1 Feb 2012 07:00
PuriCore plc
("Puricore" or the "Company")
Pre-Close Trading Update for Year Ended 31 December 2011
Company Moves to EBITDA Profitability in Q4
MALVERN, PENNSYLVANIA, AND STAFFORD, UK, 1 February 2012 - PuriCore(LSE: PURI), the life sciences company focused on developing and commercialising proprietary, green solutions that safely, effectively, and naturally kill infectious pathogens, announces its pre-close trading update for the year ended 31 December 2011. Audited results for this period are expected to be announced in April 2012.
Full-Year and Q4 2011 Financial Highlights (unaudited)
Q4 2011
§ Profitable in all business divisions in Q4
§ EBITDA profitable across the business in Q4
§ Q4 revenue increased 39% to $14.3 million (Q4 2010: $10.4 million)
·; Q4 Supermarket Retail revenue increased 148% to $7.3 million (Q4 2010: $2.9 million)
·; Q4 Endoscopy revenue decreased 5% (6% at constant currency) to $6.8 million (Q4 2010: $7.2 million)
·; Q4 Wound Care revenue increased 81% to $0.2 million (Q4 2010: $0.1 million)
·; Q4 positive cash flow from operations
Full-Year 2011
§ 2011 revenue increased 5% (3% at constant currency) to $42.6 million (2010: $40.5 million)
·; 2011 Supermarket Retail revenue increased 31% to $19.4 million (2010: $14.9 million)
·; 2011 Endoscopy revenue decreased 11% (14% at constant currency) to $22.5 million (2010: $25.1 million)
·; 2011 Wound Care revenue increased 60% to $0.7 million (2010: $0.4 million)
§ Cash of $4.5 million at period end
Full Year Operational Highlights
Supermarket Retail
§ Increased the installed base by ~1,100 Sterilox Systems during the year
·; Installed more than 400 systems for the second largest US supermarket retailer (totalling more than 625 systems)
·; Secured two additional leading US regional retailers
·; Secured approximately $5.5 million in year-end orders for Sterilox Fresh and FloraFresh Systems for H1 2012 installations
·; Total of 5,210 Systems installed as at 31 December 2011
·; More than 42% of the target market in North America is now either a customer or is in a pilot programme with the Company
Endoscopy
§ Endoscopy 2011 recurring revenues increased 4% to $17.1 million (2010: $16.4 million), accounting for 76% of division sales
§ Awarded a £484,000 ($775,000) contract for the installation of eight ISIS automatic endoscopy washers in the OJEU tender proposal for the Greater Glasgow Health Board for delivery in 2012
§ Launched and received first orders for PuriSept proprietary disinfection chemistry
Wound Care
§ Launched new Vashe Wound Therapy for Instillation Applications suitable for adjunctive therapies including ultrasonic debridement and negative-press wound therapy
§ Initiated shipping units of wound care solution under a distribution agreement with Misonix for a private label version as part of a settlement claim
New Market: Agriculture
§ Received confirmation from the US EPA for ActiVita Agriculture System as a fungicidal crop protection device
Successful Financings
§ Reached agreement with the requisite majority of holders of the Convertible Loan Notes for a two-year extension of the repayment date to 31 December 2013 of £7.95 million in Convertible Loan Notes
§ Secured two debt facilities with Republic Bank for $1.9 million and $3.5 million to finance Sterilox Fresh System installations
Settled Litigation
§ Reached agreement for the settlement of the claim against Misonix, Inc., in connection with the acquisition of Labcaire in 2009
·; Cancelled $1 million of commissions otherwise due to Misonix
·; Included a distribution agreement for a private-label version of PuriCore's Wound Care solution with guaranteed distribution profits totalling $2 million over the next 3 years
Post-Period Events
§ Received confirmation from the US EPA for Aqualox System as an oil and gas biocide to treat hydraulic fracturing (or frac) water in January 2012
§ Announced today the appointment of Michael R.D. Ashton as Non-Executive Director; he will serve as Chairman of the Remuneration Committee and on the Audit and Nomination Committees
§ Announced today the award of £500,000 by the Biotechnology and Biological Sciences Research Council (BBSRC) in a research grant to The University of Oxford for the study of PuriCore's ActiVita Agricultural Solution
Company Report
PuriCore ended the year in a strong position with robust order flow in the US Supermarket Retail sections, the re-initiation of UK National Health Service (NHS) spending in the UK, and strong growth in the Wound Care business as well as initial orders for the Wound Care distribution agreement with Misonix. Q4 full company sales of $14.3 million, an increase of 39% over Q4 2010, moved PuriCore to group EBITDA profitability for the period. Additionally in Q4, each business division was profitable. For the full year, sales reached $42.6 million, an increase of 5% (3% at constant currency) over 2010. As at 31 December 2011, cash was $4.5 million.
During the year, PuriCore successfully resolved two outstanding corporate issues. In July, the Company announced that it reached a settlement with Misonix following legal action in January 2011 against Misonix, Inc., the seller of the Labcaire business. PuriCore sought damages in excess of £2.1 million for breaches of warranty under the Sale and Purchase Agreement (SPA) in connection with PuriCore's acquisition of Labcaire in August 2009. As part of the settlement, PuriCore is no longer liable for $1 million in commission payments as defined in the SPA, and Misonix reimbursed PuriCore $650,000 towards costs and fees of the litigation to date. The companies simultaneously agreed to enter into a distribution agreement for a private label version of PuriCore's Wound Care solution for use principally in conjunction with the Misonix line of ultrasonic systems. As part of this agreement, Misonix has agreed either to purchase product or pay a minimum of $2 million in gross margin value over a three-year period to PuriCore's growing Wound Care division.
In addition, PuriCore reached an agreement in December with the requisite majority of holders of the Convertible Loan Notes for a two-year extension of the repayment date, which will now be 31 December 2013. The Convertible Loan Notes, amounting to £7.95 million, were due to be repaid on 31 December 2011, subject to the holders having the right to convert all or part of their holdings into ordinary shares of the Company at a price (following the consolidation of the share capital on 14 June 2010) of 75p per share. There have otherwise been no other changes to the terms of the Convertible Loan Notes.
PuriCore continued to finance installations of its Sterilox Fresh and FloraFresh Systems. In September, the Company successfully secured $1.9 million in debt facilities with Republic Bank for this purpose. This debt facility was repaid and terminated effective 15 December 2011. In December, PuriCore secured an additional $3.5 million to finance Sterilox Fresh and FloraFresh System installations.
Supermarket Retail
For the full year, sales increased 31% to $19.4 million (2010: $14.9 million), and installations nearly doubled compared with 2010. These installations included full adoption in one regional division and expanded installations for the number-two US supermarket retailer, enterprise-wide contracts with two new leading US supermarket customers (Winn-Dixie Stores and Stater Bros Markets), and approximately $5.5 million in year-end orders for Sterilox Fresh and FloraFresh Systems for H1 2012 installations. During the fourth quarter alone, the Supermarket Retail business achieved growth of 148% with $7.3 million in revenue (Q4 2010: $2.9 million), providing a strong foundation for 2012.
With the significant increase in installations in 2011 of approximately 1,100 Systems, bringing the total to 5,210, PuriCore now has installations in 19% of the target market stores in the US and Canada. These customers and others in pilot programmes represent 42% of the target market in total. PuriCore expects continued volume growth in 2012 with a strong pace of installations within its current customer base and with new supermarket chains.
Endoscopy
Significant capital spending delays in the UK resulted in an 11% decrease (14% at a constant currency) in sales (2011: $22.5 million; 2010: $25.1 million). During 2011, the primary UK customer, the NHS, initiated capital spending constraints as it started its fiscal year in April. In addition, public sector spending restrictions led to pressure on capital spending in the Laboratory Clean Air segment of this division. Whilst these purchasing delays contributed to lower than expected sales for the full year, the NHS supply chain and purchasing process improved in Q4 2011. Late in the year, PuriCore was awarded a significant contract valued at £484,000 ($775,000) for the installation of eight ISIS automatic endoscopy washers in the OJEU tender proposal for the Greater Glasgow Health Board in 2012.
PuriCore is focused on growing recurring revenues, including rentals and the newly launched PuriSept proprietary disinfectant chemistry. In 2011, recurring revenues continued to increase, up 4% to $17.1 million (2010: $16.4 million), accounting for 76% of division sales for the year.
Wound Care
In the Wound Care business (including Dental), sales increased 60% in 2011 to $0.7 million (2010: $0.4 million), nearly all attributable to the new bottled Vashe Wound Therapy. In December, revenues also included shipments to Misonix under the distribution agreement. With the revenue boost of initial orders for this agreement, Q4 sales increase 81% to $0.2 million (Q4 2010: $0.1 million). In addition, the Company launched a new line of Vashe Wound Therapy for Instillation Applications, which offers a controlled flow of Vashe solution, addressing increasing prevalence of adjunctive therapies such as ultrasonic debridement and negative-pressure wound therapy.
New Markets
PuriCore continued to advance promising new biocidal applications of its water-based clean technology in two new industries. In December, PuriCore received confirmation from the US Environmental Protection Agency (EPA) for its ActiVita Agriculture System as a fungicidal crop protection device. Research continues on this potential breakthrough application of PuriCore's technology. Today, the Company announces the award of £500,000 by the Biotechnology and Biological Sciences Research Council (BBSRC) in a research grant to The University of Oxford for the study of its ActiVita Agricultural Solution. The three-year grant will fund research focused on exploring the mode of action of the ActiVita solution on major food crops including wheat, rice, and maize. The research will be led by Sarah Gurr, PhD, Professor of Molecular Plant Pathology at The University of Oxford, a specialist in crop disease, plant pathogenic fungi, and fungal biotechnology.
In addition, in January 2012, the Company received confirmation from the US EPA for its Aqualox System as an oil and gas biocide. The Aqualox System generates on-site a proprietary, environmentally safe biocidal solution formulated for applications including in the oil and gas industry to treat hydraulic fracturing (or frac) water, which is used to open deep subterranean natural gas reserves. Aqualox is a highly effective biocide that does not damage fracking stimulation fluids and gel agents or cause corrosion. PuriCore will continue work in 2012 to commercialise this application.
Chris Wightman, Executive Chairman of PuriCore, said:
"We ended the year in a strong position across all three business divisions, achieving EBITDA profitability for the business as a whole in the fourth quarter and reporting a profit in each of our business divisions. The Board remains confident in the ongoing profitability of each division and in PuriCore collectively in 2012 but continues to maintain a prudent approach to costs in a business that is highly dependent upon NHS spending in the UK, and the strength of consumer spending in the US. We believe the current business mix will deliver both robust growth and significant cash generation and that we will continue to make progress on promising new business opportunities in each division as well as in new market segments."
Enquiries:
FTI Consulting | +44 (0) 20 7831 3113 |
Susan Quigley | |
Ben Brewerton |
About PuriCore
PuriCore plc (LSE: PURI) is a water-based clean technology company focused on developing and commercialising proprietary green solutions that safely, effectively, and naturally kill infectious pathogens without causing harm to human health or the environment. PuriCore's patented, proprietary technology offers a safe and non-hazardous approach to disinfection and sanitisation. The Company's products are used in a broad range of markets that depend upon controlling contamination, including food retail and foodservice, medical device disinfection, and wound care. PuriCore's Solutions are proven to be safe, environmentally friendly, and fast acting against a broad range of infectious pathogens, including major public health threats of C.difficile, E.coli, HIV, Human and Animal Influenza (including H1N1 and H5N1), Legionella, MRSA, M.tuberculosis, Norovirus, and Salmonella. PuriCore is headquartered in Malvern, Pennsylvania, with operations in Stafford and Clevedon, UK.
To receive additional information on PuriCore, please visit our website at www.puricore.com, which does not form part of this press release.
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.
All 2011 financials are unaudited.