12 Jan 2021 07:01
Trading Update
Oxford, UK - 12 January 2021: Circassia Group plc ("Circassia" or "the Company"; LSE: CIR), a medical device company focused on respiratory diagnostics and monitoring, today announces a trading update for the year ended 31 December 2020.
Unaudited revenues for the continuing Niox business for the year ended 31 December 2020 were approximately £23.9m (2019: £34.6m) having been impacted by the Covid-19 pandemic causing restrictions in routine FeNO testing. Unaudited H1 revenues were £11.4m, with unaudited H2 revenues improving to approximately £12.5m. The global lockdown which commenced at the start of the second quarter significantly affected testing volumes in the Clinical business and delayed studies for our Research customers. In the final few weeks of H1, revenues started to recover and have continued an upward trajectory, such that Q4 revenues were 86% of Q1 revenues.
The discontinued COPD business has continued to trade resiliently and profitably during H2. The transfer of these products back to Astra Zeneca is expected to be completed on 31 March 2021.
The unaudited cash balance at 31 December 2020 was £7.4m (2019: £27m) with the Group generating a net cash inflow of £1.4m since the end of September. This much improved performance is partly a function of the timing of rebate payments in the COPD business, which were much higher in Q3 than in Q4, and partly the result of greatly reduced operating losses in the Niox business.
At the time of the half year results, we indicated that management was in the process of undertaking a major restructuring of the business to focus on Niox, which would lead to significant cost savings, such that we would expect the Group to be EBITDA profitable on attaining its 2019 level of Niox revenues of £34.6m. We also indicated that annual overheads excluding head office costs would be no more than £23m, down from £35m in 2019. We are now pleased to report that the restructuring is largely complete and has delivered further savings resulting in a revised annual cost base for the Niox business (excluding head office costs of around £1.8m) of approximately £21m. On current gross margins this means that the EBITDA breakeven point for the Niox business will be lower than previously indicated at around £30m of annualised revenue, or £32m for the Group.
Circassia expects to release its Final Results for the year ended 31 December 2020 on 24 March 2021 and will provide a further update on Q1 trading and its growth strategy then.
Ian Johnson, Circassia's Executive Chairman, said: "2020 has been a transformational year for the Company, which was led by the decision to hand back the Astra Zeneca COPD products in May and the decision to focus on the Niox product line. The management team has successfully completed a major restructuring of the business and concentrated relentlessly on the optimisation of the cost base. Circassia emerges as a global medical device business with a market leading product for the diagnosis and management of asthma.
One of the strengths of the business is the high level of recurring revenues from consumables. In a normal year these are typically 90% of total revenues and, whilst the Covid-19 pandemic impacted these by restricting patient testing, the recovery by the end of year to 86% of Q1 revenues is testimony to the resilience of the business.
The Company is now debt free and has net cash, and whilst we will still be living with the effects of Covid-19, the Board believes that the actions taken will deliver greater shareholder value and that over the medium term the business will be profitable and cash generative."
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.The Directors of the Company take responsibility for this announcement.
Contacts
Circassia
Ian Johnson, Executive Chairman Tel: +44 (0) 1865 405 560
Michael Roller, Chief Financial Officer
N+1 Singer (Nominated Adviser and Broker)
Aubrey Powell/ Jen Boorer/ Hannah Woodley Tel: +44 (0) 20 7496 3000
About Circassia
Circassia is a medical device company focused on respiratory diagnostics and monitoring. Our market-leading NIOX® products are used in clinical settings by physicians around the world to help improve asthma diagnosis and management and by leading research organisations conducting clinical studies on behalf of pharmaceutical companies. Customers are able to buy products and receive customer service via dedicated teams in the United States, UK, Sweden, Germany and China, on-line in some regions and our network of global partners. For more information please visit www.circassia.com.
Forward-looking statements
This press release contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of Circassia. The use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target" or "believe" and similar expressions (or the negatives thereof) are generally intended to identify forward-looking statements. These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. Nothing contained in this press release should be construed as a profit forecast or profit estimate. Investors or other recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. Circassia undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events or other circumstances.