financial Position

 



30 June

30 June

31 December



2012

2011

2011


Note

£'000

£'000

£'000

Assets





Non-current assets





Property, plant and equipment

8

9,549

9,614

9,542

Goodwill


2,794

3,544

2,720

Other intangible assets


2,248

2,499

2,423

Deferred tax assets


2,850

 

2,383

 

2,684

Total non-current assets


17,441

18,040

17,369

Current assets





Inventories


13,608

14,938

14,219

Trade and other receivables


10,562

10,760

11,004

Cash and cash equivalents


1,989

1,513

1,331

Total current assets


26,159

27,211

26,554

Total assets

2

43,600

45,251

43,923






EQUITY AND LIABILITIES





Equity attributable to owners of the parent




Share capital

9

1,070

1,070

1,070

Share premium account


15,751

15,751

15,751

Share scheme reserve


5,092

4,740

4,922

Own shares held reserve


(10)

(10)

(10)

Translation reserve


          3,516

           3,784

3,869

Retained earnings


2,532

2,366

 2,084

Total equity


27,951

27,701

27,686






Non-current liabilities





Long-term borrowings


2,446

3,652

3,142

Deferred tax liabilities


62

38

62

Provisions


1,731

2,217

1,660

Total non-current liabilities


4,239

5,907

4,864

Current liabilities





Trade and other payables


7,204

7,488

6,986

Current tax payable


292

277

476

Short-term borrowings


3,914

 

3,878

 

3,911

Total current liabilities


11,410

11,643

11,373






Total liabilities


15,649

17,550

16,237

 

Total equity and liabilities


 

43,600

 

45,251

43,923

 

 

Condensed Consolidated Unaudited Statement of Cash Flows

 



6 Months to

6 Months to

12 Months to



30 June

30 June

December



2012

2011

2011



£'000

£'000

Restated

£'000

Cash flows from operating activities





Profit before tax from continuing operations


862

224

1,511

(Loss) before tax from discontinued operations


-

(338)

(1,127)

Adjustments for:





Depreciation and amortisation


1,910

1,956

3,829

Interest received


(6)

(11)

(38)

Interest charged


193

124

542

Share based payments


170

193

385

Movement in fair value of forward exchange contracts


95

13

(60)

Loss/(Profit) on disposal of plant, property and equipment from continuing operations


11

(4)

64

Loss on disposal of plant, property and equipment from discontinued operations


-

-

510

Impairment to investment


-

-

2

Decrease/(Increase) in inventories


333

(1,467)

(697)

Decrease in trade and other receivables


294

176

75

Increase in trade and other payables


258

76

207

Cash generated from operations


4,120

942

5,203

Interest paid


(112)

(124)

(271)

Taxes paid


(471)

(701)

(1,631)

Net cash flows from operating activities


3,537

117

3,301

Cash flows from investing activities





Interest received


6

 

11

38

Proceeds from sale of property, plant and equipment


40

37

174

Capital expenditure - property, plant and equipment


(1,875)

(1,818)

 (4,042) (4,042)

Capital expenditure - other intangible assets


-

-

(211)

Net cash used in investing activities


(1,829)

(1,770)

(4,041)

Cash flows from financing activities





Inception of finance leases


83

202

653

Proceeds from borrowings


-

4,700

1,100

Repayment of bank borrowings


(600)

(4,200)

(1,200)

Repayment of capital portion of finance lease liabilities


(257)

(311)

(621)

Dividend paid to Australian minority shareholder


(273)

(232)

(232)

Dividend paid to owners of the parent company


-

-

(590)

Net cash (used in)/received from financing activities


(1,047)

159

(890)

 

Net increase/(decrease) in cash and cash equivalents 


 

661

 

(1,494)

(1,630)

 

(Overdraft)/Cash and cash equivalents at the beginning of the period


 

(874)

 

746

 

746

Exchange adjustments


(85)

37

10

(Overdraft)/Cash and cash equivalents at the end of     the period

13

(298)

(711)

(874)

 

 

Condensed Consolidated Unaudited Statement of Cash Flows (continued)

 

 

 

 




Cash and cash equivalents comprises:

£'000

£'000

£'000





Cash available on demand

1,989

1,513

1,331

Bank overdraft

 (1,672)

(1,805)

(1,141)

Other short term borrowings

(615)

(419)

(1,064)

(Overdraft)/Cash and cash equivalents at the end of     the period

13

(298)

(711)

(874)

 

 

Condensed Consolidated Statement of Changes in Equity

 






Own




Share

Share


Share

Shares




Capital

Scheme

Translation

Premium

Held

Retained

Total


Reserve

Reserve

Reserve

Account

Reserve

Earnings

Equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2012

1,070

4,922

3,869

15,751

(10)

2,084

27,686

 

Total comprehensive (expense)/income for the period

-

-

(353)

-

-

721

368

 

Share-based payment expense

-

170

-

-

-

-

170

 

Dividends paid

-

-

-

-

-

(273)

(273)

 

At 30 June 2012

1,070

5,092

3,516

15,751

(10)

2,532

27,951

 

 






Own



 


Share

Share


Share

Shares



 


Capital

Scheme

Translation

Premium

Held

Retained

Total

 


Reserve

Reserve

Reserve

Account

Reserve

Earnings

Equity

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

At 1 January 2011

1,070

4,537

3,724

15,751

(10)

3,222

28,294

Total comprehensive income/(expense) for the period

-

10

60

-

-

(239)

(169)

Share-based payment expense

-

193

-

-

-

-

193

Dividends paid

-

-

-

-

-

(617)

(617)

At 30 June 2011

1,070

4,740

3,784

15,751

(10)

2,366

27,701

 






Own




Share

Share


Share

Shares




Capital

Scheme

Translation

Premium

Held

Retained

Total


Reserve

Reserve

Reserve

Account

Reserve

Earnings

Equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

At 1 January 2011

1,070

4,537

3,724

15,751

(10)

3,222

28,294

Total comprehensive income/(expense) for the year

-

-

145

-

-

(316)

(171)

Share-based payment expense

-

385

-

-

-

-

385

Dividends paid

-

-

-

-

-

(822)

(822)

At 31 December 2011

1,070

4,922

3,869

15,751

(10)

2,084

27,686

 

 

Notes to the Condensed Consolidated Unaudited Financial Statements

 

1.  Basis of preparation

 

Corin Group PLC (the "Company") is a company domiciled in England. The condensed consolidated unaudited interim financial statements of the Company for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as the "Group").

 

The condensed consolidated interim financial statements have been prepared using the principal accounting policies set out in the Group's 2011 annual report and financial statements and in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and IAS 34 Interim Financial Reporting as adopted by the European Union.

 

Since the 2011 Annual Report the IASB has also issued a variety of IFRIC amendments and interpretations that have no impact on the Group's reporting.

 

The condensed interim financial statements for the six months ended 30 June 2012 have neither been audited nor reviewed. 

 

The financial information for the year ended 31 December 2011 set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. Statutory financial statements for 2011, which were prepared under IFRS as adopted by the European Union ('adopted IFRSs'), have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or 498 (3) of the Companies Act 2006.

 

Discontinued Operations

 

The prior year Consolidated Income statement to 30 June 2011 has been restated to present Chinese operations as discontinued.  The relevant notes have also been restated.  For H1 2011, the financial impact of this adjustment is a reduction in revenue of £338,000 and a reduction in costs of £676,000.  This results in an increase in operating profit of £338,000.  Further details of the Discontinued Operations are set out in Note 5.

 

2.  Segmental analysis

 

The operating segments reported below reflect the major operating areas by region used for internal management reporting to the CEO who is deemed to be the 'chief operating decision maker' as defined by IFRS 8. All segments include only orthopaedic products.

 

The current year results of the Austrian business have been added to the results of the German business.  The prior year results to 30 June 2011 have been restated to reflect this treatment. 

 


6 Months to

6 Months to

12 Months to


30 June

30 June

31 December


2012

2011

2011


£'000

£'000

Restated

£'000

Continuing revenue




UK operations

13,757

12,605

26,146

German and Austrian operations

3,554

2,919

5,933

Australian operations

5,561

6,163

12,461

Japanese operations

3,999

3,496

6,995

US operations

4,739

2,333

8,686


31,610

27,516

60,221

 

Less intercompany sales:




Germany

(1,845)

(1,196)

(3,968)

Australia

(1,680)

(1,867)

(3,689)

Japan

(1,991)

(1,821)

(2,988)

All other segments

(1,116)

(829)

(1,701)

Total revenue to external customers

24,978

21,803

47,875

 

Revenue of £6,292,000 (H1 2011: £5,538,000) from intercompany sales is included in revenue from UK operations.  Revenue of £340,000 (H1 2011: £175,000) is included in revenue from German operations. 

 


6 Months to

6 Months to

12 Months to


30 June

30 June

31 December


2012

 

£'000

 

2011

 

£'000

Restated

2011

 

£'000

 

Continuing profit/(Loss) before taxation




UK operations

(1,034)

(1,590)

(1,555)

German and Austrian operations

(79)

(428)

(525)

Australian operations

1,123

1,636

3,144

Japanese operations

(101)

66

370

US Operations

991

545

85

Distributor markets

(38)

(5)

(8)


862

224

1,511





Assets




UK operations

22,028

24,969

23,688

German and Austrian operations

4,690

3,559

3,345

Australian operations

7,201

7,659

7,200

Japanese operations

7,269

6,293

7,065

US Operations

2,315

1,434

2,532

All other segments

97

1,337

93


43,600

45,251

43,923

 

3.  Finance costs

 


6 Months to

6 Months to

12 Months to


30 June

30 June

31 December


2012

2011

2011


£'000

£'000

£'000

Interest expense on financial liabilities measured at amortised cost

80

187

Interest on finance leases

32

44

84

Amortisation of discount on Australian Minority Interest Put Option

81

115

271

Total finance costs

193

239

542

 

4.  Taxation

 


6 Months to

6 Months to

12 Months to


30 June

30 June

31 December


2012

2011

2011

 

The tax charge is made up as follows:

 

£'000

 

£'000

Restated

 

£'000

United Kingdom corporation tax on profits for the period

-

-

Income tax of overseas operations on profits/(losses) for the period

              410   

141

1,108

Adjustment for under/(over) provision in prior periods

           (100)     

29

336

Total current tax

310

170

1,444

Origination and reversal of temporary differences:




Deferred tax

Prior year adjustments

(88)

(81)

(35)

(10)

(435)

(309)

Total tax on profit on ordinary activities

141

125

700

 

The tax charge for the 6 months to 30 June 2012 has been calculated based on an estimate of the tax charge for the year ending 31 December 2012.

 

5.  Discontinued Operations

 

During the prior year, the Group discontinued its Chinese operations.

 

The results of discontinued operations for the year are as follows:

 


6 Months to

6 Months to

12 Months to


30 June

30 June

31 December


2012

2011

2011


£'000

£'000

£'000

Turnover

-

531

Operating expenses

-

(676)

(1,026)

Operating loss before taxation and exceptional items

-

(338)

(495)

Exceptional items - stock

-

-

(491)

Exceptional items - instruments

-

-

(133)

Exceptional items - other

-

-

(8)

Operating Loss before taxation

-

(338)

(1,127)

Tax credit on loss on disposal

-

-

-

Total loss arising from discontinued operations

-

(338)

(1,127)

 

6.  Dividends

 


6 Months to

6 Months to

12 Months to


30 June

30 June

31 December


2012

2011

2011


£'000

£'000

£'000

Final dividend of 0.9p per ordinary share accrued/paid during the period relating to previous year's results

-

385

385

Interim dividend of 0.48p per ordinary share paid during the period

-

-

205

Dividend paid by Corin Australia to minority shareholder

273

232

232


273

617

822

 

The directors did not propose a final dividend relating to the previous year's results.  The directors are not proposing an interim dividend.

 

7.  Earnings/(Loss) per share

 

The calculation of basic earnings/(loss) per share is based on the profit/(loss) attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.  Shares held in employee share trusts are treated as cancelled for the purposes of this calculation.

 

The calculation of diluted earnings/(loss) per share is based on the calculation described above adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.

 

 

Continuing operations

 


June 2012



June 2011



Dec 2011




Weighted

Per


Weighted

Per


Weighted

Per



average

Share


average

Share


average

Share


Earnings

number

amount

Earnings

number

amount

Earnings

number

amount


£'000

of shares

p

£'000

of shares

p

£'000

of shares

p





Restated

Restated

Restated




Post-exceptional item

Basic earnings per share

721

42,765,478

1.69

99

42,765,478

0.23

811

42,765,478

1.90

Diluted earnings per share

721

42,765,478

1.69

99

42,765,478

0.23

811

42,765,478

1.90











Underlying earnings/(loss) per share

Basic earnings per share

721

42,765,478

1.69

500

42,765,478

1.17

1,266

42,765,478

2.96











 

 

Discontinued operations

 


June 2012



June 2011



Dec 2011




Weighted

Per


Weighted

Per


Weighted

Per

 


(Loss)/

average

Share


average

Share


average

Share

 


earnings

number

amount

       (Loss)

number

amount

(Loss)

number

amount

 


£'000

of shares

p

£'000

of shares

p

£'000

of shares

p

 

 

 




Restated

Restated

Restated




 

Post-exceptional item

 

Basic (loss)/ earnings per share

-

-

-

(338)

42,765,478

(0.79)

(1,127)

42,765,478

(2.64)

 

Diluted (loss)/ earnings per share

-

-

-

(338)

42,765,478

(0.79)

(1,127)

42,765,478

(2.64)

 











 

Underlying (loss)/ earnings per share

 

Basic (loss)/earnings per share

-

-

-

(338)

42,765,478

(0.79)

(1,127)

42,765,478

(2.64)

 

 

 

Total operations

 


June 2012



June 2011



Dec 2011


 



Weighted

Per


Weighted

Per


Weighted

Per



average

Share

(Loss)/

average

Share

(Loss)/

average

Share


Earnings

number

amount

earnings

number

amount

earnings

number

amount


£'000

of shares

p

£'000

of shares

p

£'000

of shares

p





Restated

Restated

Restated




Post-exceptional item






Basic earnings/(loss) per share

721

42,765,478

1.69

(239)

42,765,478

(0.56)

(316)

42,765,478

(0.74)

Diluted earnings/(loss) per share

721

42,765,478

1.69

         (239)

42,765,478

(0.56)

(316)

42,765,478

(0.74)











Underlying earnings/(loss) per share

Basic earnings/(loss) per share

721

42,765,478

1.69

163

42,765,478

(0.38)

139

42,765,478

0.33

 

 

There were no dilutive potential shares for the periods ended 30 June 2012 and 30 June 2011 and the year ended 31 December 2011.

 

Underlying earnings per share at 30 June 2011 is before the post tax exceptional cost of £401,000 as detailed in note 11.

 

Underlying earnings per share at 31 December 2011 is before the post tax exceptional cost of £455,000 as detailed in note 11.

 

8.  Property, plant and equipment

 



Plant

Consigned



Leasehold

equipment

surgical



improvements

& vehicles

Instrumentation

Total

Cost

£'000

£'000

£'000

£'000

At 1 January 2011

845

9,099

15,356

25,300

Additions

12

1,038

699

1,749

Exchange movement in the year

-

41

208

249

Disposals

-

(121)

(246)

(367)

At 30 June 2011

857

10,057

16,017

26,931

Additions

9

732

1,552

2,293

Exchange movement in the year

-

(22)

(161)

(183)

Disposals

-

(271)

(1,396)

(1,667)

At 31 December 2011

866

10,496

16,012

27,374

Additions

69

520

1,285

1,874

Exchange movement in the period

-

(33)

(248)

(281)

Disposals

-

(1,511)

(123)

(1,634)

At 30 June 2012

935

9,472

16,926

27,333

Depreciation





At 1 January 2011

354

6,385

8,860

15,599

Provided in the year

38

536

1,208

1,782

Exchange movement in the year

-

31

155

186

Eliminated on disposals

-

(86)

(164)

(250)

At 30 June 2011

392

6,866

10,059

17,317

Provided in the year

39

575

1,103

1,717

Exchange movement in the year

-

(24)

(141)

(165)

Eliminated on disposals

-

(199)

(838)

(1,037)

At 31 December 2011

431

7,218

10,183

17,832

Provided in the period

38

558

1,149

1,745

Exchange movement in the period

-

(24)

(148)

(172)

Eliminated on disposals

-

(1,511)

(110)

(1,621)

At 30 June 2012

469

6,241

11,074

17,784

Net book amount at 30 June 2012

466

3,231

5,852

9,549

Net book amount at 31 Dec 2011

435

3,278

5,829

9,542

Net book amount at 30 June 2011

465

3,191

5,958

9,614

 

9.  Share capital

 


30 June

30 June

31 Dec

30 June

30 June

31 Dec


2012

2011

2011

2012

2011

2011


number

number

number

£'000

£'000

£'000

Authorised:







Ordinary shares of 2.5p each

66,100,000

66,100,000

66,100,000

1,653

1,653

1,653








Allotted, called up and fully paid:







Ordinary shares of 2.5p each

42,784,907

42,784,907

42,784,907

1,070

1,070

1,070

 

Share issues under share option schemes

 

No ordinary shares were issued during the period, pursuant to the exercise of options granted under any share or option schemes.

 

10.  Related party transactions

 

The directors are related parties within the definition of IAS24 (Related Party Disclosures) for key management personnel. During the period, other than the remuneration of each individual director, there have been no other transactions with key management personnel or with other related parties that have been identified.

 

11.  Exceptional items

 

Items that are both material and non-recurring and whose significance is sufficient to warrant separate disclosure and identification within the financial statements are referred to as exceptional items and disclosed within their relevant consolidated Income Statement category. Events and transactions that may give rise to classification as exceptional include, but are not limited to, significant and material announced restructuring and reorganisation programmes, gains or losses arising from the disposal of businesses not classified as discontinued operations, asset impairment charges, changes in the fair value of derivative financial instruments, amortisation of intangible assets on acquisition, acquisition costs and material adjustments to the fair value of acquired assets and / or liabilities on a business combination that arise after the hindsight recognition period.

 

There are no exceptional items for the period to 30 June 2012.

 

For the year to 30 June 2011, exceptional items comprised:

 


£'000

Administrative expenses


Acquisition costs

420

Total exceptional item

420



Tax effect

(19)

Post tax exceptional item

401

 

 

Costs of £420,000 were expensed in respect of a potential acquisition. 


 

For the year to 31 December 2011, exceptional items comprised:


£'000

Administrative expenses


Acquisition costs

455

Total exceptional item

455



Tax effect

-

Post tax exceptional item

455



 

Costs of £455,000 were expensed in respect of a potential acquisition. 


 

12.  Borrowings

 

In February 2011, Corin Limited entered into a new £4.7 million term loan facility agreement with Lloyds TSB and repaid the £3.6 million existing loan at that time. The £4.7 million loan is repayable in 11 quarterly instalments of £0.3 million commencing in May 2011, with a final repayment of £1.4 million in February 2014. The balance of this loan at 30 June 2012 was £3.2m.

 

13.  Net debt

 


6 Months to

6 Months to

12 Months to


30 June

30 June

31 December


2012

2011

2011


£'000

£'000

£'000





Cash available on demand

(1,989)

(1,513)

(1,331)

Bank overdrafts

1,672

1,805

1,141

Other short term borrowings

615

419

1,064

Overdraft/(Cash and cash equivalents)

298

711

874

Long-term borrowings

2,446

3,652

3,142

Short-term borrowings

1,627

1,654

1,706

Net debt

4,371

6,017

5,722

 

14.  Sales at constant currency

 

A reconciliation of reported sales to constant currency sales is set out below.

 

Constant currency sales are calculated by translating 2011 results at the average exchange rates used for the six month period ended 30 June 2012.

 


6 Months to

6 Months to



30 June 2012

30 June 2011



£'000

£'000

Growth

Reported sales

24,978

21,803

15%

Currency movement

-

216


Sales at 2012 rates

24,978

22,019

13%

 

The Group has operations in the USA, where revenues and expenses are denominated in US dollars; in Germany and Austria, where revenues and expenses are denominated in Euros; in Japan, where revenues and expenses are denominated in Yen and in Australia, where revenues and expenses are denominated in Australian dollars.  The Group also has substantial sales to export markets from its UK base which are priced in a variety of currencies, principally Sterling, Euros, US dollars and Polish Zloty. 

 

15.  Principal risks and uncertainties

 

In common with all trading businesses, the Group is exposed to a variety of risks in the conduct of its normal business operations. Set out on page 21 of the Group's Annual Report for the year ended 31 December 2011 is a summary of some of the most important risks and uncertainties which, in the opinion of the Directors, could impact its performance. These are equally applicable to the current financial year and are unchanged from those disclosed in the Group's Annual Report.

 

 

Responsibility Statement

 

We confirm that, to the best of our knowledge:

 

(a)  the condensed unaudited set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

(b)  the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and descriptions of principal risks and uncertainties for the remaining six months of the year); and

(c)  the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

 

 

By order of the Board:

 

 

P W Huntley


I Slater

Chief Executive


Finance Director

Date 29 August 2012


Date 29 August 2012

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR BKFDNABKDQFB

a d v e r t i s e m e n t