Final Results 31st March 2011

Sutherland Health Group announces Final Results for the year ended 31st March 2011.

                                                                                                                                               AUGUST  2011
                                                              SUTHERLAND HEALTH GROUP PLC
                                                  (“Sutherland Health Group” or “the Company”)
                                                                       PLUS Symbol: SHGP


                                                                          FINAL RESULTS


The Board of Sutherland Health Group, a national supplier of patient hygiene, sexual health and diagnostic products to customers including the NHS is pleased to announce its Final Results for the year ended 31st March 2011.


Highlights

•                        Reduced dependency on NHS Contracts
•                        Increased distribution and new products
•                        Overheads reduced by 2% to £445,650


Commenting on today’s news Chairman John French said:


“Whilst it was a difficult trading period to 31st March 2011, we have been making progressing in changing the shape of our future business, by reducing our dependence on NHS Hospitals and by expanding distribution into other medical and retail customers with a now broader range of products.


I am pleased to inform shareholders today that evidence of our progress, is that Amazon UK’s Health & Personal Care division has agreed to stock 22 of our products from 1st August 2011.”


The Chairman presents his statement for the period.


Dear Shareholder
 

I am pleased to report on the progress of the Company. It has been a difficult trading period which has seen a reduction in sales in our key patient hygiene business leading to an overall loss in profits for the year.


Having achieved several years of consistent sales growth, the Company suffered a fall in sales of our patient hygiene range due to a Chinese competitor offering lower cost product to NHS England. The Company has however been very active in dealing with this situation by broadening the distribution base of its products into and outside of the NHS, which will in time make the Company less dependent on patient hygiene products and the NHS for its future turnover.


Significant progress has been made since the year end with our extended product range taken up by 5 new key distributors. As a result, the Company has been introduced to new markets and customers such as GP’s, Private Clinics and Private Hospitals that will benefit the business going forward.


The management team have continued to keep costs under tight control despite having borne the development costs for the new Vision range of diagnostics within the financial year. Our emphasis on broadening the Company’s product range is enabling our gross margin to continue to rise and it is now at an all-time high ensuring that a return to higher turnover will deliver more easily a return to profitable trading.


Review of activities


April 2010

The start of the financial year began with news that we had signed a Relationship Letter with Thames Valley Innovation and Growth (TVIG). The Company had been selected by TVIG as it met the required criteria of being both an innovative and a growth company located in the Thames Valley. This relationship enabled the Company to receive funding for specialist consultancy to further its research into new market opportunities.


May 2010

We announced that the Company had placed 8,680,000 new Ordinary Shares at 2.5p raising £217,000. The Directors purchased 600,000 new Ordinary Shares in the Placing. The funds raised were for working capital and to continue new product development.


June 2010

In June 2010, the Company announced it had been awarded a contract by NHS England to supply its nutritional supplement Thixo-D® Original for a period of 12 months. The product is an instant food and drink thickener for the management of the medical condition dysphagia, where patients have difficulty in swallowing certain foods or liquids. The product is also available on prescription.


October 2010


On the 25th October 2010, we announced the Condomania division had finally completed development and had gained approval from the NHS to market the two new gynaecology diagnostics Vision® Amniotic Leak Detector and Vision® Vaginal Infection Swab.


Both products are on a Framework Agreement on the Obstetric and Gynaecological Sundries and Accessories Contract with NHS England that became effective 1st October 2009 and runs until 30th September 2012. The Agreement has an option to run for a further 12 months.


The Vision® Vaginal Infection Swab is a point of care professional probe for use by health professionals that detects within 10 seconds whether a woman has Bacterial Vaginosis, Trichomoniasis, or other parasitic infections. It can be used when a patient has an abnormal vaginal discharge, but can also be used to routinely check women who have a history of pre-term delivery in pregnancy, before IVF procedures, and other vaginal procedures.


The second product, Vision® Amniotic Leak Detector is a diagnostic panty liner worn by pregnant women that has a patented technology proven in clinical trials that can warn if any amniotic fluid leak has been detected on the panty liner. This helps to protect the mother and baby and also helps to reduce the risk of complications or premature birth. The product is recommended for use in both high risk and normal pregnancies.


February 2011


Following on the October announcement about the Vision diagnostics, we announced on the 23rd February 2011 that NHS Supply Chain had evaluated the new products using their Innovation Scorecard.


The NHS Supply Chain Innovation Scorecard was developed in collaboration with NHS National Innovation Centre (NIC) and is designed to enable assessment of new products beyond prototype stage. The products must be CE marked and clinical trials where appropriate. The scorecard consists of 47 questions which identify the concept, value, and capability of the products assessed.


The Company was pleased to inform shareholders that both products were given excellent ratings, and as such would be promoted by NHS Supply Chain to all key healthcare and purchasing professionals within NHS England.


We also informed shareholders that in line with its strategy of broadening distribution of its products outside of NHS Hospitals, that the Company had been in negotiations with a number of key distributors who specialise in the supply to GP’s, Private Clinics, and Private Hospitals. The Board was pleased to inform shareholders that the negotiations were successful and orders had been received.


March 2011


We announced a new trading relationship with NCT formerly known as National Childbirth Trust. This trading relationship meant that we would supply our Vision diagnostic products for sale via their online stores nctshop.co.uk and nctprofessional.co.uk enabling the Company to improve its distribution to mothers-to-be and to midwives.


Finacial Review


During the period to 31st March 2011 the Company achieved a turnover of £734,937 (2010: £956,509)
representing a decrease in sales of 23% over the previous year, producing a gross profit of £393,433 (2010 £500,523). Administrative expenses were £407,862 (2010 £398,822) after charging £26,762 (2010 £27,179) for amortisation and depreciation, and a foreign exchange gain of £5,184 (2010 loss £1,920). The pre-tax loss was £60,024 (2010 profit £29,336) and the loss per ordinary share was 0.10p (2010 profit 0.05p). Cash at the bank on the balance sheet as at the 31st March 2011 was £13,653 (2010 £61,148)


Post Balance Sheet


Since the end of the period, on the 12th April 2011 the Company announced that it had raised £300,000 via the issue of £200,000 unsecured convertible loan notes 2015 and the placing of 5,714,285 new Ordinary Shares at 1.75p per share thereby raising £100,000. The funds are being used to repay £74,000 July 2011 Loan Notes as announced on the 13thJuly 2011, for working capital and to continue the support of the extended range of products’ move into new distribution channels.


We announced on 28th April 2011 the resignation of Hugh Robertson from the Board. Hugh reluctantly stepped down due to his increasing executive commitments with other companies that he holds directorships of.


CEO George Sutherland commented “Hugh played a key part in the formation of SHG and its flotation on the Plus Market and has always been an excellent contributor at Board Meetings. The Company will undoubtedly miss his sage advice and I would like to take this opportunity to thank him for his part in the development of the Company.”


I share the views expressed by George Sutherland and will miss the contribution and companionship of Hugh and wish him well for the future.


Outlook

The loss of a percentage of our patient hygiene business to the NHS impacted on sales and profits. Over
recent years the Company has been developing and expanding its product range to broaden appeal to
additional market sectors, thereby reducing its dependence on the NHS. During this period and up to date, 8 products have been introduced and received acceptance, the Board therefore feels that whilst the impact of the recent changes by the NHS on patient hygiene products is unfortunate prospects for future growth remain strong.


We see in the future much less of an overall reliance on NHS Contracts and a more widely distributed customer base for our increasing portfolio of products.


Already, the share of NHS and non-NHS business has changed for the better with the percentage of sales that the NHS Hospitals representing falling from 73% last year to currently 50% as our recent successes in gaining new distribution channels impacts on our customer mix.


The NHS Hospitals will of course always be an important part of our business, but it is in our view a sensible position to ensure that we have a diverse customer base of other important customers too.


The new financial year has started in line with our expectations. It is expected that it would take time to build sales in the new sectors as we are a new supplier with new products for those customers. I am pleased to say however that we are seeing excellent progress in gaining distribution with large medical distributors and we continue to work at gaining new customers within the NHS and outside of it. Your Board and staff are confident that the Company will return to a profitable trading base as the benefits of recent changes to strategy begin to impact.


I would like to thank the management and staff, whom I know have worked particularly hard this year to make the necessary changes to be able to secure the future of the Company. I would also like to take this opportunity to thank the Company’s advisers and of course our shareholders who have been very supportive in our plans.


F J French
 

Chairman
 

2 August 2011


                                                       CONSOLIDATED PROFIT AND LOSS ACCOUNT
                                                           FOR THE YEAR ENDED 31 MARCH 2011


                                                                                                                   2011                               2010
                                                                                                                         £                                     £
TURNOVER


                                                                                                               734,937                         956,509

 
Cost of sales                                                                                        (341,504)                       (455,986)


GROSS PROFIT                                                                                     393,433                          500,523
 

Distribution costs                                                                                   (37,788)                         (55,734)


Administrative expenses                                                                      (407,862)                       (398,822)


Other operating income                                                                           10,464                             7,386


OPERATING (LOSS)/PROFIT                                                               (41,753)                         53,353


Interest payable and similar charges                                                     (18,271)                       (24,017)


(LOSS)/PROFIT ON ORDINARY ACTIVITIES BEFORE
TAXATION 
                                                                                              (60,024)                        29,336


Tax on (loss)/profit on ordinary activities                                                     -                                   -


(LOSS)/PROFIT FOR THE FINANCIAL YEAR                                          (60,024)                       29,336


All amounts relate to continuing operations.


There were no recognised gains and losses for 2011 or 2010 other than those included in the Profit and Loss Account.


EARNING PER SHARE IN PENCE                                                                     (0.10)p                          0.05p
DILUTED EARNING PER SHARE IN PENCE                                                      (0.09)p                          0.05p


                                                                   CONSOLIDATED BALANCE SHEET
                                                                           AS AT 31 MARCH 2011


                                                                                                              2011                               2010
                                                                                                    £                      £               £                   £


FIXED ASSETS


Intangible assets                                                                                 291,690                           314,709


Tangible assets                                                                                      14,683                              7,849


                                                                                                            306,373                           322,558


CURRENT ASSETS


Stocks                                                                                                  156,868                           159,044
 

Debtors                                                                                                447,595                           187,526


Cash at bank and in hand                                                                      13,653                            61,148


                                                                                                             618,116                          407,718
 

CREDITORS: amounts falling due within
one year                                                                                             (388,259)                        (492,845)


NET CURRENT ASSETS/(LIABILITIES
)                                             229,857                          (85,127)


TOTAL ASSETS LESS CURRENT LIABILITIES                                    536,230                           237,431


CREDITORS: amounts falling due after
more than one year                                                                          (305,848)                         (239,585)


NET ASSETS/(LIABILITIES)                                                             230,382                              (2,154)


CAPITAL AND RESERVES


Called up share capital                                                                      138,805                             110,016


Share premium account                                                                  1,130,761                             866,990


Other reserves                                                                                  111,478                             111,478


Profit and loss account                                                                  (1,150,662)                       (1,090,638)


SHAREHOLDERS' FUNDS/(DEFICIT)                                               230,382                               (2,154)


The financial statements were approved and authorised for issue by the board and were signed on its behalf on


2 August 2011.
 

G M Sutherland

Director

The Directors do not recommend payment of a final dividend.
 

The above information contained in this announcement has been extracted from Audited accounts.


The Directors of the Issuer accept responsibility for this announcement.


For further information:


John French, Chairman
Sutherland Health Group plc
john@sutherlandhealth.com
Tel: 07836 722 482


Heena Karani
Rivington Street Corporate Finance Limited
heena.karani@rs-cf.com
Tel: 0207 562 3393
 

Notes to Editors:

Sutherland Health Group Plc is a national supplier of patient hygiene, sexual health and diagnostic
products to the UK National Health Service (NHS) and other UK customers. Its aim is to supply innovative solutions to current health issues by studying current trends and working alongside leading professionals who also work within the health sector.


The company is committed to developing and marketing high quality brands and products that will benefit health professionals and consumers alike in many areas of health. The Group has established its own brands: Condomania® Condoms; Sutherland® Patient Hygiene and Personal Care; Lubricating Jelly; and Vision® pregnancy and gynaecology diagnostics. These products have already become established within the NHS business.


The Group is ISO and MHRA registered, and at present principally operates within the United Kingdom.


For further information on the Company visit www.sutherlandhealth.com
 

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