8 Aug 2013 07:00
8 August 2013
PuriCore plc
("PuriCore" or the "Company")
2013 Interim Financial Results
Continued EBITDA profitability in all business divisions and
strong second half US order book
Strategic focus on increasing recurring revenue streams and growing margins
PuriCore(LSE: PURI), a global company focused on safely and effectively protecting people from the spread of infectious pathogens, today announces its interim financial results for the six months ended 30 June 2013.
Financial Highlights
·; EBITDA* profitability maintained in all business divisions
·; Group revenue decreased 4.9% (4.1% at constant currency) to $24.1m (H1 2012: $25.3m) but does not reflect the full revenue impact of H1 Supermarket Retail contract wins that are expected in H2 2013 and beyond
§ Endoscopy revenue up 1.7% (3.9% at constant currency) to $11.8m (H1 2012: $11.6m)
§ Supermarket Retail revenue down 19.0% to $10.6m (H1 2012: $13.0m)
§ Wound Care revenue up 148.0% to $1.7m (H1 2012: $0.7m)
§ Q2 revenue increased 19.4% (20.5% at constant currency) to $13.2m (Q2 2012: $11.1m) as a result of higher comparative quarter revenue in all three businesses especially Supermarket Retail
·; Gross profit margin strengthened to 33.7% (H1 2012: 33.0%)
·; Operating expenses decreased 2.9% to $9.0m (H1 2012: $9.2m)
·; Loss per share (after deduction of exceptional item) of $0.03 (H1 2012: $0.06 loss per share)
·; Cash flow generated from operations $0.8m (H1 2012: $2.9m)
·; Balance sheet significantly strengthened
§ 95% of the £7.95m convertible loan notes converted into ordinary shares
§ £2.3m (before expenses) raised in placing
§ Gross cash of $4.2m at period end, including the ($0.3m) impact of foreign exchange rate changes
§ Loans and borrowings of $0.9m ($13.4m as at 31 December 2012)
*Earnings before interest, tax, depreciation, and amortisation.
Operational Highlights
Food & Agriculture
·; $13.5m ProduceFresh™ agreement signed with a top-3 US retailer with revenue benefits starting in late H2 2013
§ New bottled concentrate alternative providing greater choice to Supermarket Retail customers
§ Offers long-term recurring revenue stream with reduced costs of manufacturing, installation, and servicing
·; $14.0m Sterilox® Fresh agreement signed with a top-5 US retailer with revenue benefits starting in Q2 2013
Health Sciences
·; Marketing partnership with Onset Dermatologics for new Vashe®-based dermatologic hydrogel products
·; Marketing partnership with SteadMed Medical for Vashe Wound Therapy in the US, Canada, and Mexico
·; US FDA clearance for Vashe Skin and Wound Hydrogel formulation for itch related to atopic dermatitis
Michael Ashton, Executive Chairman, said:
"Our strategic focus is to increase recurring revenue by expanding market share and customer usage whilst pursuing partnerships that leverage our core technologies into new markets and geographies. This strategy will require targeted investment in all three businesses to support the expansion of our product offerings and drive profitability. Encouragingly the second quarter was strong with significantly increased revenue from a major US contract, recurring revenue growth, and two new marketing partnerships in Wound Care. With these partnerships in place, new product launches, and a strong US order book for the remainder of the year, the Directors remain confident in the future prospects for the Company."
PuriCore will host a conference call and webcast for investors and analysts today at 9.30 am BST. To participate, please access the webcast through investor.puricore.com and dial +44 20 3139 4830 from the UK (+1 718 873 9077 from the US) using pin code 14528742#. A recording of the presentation will be archived on the Company's website at investor.puricore.com/events.
Enquiries:
UK | US |
FTI Consulting | Sage Strategic Marketing |
Susan Stuart | Jennifer Guinan |
Victoria Foster Mitchell | +1 610.410.8111 |
+44 (0) 20 7831 3113 | jennifer@sagestrat.com |
About PuriCore
PuriCore plc (LSE: PURI) is a global company focused on safely and effectively protecting people from the spread of infectious pathogens without causing harm to human health or the environment. PuriCore's antimicrobial technology and complementary products are used principally in well-established core businesses and emerging sectors of two broad markets: Health Sciences and Food & Agriculture. In the Health Sciences market, PuriCore is the leading full provider of all products and services required for a safe, efficient, and compliant endoscope decontamination to protect patients in UK hospitals. PuriCore's breakthrough wound therapy solution is used to treat chronic and acute wounds including diabetic ulcers and burns as well as atopic dermatitis as dermatologic treatment products. In the Food & Agriculture market, PuriCore's portfolio provide savings to supermarket retailers in labour costs and improvements in inventory loss as well as address the issue of cross contamination of fresh produce and floral products. In addition, the Company is progressing in its research and development programmes in the UK on the use of its technology as an agricultural fungicide. PuriCore is headquartered in Malvern, Pennsylvania, with operations in Stafford and Clevedon, UK. To receive additional information on PuriCore, visit www.puricore.com.
Operational Review
All three PuriCore business divisions, Supermarket Retail, Endoscopy, and Wound Care, were EBITDA profitable for the six months ended 30 June 2013. Group revenue decreased 4.9% to $24.1 million (4.1% at constant currency) for the period (H1 2012: $25.3 million). This variance primarily was due to timing of orders in the Supermarket Retail business, which were very strong in the first quarter of 2012 compared with the first quarter of 2013. Second quarter revenue for the Company significantly improved with a 19.4% increase (20.5% at constant currency) over the prior period (Q2 2013: $13.2 million; Q2 2012: $11.1 million) driven by revenue growth in all three businesses, with the largest growth coming from Supermarket Retail. The Directors are confident that a quarter-to-quarter compared with prior year revenue growth trend will continue in 2013.
Partnership revenue in Wound Care and slightly higher margins in Endoscopy contributed to an improvement in gross profit margin for the Company to 33.7% (H1 2012: 33.0%).
The Company reported net loss for the period of $6.7 million, including a $5.8 million non-cash loss on the reduction of the conversion price on the converted loan notes. Excluding this exceptional item, net loss for the period was $0.9 million compared with a net loss of $1.5 million for the six months ended 30 June 2012.
During the period, the Company significantly strengthened its balance sheet. As announced in December 2012 and approved by shareholders in January, the Company restructured 95.28% of the £7.95 million of convertible loan notes, the unconverted portion of which will mature on 31 December 2013. In addition, the Company completed a placing, announced in December 2012 and approved by shareholders in January, raising approximately £2.3 million in new shares (before expenses) at a price of 43 pence per Ordinary Share. Cash and cash equivalents were $4.2 million as at 30 June 2013, which includes a negative $0.3 million impact of foreign exchange rate changes. Loans and borrowings of $0.9 million as at 30 June 2013 were $12.4 million lower as compared with 31 December 2012 ($13.4 million).
Food & Agriculture
Supermarket Retail: Fresh Produce and Floral
In the Supermarket Retail business, PuriCore continued to expand its customer base with major contract wins, reflecting the attractive value proposition of enhancing food protection and product quality whilst driving down costs for customers. Although the division was EBITDA profitable for the period, revenue decreased 19.0% to $10.6 million (H1 2012: $13.0 million) due to very high installations of Sterilox Fresh Systems during Q1 2012 as compared with Q1 2013 but partially offset by higher installations in Q2 2013 as compared with Q2 2012.
The Company has initiated a strategy to drive recurring revenue in the Supermarket Retail business by expanding product formats and applications to grow market share and expand usage. One such product is ProduceFresh, a new bottled concentrate option for customers, which will begin shipping in late H2 2013. In June, the Company announced a sales agreement for $13.5 million with a top-three US supermarket retailer that will use ProduceFresh in all of its stores for a contracted period of approximately four years commencing in late H2 2013. PuriCore expects this revenue will be booked in the Company's financial accounts from 2013 through to 2017.
ProduceFresh is the most recent product offering in the PuriCore Supermarket Retail portfolio, which also includes the Sterilox Fresh System and FloraFresh bottled concentrate. Like the Sterilox Fresh System, new ProduceFresh bottled concentrate reduces the risk of the transmission of foodborne illnesses in retail supermarkets and reduces inventory shrink. This new offering provides retail customers with greater choice according to their business model: either on-site generation of Sterilox Fresh solution or purchase of ProduceFresh bottled concentrate solution for on-site dilution. This additional bottled product provides PuriCore with a long-term recurring revenue stream and reduces the costs of manufacturing, installation, and servicing.
In Q2 2013, the Company commenced installing Sterilox Fresh Systems as part of a $14 million agreement with a top-five US supermarket retailer as announced in April. Under the terms of the agreement, the retailer will broadly implement Sterilox Fresh across its enterprise and has agreed to a six-year service contract. Revenue recognition for this agreement began in Q2 2013, and the majority of the capital revenue will be recorded in the 2013 financial accounts. The revenue that relates to the service contract will be recognisedover the term of the contract.
PuriCore continued to ship new FloraFresh bottled concentrate as part of a four-year, $7 million agreement with an existing top-five US supermarket retailer announced last year. At period end, 95% of this customer's enterprise had implemented FloraFresh.
R&D: Agriculture
PuriCore continued to advance its R&D efforts for ActiVita™ Agriculture Solution at the University of Oxford under a three-year research grant from the Biotechnology and Biological Sciences Research Council (BBSRC). ActiVita is a proprietary, environmentally safe fungicidal solution formulated for agricultural applications. The three-year grant funds research exploring the mode of action of the ActiVita solution on fungi that devastate major food crops, including wheat, rice and maize. To date, the research shows that ActiVita demonstrates potential as a potent broad-spectrum antifungal agent. Research is ongoing and, when the Directors have a better understanding of the potential commercial opportunity, the Company plans to enter into discussions with appropriate partners.
R&D: Water Treatment and Food Processing
PuriCore continues to develop marketing opportunities for water treatment in food and agriculture applications as part of its partnership agreement with Lohas Products GmbH, an innovative German provider of individualised solutions for food safety and water treatment. PuriCore provides technical and scientific knowledge in the development and commercialisation of new applications whilst Lohas has an exclusive license to market and distribute the applications in certain markets and territories (excluding the US and UK). These potential applications include the use of PuriCore's technology for seafood production, water treatment in restaurants, and livestock husbandry. Collaboration on marketing plans and application development continues, and revenue continues to be expected in 2014. Under the terms of the agreement, PuriCore and Lohas will share profits of the products equally as they are commercialised.
Health Sciences
Endoscopy
In the Endoscopy business (including Surgical and Scientific), PuriCore continued to focus on its strong presence in UK NHS (National Health Service) hospitals and on increasing recurring revenue. During the period, revenue increased 1.7% (3.9% at constant currency) to $11.8 million (H1 2012: $11.6 million), and the business maintained EBITDA profitability. Recurring revenue, including leases, services, and consumables, represented 78% of sales (H1 2012: 77%).
The Company continues its strategy to grow the UK market share beyond the current 300 hospitals in the NHS system and ultimately to expand into Europe. This includes expanded product offerings now rolling out with the new Surgical catalogue following the purchase of Monmouth Surgical last year. The Company is focused on leveraging its existing footprint in the UK NHS system to offer these consumable products to current customers. The Endoscopy business is also working to create best-in-class products with the recent launch of new Endoscope Storage and Drying Cabinets promising improved productivity and reliability and the launch of the new state-of-the-art RapidAER later in 2013.
Wound Care and Dermatology
Revenue in the Wound Care business (including Dermatology and Dental) increased by 148.0% to $1.7 million (H1 2012: $0.7 million). The focus for the Wound Care business is on business development opportunities for the core technology. PuriCore successfully launched two new marketing partnerships in H1 and continued to expand indications and product formats, including Animal Health applications, as well as to pursue European expansion and rest-of-world partnerships.
In February, PuriCore announced it had received US FDA regulatory clearance for Vashe Skin and Wound Hydrogel formulation for the management and relief of pain, burning, and itching experienced with various dermatoses including atopic dermatitis. This clearance was a key milestone in PuriCore's marketing partnership, announced in March, with Onset Dermatologics, a leader in the development and commercialisation of prescription dermatology products. The partnership includes upfront payments and double-digit royalty payments on future sales of Aurstat Anti-Itch Hydrogel and Aurstat Kit. Onset Dermatologics commenced marketing and distributing this new Vashe-based formulation exclusively in the US in Q2. The products have been well received by the marketplace and are beginning to generate royalty revenue for the Company. All intellectual property related to the Vashe hydrogel formulation remains with PuriCore.
In April, PuriCore announced a marketing partnership with SteadMed Medical, a leading marketer of acute and chronic wound care products, to commercialise Vashe Wound Therapy in the US, Canada, and Mexico. Vashe is an integral part of the SteadMed comprehensive protocol of care for acute and chronic wounds and burns, targeting wound care centres, hospitals, and home health agencies. This agreement expands marketing reach for the Vashe product through SteadMed's experienced sales, marketing, and clinical teams. Under the terms of the multi-year agreement, PuriCore received an upfront payment of $500,000 and will receive royalties in the high teens based on sales volumes. All intellectual property related to Vashe remains with PuriCore.
Outlook
The Company remains strategically focused on delivering more predictable recurring revenue and profitability. In the Supermarket Retail sector, existing Sterilox Fresh opportunities and the new FloraFresh and ProduceFresh products are expected both to deliver strong revenue over time and to drive increased market share and product usage by current and new customers. In the UK, the business remains focused on growing recurring revenue and market share by capitalising on new and existing customer opportunities, including ultimately in Europe, through new sales strategies and broader product offerings. The new partnerships in Health Sciences, plus other marketing partnership options being pursued, will allow the Company to leverage greater marketing resources with targeted investment whilst delivering increased licensing revenue.
The strong US order book for the remainder of the year, combined with the new marketing partnerships and anticipated product launches, create a strong foundation from which to grow the business and create a sustainably profitable company.
Financial Review
Income Statement
PuriCore's three business divisions were EBITDA profitable for the period. Revenue for the Group decreased 4.9% (4.1% at constant currency) to $24.1 million in H1 2013 (H1 2012: $25.3 million). This decrease resulted from a particularly strong Q1 2012 in the Supermarket Retail business partially offset by higher revenue in Wound Care and Endoscopy. Group revenue in Q2 2013 increased by 19.4% to $13.2 million (Q2 2012: $11.1 million).
The Company improved gross profit margin to 33.7% (H1 2012: 33.0%) due to high margin partnership revenue in Wound Care and slightly higher margins in Endoscopy.
Operating expenses, comprising sales and marketing, research and development (R&D), and general and administrative expenses, decreased 2.9% to $9.0 million (H1 2012: $9.2 million) due to increased investment in sales and marketing as the company initiates the new recurring revenue strategy as well as the capitalisation of internal development costs associated with new products that will be launched in 2013. PuriCore continues to prudently manage cash expenditures whilst investing in resources and R&D to drive growth across all businesses.
Net loss for the period of $6.7 million includes a $5.8 million non-cash loss on the reduction of the conversion price on the converted loan notes. Excluding this exceptional item, net loss for the period was $0.9 million as compared with a net loss of $1.5 million in H1 2012. Loss per share was $0.15 for the six months ended 30 June 2013. Net of the exceptional item, loss per share was $0.03, showing an improvement over the $0.06 loss per share for the six months ended 30 June 2012. The increase in share capital arising from the conversion of loan notes and the placing contributed significantly to this loss per share improvement.
Cash Flow
PuriCore generated $0.8 million in cash flow from operations in H1 2013 (H1 2012: $2.9 million). The decrease in cash generated from operations is largely due to the timing of revenue recognition resulting in higher trade receivable balances as at 30 June 2013 compared with 30 June 2012. The placing, announced in December 2012 and approved by shareholders in January, raised approximately $2.5 million (after expenses) in cash through the issuance of new shares at a price of 43 pence per Ordinary Share. As at 30 June 2013, cash and cash equivalents were $4.2 million, which includes a negative $0.3 million impact of foreign exchange rate changes (as at 31 December 2012: $2.5 million).
Loans and Borrowings
As announced in December 2012 and approved by shareholders in January, the Company restructured 95.28% of the £7.95 million of Convertible Loan Notes. The restructuring varied the terms of the Company's Convertible Loan Note Instrument to enable conversion of £7.575 million of the Loan Notes at 40 pence per Ordinary Share in January. As a result, £375,000 in aggregate nominal amount of Convertible Loan Notes remain outstanding and due for repayment by the Company (unless previously converted at 75p) on 31 December 2013. In addition, the Company reduced other debt and lines of credit. Total loans and borrowings as at 30 June 2013 were $0.9 million ($13.3 million as at 31 December 2012).
Condensed Consolidated Statement of Comprehensive Income
For the six-month periods ended 30 June 2013 and 2012 and the 12-month period ended 31 December 2012
30 June 2013 | 30 June 2012 | 31 December 2012 | |
$ | $ | $ | |
Revenue | 24,110,701 | 25,349,219 | 47,358,164 |
Cost of sales | (15,985,065) | (16,985,839) | (31,878,062) |
Gross Profit | 8,125,636 | 8,363,380 | 15,480,102 |
Sales and marketing expenses | (2,687,133) | (2,459,136) | (4,657,411) |
General and administrative expenses | (5,046,361) | (4,690,232) | (8,897,618) |
Research and development expenses | (1,239,164) | (2,094,428) | (3,988,250) |
Loss before Interest and Tax | (847,022) | (880,416) | (2,063,177) |
Finance costs | (47,053) | (655,300) | (1,104,461) |
Loss on discount of convertible bond conversion price* | (5,800,671) | - | - |
Finance income | 2,399 | 14,979 | 15,022 |
Net Finance Loss | (5,845,325) | (640,321) | (1,089,439) |
Loss before Taxation | (6,692,347) | (1,520,737) | (3,152,616) |
Taxation | - | 65,943 | 2,224,697 |
Loss for the Period | (6,692,347) | (1,454,794) | (927,919) |
Other Comprehensive Income: | |||
Foreign currency translation for foreign operations | (683,753) | (78,751) | (348,119) |
Total comprehensive loss for the period | (7,376,100) | (1,533,545) | (1,276,038) |
Loss Attributable to: | |||
Equity Holders of the Parent | (6,692,347) | (1,454,794) | (927,919) |
Total comprehensive loss attributable to: | |||
Equity holders of the Parent | (7,376,100) | (1,533,545) | (1,276,038) |
$/share | $/share | $/share | |
Basic and Diluted Loss Per Share | (0.15) | (0.06) | (0.04) |
Basic and Diluted Loss Per Share Excluding Exceptional Item* | (0.03) |
* Exceptional item is the $5.8million non-cash loss recorded as a result of the discount of the conversion price on the converted loan notes.
Condensed Consolidated Statement of Financial Position
As at the dates noted
30 June 2013 | 30 June 2012 | 31 December 2012 | |
$ | $ | $ | |
ASSETS | |||
Non Current Assets | |||
Intangible assets | 4,820,825 | 5,514,696 | 5,019,768 |
Property, plant, and equipment | 2,802,639 | 3,494,462 | 3,194,113 |
Trade and other receivables | 40,664 | 73,831 | 37,505 |
Deferred tax asset | 1,855,376 | - | 1,933,334 |
Total Non Current Assets | 9,519,504 | 9,082,989 | 10,184,720 |
Current Assets | |||
Inventories | 4,694,323 | 6,221,804 | 5,404,271 |
Trade and other receivables | 9,145,615 | 7,052,913 | 6,999,899 |
Cash and cash equivalents | 4,197,228 | 4,722,367 | 2,537,145 |
Total Current Assets | 18,037,166 | 17,997,084 | 14,941,315 |
Total Assets | 27,556,670 | 27,080,073 | 25,126,035 |
LIABILITIES | |||
Current Liabilities | |||
Trade and other payables | (14,269,259) | (13,989,333) | (13,091,921) |
Loans and borrowings | (949,009) | (2,123,383) | (13,367,080) |
Provisions | (75,919) | (73,391) | (75,919) |
Total Current Liabilities | (15,294,187) | (16,186,107) | (26,534,920) |
Non Current Liabilities | |||
Loans and borrowings | - | (12,653,062) | - |
Total Non Current Liabilities | - | (12,653,062) | - |
Total Liabilities | (15,294,187) | (28,839,169) | (26,534,920) |
Net Assets/(Liabilities) | 12,262,483 | (1,759,096) | (1,408,885) |
EQUITY | |||
Share capital | 8,515,641 | 4,527,883 | 4,527,883 |
Share premium | 180,109,315 | 163,082,712 | 163,082,712 |
Other Reserves | 8,564,384 | 8,438,571 | 8,531,276 |
Retained earnings | (181,977,219) | (175,811,747) | (175,284,872) |
Cumulative translation adjustment | (2,949,638) | (1,996,515) | (2,265,884) |
Issued capital and reserves attributable to equity holders of the parent | 12,262,483 | (1,759,096) | (1,408,885) |
Total Equity | 12,262,483 | (1,759,096) | (1,408,885) |
Condensed Consolidated Cash Flow Statement
For the six-month periods ended 30 June 2013 and 2012 and the 12-month period ended 31 December 2012
30 June 2013 | 30 June 2012 | 31 December 2012 | |
$ | $ | $ | |
Cash Flows From Operating Activities | |||
Loss for the period | (6,692,347) | (1,454,794) | (927,919) |
Adjustments for: | |||
Taxation | - | - | (2,224,697) |
Finance costs | 47,053 | 655,300 | 1,104,462 |
Loss on discount of convertible bond price | 5,800,671 | - | - |
Finance income | (2,399) | (14,979) | (15,022) |
Depreciation and amortization | 1,344,402 | 1,555,620 | 3,308,222 |
Share based payment expense | 33,106 | 49,303 | 142,008 |
Loss on disposal of property, plant, and equipment | 63,605 | 23,338 | 158,528 |
Operating Income Before Movement In Working Capital | 594,091 | 813,788 | 1,545,582 |
Decrease/(Increase) in inventories | 564,520 | (1,226,577) | (409,044) |
(Increase)/Decrease/in trade and other receivables | (2,469,336) | 2,212,586 | 3,005,672 |
Increase in trade and other payables | 2,136,496 | 1,085,146 | 187,734 |
Cash Generated By Operations | 825,771 | 2,884,943 | 4,329,944 |
Interest received | 2,399 | 14,979 | 15,022 |
Income tax credit received | - | - | - |
Net Cash Flow From Operating Activities | 828,170 | 2,899,922 | 4,344,966 |
Cash Flows From Investing Activities | |||
Purchase of property, plant and equipment | (346,836) | (599,319) | (1,126,197) |
Purchase of intangible assets | (702,792) | (312,300) | (745,766) |
Net Cash Flow From Investing Activities | (1,049,628) | (911,619) | (1,871,963) |
Cash Flows From Financing Activities | |||
Issue of shares, options, and warrants | 3,749,704 | - | - |
Proceeds from new loan notes | - | 1,663,980 | 1,714,081 |
Equity issuance & debt conversion cost | (1,296,875) | - | - |
Repayment of borrowings | (210,764) | (3,369,856) | (5,300,341) |
Interest paid on borrowings | (47,053) | (60,403) | (921,948) |
Net Cash Flow From Financing Activities | 2,195,012 | (1,766,279) | (4,508,208) |
Net Increase/(Decrease) In Cash And Cash Equivalents | 1,973,554 | 222,024 | (2,035,205) |
Cash and cash equivalents at beginning of year | 2,537,145 | 4,490,746 | 4,490,746 |
Effect of foreign exchange rate changes on cash held | (313,471) | 9,597 | 81,604 |
Cash and Cash Equivalents | 4,197,228 | 4,722,367 | 2,537,145 |
Total Cash at End of Period | 4,197,228 | 4,722,367 | 2,537,145 |
Condensed Consolidated Statement of Changes in Equity
For the six-month periods ended 30 June 2013 and 2012 and the 12-month period ended 31 December 2012
30 June 2013 | 30 June 2012 | 31 December 2012 | |
$ | $ | $ | |
Balance at beginning of period | (1,408,884) | (274,854) | (274,854) |
Loss | (6,692,347) | (1,454,794) | (927,919) |
Other comprehensive income | |||
Foreign currency translation for foreign operations | (683,753) | (78,751) | (348,119) |
Total other comprehensive income | (683,753) | (78,751) | (348,119) |
Total comprehensive loss for the period | (7,376,100) | (1,533,545) | (1,276,038) |
Transactions with owners, recorded directly in equity | |||
Issue of ordinary shares | 21,014,361 | - | - |
Share-based payment movements | 33,106 | 49,303 | 142,008 |
Total contributions by and distributions to owners | 21,047,467 | 49,303 | 142,008 |
Balance at end of period | 12,262,483 | (1,759,096) | (1,408,884) |
Basis of Preparation
PuriCore plc (the "Company") is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2013 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and jointly controlled entities.
The consolidated interim financial statements are the responsibility of the Directors and were authorised and approved by the Board of Directors for issuance on 8 August 2013.
The interim financial statements for the period ended 30 June 2013 are unaudited and do not comprise statutory accounts within the meaning of Sections 434 and 435 of the Companies Act of 2006.
Statement of Compliance
These interim financial statements have been prepared in accordance with IAS 34, 'Interim Financial Reporting,' as adopted by the EU. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the group for the year ended 31 December 2012.
The comparative figures for the financial year ended 31 December 2012 are not the Company's statutory accounts for the financial year. The statutory accounts for the year ended 31 December 2012, which were prepared under International Financial Reporting Standards adopted by the EU ("Adopted IFRS"), have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters that the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The accounting policies set out in the annual report and accounts for the year ended 31 December 2012 have been applied consistently throughout the Group for the purpose of these consolidated interim financial statements.
For the purposes of Rule 4.2.9(2) of the Disclosure and Transparency Rules, this report has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board Guidance on Review of Interim Financial Information.
Significant Accounting Policies
As required by the Disclosure and Transparency Rules of the Financial Services Authority, this condensed set of financial statements has been prepared by the Group by applying the same accounting policies as were applied by the Group in its published consolidated financial statements as at and for the year ended 31 December 2012.
Use of Estimates and Judgements
The preparation of interim financial statements required management to make judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these consolidated interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2012.
Going Concern
The financial statements are prepared on a going concern basis, which the Directors believe to be appropriate for the reasons set out below.
The Group meets its day-to-day working capital requirements through cash reserves and external funding facilities. At 30 June 2013 cash and cash equivalents were $4.2 million and loans and borrowings were $0.9 million.
The Board is constantly reviewing alternative strategies for funding the Group. On the basis of the additional funds raised and the strategies being considered, the Board considers that the Group will continue to operate with sufficient funding and accordingly these financial statements have been prepared on a going concern basis.
Segmental Analysis
The Group is managed by type of business. Segmental information is provided having regard to the nature of the goods and services provided and the markets served. Under 'other,' PuriCore has classified certain businesses, including Wound Care, Dermatology, and Dental not yet generating significant revenue, and other business development activities.
Primary Reporting Format - Business Segments
For the six months ended 30 June 2013
Endoscopy | Supermarket Retail | Other1 | Corporate, & Unallocated2 | Total | |
$ | $ | $ | $ | $ | |
Revenue | 11,785,536 | 10,581,817 | 1,743,348 | - | 24,110,701 |
Profit/(Loss)Before Interest, Tax, Depreciation and Amortisation | 1,611,919 | 298,451 | 94,178 | (1,507,168) | 497,380 |
Depreciation and Amortisation | (459,208) | (570,854) | (121,354) | (192,986) | (1,344,402) |
Profit/(Loss) Before Interest and Tax | 1,152,711 | (272,403) | (27,176) | (1,700,154) | (847,022) |
Total Assets | 15,169,237 | 4,499,842 | 1,100,722 | 6,786,869 | 27,556,670 |
For the six months ended 30 June 20123
Endoscopy | Supermarket Retail | Other1 | Corporate, & Unallocated2 | Total | |
$ | $ | $ | $ | $ | |
Revenue | 11,585,778 | 13,060,582 | 702,859 | - | 25,349,219 |
Profit/(Loss) Before Interest, Tax, Depreciation and Amortisation | 1,132,168 | 1,054,760 | (159,957) | (1,351,767) | 675,204 |
Depreciation and Amortisation | (624,157) | (598,615) | (110,099) | (222,749) | (1,555,620) |
Profit/(Loss) Before Interest and Tax | 508,011 | 456,145 | (270,056) | (1,574,516) | (880,416) |
Total Assets | 14,239,830 | 5,947,078 | 892,929 | 6,000,236 | 27,080,073 |
For the year ended 31 December 2012
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Endoscopy | Supermarket Retail | Other1 | Corporate, & Unallocated2 | Total | ||||
$ | $ | $ | $ | $ |
| |||
Revenue | 23,492,735 | 22,171,135 | 1,694,294 | -- | 47,358,164 | |||
Profit/(Loss) Before Interest, Tax, Depreciation and Amortisation | 2,200,617 | 1,272,126 | 308,981 | (2,536,679) | 1,245,045 | |||
Depreciation and Amortisation | (1,472,492) | (1,189,364) | (220,197) | (426,169) | (3,308,222) | |||
Profit/(Loss) Before Interest and Tax | 728,125 | 82,762 | 88,784 | (2,962,848) | (2,063,177) | |||
Total Assets | 15,295,409 | 5,112,871 | 829,513 | 3,888,242 | 25,126,035 | |||
1 Other includes Wound Care, Dermatology, and Dental.
2 Corporate and unallocated in 2012 includes costs associated with Agriculture and Water Treatment.
3 Certain costs in Corporate & Unallocated were reclassified to other segments to conform to year-ended 31 December 2012 and six months ended 30 June 2013 presentation.
Sales by Geographic Areas |
Six months ended 30 June 2013 |
Six months ended 30 June 2012 |
Year ended 31 Dec. 2012 |
$ | $ | $ | |
United Kingdom | 11,785,536 | 11,585,778 | 23,492,735 |
United States | 12,325,165 | 13,763,441 | 23,865,429 |
24,110,701 | 25,349,219 | 47,358,164 |
The geographic areas above are segregated based upon the location of the respective operating division of the company.
Related-Party Transactions and Transactions with Key Management Personnel
Key management personnel receive compensation in the form of salary, bonuses, short-term employee benefits, retirement plan benefits, and share based payment awards. Key management personnel received total compensation of $984,105 for the six months ended 30 June 2013 (six months ended 30 June 2012: $919,866; 12 months ended 31 December 2012: $2,558,331).
In relation to the restructure of the Convertible Loan Notes approved by shareholders in January, Joseph William Birkett, Neil Blewitt, Gregory Bosch, James Walsh, and Christopher Wightman (through an associate), who collectively held 2.73% of the Convertible Loan Notes, were related parties of the Group in accordance with Chapter 11 of the Listing Rules for purposes of the restructure. No consideration was paid by the Group to any note holders (including these individuals) in connection with the restructure to enable conversion of the Convertible Loan Notes at 40 pence per ordinary share.
Risks
The Group continues to be affected by a number of risks. These have not changed since the year end and are detailed beginning on page 6 of the Company's Annual Report and Accounts 2012, a copy of which is available on the Company's website, www.puricore.com.
Responsibility Statement of the Directors in Respect of the Half Yearly Financial Report
We confirm that to the best of our knowledge the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
The interim management report includes a fair review of the information required by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
The Directors of PuriCore plc are listed on the Company's website at www.puricore.com. The PuriCore plc Annual Report for 31 December 2012 is available at PuriCore plc's registered office at: Wolseley Court, Staffordshire Technology Park, Stafford ST18 0GA, and on the Company's website.
By order of the Board
Michael Ashton Executive Chairman
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8 August 2013
The H1 2013 results are unaudited.
Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.
PuriCore, Sterilox, Vashe, and FloraFresh are registered trademarks and Activita and ProduceFresh are trademarks of PuriCore, Inc.