Trading update8 Aug 2014 08:48
Financial Highlights for the Continuing Operations*
As indicated in the Trading Update on 11 July 2014, the rebalancing of Supermarket Retail product mix, the absence of milestone payments, and higher service costs resulting from rapid concentrate roll-out affected period results.
· Group revenue decreased 30.5% to $8.6m (H1 2013: $12.3m)
§ Supermarket Retail revenue decreased 27.3% to $7.7m (H1 2013: $10.6m) due to a planned shift in product mix from capital to consumables as compared with prior period
§ Wound Care and Dermatology revenue constant at $0.9m, excluding milestones (H1 2013: $1.7m, which benefited from milestone payments of $0.8m)
· Gross margin: 28.2% (H1 2013: 33.1%) primarily due to a lack of all-margin milestone payments as well as higher service costs
· Operating expenses maintained at $6.1m (H1 2013: $6.1m)
· EBITDA** loss: $2.2m (H1 2013: loss of $1.1m) due to the decline in revenue
· Gross cash proceeds from sale of Endoscopy business: $28.0m received in July 2014; net proceeds: approximately $25.7m after purchase price adjustments and deal expenses
· Cash and cash equivalents
§ As at 30 June 2014: $1.2m (31 December 2013: $3.4m, including $1.9m Endoscopy cash)
§ As at 1 July 2014 following receipt of sale proceeds, pay-down of line of credit, and payment of certain deal related expenses: $26.8m
· Loans and borrowings as at 30 June 2014: $2.2m, of which $2.0m was repaid in July (31 December 2013: nil)
Operational Highlights
Food and Agriculture
· Produce market share increased to 26% of the target Supermarket Retail sector (the conversion of existing customers from equipment to concentrate created new recurring revenue but had no impact on market share as these Sterilox customers were previously counted)
· Floral market share increased to 13% of the target Supermarket Retail sector
Health Sciences
· Sold the Endoscopy business, PuriCore International Limited (PIL), to Cantel Medical for $28.0m in cash (gross)
· Initiated shipments under a Wound Care marketing and distribution agreement with Ueno Corporation for Vashe® in 15 Middle East and North African countries
· Launched NovaZo™ Wound Hydrogel Dressing, a complementary Animal Health product
· Developed two new products expected to launch in Q3 2014 in the Middle East and North Africa: Vashe Wound Hydrogel, a complementary Wound Care product, and PURICIDE™ hospital-grade hard-surface disinfectant
Strategic Review
· Initiated a strategic and operational review of the business to optimise the use of PIL sale proceeds to build shareholder value, the results of which will be communicated to the market in Q4 2014
* Continuing Operations comprises Supermarket Retail and Wound Care and Dermatology.
** Earnings before interest, tax, depreciation, amortisation, and non-cash equity-related charges.
Michael Asht