Corin Group PLC (Corin), a UK-based orthopedic devices company, has reported revenues of GBP39.84 million for the full year 2008, up 7.7%, compared with the revenues of GBP36.99 million in the year 2007. It has also reported loss of GBP3.9 million, or 9.48 pence per share, for the full year 2008, compared with the profit of GBP2.8 million, or 6.48 pence per share, in year 2007.
Operating profit before exceptional items EUR3.4 million (2007: EUR5.6 million); reflecting lower sales to Stryker and investment in product development and sales resources
Exceptional items of EUR7.1 million, including EUR5.2 million inventory provision
Operating loss of EUR3.7 million (2007: profit of EUR4.5 million)
Loss per share 9.48 pence (2007: earnings per share 6.49 pence)
Proposed final dividend of 0.9 pence per share, making full year dividend of 1.38 pence per share (2007: 1.38 pence per share).
Strategic review completed in first half of 2008
Continue focus on growth market – demographics, more active population and younger patients
Opportunity to broaden portfolio, innovate, expand internationally and develop Cormet in US
Implementation of new strategy well underway
Completed management restructure, added industry experience
Resourced acceleration of product development
Launched Metafix cementless hip stem; Zenith ankle; evaluated MiniHip small stem hip
Completed portfolio strategy and taken exceptional inventory charge
Constant currency is calculated by translating 2008 results at the average exchange rates used for the 2007 results
Peter Huntley, Corin chief executive, said:
‘The management team has moved quickly to implement our new strategy and I am therefore very pleased to report that in the second half of 2008 we saw early signs of good progress with an acceleration in sales growth rates outside the US.
‘Although growth in the orthopaedic market is expected to slow, overall we are well positioned in a resilient industry. We have made a steady start to 2009 following on the good progress made during the last few months of 2008 and therefore remain confident that implementation of the revised strategy will deliver good returns in the medium term.’
Excluding sales to the US, Group sales were EUR31.4m (2007: EUR26.0m), an increase of 21% (and 12% on a constant currency basis). The constant currency growth rate increased from 3% in the first half to 23% in the second half, demonstrating the early impact of the strategy to broaden the hip and knee portfolio. Sales to the US were EUR8.5m (2007: EUR11.0m), the decline being primarily due to the reduction in sales to Stryker.
Operating profit before exceptional items was EUR3.4 million (2007: EUR5.6 million), reflecting the lower sales to Stryker and the investment in resources to drive the new strategy.
Exceptional items totalled EUR7.1 million (2007: EUR1.1 million). The disappointing progress of the Cormet resurfacing hip in the US, particularly in the second half of 2008, caused the Group to review inventories of Cormet implants and instrumentation. This resulted in a provision against these inventories of EUR2.0 million which, together with the provisions against inventories delisted as a result of the EU reclassification (EUR0.6 million) and products being phased out as a result of the new portfolio strategy (EUR2.6 million), resulted in a total inventory provision of EUR5.2 million. Additional exceptional items include a charge for the restructuring of the management team (EUR0.7m), the costs of an acquisition aborted in the first half of 2008 (EUR0.6 million), the impairment of an investment and the associated fixed assets (EUR0.3 million) and the write-off of costs of an aborted US approval process for one of the knee products (EUR0.3 million). The net cash outflow associated with these exceptional items was EUR1.1 million.
After an interest charge of EUR0.5 million (2007: EUR0.5 million), profit before tax and exceptional items was EUR2.9 million (2007: EUR5.1 million) and the reported loss before tax was EUR4.2 million (2007: profit of EUR4.1 million).
Earnings per share before exceptional items were 3.03 pence (2007: 8.21 pence). The Group reported a loss per share of 9.48p (2007: earnings per share 6.49p).
The board is recommending a maintained final dividend of 0.9 pence per share, making a full year dividend of 1.38 pence per share (2007: 1.38 pence per share).
The Group generated cash from operations of EUR3.6 million after capital expenditure of EUR6.2 million. Net borrowings at 31 December 2008 were EUR5.5 million (2007: EUR8.0 million).
Constant currency is calculated by translating 2008 results at the average exchange rates used for the 2007 results.