UK: NeutraHealth H1 Revenue Grows 43%

15 September 2009 - NeutraHealth plc, one of the leading UK vitamins & supplements companies, today announces its interim results for the six months to 30th June 2009.

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The Company has increased revenue by 43% in the first half of the year, and delivered an EBITDA growth of 33%. 

• Revenue increased by 43% to £16.6m (2008: £11.6m)

• Like for like revenue increased by 2%

• EBITDA increased by 33% to £1.1m (2008 excluding one off items:£0.9m)

• Adjusted* PBT increased by 24% to £0.7m (2008:£0.5m)

• Adjusted* EPS increased by 28% to 0.3p (2008:0.2p)

*Adjusted figure excludes the non-cash effect of acquired intangible asset amortisation, share option related charges (and post tax impact of one off items for EPS).

• Net debt increased by £0.9m due to final deferred consideration payment of £0.7m and seasonal increase in inventory 

Ray Myers, NeutraHealth Chief Executive, commented:

"NeutraHealth has achieved solid organic growth in terms of both revenue and profits and we are very pleased with these results despite a difficult twelve months for the wider UK economy.  

Our emphasis is now on further organic growth across the Group and on improving our core business revenue and profitability through new product development and cost price reduction. We expect to continue steady progress with this over the coming months."

 

  BOARD STATEMENT

Overview

NeutraHealth has maintained forward momentum in the first half of 2009 following the challenging market conditions of 2008. We are experiencing enhanced demand for our products and are building ever stronger relationships with key customers, resulting in increased business. 

We are well progressed in our project to source materials more cost effectively, in response to volatile and rising input prices in 2008, and we are having success with our product innovation which helps maintain product margins. 

Results

Revenue growth of 43% to £16.6m includes the full year effect of the acquisition of Perrigo UK Ltd in June 2008 which saw us become the market leading supplier of private label vitamins and supplements in the UK. More significant is the 2% like for like revenue growth achieved. Our seven largest customers, who generate two thirds of group revenue, have grown like for like by 14.8%. The most pleasing aspect of our results is the increase in EBITDA to £1.1m or 6.9% of revenue. This helped to deliver the 28% adjusted EPS increase to 0.3p. We expect success in our material sourcing project will help deliver increased profitability and revenue growth opportunities.

Our net debt increased from £4.2m at the end of 2008 to a peak of over £6m in March, falling to £5.1m in June 2009, and is expected to continue to decline. There have been two significant factors behind the increase. Firstly the final deferred consideration payment of £0.7m for Brunel Healthcare Ltd (acquired in January 2007) was made in March 2009. Secondly, inventories have increased by £1.4m. This increase has been a result of low inventory during the consolidation of operations in 2008, and significant holdings at the end of June 2009 to fulfil new business won, to satisfy orders from multiple retailers in advance of the autumn increase in demand, and to cover lower production during the holiday months. Nonetheless, inventory value is only 4% higher than June 2008. We continue to investigate ways of maintaining an appropriate balance between working capital levels and operational efficiency.

Review of businesses

Brunel has maintained its position of market leader in the private label multiple retail sector and we continue to increase market share. The four fundamentals for private label success are cost, quality, service and innovation. Our quality and service are good. We are working to reduce cost through our sourcing project as we pursue factory gate prices direct from world-leading suppliers. Our progress in innovation has resulted in a number of significant new lines being listed by customers. We have recruited a highly respected and experienced business development director for Brunel, which we expect will lead to new sales and product opportunities in this sector.

BioCare and our other businesses focused across the practitioner, independent and direct to consumer channels are starting to benefit from the data made available by recently installed systems. Although the smaller branded businesses are not performing as well as management expected, we are investigating the options to address this and have restructured and strengthened the team in our Birmingham based operations. Market research has confirmed the strength of the BioCare brand and has revealed areas for growth that we are now pursuing. 

Outlook

For the time being our focus is on organic growth across the group, in the UK and abroad as those opportunities arise. We are now fully focussed on our core business, free from the distractions of operational consolidation, system installations, and the potential offer for the Group. 

We expect the vitamin and supplement industry to consolidate further and our strategy of being a consolidator in the market is unchanged. We expect that improved performance and greater stability in the financial markets will give us opportunities to resume acquisition activity.

  Consolidated Income Statement

Six months ended 30 June 2009

 

Consolidated Statement of Equity

Six months ended 30 June 2009

 

 Consolidated Balance Sheet

At 30 June 2009 

 

   

 

Consolidated Cash Flow Statement

Six months ended 30 June 2009

 

  Notes to the Interim Report

For the six months ended 30 June 2009

NeutraHealth plc is a company incorporated in England & Wales under the provisions of the Companies Act 1985. The address of the registered office is 180 Lifford Lane, Kings Norton, Birmingham, B30 3NU.

Copies of the interim statement maybe obtained from the above address or the Investors section of the Company's website.

2.    Basis of preparation

These interim consolidated financial statements are for the six months ended 30 June 2009. 

The interim financial report, which is unaudited, has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards and IFRIC interpretations adopted for use in the European Union ("IFRS"). The accounting policies and methods of computation used are consistent with those used in the Group annual report for the year ended 31 December 2008 and are expected to be used in the Group Annual Report for the year ended 31 December 2009. The six month period figures have not been audited.

The financial information for the year ended 31 December 2008 does not constitute statutory information. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 237(2) or 237(3) of the Companies Act 1985.

The interim consolidated financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the group operates. All values are rounded to the nearest thousand pounds (£'000) except when otherwise stated.

The reconciliation of Profit from Operations before one off items to EBITDA is as follows:

 

3.    Significant Accounting Policies

Except as stated below, the accounting policies and presentation applied in this condensed set of financial statements are consistent with those described in the Annual Report for the year ended 31 December 2008.

Presentation of Cash Flow Statement

A revised presentation of the Consolidated Cash Flow statement has been adopted to present cash flow information with more clarity.  Values have remained consistent with previously reported information. 

4.    Revenue

The whole of revenue is attributable to one principal activity of the Group, being the sale and distribution of nutraceutical products. For management purposes, all results are reported as part of this single activity.

All revenue originates in the United Kingdom. A geographical analysis of revenue by destination is as follows:

5.    Earnings per share

        There is no dilutive effect from the share options in issue.